[Federal Register Volume 68, Number 53 (Wednesday, March 19, 2003)]
[Proposed Rules]
[Pages 13522-13587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6453]



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Part IV





Environmental Protection Agency





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40 CFR Part 125



National Pollutant Discharge Elimination System--Proposed Regulations 
To Establish Requirements for Cooling Water Intake Structures at Phase 
II Existing Facilities; Notice of Data Availability; Proposed Rule

  Federal Register / Vol. 68, No. 53 / Wednesday, March 19, 2003 / 
Proposed Rules  

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 125

[FRL-7468-6]
RIN 2040-AD62


National Pollutant Discharge Elimination System--Proposed 
Regulations To Establish Requirements for Cooling Water Intake 
Structures at Phase II Existing Facilities; Notice of Data Availability

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule; Notice of data availability.

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SUMMARY: On April 9, 2002, EPA published proposed standards for cooling 
water intake structures at Phase II existing facilities as part of 
implementing section 316(b) of the Clean Water Act (CWA). This notice 
presents a summary of significant data EPA received or collected since 
proposal, a discussion of how EPA is considering using these data in 
revised analyses supporting the rule, a discussion of some refinements 
that EPA is considering for the proposed regulatory requirements, and 
additional information regarding data quality. This notice also 
provides new information on a broader suite of technology options that 
may be appropriate for compliance at specific sites. EPA solicits 
public comment on the information presented in this notice and the 
record supporting this notice.

DATES: Comments on this notice of data availability and all aspects of 
the April 9, 2002, proposal must be received or postmarked on or before 
midnight June 2, 2003.

ADDRESSES: Comments may be submitted electronically, by mail, or 
through hand delivery/courier. Mail comments to the Water Docket, 
Environmental Protection Agency, Mailcode: 4101T, 1200 Pennsylvania 
Ave., NW., Washington, DC 20460, Attention Docket ID No. OW-2002-0049. 
Follow the detailed instructions as provided in Section I.B. of the 
SUPPLEMENTARY INFORMATION section for additional ways to submit 
comments.

FOR FURTHER INFORMATION CONTACT: For additional technical information 
contact Debra D. Hart at (202) 566-6379. For additional economic 
information contact Lynne Tudor, Ph.D. at (202) 566-1043. For 
additional biological information contact Dana A. Thomas, Ph.D. at 
(202) 566-1046. The e-mail address for the above contacts is 
[email protected].

SUPPLEMENTARY INFORMATION: 

Contents

I. General Information
    A. How Can I Get Copies Of This Document and Other Related 
Information?
    B. How and To Whom Do I Submit Comments?
    C. How Should I Submit CBI To the Agency?
II. Purpose of this Notice
III.Major Changes to Assumptions Used in EPA's Analyses
IV. Engineering Cost Analysis
    A. Facility Flow Verifications
    B. Technology Cost Modules
    C. Facility-Level Costing Options
    D. Clarifications and Corrections
V. IPM Analyses
    A. Changes to the IPM Analyses Since Proposal
    B. Revised Results for the Preferred Option
    C. Revised Results for the Waterbody/Capacity-based Option
VI.Other Economic Analyses
    A. National Costs
    B. Cost-to-Revenue Measure
    C. Cost Per Household
    D. Electricity Price Analysis
VII.Performance Standards
    A. Technology Efficacy Database to Support Performance Standards
    B. Streamlined Technology Option For Certain Locations
VIII. Cost Tests
IX. Biology--Supporting Information
    A. Entrainment Survival
    B. Restoration
    C. Request for Impingement and Entrainment Data
X. National Benefits
    A. Case Study Clarifications and Corrections
    B. Regional Approach To Developing Benefits Estimates
    C. North Atlantic Regional Study
    D. Northern California Regional Study
    E. Nonuse Benefits
    F. Regional-Level Benefit Cost Analysis
    G. Break-Even Analysis
XI. Implementation and Other Regulatory Refinements
    A. Definition and Methods for Determining the ``Calculation 
Baseline''
    B. Options for Evaluating Compliance with Performance Standards
    C. Compliance Timelines, Schedules, and Determination
    D. Determining Capacity Utilization Rates
    E. Clarifications and Corrections
XII. General Solicitation of Comments

I. General Information

A. How Can I Get Copies of This Document and Other Related Information?

    1. Docket. EPA has established an official public docket for this 
action under Docket ID No. OW-2002-0049. The official public docket 
consists of the documents specifically referenced in this action, any 
public comments received, and other information related to this action. 
The official public docket is the collection of materials that is 
available for public viewing at the Water Docket in the EPA Docket 
Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW., 
Washington, DC. The EPA Docket Center Public Reading Room is open from 
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The telephone number for the Public Reading Room is (202) 
566-1744, and the telephone number for the Water Docket is (202) 566-
2426.
    2. Electronic Access. You may access this Federal Register document 
electronically through the EPA Internet under the ``Federal Register'' 
listings at http://www.epa.gov/fedrgstr/.
    An electronic version of the public docket is available through 
EPA's electronic public docket and comment system, EPA Dockets. You may 
use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public 
comments, access the index listing of the contents of the official 
public docket, and to access those documents in the public docket that 
are available electronically. Once in the system, select ``search,'' 
then key in the appropriate docket identification number.
    Certain types of information will not be placed in EPA Dockets. 
Information claimed as confidential business information (CBI) and 
other information whose disclosure is restricted by statute, which is 
not included in the official public docket, will not be available for 
public viewing in EPA's electronic public docket. EPA's policy is that 
copyrighted material will not be placed in EPA's electronic public 
docket but will be available only in printed, paper form in the 
official public docket. To the extent feasible, publicly available 
docket materials will be made available in EPA's electronic public 
docket. When a document is selected from the index list in EPA Dockets, 
the system will identify whether the document is available for viewing 
in EPA's electronic public docket. Although not all docket materials 
may be available electronically, you may still access any of the 
publicly available docket materials through the docket facility 
identified in Unit I.A1. EPA intends to work towards providing 
electronic access to all of the publicly available docket materials 
through EPA's electronic public docket.
    For public commenters, it is important to note that EPA's policy is 
that public comments, whether submitted electronically or on paper, 
will be made available for public viewing in EPA's electronic public 
docket as EPA receives them and

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without change, unless the comment contains copyrighted material, CBI, 
or other information whose disclosure is restricted by statute. When 
EPA identifies a comment containing copyrighted material, EPA will 
provide a reference to that material in the version of the comment that 
is placed in EPA's electronic public docket. The entire printed 
comment, including the copyrighted material, will be available in the 
public docket.
    Public comments submitted on computer disks that are mailed or 
delivered to the docket will be transferred to EPA's electronic public 
docket. Public comments that are mailed or delivered to the Docket will 
be scanned and placed in EPA's electronic public docket. Where 
practical, physical objects will be photographed, and the photograph 
will be placed in EPA's electronic public docket along with a brief 
description written by the docket staff.

B. How and to Whom Do I Submit Comments?

    You may submit comments electronically, by mail, or through hand 
delivery/courier. Please submit with your comments any references cited 
in your comments. To ensure proper receipt by EPA, identify the 
appropriate docket identification number in the subject line on the 
first page of your comment. Please ensure that your comments are 
submitted within the specified comment period. Comments received after 
the close of the comment period will be marked ``late.'' EPA is not 
required to consider these late comments, however, late comments may be 
considered if time permits. If you wish to submit CBI or information 
that is otherwise protected by statute, please follow the instructions 
in Unit I.C. Do not use EPA Dockets or e-mail to submit CBI or 
information protected by statute.
    1. Electronically. If you submit an electronic comment as 
prescribed below, EPA recommends that you include your name, mailing 
address, and an e-mail address or other contact information in the body 
of your comment. Also include this contact information on the outside 
of any disk or CD ROM you submit, and in any cover letter accompanying 
the disk or CD ROM. This ensures that you can be identified as the 
submitter of the comment and allows EPA to contact you in case EPA 
cannot read your comment due to technical difficulties or needs further 
information on the substance of your comment. EPA's policy is that EPA 
will not edit your comment, and any identifying or contact information 
provided in the body of a comment will be included as part of the 
comment that is placed in the official public docket, and made 
available in EPA's electronic public docket. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment.
    i. EPA Dockets. Your use of EPA's electronic public docket to 
submit comments to EPA electronically is EPA's preferred method for 
receiving comments. Go directly to EPA Dockets at http://www.epa.gov/edocket, and follow the online instructions for submitting comments. To 
access EPA's electronic public docket from the EPA Internet Home Page, 
select ``Information Sources,'' ``Dockets,'' and ``EPA Dockets.'' Once 
in the system, select ``search,'' and then key in Docket ID No. OW-
2002-0049. The system is an ``anonymous access'' system, which means 
EPA will not know your identity, e-mail address, or other contact 
information unless you provide it in the body of your comment.
    ii. E-mail. Comments may be sent by electronic mail (e-mail) to [email protected], Attention Docket ID No. OW-2002-0049. In contrast to 
EPA's electronic public docket, EPA's e-mail system is not an 
``anonymous access'' system. If you send an e-mail comment directly to 
the Docket without going through EPA's electronic public docket, EPA's 
e-mail system automatically captures your e-mail address. E-mail 
addresses that are automatically captured by EPA's e-mail system are 
included as part of the comment that is placed in the official public 
docket, and made available in EPA's electronic public docket.
    iii. Disk or CD ROM. You may submit comments on a disk or CD ROM 
that you mail to the mailing address identified in Unit I.B.2. These 
electronic submissions will be accepted in WordPerfect or ASCII file 
format. Avoid the use of special characters and any form of encryption.
    2. By Mail. Send an original and three copies of your comments to 
the Water Docket, Environmental Protection Agency, Mailcode: 4101T, 
1200 Pennsylvania Ave., NW., Washington, DC 20460, Attention Docket ID 
No. OW-2002-0049.
    3. By Hand Delivery or Courier. Deliver copies of your comments to: 
Water Docket, EPA Docket Center, EPA West, Room B102, 1301 Constitution 
Ave., NW., Washington, DC, Attention Docket ID No. OW-2002-0049. Such 
deliveries are only accepted during the Docket's normal hours of 
operation as identified in Unit I.A.1.

C. How Should I Submit CBI to the Agency?

    Do not submit information that you consider to be CBI 
electronically through EPA's electronic public docket or by e-mail. 
Send information claimed as CBI by mail only to the following address, 
Office of Science and Technology, Mailcode 4303T, U.S. Environmental 
Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460, 
Attention: Debbi Hart/Docket ID No. OW-2002-0049. You may claim 
information that you submit to EPA as CBI by marking any part or all of 
that information as CBI (if you submit CBI on disk or CD ROM, mark the 
outside of the disk or CD ROM as CBI and then identify electronically 
within the disk or CD ROM the specific information that is CBI). 
Information so marked will not be disclosed except in accordance with 
procedures set forth in 40 CFR Part 2.
    In addition to one complete version of the comment that includes 
any information claimed as CBI, a copy of the comment that does not 
contain the information claimed as CBI must be submitted for inclusion 
in the public docket and EPA's electronic public docket. If you submit 
the copy that does not contain CBI on disk or CD ROM, mark the outside 
of the disk or CD ROM clearly that it does not contain CBI. Information 
not marked as CBI will be included in the public docket and EPA's 
electronic public docket without prior notice. If you have any 
questions about CBI or the procedures for claiming CBI, please consult 
the person identified in the FOR FURTHER INFORMATION CONTACT section.

II. Purpose of This Notice

    On April 9, 2002, EPA published proposed standards for cooling 
water intake structures at Phase II existing facilities (67 FR 17122). 
EPA received voluminous comments and data submissions during the 120-
day public comment period on the proposal. However, many commenters, 
including both industry and environmental groups, requested additional 
time to review the proposal and the supporting record and to prepare 
further comments. Therefore, EPA is reopening the comment period on all 
aspects of the April 9, 2002, proposal. In addition, following 
publication of the proposal, EPA collected more data and revised 
several methodologies related to costing and benefits estimations. This 
notice makes these new data available for comment and discusses the 
relevance of these data to the analyses conducted by EPA. Thus, EPA 
also solicits public comment on the information presented

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in this notice and the record supporting this notice.
    EPA notes that all options and issues discussed in its proposal are 
still under consideration for the final rule. This notice merely makes 
new information available for public review that the Agency will 
consider in making decisions for the final rule.

Summary of Proposed Rule for Existing Facilities

    The proposed rule would implement section 316(b) of the Clean Water 
Act (CWA) for certain existing power producing facilities that employ a 
cooling water intake structure and that withdraw 50 million gallons per 
day (MGD) or more of water from rivers, streams, lakes, reservoirs, 
estuaries, oceans, or other waters of the U.S. for cooling purposes. 
The proposed rule constitutes Phase II in EPA's development of section 
316(b) regulations and would establish national requirements applicable 
to the location, design, construction, and capacity of cooling water 
intake structures at these facilities. The proposed national 
requirements, which would be implemented through National Pollutant 
Discharge Elimination System (NPDES) permits, would minimize the 
adverse environmental impact associated with the use of these 
structures.
    The proposed rule would establish location, design, construction, 
and capacity requirements that reflect the best technology available 
for minimizing adverse environmental impact from the cooling water 
intake structure based on waterbody type and the amount of water 
withdrawn by a facility. The Environmental Protection Agency (EPA) 
proposed to group surface water into five categories--freshwater rivers 
and streams, lakes and reservoirs, Great Lakes, estuaries and tidal 
rivers, and oceans--and establish requirements for cooling water intake 
structures located in distinct waterbody types. In general, the more 
sensitive or biologically productive the waterbody type, the more 
stringent the requirements proposed as reflecting the best technology 
available for minimizing adverse environmental impact. Proposed 
requirements also vary according to the percentage of the source 
waterbody withdrawn and facility utilization rate.
    A facility may choose one of three options for meeting best 
technology available requirements under the proposed rule. These 
options are (1) demonstrating that the facility's existing design and 
construction technology, operational measures, and/or restoration 
currently meets specified performance standards; (2) selecting and 
implementing design and construction technologies, operational 
measures, or restoration measures that meet specified performance 
standards; or (3) demonstrating that the facility qualifies for a site-
specific determination of best technology available because its costs 
of compliance are significantly greater than either (1) the costs 
considered by the Agency during the development of the rule, or (2) a 
site-specific determination of the benefits of compliance with the 
proposed performance standards. The proposed rule also provides that 
facilities may use restoration measures in addition to or in lieu of 
other technology measures to meet the performance standards established 
in the rule or on a site-specific basis.
    EPA expects that the proposed regulation would minimize adverse 
environmental impact, including substantially reducing the harmful 
effects of impingement (organisms trapped against intake screens or 
other barriers at the entrance of cooling water intake structures) and 
entrainment (organisms drawn into a cooling water intake structure), at 
existing facilities over the next 20 years. As a result, the Agency 
anticipates that the proposed rule would help protect ecosystems in 
proximity to cooling water intake structures. The proposal would help 
preserve aquatic organisms, including threatened and endangered 
species, and the ecosystems they inhabit in waters used for cooling 
purposes by existing power producing facilities. EPA considered the 
potential benefits of the proposed rule and discussed these benefits in 
both quantitative and non-quantitative terms. Benefits, among other 
factors, are based on a decrease in expected mortality or injury to 
aquatic organisms that would otherwise be subject to entrainment into 
cooling water systems or impingement against screens or other devices 
at the entrance of cooling water intake structures. Benefits may also 
accrue at multiple ecological scales including population, community, 
or ecosystem levels.
    In addition to the proposed regulatory requirements, EPA also 
invited comments on a number of other regulatory alternatives. The 
Agency will continue to consider all of these regulatory alternatives 
when making decisions on a final rule.

III. Major Changes to Assumptions Used in EPA's Analyses

    Based on comments received, additional information made available, 
and the results of subsequent analyses, EPA is considering a number of 
revisions to the assumptions that were used in developing the 
engineering costs, the information collection costs, the economic 
analyses, and the benefits analyses. These new assumptions are 
presented below and were used in the current analyses, the results of 
which are presented in this Notice of Data Availability (NODA). EPA 
requests comment on each of these revised assumptions.

1. Number of Phase II Facilities

    Since proposal, EPA verified design flow information for facilities 
that had been classified as either Phase II or Phase III facilities. 
This verification resulted in the following changes: five facilities 
that were classified as Phase II facilities at proposal have been 
reclassified as Phase III facilities. Conversely, six facilities that 
were classified as Phase III facilities at proposal have been 
reclassified as Phase II facilities. As a result, the overall number of 
Phase II facilities increased from 539 to 540 facilities.\1\ For the 
NODA, all cost and economic analyses are based on the updated set of 
Phase II facilities.
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    \1\ Note that these numbers are unweighted. On a sample-weighted 
basis, the number of Phase II facilities increased from 550 to 551.
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2. Technology Costs

    EPA used new information to revise the capital and operation and 
maintenance (O&M) costs for several compliance technologies, including 
those used as the primary basis for the proposed regulatory option. 
Overall, the cost updates resulted in the following changes. For the 
preferred option (discussed above at Section II), total capital costs 
increased by 66 percent and total O&M costs increased by 48 percent. 
For the waterbody/capacity-based option, which would set performance 
standards for impingement mortality and entrainment reduction based on 
closed-cycle, recirculating cooling for some facilities and 
technologies such as fine-mesh screens and fish-return systems for 
others, total capital costs increased by 40 percent (net of existing 
condenser cost savings), while total O&M costs decreased by 13 percent. 
These comparisons are based on the raw costs, adjusted to year-2002 
dollars, which have not been discounted or annualized.\2\
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    \2\ Based on additional research between the proposal and the 
NODA, some facilities also experienced a change in their projected 
compliance response. This change, together with the increase in in-
scope Phase II facilities, may have contributed to the change in 
total compliance costs. See section IV of the NODA preamble for more 
information.

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    The revised costing assumptions are discussed in detail below. EPA 
notes that the proposed rule includes a compliance option that allows 
site-specific flexibility in cases where compliance costs for a 
particular facility significantly exceed those estimated in the 
analysis for the final rule. EPA is currently considering whether the 
final rule should provide additional guidance on how to conduct this 
comparison, including how best to use the costing information in the 
rule record. EPA requests comment on its costing methodology; its 
relationship to the proposed site-specific, cost-cost comparison 
provisions; and what additional guidance, if any, EPA should provide on 
implementation of these provisions.

3. Permitting and Monitoring Costs

    At proposal, the single most costly permitting activity was the 
``Impingement Mortality and Entrainment Characterization Study,'' a 
required element of the ``Comprehensive Demonstration Study.'' See 
proposed Sec.  125.95(b). The proposed rule did not require facilities 
with cooling towers to conduct these studies but, inadvertently, EPA 
included costs for the Impingement Mortality and Entrainment 
Characterization Study in its cost estimates for facilities projected 
to have cooling towers in the base case (i.e., those projected to have 
cooling towers in the absence of the rule). EPA also applied costs for 
this study to facilities that EPA projected to install cooling towers 
under certain regulatory options. For the NODA analysis, EPA did not 
include the cost of the Impingement Mortality and Entrainment 
Characterization Study for facilities projected to have cooling towers 
in the base case or the waterbody/capacity-based option.

4. Net Installation Downtime for Compliance Technologies Other Than 
Recirculating Cooling Towers

    In the analysis for the proposed rule, EPA made the assumption that 
compliance technologies other than recirculating cooling towers would 
not require facility downtime for installation. EPA has since revised 
this assumption. EPA expects additional unscheduled downtimes of 
between two and eight weeks for the installation of the various non-
recirculating compliance technologies.

5. Net Installation Downtime and Other Site-Specific Factors for 
Recirculating Cooling Towers

    To support the proposed Phase II rule, EPA assumed that each 
projected cooling system conversion would require a net downtime of 
four weeks. This estimate was based on information that had been 
previously available to EPA on the downtime needed for fossil-fuel and 
nuclear power plants. Just prior to proposal, EPA received additional 
technical information on the amount of operational downtime needed 
during cooling system conversions from once through to closed-cycle, 
recirculating with cooling towers at nuclear power plants (see DCN 4-
2529). For the new analyses, EPA is incorporating the new information 
which suggests that cooling system conversions at nuclear power plants 
may take seven months. To the extent that conversions at nuclear power 
plants take less time to complete, costs for this factor would be 
lower.
    For non-nuclear power plants, EPA's cost estimates at proposal 
assumed four weeks downtime for the retrofit of wet cooling towers at 
existing power plants. The Agency requests comment on whether more or 
less downtime may be required at some plants due to site-specific 
factors and, if so, whether EPA should use a different estimate of 
downtime in analyzing the costs of this regulatory option.

6. Energy Penalties

    For the proposed Phase II rule, the average annual energy penalty, 
by region and fuel type, was applied to each facility upgrading to a 
closed-cycle, recirculating cooling system. Based on comments received, 
EPA has changed the energy penalty assumption to attempt to account for 
seasonal, peak effects. For the new analyses, the energy penalty 
applied is the greater of the peak-summer penalty or the average annual 
penalty for each facility projected to convert their cooling systems to 
a closed-cycle, recirculating cooling system. EPA notes that the 
approach used at proposal might have understated potential impacts of 
the energy penalty on generating capacity. Conversely, using the 
greater of the peak summer penalty and the average annual penalty might 
overestimate potential impacts of the energy penalty on generating 
capacity. EPA has adopted the latter approach in order to ensure that 
impacts are not underestimated.

7. Capacity Utilization Rates

    For the proposed Phase II rule, the 15 percent capacity utilization 
determination was based on the generation and capacity of the entire 
facility, including steam electric and non-steam generators. EPA 
believes that utilization of the steam electric part of a facility 
better reflects a facility's potential for adverse environmental impact 
because only the steam electric generators use cooling water. As 
discussed at Section XI below, EPA is considering refining its 
regulatory definition for ``capacity utilization rate'' at the proposed 
Sec.  125.93 to reflect use of the steam electric part of a facility. 
For the NODA, EPA is using the capacity utilization of only the steam 
electric generators at Phase II facilities so that its updated economic 
analyses include this potential refinement.
    In addition, at proposal, EPA used the average capacity utilization 
based on EIA data for 1995 to 1999. This utilization rate was often 
different from the rate based on the ``IPM base case results'' EPA used 
to support its estimates of the economic impacts of the rule (see 
section V for additional description of EPA's economic analysis 
methodology. For the NODA analyses, EPA used projected capacity 
utilization rates for 2008 (the first model-run year in EPA's economic 
analysis), in order to ensure internal consistency in the analysis. For 
many facilities, this resulted in a lower capacity utilization rate in 
the baseline. As a result, the compliance requirements and compliance 
costs for these facilities may be lower, depending on the waterbody 
type from which they withdraw and the impingement mortality and 
entrainment technologies they already have in place in the baseline. 
Facilities with lower projected compliance costs than under the 
previous assumption may also have lower projected impacts in the 
analysis, depending on the magnitude of the cost differential and the 
facilities' operating characteristics in the baseline (e.g., a change 
in cost for marginal units would have a greater effect than for units 
that generate electricity well below the cost of the marginal unit). 
EPA requests comment on this change in assumptions.

8. Compliance Schedule

    At the time of proposal, promulgation of the final section 316(b) 
Phase II rule was scheduled for August 28, 2003. As a result, EPA 
assumed that facilities would come into compliance with the preferred 
option between 2004 and 2008 as their existing NPDES permits expired 
and were reviewed. For regulatory options based on the reductions in 
impingement and entrainment achievable using a closed-cycle 
recirculating system, EPA further assumed that facilities costed with a 
cooling tower would come into compliance between 2005 and 2012. Since 
proposal, the section 316(b) regulatory development schedule has 
changed. Promulgation of the final rule is now scheduled for February 
16, 2004,

[[Page 13526]]

making it impossible for facilities to come into compliance in 2004 
(the assumption in all economic analyses is that facilities comply in 
the beginning of the year in which they receive requirements in their 
permit). As a result, EPA shifted the compliance schedule for the NODA 
analysis by one year for all Phase II facilities. Facilities costed 
with a cooling tower are now assumed to have a compliance window from 
2005 to 2013, while facilities without a recirculating requirement are 
assumed to come into compliance between 2005 and 2009 (during the year 
of their first post-promulgation permit). For purposes of the cost and 
impacts analysis, EPA used the 2010 model run year instead of the 2008 
model run year, as at proposal. Under the preferred option, all 
facilities are projected to come into compliance by 2009.

9. Number of Facilities Projected To Upgrade to Recirculating Wet 
Cooling (Waterbody/Capacity-Based Option)

    For the proposed Phase II rule, EPA estimated that 51 model 
facilities would upgrade their cooling systems from once-through to 
closed-cycle, recirculating cooling systems under the waterbody/
capacity-based option. EPA estimates for these analyses that 44 model 
facilities would upgrade cooling systems for the same option. The 
requirements of the regulatory alternative have not changed. The change 
in number of facilities that would be required to upgrade their cooling 
system is due to: (1) EPA's effort to update, correct, and verify 
facility design intake flows and (2) the fact that EPA no longer needs 
to use a statistical methodology to determine the number of short 
technical questionnaire facilities that withdraw more than one percent 
of the mean tidal excursion. EPA has updated design intake flows for a 
number of in-scope facilities. In a few cases, these database flow 
changes have impacted the determination of whether a facility is 
projected to upgrade its cooling system because the requirements for 
the waterbody/capacity-based option, in some instances, hinge on intake 
flow. Since proposal, EPA has identified those short technical 
questionnaire facilities whose design intake flow exceeds one percent 
of the mean tidal excursion. This information was not available for the 
analyses supporting the proposal, and as such, EPA utilized a 
statistical method to project which facilities would meet these 
criteria. For these current analyses, EPA has utilized the actual data 
in lieu of the statistical method. As a result, a number of changes 
have been made to the list of short-technical questionnaire model 
facilities projected to upgrade their cooling systems.

IV. Engineering Cost Analysis

A. Facility Flow Verifications

    In order to ensure the accuracy and quality of the data used for 
the costing effort, the Agency revisited its database of facility and 
intake design flows. Flow is an important factor in calculating costs. 
The Agency first screened the flow data in order to identify facilities 
with potentially inaccurate flow information. From this first set of 
facilities, the Agency attempted to identify errors by inspecting the 
original questionnaires on which the flows were reported. Through this 
effort, the Agency was able to correct a few flow values by identifying 
survey reporting errors (such as unit conversion inconsistencies). The 
remainder of the potentially inaccurate flow data set required outreach 
to 25 facilities to solve the identified discrepancies. In many cases, 
the original reported flows were correct. In others, incorrect initial 
reporting had led to incorrect calculations of design flow rates. The 
Agency corrected these flows for the master database used to support 
analyses presented in this Notice of Data Availability (see ``Flow 
Correction and Verification,'' in the Confidential Business Information 
portion of the docket).

B. Technology Cost Modules

    The Agency developed a new approach to developing compliance costs 
that includes a broader range of compliance technologies than it used 
for calculating compliance costs for the proposed rule requirements. In 
order to do so, the Agency sought to evaluate new and/or additional 
costs for a wider range of intake technologies identified as having the 
potential to meet the proposed regulation requirements without the 
expense and energy penalty associated with capacity-reduction 
technologies such as cooling towers. In selecting among available 
technologies, EPA revised its traditional least cost approach, and 
instead assigned costs based on the projected performance of available 
technologies on a site-specific basis. This approach is discussed in 
more detail in section IV.C. below.
    The revised and new technology modules analyzed by the Agency 
include the following:
    --Addition of fish handling and return system to an existing 
traveling screen system,
    --Addition of fine-mesh screens (both with and without a fish 
handling and return system) to an existing traveling screen system,
    --Addition of a new, larger intake in front of an existing intake 
screen system,
    --Addition of passive fine-mesh screen system (cylindrical 
wedgewire) near shoreline,
    --Addition of a fish net barrier system,
    --Addition of an aquatic filter barrier system,
    --Relocation of an existing intake to a submerged offshore location 
(with velocity cap inlet, passive fine-mesh screen inlet, or onshore 
traveling screens),
    --Addition of a velocity cap inlet to an existing offshore intake,
    --Addition of passive fine-mesh screen to an existing offshore 
intake,
    --Addition or modification of a shoreline-based traveling screen 
for an offshore intake system, and
    --Addition of dual-entry, single-exit traveling screens (with fine-
mesh) to a shoreline intake system.
    The explanation and derivation of each of these modules is 
discussed in the public record (see ``316(b) Phase II NODA Cost 
Modules.'')
    At proposal, EPA based its cost analysis primarily on the addition 
of fine-mesh traveling screens with fish handling systems. EPA 
recognized at proposal that some facilities would need to add larger 
intakes, move intakes, or modify offshore intakes, and included an 
approximate adjustment factor in its cost estimates to account for 
these types of modifications, but lacked sufficient data to model them 
explicitly. In the NODA analysis, EPA has added explicit cost modules 
for each of these activities. As a result, the per facility costs for 
adding traveling screens with fish handling systems have gone down 
significantly, but a significant number of facilities (about 40% of the 
in-scope universe) have been costed for other technologies, which are 
significantly more expensive than traveling screens. To help commenters 
better understand the impacts of these revisions, EPA has placed a 
summary document in the record that shows modeled costs for a range of 
flows for each major technology module used at proposal and in this 
NODA, broken out by salt water versus freshwater and nuclear facility 
versus non-nuclear facility (see ``Comparison of Capital and Net O & M 
Compliance Costs for Technologies Costed in Proposed Rule and NODA''). 
As discussed in section III above, EPA also modified its estimate of 
facility downtime potentially necessary to install these technologies, 
as well as

[[Page 13527]]

capacity reduction technologies such as cooling towers.
    EPA has not yet examined other new information suggesting that 
site-specific factors may affect the costs of retrofitting wet towers 
at existing power plants. For example, in October 2002, the Department 
of Energy (DOE) provided EPA with a study analyzing the costs of 
retrofitting wet cooling towers at four facilities (see DCN W-00-32, 
316(b) Phase II, comment 2.11). The study found costs at these 
facilities would be higher than EPA estimated for similar facilities in 
its proposal record. EPA invites comment on the data contained in the 
DOE study, and will consider these data as the Agency makes decisions 
for the final rule. In January 2003, the DOE/National Energy Technology 
Laboratory (NETL) provided EPA with an addendum to their October 2002 
(see DCN W-00-32, 316(b) Phase II, comment 2.14). In that addendum, DOE 
determined that three out of four facilities would likely require plume 
abatement technologies that could double the capital costs of the 
cooling tower portion of a retrofit project. In February 2003, DOE 
provided additional information indicating that one plant located on 
brackish waters in a densely populated urban area that is considering a 
cooling tower retrofit may install a reverse osmosis system to reduce 
particulate salt emissions (see ``Astoria Repowering Project Article X 
Supplement,'' Reliant Energy, November 12, 2002). EPA notes that some 
other facilities located on brackish water using cooling towers do not 
use such systems to reduce particulate emissions (see DCN 4-2553) . The 
Agency requests comment on whether site-specific factors other than 
those addressed in the Agency's derivation of cost estimates for the 
waterbody/capacity-based option at proposal could increase or lower the 
costs of retrofitting a wet cooling tower at an existing plant.

C. Facility-Level Costing Options

    In order to implement the revised costing approach (see section 
IV.B. above), the Agency necessarily changed its approach to developing 
costs at the model facility level. This approach focuses as much as 
possible on site-specific characteristics for which the Agency obtained 
data through the 316(b) questionnaire. In addition, EPA utilized 
available geographic information, including detailed topographic 
mapping and overhead satellite imagery, to better utilize site-specific 
characteristics of each model facility's intake(s) to inform decisions 
on the proper costing modules projected for compliance. ``Technology 
Costing Module Applications for Model Facilities,'' provides the 
background and explanation of the Agency's approach to model facility 
level costing.
    EPA's approach to model facility-level costing may be described as 
follows. In order to project upgrades to technologies as a result of 
compliance with the proposed rule, the Agency utilizes as much 
information as is available about the characteristics of the hundreds 
of facilities within the scope of the proposed rule. By incorporating 
as many site-specific features as possible into the design and 
implementation of its costing approach the Agency has been able to 
capture a representative range of compliance costs at what it deems 
``model facilities.'' However, the Agency did not have and will never 
have the opportunity to visit and study in detail all of the 
engineering aspects of each facility complying with this rule (over 400 
facilities could incur technology-related compliance costs as a result 
of this rule). Therefore, although the Agency has developed costs that 
represent EPA's best effort to develop a site-specific engineering 
assessment for a particular facility, this assessment does not 
incorporate certain peculiarities that only long-term study of each 
facility would bear out. Hence, the Agency refers to its approach as a 
``model'' facility approach.
    In selecting technology modules for each model facility, EPA 
departed from its traditional least cost approach. This is because, 
while the Agency is confident that the suite of available technologies 
can achieve compliance with the proposed performance generally (60-90% 
reduction in entrainment and 80-95% reduction in impingement relative 
to the calculation baseline) EPA lacks sufficient data to determine the 
performance of each technology on a site-specific basis. The Agency 
thus selected the best performing technology (rather than the least 
costly technology) that was suitable for each site, in order to ensure 
that the technology on which costs were based would in fact achieve 
compliance at that site. EPA recognizes that this approach may entail a 
greater degree of cost conservatism than is typical in regulatory 
analyses, and that this may have implications for the cost-cost 
comparison provisions in the proposed rule. EPA requests comment on its 
revised approach for selecting model facility cost modules.
    EPA believes that its modular approach to deriving costs of 
technologies and the costs to install and operate technologies 
incorporates sufficient flexibility to derive costs that reflect a 
broad range of applications. To ensure that the Agency does not 
underestimate the costs of the rule, EPA has approached the compliance 
costing effort with great conservatism. When there is uncertainty or 
the data are inconclusive, EPA has favored conservative approaches to 
costs (that is, higher than average). Therefore, the Agency is 
confident that the compliance costs represented in the analyses 
accompanying this Notice of Data Availability represent conservative 
estimates for the range of model facilities represented. However, for a 
particular facility, the costs may be higher or may be lower than would 
actually be realized.

D. Clarifications and Corrections

Estimating Design Intake Flows for Short Technical Questionnaire 
Facilities
    At proposal, the Agency utilized a statistical methodology based on 
linear regression to assess the design intake flow information for 
facilities that responded to the short technical questionnaire. Because 
the Agency initially asked short technical respondents for only their 
actual annual intake flow for the reporting year, it was necessary to 
obtain design intake flow information for the purpose of accurately 
assessing compliance costs. The Agency did not include the statistical 
methodology for estimating design intake flows for short technical 
questionnaire facilities and its results in the record for the proposed 
rule. The Agency continues to use this methodology for this Notice of 
Data Availability and hereby includes the supporting information in the 
record (see DCN 5-2501).

V. IPM Analyses

    At proposal, EPA used an electricity market model, the Integrated 
Planning Model 2000 (IPM[reg] 2000), to identify potential 
economic and operational impacts of various regulatory options 
considered for proposal.\3\ EPA conducted impact analyses at the market 
level, by North American Electric Reliability Council (NERC) region,\4\ 
and for facilities subject to the

[[Page 13528]]

Phase II regulation. Analyzed characteristics included changes in 
capacity, generation, revenue, cost of generation, and electricity 
prices. These changes were identified by comparing two scenarios: (1) 
The base case scenario (in the absence of any Section 316(b) 
regulation) and (2) the post compliance scenario (after the 
implementation of the new Section 316(b) regulations). The results of 
these comparisons were used to assess the impacts of the preferred 
option and two of the five alternative regulatory options considered by 
EPA: (1) the ``Intake Capacity Commensurate with Closed-Cycle, 
Recirculating Cooling System based on Waterbody Type/Capacity'' Option 
(hereafter the ``waterbody/capacity-based'' option) and (2) the 
``Intake Capacity Commensurate with Closed-Cycle, Recirculating Cooling 
System for All Facilities'' Option (hereafter the ``all closed-cycle'' 
option).
---------------------------------------------------------------------------

    \3\ For a detailed description of the IPM 2000 see Chapter B3 of 
the Economic and Benefits Analysis (EBA) document in support of the 
proposed rule (DCN 4-0002; http://www.epa.gov/ost/316b/econbenefits/b3.pdf).
    \4\ The ten NERC regions modeled by the IPM are: ECAR (East 
Central Area Reliability Coordination Agreement), ERCOT (Electric 
Reliability Council of Texas), FRCC (Florida Reliability 
Coordinating Council), MAAC (Mid-Atlantic Area Council), MAIN (Mid-
America Interconnected Network, Inc.), MAPP (Mid-Continent Area 
Power Pool), NPCC (Northeast Power Coordination Council), SERC 
(Southeastern Electricity Reliability Council), SPP (Southwest Power 
Pool), and WSCC (Western Systems Coordinating Council). Electric 
generators in Alaska and Hawaii are not modeled by the IPM.
---------------------------------------------------------------------------

    Since publication of the proposed rule, EPA has made several 
changes to its IPM analysis. The following sections present a 
discussion of these changes and the results of the re-analysis of the 
preferred option and the waterbody/capacity-based option. EPA would use 
the same methodology as described in Chapter B3 of the EBA (as amended 
in this NODA) to analyze other options presented at proposal but not 
explicitly analyzed for this NODA if they were chosen for promulgation.

A. Changes to the IPM Analyses Since Proposal

    This section presents the changes to the IPM assumptions and 
modeling procedures used at proposal. This section also describes 
modifications EPA made to the analyses to correct errors that were 
discovered after publication of the proposed rule.
1. IPM Analysis of the Proposed Regulatory Requirements
    For the proposal, EPA did not explicitly analyze the preferred 
option because of time constraints. Rather, EPA conducted an 
electricity market model analyses of two alternative options that had 
higher costs than those of the preferred option. To assess the expected 
economic impacts of the preferred option at proposal, EPA adopted an 
indirect approach.\5\ EPA acknowledges that an analysis specific to the 
requirements of the preferred option is preferable, and, as a result, 
EPA conducted an IPM model run using the proposed regulatory 
requirements for this NODA. The results of this analysis are presented 
in Section V.B below.
---------------------------------------------------------------------------

    \5\ For more information on this analysis, please refer to 
Section VIII.A of the preamble to the proposed rule and Chapter B3 
of the EBA document.
---------------------------------------------------------------------------

2. Model Aggregation
    At proposal, the steam electric generators of the 530 Phase II 
facilities that are modeled by the IPM were disaggregated from the 
existing IPM model plants (as used in the standard IPM base case used 
for other EPA regulations, the EPA Base Case 2000) and ``run'' as 
individual facilities along with the other existing model plants. This 
change increased the total number of model plants from 1,390 under the 
EPA Base Case 2000 to 1,777 under the 316(b) Proposal Base Case.\6\ For 
this NODA, EPA made two further changes to the model aggregation, which 
increased the total number of model plants from 1,777 to 2,096:
---------------------------------------------------------------------------

    \6\ For more information on changes made to the EPA Base Case 
2000, see EBA, Chapter B3, Section B3-2.2.
---------------------------------------------------------------------------

    [sbull] Disaggregation of non-steam generators at Phase II 
facilities. At proposal, EPA only disaggregated Phase II steam electric 
generators from the original model plant specification. These steam 
electric generators were then re-aggregated to the facility-level, and 
the facility-level output was used in EPA's facility impact analyses. 
Disaggregating only steam-electric generators led to the 
underestimation of certain facility-level operating characteristics 
(e.g., generation and revenues) because the facility-level results 
produced by the model did not include the economic activities of non-
steam generators at Phase II facilities. Therefore, for this NODA 
analysis, EPA also disaggregated the non-steam generators at facilities 
subject to the rule from the original model plant specification, so 
that the facility-level results include the economic activities of the 
entire plant.
    [sbull] Phase III facilities. In addition to disaggregating 
generators at Phase II facilities, EPA also disaggregated generators at 
Phase III facilities for this NODA. (At the time this analysis was 
started, the section 316(b) regulatory schedule called for proposal of 
the Phase III rule three months before promulgation of the Phase II 
rule.)
    Because changes in model aggregation can result in changes to the 
base case results, EPA compared the base case results generated for the 
proposal and NODA analyses. This comparison identified little 
difference in the base case results caused by the modification in the 
model aggregation: Base case total production costs (capital, O&M, and 
fuel) using the revised NODA specifications are lower by 0.2% to 0.3% 
in the years 2008, 2010, and 2020. Early retirements of base case oil 
and gas steam capacity under the NODA specifications decreased by 1,258 
MW. Early retirements of base case nuclear and coal capacity remained 
constant. In addition, the revised model specifications result in 
changes in base case coal and gas fuel use by less than 1.0 percent.
3. Capacity Utilization
    Under the preferred option and the alternative regulatory options 
considered at proposal, facilities with a capacity utilization rate of 
less than 15 percent may be subject to less stringent compliance 
requirements than facilities with a utilization rate of 15 percent or 
more, depending on the water body from which they withdraw and the 
technologies they already have in place. EPA made the following changes 
to the determination of the capacity utilization of Phase II facilities 
for the economic analysis:
    [sbull] Capacity utilization rates based on steam-electric 
generators only. At proposal, the 15 percent capacity utilization 
determination was based on the generation and capacity of the entire 
facility, including steam electric and non-steam generators. As 
discussed at Section III above, EPA believes that utilization of the 
steam electric part of the facility better reflects the facility's 
potential for adverse environmental impact because only the steam 
electric generators use cooling water subject to this regulation. At 
Section XI below, EPA invites comment on a refinement to the definition 
of ``capacity utilization rate'' at proposed Sec.  125.93 to focus only 
on the steam electric generators at a facility. For the NODA, EPA is 
using the capacity utilization of only the steam electric generators at 
Phase II facilities so that the updated economic analyses, including 
the IPM analysis, include this potential refinement.
    [sbull] IPM capacity utilization rates. At proposal, EPA used the 
average capacity utilization based on Energy Information Administration 
(EIA) data for 1995 to 1999. This utilization rate was often different 
from the rate based on the IPM base case results. This discrepancy 
might have led to an underestimation of economic impacts for those 
facilities whose utilization rate is less than 15 percent based on EIA 
data but 15 percent or more based on IPM data, and to an overestimation 
of economic impacts for those facilities whose utilization rate is 15 
percent or more based on EIA data but less than 15

[[Page 13529]]

percent based on IPM data. To make the compliance response and costs 
consistent with the economic performance of facilities in the IPM, EPA 
used projected IPM capacity utilization rates for 2008 (the first 
model-run year) for the NODA.

As a result of these two changes, of the 530 facilities modeled by the 
IPM at proposal, 19 facilities that had a capacity utilization rate of 
less than 15 percent for the proposal analysis have a rate of 15 
percent or more for the NODA analysis (base case using the EPA 
electricity demand growth assumption). Conversely, 75 facilities that 
had a rate of 15 percent or more for the proposal analysis have a rate 
of less than 15 percent for the NODA analysis (base case using the EPA 
electricity demand growth assumption). The net effect of these changes 
is that for the NODA analysis more facilities are estimated to have the 
less stringent compliance requirements associated with a low capacity 
utilization rate than was the case for the proposal analysis.

    [sbull] Generation cap. A final modification to the capacity 
utilization of Phase II facilities relates to the potential change in 
the utilization rate between the base case and the post-compliance 
cases. Because facilities with a baseline capacity utilization rate of 
less than 15 percent are potentially subject to less stringent 
compliance requirements (depending on the water body from which they 
withdraw and the technologies they already have in place), they would 
not be able to increase their post-compliance capacity utilization 
without incurring more stringent compliance requirements. In order to 
ensure that the capacity utilization rate in the post-compliance case 
is consistent with the costing assumptions, the generation of 
facilities with a steam-electric capacity of less than 15 percent in 
the base case was capped so that their post-compliance capacity 
utilization would remain below 15 percent.
4. Treatment of Installation Downtime
    The IPM models the electric power market over the 26-year period 
2005 to 2030. Due to the data-intensive processing procedures, the 
model is run for a limited number of years only. Run years are selected 
based on analytical requirements and the necessity to maintain a 
balanced choice of run years throughout the modeled time horizon. EPA 
selected the following run years for the Section 316(b) analyses: 2008, 
2010, 2013, 2020, and 2026.\7\ 2005 to 2009 are mapped into the 2008 
run year; 2010 to 2012 are mapped into the 2010 run year; and 2013 to 
2015 are mapped into the 2013 run year. The years that are mapped into 
a run year are assumed to have the same characteristics as the run year 
itself. This model characteristic creates a challenge in correctly 
representing estimated downtimes associated with recirculating systems 
and other compliance technologies exactly the way they are estimated to 
occur (downtimes assigned to a model run year are also assigned to non-
run years, and downtimes assigned to non-run years are not taken into 
account).
---------------------------------------------------------------------------

    \7\ Model run years 2020 and 2026 were specified for model 
balance, while run years 2008, 2010, and 2013 were selected to 
provide output across the compliance period. Output for 2020 and 
2026 is not used in EPA's analyses. For more information on IPM 
model run years, see Chapter B3, section B3-2.1.d of the EBA.
---------------------------------------------------------------------------

    There are different options of accounting for downtimes. At 
proposal, EPA decided to model the downtime for each facility in its 
estimated year of compliance. Since 2005 through 2009 are all mapped 
into 2008, a facility that had downtime in 2008 was modeled as if it 
also had downtimes in 2005, 2006, 2007, and 2009. This may have 
understated the net present value (NPV) of the facility's operations 
and therefore overestimated its closure decision. Conversely, a 
facility that had a downtime in a non-model run year was modeled as if 
it had no downtime at all. This may have overestimated its NPV and 
therefore understated its closure decision. While this approach 
potentially affected the facility-level analysis, it provided for a 
realistic snapshot of the market effect of downtimes in the model run 
year.
    For the NODA analysis, EPA decided to change the representation of 
downtimes to an average over the years that are mapped into each model 
run year. For example, a facility with a downtime in 2008 was modeled 
as if 1/5th of its downtime occurred in each year between 2005 and 
2009. This approach more closely models potential facility-level 
impacts as it accounts for the correct total amount of downtime for 
each facility. The potential drawback of this approach is that the 
snapshot of the market-level effect of downtimes during the model run 
year is the average effect; this approach does not model potential 
worst-case effects of above-average amounts of capacity being down in 
one NERC region during a specific year.
5. Correction of Errors
    EPA corrected two IPM input errors that were discovered after 
publication of the proposed rule: (1) At proposal, the capital costs of 
compliance were erroneously considered sunk and were not taken into 
account in making early retirement decisions; (2) The energy penalty 
was omitted for a few facilities costed with a recirculating system 
(one out of 49 facilities under the waterbody/capacity-based option and 
nine out of 408 facilities under the all closed-cycle option). These 
errors may have led the IPM to understate the modeled economic impacts 
at these facilities.
6. Other Changes Affecting the IPM Results
    In addition to the modeling changes described above, a number of 
other changes affect the results presented below. These changes are 
outlined in Section III above and include the following: an increase in 
the estimated number of in-scope Phase II facilities from 550 to 551 
(as a result, the number of Phase II facilities modeled by the IPM 
increased from 530 to 531); revisions of technology and permitting/
monitoring costs; changes to the assumption of construction downtimes 
of recirculating cooling towers and other compliance technologies; an 
adjustment of energy penalties; changes in the estimation of the 
capacity utilization threshold; and adjustments to the compliance 
schedule.
    EPA also notes that in 2010, non-dispatched capacity in the IPM 
base case (based on EPA's electricity demand growth assumption) is 
approximately 12 percent of total capacity, which is consistent with 
historical rates to ensure system reliability. (Non-dispatched 
facilities are those that operate on a stand-by basis throughout the 
year but are not called upon to generate and dispatch electricity.) 
Most of this capacity is oil/gas steam capacity (66 percent) and gas 
turbines (27 percent). Overall, 11 percent of steam electric capacity 
and 15 percent of non-steam capacity are modeled to be on stand-by. A 
large portion of the non-dispatched steam electric capacity is subject 
to Phase II regulation. In total, approximately 12 percent of Phase II 
steam electric capacity is not dispatched in the base case. This number 
is higher than historical data for these facilities. The main reason 
for this difference is that over time, existing capacity, especially 
oil/gas steam capacity, is expected to become less competitive relative 
to new capacity additions, especially combined-cycle facilities. Oil 
and gas steam units generally have (a) higher heat rates, (b) higher 
fuel costs, (c) higher variable O&M costs, and (d) higher emission 
rates than other steam electric capacity. As a result, some relatively 
inefficient oil and gas steam units are modeled to be idle in the IPM.

[[Page 13530]]

    All Phase II facilities are subject to the requirements of the 
Phase II regulation, even if they do not generate electricity. 
Therefore, unless EPA modeled a facility to cease operations and exit 
the marketplace, EPA assigned compliance costs to non-dispatched 
facilities. While none of the Phase II units that stand-by in the base 
case are modeled to be economic closures under the preferred option, it 
is possible that other economic measures, e.g., impacts on pre-tax 
income, may be overestimated for these facilities. This would be the 
case because revenues might be understated if the modeling assumption 
that these facilities do not generate electricity is not realistic.
    EPA requests comment on this part of the analysis.

B. Revised Results for the Preferred Option

    This section presents the revised impact analysis of the preferred 
option. The impacts of compliance with the preferred option are defined 
as the difference between the model output for the base case scenario 
and the model output for the post-compliance scenario.\8\ EPA analyzed 
impacts from the preferred option using output from model run year 
2010. 2010 was chosen to represent the effects of the preferred option 
for a typical year in which all facilities are in compliance 
(compliance years for the preferred option are 2005 to 2009).\9\ The 
analysis was conducted at two levels: the market level including all 
facilities (by NERC region) and the Phase II facility level (including 
analyses of the in-scope Phase II facilities as a group and of 
individual Phase II facilities). The results of these analyses are 
presented below.
---------------------------------------------------------------------------

    \8\ Two base case scenarios were used to analyze the impacts 
associated with the preferred option and the waterbody/capacity-
based option. The base case scenario used to analyze the preferred 
option was developed using EPA's electricity demand assumption. 
Under this assumption, demand for electricity is based on the Annual 
Energy Outlook (AEO) 2001 forecast adjusted to account for demand 
reductions resulting from the implementation of the Climate Change 
Action Plan (CAAP). The base case for the waterbody/capacity-based 
option was developed using the unadjusted electricity demand from 
the AEO 2001. (See the Appendix of ch.B8 of the EBA, as published 
for the proposed rule, for further explanation on the two base 
cases; http://www.epa.gov/ost/316b/econbenefits/b8.pdf.) EPA is 
currently completing additional IPM runs and will develop analyses 
of both options using both base cases. EPA intends to place these 
additional analyses in the docket during the comment period on this 
Notice. EPA expects to use information from the analyses in today's 
Notice and these additional analyses to support decision-making for 
the final rule.
    \9\ EPA also analyzed potential market-level impacts of the 
preferred option for a year within the compliance period during 
which some Phase II facilities experience installation downtimes. 
This analysis used output from model run year 2008. See ch. B3, sec. 
B3-4.3 of the EBA, as updated for this NODA analysis, for the 
results of this analysis.
---------------------------------------------------------------------------

1. Market-Level Impacts of the Preferred Option
    The market-level analysis includes results for all generators 
located in each NERC region including facilities both in scope and out 
of scope of the proposed Phase II rule. Exhibit 1 below presents five 
measures used by EPA to assess market-level impacts associated with the 
preferred option: (1) Incremental capacity closures, calculated as the 
difference between capacity closures under the preferred option and 
capacity closures under the base case; (2) incremental capacity 
closures as a percentage of baseline capacity; (3) post-compliance 
changes in variable production costs per MWh, calculated as the sum of 
total fuel and variable O&M costs divided by total generation; (4) 
post-compliance changes in energy price, where energy prices are 
defined as the wholesale prices received by facilities for the sale of 
electric generation; and (5) post-compliance changes in pre-tax income, 
where pre-tax income is defined as total revenues minus the sum of 
fixed and variable O&M costs, fuel costs, and capital costs. Additional 
results are presented in Chapter B3: Electricity Market Model Analysis 
(sec. B3-4.1) of the EBA, as updated for this NODA analysis. Chapter B3 
also presents a more detailed interpretation of the results of the 
market-level analysis.

                         Exhibit 1.--Market-Level Impacts of the Preferred Option (2010)
----------------------------------------------------------------------------------------------------------------
                                                         Closures as     Change in                    Change in
                             Baseline     Incremental       % of         variable       Change in      pre-tax
       NERC region           capacity      capacity       baseline      production    energy price     income
                               (MW)      closures (MW)    capacity     cost per MWh      per MWh       ($2002)
----------------------------------------------------------------------------------------------------------------
ECAR.....................      118,529               0          0.0             0.1           0.0          -1.1
ERCOT....................       75,290               0          0.0             0.0           6.1          -6.0
FRCC.....................       50,324               0          0.0             0.4           0.6          -3.1
MAAC.....................       63,784               0          0.0            -0.1           0.0          -0.9
MAIN.....................       59,494             434          0.7             0.8          -0.3          -0.7
MAPP.....................       35,835               0          0.0            -0.1          -0.4          -0.6
NPCC.....................       72,477               0          0.0            -0.4           0.9           0.8
SERC.....................      194,485               0          0.0            -0.1           0.0          -0.5
SPP......................       49,948               0          0.0            -0.1          -0.2          -0.4
WSCC.....................      167,748               0          0.0             0.0           0.0          -1.1
                          --------------
    Total................      887,915             434          0.0             0.0         n/a            -1.1
----------------------------------------------------------------------------------------------------------------

    One of the ten NERC regions modeled, MAIN, would experience 
economic closures of existing capacity as a result of the preferred 
option. However, this closure of 434 MW of nuclear capacity represents 
a relatively small percentage of baseline capacity in the region (0.7 
percent). Three NERC regions would experience increases in variable 
production costs per MWh, although the largest increase would not 
exceed 1.0 percent. In addition, three NERC regions would experience an 
increase in energy price under the preferred option. Of these, only 
ERCOT would experience an increase of more than 1.0 percent (6.1 
percent). Pre-tax incomes would decrease in all but one region, but the 
majority of these changes would be on the order of 1.0 percent or less. 
ERCOT would experience the largest decrease in pre-tax income (-6.0 
percent). Only one region, NPCC, would experience an increase in 
market-level pre-tax income (0.8 percent).
2. Facility-Level Impacts of the Preferred Option
    The results from model run year 2010 were used to analyze two 
potential facility-level impacts associated with the preferred option: 
(1) Potential changes in the economic and operational characteristics 
of the group

[[Page 13531]]

of in-scope Phase II facilities and (2) potential changes to individual 
facilities within the group of Phase II facilities. EPA analyzed 
incremental capacity closures, changes in variable production costs per 
MWh of generation, total generation, and pre-tax income to assess 
impacts to all Phase II facilities resulting from the preferred option. 
Exhibit 2 below presents the results of this analysis, by NERC region.

                    Exhibit 2.--Impacts on Phase II Facilities of the Preferred Option (2010)
----------------------------------------------------------------------------------------------------------------
                                              Incremental closures       Change in
                                Baseline  ---------------------------    variable       Change in     Change in
         NERC region            capacity                    % of        production     generation      pre-tax
                                  (MW)       Capacity     baseline     cost per MWh        (%)       Income (%)
                                               (MW)       capacity          (%)
----------------------------------------------------------------------------------------------------------------
ECAR........................       82,313            0          0.0             0.0          -0.1          -1.4
ERCOT.......................       43,522            0          0.0            -0.7          -1.7         -11.0
FRCC........................       27,537            0          0.0             0.3          -0.8          -4.1
MAAC........................       33,590            0          0.0             0.0           0.2          -1.4
MAIN........................       35,373          434          1.2             0.5          -1.1          -1.0
MAPP........................       15,727            0          0.0             0.0           0.0          -1.6
NPCC........................       37,651            0          0.0            -1.4          -2.3          -0.8
SERC........................      107,450            0          0.0            -0.2          -0.2          -0.7
SPP.........................       20,471            0          0.0            -0.4          -0.6          -1.0
WSCC........................       27,206            0          0.0            -1.0          -5.5         -27.0
                             --------------
    Total...................      430,840          434          0.1            -0.5          -0.8          -2.0
----------------------------------------------------------------------------------------------------------------

    Similar to the market level results, MAIN is the only region that 
would experience incremental capacity closures at Phase II facilities 
under this regulatory option: A total of 434 MW, or 1.2 percent of all 
Phase II capacity in this region, would be retired. Total capacity 
closures in MAIN are a net estimate (i.e., policy case closures minus 
base cases closures) consisting of 519 MW of capacity retiring at one 
facility and an 85 MW reduction in closures at a second facility. 
Variable production costs per MWh at Phase II facilities would increase 
in two regions and decrease in five regions under the preferred option. 
No region would experience an increase in Phase II variable production 
costs that exceeds 0.5 percent while Phase II facilities in NPCC and 
WSCC would see reductions of 1.4 percent and 1.0 percent, respectively. 
Phase II facilities in four NERC regions would experience decreases in 
generation in excess of 1.0 percent as a result of the preferred 
option. The largest decrease would be in WSCC, where Phase II 
facilities would experience a 5.5 percent reduction in both generation 
and revenues. Overall, pre-tax income would decrease by 2.0 percent for 
the group of Phase II facilities. The effects of this change are 
concentrated in a few regions: WSCC would experience a reduction in 
pre-tax income of 27.0 percent, which is driven by a reduction in both 
generation and revenues (not presented in this exhibit). ERCOT and FRCC 
are estimated to experience a reduction of 11.0 and 4.1 percent, 
respectively.
    Results for the group of Phase II facilities as a whole may mask 
shifts in economic performance among individual facilities subject to 
this rule. To assess potential distributional effects, EPA analyzed 
facility-specific changes in capacity utilization (defined as 
generation divided by capacity times 8,760 hours), generation, revenue, 
variable production costs per MWh (defined as variable O&M cost plus 
fuel cost divided by generation), and pre-tax income.
    Exhibit 3 presents the total number of Phase II facilities with 
different degrees of change in each of these measures. This exhibit 
excludes 18 in-scope facilities with significant status changes (10 
facilities are baseline closures, one facility is a policy closure, and 
seven facilities changed their repowering decision between the base 
case and the policy case). These facilities are either not operating at 
all in either the base case or the post-compliance case, or they 
experience fundamental changes in the type of units they operate; 
therefore, the measures presented below would not be meaningful for 
these facilities. In addition, the change in variable production cost 
per MWh of generation could not be developed for 57 facilities with 
zero generation in either the base case or post-compliance scenario. 
For these facilities, the change in variable production cost per MWh is 
indicated as ``n/a.''

                                Exhibit 3.--Operational Changes at Phase II Facilities From the Preferred Option (2010) a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Reduction                           Increase
                                                           ----------------------------------------------------------------------
                     Economic measures                                                                       No change      N/A
                                                             [lE]=1%      1-3%         3%       [lE]=1%      1-3%         3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Capacity Utilization b..........................          9         15          24           9          6           9           441          0
Change in Generation......................................          7          1          44          10          3          17           431          0
Change in Revenue.........................................         80         27          42         100         22          15           227          0
Change in Variable Production Costs/MWh...................         33         13           9         140         13          14           234         57
Change in Pre-Tax Income..................................        105        113         199          22         13          37            24         0
--------------------------------------------------------------------------------------------------------------------------------------------------------
a For all measures percentages used to assign facilities to impact categories have been rounded to the nearest 10th of a percent.
b The change in capacity utilization is the difference between the capacity utilization percentages in the base case and post-compliance case. For all
  other measures, the change is expressed as the percentage change between the base case and post-compliance values.

    Exhibit 3 indicates that the majority of Phase II facilities would 
not experience changes in capacity utilization or generation due to 
compliance with the preferred option. Of those facilities with changes 
in post-compliance capacity

[[Page 13532]]

utilization and generation, most would experience decreases in these 
measures. Exhibit 3 also indicates that the majority of facilities with 
changes in post-compliance variable production costs would experience 
increases. However, more than 80 percent of those increases would not 
exceed 1.0 percent. Changes in revenues at most Phase II facilities 
would also not exceed 1.0 percent. The largest effect of the preferred 
option would be on facilities' pre-tax income: over 80 percent of 
facilities would experience a reduction in pre-tax income, with almost 
40 percent experiencing a reduction of 3.0 percent or greater.

C. Revised Results for the Waterbody/Capacity-Based Option

    This section presents the revised impact analysis of the 
alternative waterbody/capacity-based option. Under this option, 
facilities that withdraw water from an estuary, tidal river, or ocean 
and that meet certain intake flow requirements, would generally be 
required to meet performance standards for reducing impingement 
mortality and entrainment based on a level that can be attained by 
using a closed-cycle, recirculating cooling system. These facilities 
would have the choice to comply with Track I or Track II requirements. 
Facilities that choose to comply with Track I would be required to 
reduce their intake flow to a level commensurate with that which can be 
attained by a closed-cycle, recirculating system. Facilities that 
choose to comply with Track II would have to demonstrate that 
alternative technologies would reduce impingement and entrainment to 
comparable levels that would be achieved with a closed-cycle 
recirculating system (see section VI.B.2 of the proposal preamble for a 
discussion of Track I and Track II under this option). Other facilities 
would be required to reduce impingement mortality or impingement 
mortality and entrainment based on the performance of technologies such 
as fine-mesh screens and fish-return systems.
    EPA's estimation of impacts associated with the alternative 
waterbody/capacity-based option is based on an electricity market model 
analysis that assumes that all facilities required to reduce 
impingement mortality and entrainment based on the performance of a 
closed-cycle recirculating cooling system would choose to comply with 
the requirements of Track I. This analysis further assumes that such 
facilities would install a recirculating wet cooling tower. These 
requirements would be met by the end of the term of the first permit 
after promulgation of the final rule (2005 to 2013), depending on when 
a permittee's first NPDES permit after promulgation expires. The 
impacts of compliance with the waterbody/capacity-based option are 
defined as the difference between the model output for the base case 
scenario and the model output for the post-compliance scenario.\10\
---------------------------------------------------------------------------

    \10\ Two base case scenarios were used to analyze the impacts 
associated with the preferred option and the waterbody/capacity-
based option. See footnote 8 above for a full explanation.
---------------------------------------------------------------------------

    EPA analyzed impacts using IPM output from model run year 2013. 
2013 was chosen to represent the effects of the waterbody/capacity-
based option for a typical year in which all facilities are in 
compliance (compliance years for the waterbody/capacity-based option 
are 2005 to 2013; however, for the purposes of this analysis, all 
facilities are modeled to comply by 2012).\11\ The analysis was 
conducted at two levels: the market level including all facilities (by 
NERC region) and the Phase II facility level (including analyses of the 
in-scope Phase II facilities as a group and of individual Phase II 
facilities), using the same framework as the analysis of the preferred 
option presented above. It should be noted that a direct comparison of 
the results of the preferred option and the waterbody/capacity-based 
option is not possible because (1) the analyses use output for 
different model run years (2010 for the preferred option and 2013 for 
the waterbody/capacity-based option) and (2) the two analyses use 
different base cases with different assumptions about future growth in 
electricity demand. As noted above, EPA will provide analyses of both 
regulatory options for both base cases and intends to place these in 
the docket during the comment period on this Notice.
---------------------------------------------------------------------------

    \11\ EPA also analyzed potential market-level impacts of the 
alternative waterbody/capacity-based option for a year within the 
compliance period during which some Phase II facilities experience 
installation downtimes. This analysis used output from model run 
year 2008. See Chapter B8, Section B8-4 of the EBA, as updated for 
this NODA analysis, for the results of this analysis.
---------------------------------------------------------------------------

1. Market-Level Impacts of the Waterbody/Capacity-Based Option

    The market-level analysis includes results for all generators 
located in each NERC region including facilities both in scope and out 
of scope of Phase II regulation. Exhibit 4 below presents the same five 
measures as discussed for the preferred option: (1) Incremental 
capacity closures, calculated as the difference between capacity 
closures under the waterbody/capacity-based option and capacity 
closures under the base case; (2) incremental capacity closures as a 
percentage of baseline capacity; (3) post-compliance changes in 
variable production costs per MWh, calculated as the sum of total fuel 
and variable O&M costs divided by total generation; (4) post-compliance 
changes in energy price, where energy prices are defined as the prices 
received by facilities for the sale of electric generation; and (5) 
post-compliance changes in pre-tax income, where pre-tax income is 
defined as total revenues minus the sum of fixed and variable O&M 
costs, fuel costs, and capital costs. Additional results are presented 
in Chapter B8 (Section B8-2) of the EBA, as updated for this NODA 
analysis. Chapter B8 also presents a more detailed interpretation of 
the results of the market-level analysis.

                                    Exhibit 4.--Market-Level Impacts of the Waterbody/Capacity-Based Option (2013) --
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Change in
                                                                 Baseline     Incremental   Closures as %      variable       Change in    Change in pre-
                         NERC Region                             capacity      capacity      of baseline   production cost   energy price    tax income
                                                                   (MW)      closures (MW)     capacity        per MWh         per MWh        ($2002)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ECAR.........................................................      133,048               0          0.0%             0.5%           0.8%           1.3%
ERCOT........................................................       86,609               0          0.0              1.2            1.7           -0.1
FRCC.........................................................       57,078               0          0.0              1.7            3.8           -5.4
MAAC.........................................................       71,441               0          0.0              1.3            1.4           -4.1
MAIN.........................................................       66,420           1,012          1.5              2.2            1.6            1.4
MAPP.........................................................       39,694               0          0.0              0.3            1.8            2.0
NPCC.........................................................       77,557               0          0.0              1.2            1.1           -3.3
SERC.........................................................      220,567               0          0.0              1.0            1.4            0.2
SPP..........................................................       55,711               0          0.0              0.6            1.5            1.2

[[Page 13533]]

 
WSCC.........................................................      186,001           2,150          1.2              2.9            1.4           -1.7
                                                              --------------
    Total....................................................      994,126           3,162          0.3              1.2          n/a             -0.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Two of the ten NERC regions modeled, MAIN and WSCC, would 
experience economic closures of facilities as a result of this option. 
The capacity closures in MAIN and WSCC represent 1.5 percent and 1.2 
percent, respectively, of baseline capacity in these regions and 0.3 
percent of total baseline capacity for all regions taken as a whole. 
Variable production costs per MWh and energy prices would increase in 
all NERC regions. The increases in variable production costs would 
exceed 1.0 percent in six NERC regions, and two regions, MAIN and WSCC, 
would experience increases of more than 2.0 percent. Energy prices 
would increase by more than 1.0 percent in nine of the ten regions 
modeled, with FRCC experiencing the largest increase (3.8 percent). 
Half of the regions would experience a reduction in pre-tax income, 
while the other half would experience increases in this measure. The 
majority of these changes would be less than 2.0 percent. FRCC, MAAC, 
and NPCC would experience the largest decrease in pre-tax income (-5.4, 
-4.1, and -3.3 percent, respectively), while the largest increase would 
occur in MAPP (2.0 percent).
2. Phase II Facility-Level Impacts of the Waterbody/Capacity-Based 
Option
    The results from model run year 2013 were used to analyze two 
potential facility-level impacts associated with the preferred option: 
(1) Potential changes in the economic and operational characteristics 
of the group of in-scope Phase II facilities and (2) potential changes 
to individual facilities within the group of Phase II facilities. EPA 
analyzed the same measures as discussed for the preferred option to 
assess impacts to the group of Phase II facilities resulting from the 
waterbody/capacity-based option: economic closures, changes in variable 
production costs per MWh of generation, total generation, and pre-tax 
income. Exhibit 5 below presents the results from this analysis, by 
NERC region.

            Exhibit 5.--Impacts on Phase II Facilities of the Waterbody/Capacity--Based Option (2013)
----------------------------------------------------------------------------------------------------------------
                                            Closure analysis          Change in
                            Baseline  ----------------------------     variable       Change in    Change in pre-
          NERC              capacity     Capacity   % of baseline  production cost    generation     tax income
                              (MW)         (MW)        capacity        per MWh
----------------------------------------------------------------------------------------------------------------
ECAR....................       82,258            0          0.0%             0.3%           0.1%           1.0%
ERCOT...................       44,400            0          0.0              0.3            0.6            0.5
FRCC....................       27,513            0          0.0              0.3            3.5           10.5
MAAC....................       34,696            0          0.0              0.8            1.0            7.7
MAIN....................       34,944        1,012          2.9              1.2            2.5            1.5
MAPP....................       15,723            0          0.0              0.0            0.1            2.0
NPCC....................       37,219            0          0.0              0.8           -0.6           -9.2
SERC....................      107,458            0          0.0              0.7            0.1           -0.1
SPP.....................       20,471            0          0.0             -0.7           -0.6            1.4
WSCC....................       28,093        2,150          7.7              0.5          -29.2          -30.7
                         --------------
    Total...............      432,776        3,162          0.7              0.0           -2.1           -2.1
----------------------------------------------------------------------------------------------------------------

    Similar to the results of the broader market-level analysis, MAIN 
and WSCC are the only regions that would experience incremental 
capacity closures at Phase II facilities under this regulatory option. 
In MAIN, 1,012 MW, or 2.9 percent of baseline Phase II capacity, would 
retire; in WSCC, 2,150 MW, or 7.7 percent of baseline Phase II 
capacity, would retire. In aggregate, these closures of 3,162 MW 
represents less than 1.0 percent of total baseline Phase II capacity. 
Phase II facilities in only one region, MAIN, would experience an 
increase in excess of 1.0 percent in variable production cost per MWh. 
Phase II facilities in seven NERC regions would experience a decrease 
in generation. Of these, three regions would see reductions in excess 
of 2.0 percent with the largest decrease occurring in WSCC (-29.2 
percent), partially because of the post-compliance closures. Similar to 
the market level, FRCC, MAAC, and NPCC would experience relatively 
large reductions in pre-tax income (-10.5, -7.7, and -9.2 percent, 
respectively). However, the highest reduction would be seen in WSCC (-
30.7 percent), where the compliance costs per MW of Phase II capacity 
is relatively high, and where only a relatively small portion of the 
overall capacity is regulated under the Phase II rule.
    To assess potential shifts in economic performance among individual 
facilities subject to this rule, EPA analyzed the same facility-
specific changes as for the preferred option: changes in capacity 
utilization (defined as generation divided by capacity times 8,760 
hours), generation, revenue, variable production costs per MWh (defined 
as variable O&M cost plus fuel cost divided by generation), and pre-tax 
income.
    Exhibit 6 presents the total number of Phase II facilities with 
different degrees of change in each of these measures. This exhibit 
excludes 30 in-scope facilities with significant status changes (nine 
facilities are baseline closures, three facilities are policy closures, 
and 18 facilities changed their repowering decision between the base 
case and the policy case). These facilities are either not operating at 
all in either the base case or the post-compliance case, or they 
experience fundamental changes in the type of units they operate; 
therefore,

[[Page 13534]]

the measures presented below would not be meaningful for these 
facilities. In addition, the change in variable production cost per MWh 
of generation could not be developed for 62 facilities with zero 
generation in either the base case or post-compliance scenario. For 
these facilities, the change in variable production cost per MWh is 
indicated as ``n/a.''

           Exhibit 6.--Number of Phase II Facilities With Operational Changes at Phase II Facilities Waterbody/Capacity-Based Option (2013) a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Reduction                             Increase
                   Economic measures                   --------------------------------------------------------------------------  No change      N/A
                                                          [lE]1%      1-3%    3%    [lE]1%      1-3%    3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Capacity Utilization \b\....................          4         11           21            6         14           15            430          0
Change in Generation..................................          7         24           37            5          7           23            398          0
Change in Revenue.....................................         56         13           41          108        247           28              8          0
Change in Variable Production Costs/MWh...............         18          5            8          154        115           21            118         62
Change in Pre-Tax Income..............................         51         62          164           45        141           36              2         0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For all measures percentages used to assign facilities to impact categories have been rounded to the nearest 10th of a percent.
\b\ The change in capacity utilization is the difference between the capacity utilization percentages in the base case and post-compliance case. For all
  other measures, the change is expressed as the percentage change between the base case and post-compliance values.

    Exhibit 6 indicates that the majority of Phase II facilities would 
not experience changes in capacity utilization or generation due to 
compliance with the waterbody/capacity-based option. Of facilities with 
post-compliance changes in capacity utilization and/or generation, the 
majority would experience a decrease in these measures. Exhibit 6 also 
indicates that the majority of Phase II facilities would experience 
increases in both revenues and variable production costs of between 0.0 
and 3.0 percent. Similarly, almost all Phase II facilities would 
experience a change in pre-tax income, with a slight majority seeing a 
reduction in this measure.

VI. Other Economic Analyses

    EPA updated several of its other economic analyses conducted at 
proposal to determine the effect of changes made to the assumptions for 
this NODA on steam electric generating facilities. For more detailed 
information on these analyses, refer to the memo entitled ``Supporting 
Documentation of Changes to Economic Impacts in Support of the Section 
316(b) Phase II NODA'' (DCN 5-3004). This section and the supporting 
memo discuss changes made to EPA's methodology and assumptions as well 
as the updated results. For a discussion of the original methodology 
used by EPA for the proposal analysis, refer to the chapters in Part B 
of the Economic and Benefits Analysis (EBA) document in support of the 
proposed rule at http://www.epa.gov/waterscience/316b/econbenefits/.
    It should be noted that the measures presented in this section are 
provided in addition to the impact measures based on the Integrated 
Planning Model (IPM[reg]) analyses (see Section V of this Notice). The 
following measures are used to assess the magnitude of compliance 
costs; they are not used to predict closures or other types of economic 
impacts on facilities subject to Phase II regulation.
    It should also be noted that the results of the preferred option 
and the waterbody/capacity-based option cannot be directly compared to 
each other. EPA used two different demand growth assumptions for the 
IPM base cases of the preferred option (EPA electricity demand 
assumption) and the waterbody/capacity-based option (AEO electricity 
demand assumption, upon request by the Department of Energy). Since EPA 
is using IPM base case data in its estimate of the cost of installation 
downtime, the cost of the energy penalty, and revenues, the results 
presented in this section could vary between the two options, even for 
facilities or NERC regions with identical compliance requirements under 
the two options.\12\ EPA intends to place additional IPM runs in the 
record during the NODA comment period to allow direct comparisons of 
both policy alternatives under both base cases.
---------------------------------------------------------------------------

    \12\ For example, compliance requirements in NERC regions 
without estuarine/tidal river or ocean facilities (i.e., ECAR, MAIN, 
MAPP, and SPP) are identical under the two options. For this NODA 
analysis, all facilities in these regions would have had identical 
compliance costs under the two options, were it not for the 
difference in base case assumptions.
---------------------------------------------------------------------------

A. National Costs

    Based on the NODA analysis, EPA estimates that facilities subject 
to the preferred option would incur annualized post-tax compliance 
costs of approximately $265 million (at proposal, this estimate was 
$178 million). These costs include one-time technology costs of 
complying with the rule, a one-time cost of installation downtime,\13\ 
annual operating and maintenance costs, and permitting costs (including 
initial permit costs, annual monitoring costs, and permit reissuance 
costs). This cost estimate does not include the costs of administering 
the rule by permitting authorities and the federal government. Also 
excluded are compliance costs for eight facilities that are projected 
to be baseline closures. Including compliance costs for projected 
baseline closure facilities would result in a total annualized 
compliance cost of approximately $269 million (at proposal, this 
estimate was $182 million). The cost differences between proposal and 
the NODA are accounted for primarily by the expanded range of 
technology options considered for the NODA and the ``best performing 
technology'' selection criteria used to assign cost modules to model 
facilities (see Section IV of this Notice).
---------------------------------------------------------------------------

    \13\ At proposal, EPA assumed that the technologies required to 
comply with the preferred option would not require installation 
downtimes (see Section III.4 of this Notice).
---------------------------------------------------------------------------

    EPA also updated the estimated total national annualized post-tax 
cost of compliance for the alternative waterbody/capacity-based option. 
Costs for this option include the same components as the estimate for 
the preferred option (one-time technology costs, cost of downtime, 
annual operating and maintenance costs, and permitting costs) but also 
include the cost of the energy penalty incurred by facilities estimated 
to upgrade to a recirculating cooling tower system. For the NODA 
analysis, the estimated total annualized post-tax cost of compliance 
for the waterbody/capacity-based option is approximately $793 million 
(at proposal, this estimate was $585 million). This increase reflects a 
number

[[Page 13535]]

of changes including increased technology costs, increased downtime for 
technology installation, and the use of electric demand assumptions 
from DOE's Annual Energy Outlook. Not included in this estimate are 
seven facilities that are projected to be baseline closures.\14\ 
Including compliance costs for projected baseline closure facilities 
would result in a total annualized cost of compliance with the 
waterbody/capacity-based option of approximately $797 million (at 
proposal, this estimate was $595 million).
---------------------------------------------------------------------------

    \14\ The number of baseline closures is different for the 
preferred option and the waterbody/capacity-based option because 
different IPM base cases were used to estimate baseline closures. 
See footnote 8 above for a full explanation.
---------------------------------------------------------------------------

    Exhibit 7 below summarizes the changes between the proposal and 
NODA analyses for the preferred option and the waterbody/capacity-based 
option.

                                 Exhibit 7--Summary of Changes in National Costs
----------------------------------------------------------------------------------------------------------------
                                                                Proposal       NODA              Change
                                                                ($2001;      ($2002;   -------------------------
                                                                 mill.)       mill.)      Absolute     Percent
----------------------------------------------------------------------------------------------------------------
                                                Preferred Option
----------------------------------------------------------------------------------------------------------------
Number of Phase II facilities...............................          550          551            1          0.2
All facilities (pre-tax)....................................         $279         $416         $137         49.1
All facilities (post-tax)...................................         $182         $269          $87         47.8
Number of baseline closures.................................           11            8          (3)        -27.3
Non-baseline closures (pre-tax).............................         $271         $410         $139         51.3
Non-baseline closures (post-tax)............................         $178         $265          $87         48.9
-------------------------------------------------------------
                                         Waterbody/Capacity-Based Option
----------------------------------------------------------------------------------------------------------------
Number of Phase II facilities...............................          550          551            1          0.2
All facilities (pre-tax)....................................         $968       $1,280         $312         32.2
All facilities (post-tax)...................................         $595         $797         $202         34.0
Number of baseline closures.................................            9            7          (2)        -22.2
Non-baseline closures (pre-tax).............................         $951       $1,273         $322         33.9
Non-baseline closures (post-tax)............................         $585         $793         $208         35.6
----------------------------------------------------------------------------------------------------------------

B. Cost-to-Revenue Measure

1. Facility-Level Analysis
    EPA examined the annualized post-tax compliance costs of the 
preferred option and the waterbody/capacity-based option as a 
percentage of baseline annual revenues, for each of the 551 facilities 
subject to Phase II of the Section 316(b) regulation. This measure 
allows for a comparison of compliance costs incurred by each facility 
with its revenues in the absence of Phase II regulation. The revenue 
estimates are facility-specific baseline projections from the IPM base 
case for 2008 (see Section V of this Notice for a discussion of EPA's 
analyses using the IPM).\15\
---------------------------------------------------------------------------

    \15\ EPA used 2008 rather than 2010 baseline revenues for this 
analysis because 2008 is the first model run year specified in the 
IPM analyses. EPA used the first model run year because it more 
closely resembles the current operating conditions of in-scope 
facilities than later run years (over time, facilities may be 
increasingly affected by factors other than a Phase II regulation).
---------------------------------------------------------------------------

    Similar to the findings at proposal, the results of this analysis 
show that the vast majority of facilities subject to the preferred 
option, 404 out of 551 (73 percent), would incur annualized costs of 
less than one percent of revenues. Of these, 292 facilities would incur 
compliance costs of less than 0.5 percent of revenues. Ninety-seven 
facilities (18 percent) would incur costs of between one and three 
percent of revenues, and 41 facilities (seven percent) would incur 
costs of greater than three percent. Eight facilities are estimated to 
be baseline closures, and for one facility, revenues are unknown.\16\ 
Exhibit 8 below summarizes these findings and also presents the ratios 
estimated at proposal.
---------------------------------------------------------------------------

    \16\ For the preferred option, IPM revenues for 2008 were not 
available for eight facilities estimated to be baseline closures, 
ten facilities not modeled by the IPM, and five facilities projected 
to have zero baseline revenues. EPA used facility-specific 
electricity generation and firm-specific wholesale prices as 
reported to the Energy Information Administration (EIA) to calculate 
the cost-to-revenue ratio for the 15 non-baseline closure facilities 
with missing information. The revenues for one of these facilities 
remains unknown.

                   Exhibit 8--Cost-to-Revenue Ratio for the Preferred Option (Facility Level)
----------------------------------------------------------------------------------------------------------------
                                                                      Proposal                    NODA
                                                             ---------------------------------------------------
              Annualized cost-to-revenue ratio                              Percent of                Percent of
                                                               All phase   total phase   All phase   total phase
                                                                   II           II           II           II
----------------------------------------------------------------------------------------------------------------
<0.5%.......................................................          331           60          292           53
/= 0.5 to <1.0%..................................           78          14%          112           20
/= 1.0% to <3.0%.................................           82           15           97           18
/= 3.0%..........................................           46            8           41            7
Baseline Closure............................................           11            2            8            1
n/a.........................................................            1            0            1            0
                                                             --------------
    Total...................................................          550          100          551          100
----------------------------------------------------------------------------------------------------------------

    Exhibit 9 below presents the same information for the waterbody/
capacity-based option.\17\

[[Page 13536]]



           Exhibit 9.--Cost-to-Revenue Ratio for the Waterbody/Capacity-Based Option (Facility Level)
----------------------------------------------------------------------------------------------------------------
                                                                      Proposal                    NODA
                                                             ---------------------------------------------------
              Annualized cost-to-revenue ratio                              Percent of                Percent of
                                                               All phase   total phase   All phase   total phase
                                                                   II           II           II           II
----------------------------------------------------------------------------------------------------------------
<0.5%.......................................................          355           65          281           51
/=0.5 to <1.0%...................................           60           11          101           18
/=1.0 to <3.0%...................................           57           10          102           19
/=3.0%...........................................           67           12           58           11
Baseline Closure............................................            9            2            7            1
n/a.........................................................            1            0            1            0
                                                             --------------
    Total...................................................          550          100          551          100
----------------------------------------------------------------------------------------------------------------

2. Firm-Level Analysis
    The firms owning the facilities subject to Phase II regulation may 
experience greater impacts than individual in-scope facilities if they 
own more than one facility with compliance costs. EPA therefore also 
analyzed the cost-to-revenue ratios at the firm level. EPA identified 
the domestic parent entity of each in-scope facility and obtained their 
sales revenue from publicly available data sources (the Dun and 
Bradstreet database for parent firms of investor-owned utilities and 
nonutilities; and Form EIA-861 for all other parent entities) and EPA's 
2000 Section 316(b) Industry Survey. This analysis showed that 128 
unique domestic parent entities own the facilities subject to Phase II 
regulation. For both analyzed options, EPA compared the aggregated 
annualized post-tax compliance costs for each facility owned by the 128 
parent entities to the firms' total sales revenue.
---------------------------------------------------------------------------

    \17\ For the waterbody/capacity-based option, IPM revenues for 
2008 were not available for seven facilities estimated to be 
baseline closures, ten facilities not modeled by the IPM, and two 
facilities projected to have zero baseline revenues. EPA used 
facility-specific electricity generation and firm-specific wholesale 
prices as reported to the Energy Information Administration (EIA) to 
calculate the cost-to-revenue ratio for the 12 non-baseline closure 
facilities with missing information. The revenues for one of these 
facilities remains unknown.
---------------------------------------------------------------------------

    Since proposal, EPA has not updated the parent firm determination 
for Phase II facilities. However, EPA updated the average Form EIA-861 
data used for this analysis from 1996 to 1998 (used at proposal) to 
1997 to 1999 (used for the NODA). In addition, EPA made one 
modification to the data sources used: At proposal, EPA used Dun and 
Bradstreet (D&B) data for any parent entity listed in the database. If 
D&B data were not available, EPA used the EIA database or the Section 
316(b) Survey. For the NODA analysis, EPA used the D&B database for 
privately-owned entities only. For other entities, EPA used the EIA 
database.
    For the preferred option, EPA estimates that of the 128 unique 
entities, only two entities would incur compliance costs of greater 
than three percent of revenues; 11 entities would incur compliance 
costs of between one and three percent of revenues; eight entities 
would incur compliance costs of between 0.5 and one percent of 
revenues; and the remaining 107 entities would incur compliance costs 
of less than 0.5 percent of revenues. The highest estimated cost-to-
revenue ratio for this NODA analysis is 7.4 percent of the entities' 
annual sales revenue (at proposal this value was 5.3 percent). Exhibit 
10 below summarizes these findings and also presents the ratios 
estimated at proposal.

                    Exhibit 10.--Cost-to-Revenue Ratio for the Preferred Option (Firm Level)
----------------------------------------------------------------------------------------------------------------
                                                                      Proposal                    NODA
                                                             ---------------------------------------------------
              Annualized cost-to-revenue ratio                              Percent of                Percent of
                                                               All phase   total phase   All phase   total phase
                                                                   II           II           II           II
----------------------------------------------------------------------------------------------------------------
<0.5%.......................................................          104           79          107           84
/= 0.5 to <1.0%..................................           12            9            8            6
/= 1.0 to <3.0%..................................           10            8           11            9
/= 3.0%..........................................            3            2            2            2
Baseline Closure............................................            2            2            0            0
                                                             --------------
    Total...................................................          131          100          128          100
----------------------------------------------------------------------------------------------------------------

    Exhibit 11 below presents the same information for the waterbody/
capacity-based option.

             Exhibit 11.--Cost-to-Revenue Ratio for the Waterbody/Capacity-Based Option (Firm Level)
----------------------------------------------------------------------------------------------------------------
                                                                      Proposal                    NODA
                                                             ---------------------------------------------------
              Annualized cost-to-revenue ratio                              Percent of                Percent of
                                                               All phase   total phase   All phase   total phase
                                                                   II           II           II           II
----------------------------------------------------------------------------------------------------------------
< 0.5%......................................................          108           82           95           74
/= 0.5 to <1.0%..................................           12            9           16           13
/= 1.0 to <3.0%..................................            6            5           15           12

[[Page 13537]]

 
/= 3.0%..........................................            3            2            2            2
Baseline Closure............................................            2            2            0            0
                                                             --------------
    Total...................................................          131          100          128          100
----------------------------------------------------------------------------------------------------------------

C. Cost Per Household

    EPA also conducted an analysis that evaluates the potential cost 
per household, if Phase II facilities were able to pass compliance 
costs on to their customers. This analysis estimates the average 
compliance cost per household for each North American Electricity 
Reliability Council (NERC) region,\18\ using two data inputs: (1) The 
average annual pre-tax compliance cost per megawatt hour (MWh) of total 
electricity sales and (2) the average annual MWh of residential 
electricity sales per household.
---------------------------------------------------------------------------

    \18\ There are twelve NERC regions: ASCC (Alaska Systems 
Coordinating Council), ECAR (East Central Area Reliability 
Coordination Agreement), ERCOT (Electric Reliability Council of 
Texas), FRCC (Florida Reliability Coordinating Council), HI 
(Hawaii), MAAC (Mid-Atlantic Area Council), MAIN (Mid-America 
Interconnected Network, Inc.), MAPP (Mid-Continent Area Power Pool), 
NPCC (Northeast Power Coordination Council), SERC (Southeastern 
Electricity Reliability Council), SPP (Southwest Power Pool), and 
WSCC (Western Systems Coordinating Council).
---------------------------------------------------------------------------

    The results of this analysis show that the average annual cost per 
residential household would range from $0.55 (in ASCC) to $5.69 (in HI) 
for the preferred option and from $0.55 (in ASCC) to $20.41 (in HI) for 
the waterbody/capacity-based option. Exhibit 12 below presents the 
values for each NERC region for the preferred option and the waterbody/
capacity-based option. The exhibit also presents the values for the 
preferred option at proposal.

                            Exhibit 12.--Summary of Cost per Household by NERC Region
----------------------------------------------------------------------------------------------------------------
                                                                      Preferred option                W/C-based
                                                        -------------------------------------------    option
                      NERC region                           Proposal                               -------------
                                                            ($2001)     NODA ($2002)     Change     NODA ($2002)
----------------------------------------------------------------------------------------------------------------
ASCC...................................................          $0.33         $0.55         $0.22         $0.55
ECAR...................................................           0.99          1.49          0.50          1.52
ERCOT..................................................           1.01          1.12          0.11          1.75
FRCC...................................................           1.58          2.04          0.46         12.08
HI.....................................................           2.55          5.69          3.14         20.41
MAAC...................................................           1.16          1.50          0.34          9.53
MAIN...................................................           0.84          1.32          0.48          1.32
MAPP...................................................           0.88          1.09          0.21          1.10
NPCC...................................................           1.09          1.49          0.40          4.57
SERC...................................................           0.83          1.17          0.34          3.21
SPP....................................................           0.64          0.88          0.24          0.88
WSCC...................................................           0.36          0.94          0.58          5.08
U.S. Average...........................................           0.87          1.30          0.43          4.00
----------------------------------------------------------------------------------------------------------------

D. Electricity Price Analysis

    EPA also considered potential effects of the proposed Phase II rule 
on electricity prices. EPA used three data inputs in this analysis: (1) 
Total pre-tax compliance cost incurred by facilities subject to Phase 
II regulation, (2) total electricity sales, based on the Annual Energy 
Outlook (AEO) 2002, and (3) prices by end use sector (residential, 
commercial, industrial, and transportation), also from the AEO 2002. 
All three data elements were calculated by NERC region.
    The results of the NODA analysis show that the annualized costs of 
complying (in cents per KWh sales) range from 0.007 cents in SPP to 
0.020 cents in NPCC for the preferred option, and from 0.007 cents in 
SPP to 0.096 cents in MAAC for the waterbody/capacity-based option.
    To determine potential effects of these compliance costs on 
electricity prices, EPA compared the per KWh compliance cost to 
baseline electricity prices by end use sector and for the average of 
the sectors. This analysis shows that the average increase in 
electricity prices would be 0.17 percent under the preferred option and 
0.51 percent under the waterbody/capacity-based option. (At proposal, 
the estimated increase in electricity prices for the preferred option 
was 0.11 percent.)
    Exhibit 13 below presents the values for each NERC region for the 
preferred option and the waterbody/capacity-based option. The exhibit 
also presents the values for the preferred option at proposal.\19\
---------------------------------------------------------------------------

    \19\ Note that Alaska and Hawaii are not represented in the AEO.

[[Page 13538]]



                                                Exhibit 13.--Summary of Electricity Prices by NERC Region
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Preferred option                            W/C-based option
                                                                  --------------------------------------------------------------------------------------
                                                                         Proposal ($2001)               NODA ($2002)                 NODA ($2002)
                                                                  --------------------------------------------------------------------------------------
                           NERC region                             Annualized pre-              Annualized pre-              Annualized pre-
                                                                   tax compliance  % change in  tax compliance  % change in  tax compliance  % change in
                                                                    cost (cents/      price      cost (cents/      price      cost (cents/      price
                                                                     KWh sales)                   KWh sales)                   KWh sales)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ECAR.............................................................          0.010        0.15            0.015        0.23            0.015        0.23
ERCOT............................................................          0.007        0.11            0.008        0.12            0.013        0.18
FRCC.............................................................          0.012        0.15            0.015        0.20            0.088        1.16
MAAC.............................................................          0.012        0.13            0.015        0.17            0.096        1.05
MAIN.............................................................          0.010        0.14            0.016        0.22            0.016        0.22
MAPP.............................................................          0.008        0.13            0.010        0.15            0.010        0.16
NPCC.............................................................          0.017        0.19            0.020        0.22            0.061        0.68
SERC.............................................................          0.006        0.10            0.008        0.14            0.023        0.38
SPP..............................................................          0.005        0.09            0.007        0.12            0.007        0.12
WSCC.............................................................          0.004        0.05            0.010        0.13            0.053        0.70
U.S. Average.....................................................          0.008        0.11            0.012        0.17            0.037        0.51
--------------------------------------------------------------------------------------------------------------------------------------------------------

VII. Performance Standards

    In the proposed rule, EPA set up a framework that would require 
facilities that did not reduce their intake capacity commensurate with 
a closed-cycle recirculating cooling system to meet certain other 
performance standards for reducing impingement mortality and 
entrainment based on technologies such as fine-mesh screens and fish-
return systems. These other performance standards were based on the 
source water body type where the cooling water intake structure is 
located, the facility's capacity utilization rate, and the proportion 
or volume of the water body that is withdrawn by the facility. In 
general, most facilities would be required to implement control 
technologies that reduce impingement mortality by 80 to 95 percent and/
or entrainment by 60 to 90 percent unless they demonstrate the need for 
a site-specific determination of best technology available. (See 
proposed Sec.  125.94 and Chapter VI. Best Technology Available for 
Minimizing Adverse Environmental Impact at Phase II Existing Facilities 
(67 FR 17140)).

A. Technology Efficacy Database to Support Performance Standards

    In an effort to document and further assess the performance of 
various technologies and operational measures designed to minimize the 
impacts of cooling water withdrawals, EPA compiled a database of 
documents that analyzes the efficacy of a specific technology or suite 
of technologies. The database contains materials that range from brief 
journal articles to more intensive analyses found in historical section 
316(b) demonstration reports and technology evaluations. At this time, 
EPA is assembling as much documentation as possible to support future 
Agency decisions. Information entered into the database includes some 
notation of the limitations the individual studies may have for use in 
further analyses (e.g., no biological data or conclusions).
    EPA's intent in assembling this information is four-fold. First, 
EPA seeks to develop a categorized database containing a comprehensive 
collection of available literature regarding technology performance 
that will serve as a more rigorous compilation of data supporting the 
determination that the proposed performance standards are best 
technology available. Second, EPA expects to use the data to 
demonstrate that the technologies chosen as compliance technologies for 
costing purposes are reasonable and can meet the performance standards. 
Third, the availability of a user-friendly database would allow EPA, 
State permit writers, and the public to more easily evaluate potential 
compliance options, facility compliance with performance standards, and 
data pertaining to the streamlined option described in this NODA (see 
section VII.B below). Fourth, EPA has attempted to evaluate the 
technology efficacy data against objective criteria in order to assess 
the general quality and thoroughness of each study. This may assist in 
further analysis of conclusions made using the data.
    Basic information from each document is recorded in the database 
(e.g., type of technology evaluated, facility at which it was tested, 
etc.) In addition to basic document information, the database contains 
information in two principal areas: (1) General facility information 
and (2) detailed study information.
    For those documents that refer to a specific facility (or 
facilities), basic technical information is included to enable EPA to 
classify facilities according to general categories. EPA collected 
locational data (e.g., waterbody type, name, state) as well as basic 
cooling water intake structure configuration information. Each 
technology evaluated in the study is also recorded, along with specific 
details regarding its design and operation. Major categories of 
technology include modified traveling screens, wedge-wire screens, 
fine-mesh screens, velocity caps, barrier nets, and behavioral 
barriers. (Data identifying the technologies present at a facility as 
well as the configuration of the intake structure refer to the 
configuration at the time the study was conducted and do not 
necessarily reflect the present facility set-up.)
    Information on the type of study and any study results, is recorded 
in the second portion of the database. EPA identifies whether the study 
evaluates the technology with respect to impingement mortality 
reduction (or avoidance), entrainment survival, or entrainment 
exclusion (or avoidance). Some studies address more than one area of 
concern and are noted accordingly. If provided, EPA records basic 
biological data used to evaluate the technology. These include target 
or commercially/recreationally valuable species, species type, life 
history stage, size, sample size, and raw numbers of impinged and/or 
entrained organisms. Finally, EPA records any overall conclusions 
reached by the study, usually presented as a percentage reduction or 
increase, depending on the area of focus. Identifying this information 
for each document allows EPA and others to more readily locate

[[Page 13539]]

and compare documents addressing similar technologies.
    Each document is reviewed according to five areas of data quality 
where possible: (1) Applicability and utility, (2) soundness, (3) 
clarity and completeness, (4) uncertainty and variability, and (5) 
evaluation and review. Because the literature in question comes from 
many different sources and was developed under widely varying 
standards, EPA was not able to evaluate all of these criteria for all 
documents contained in the database.
    To date, EPA has collected 148 documents for inclusion in the 
database. EPA did not exclude any document that addressed technology 
performance in relation to impingement and entrainment, regardless of 
the overall quality of the data. Sample questions are included in 
Exhibit 1 below. The proposed technology database is available in the 
record (See the document ``Technology Efficacy Database'' in the 
docket).

             Exhibit 1.--Quality Assurance Sample Questions
------------------------------------------------------------------------
                QA Criteria                       Sample Questions
------------------------------------------------------------------------
Applicability and Utility.................  [sbull] Does the study
                                             address impingement and/or
                                             entrainment reduction?
                                            [sbull] Does the study
                                             evaluate a technology (or
                                             technologies) in situ or
                                             against performance data
                                             from another source?
                                            [sbull] Does the study
                                             include biological data?
-------------------------------------------
Soundness.................................  [sbull] Does the study
                                             detail the CWIS
                                             configuration at the time
                                             of the study?
                                            [sbull] Are SOPs for
                                             sampling and testing
                                             included?
                                            [sbull] Is some measure of
                                             before and after biological
                                             data included?
                                            [sbull] Are O&M procedures
                                             described for the test
                                             period?
-------------------------------------------
Clarity and Completeness..................  [sbull] Is the sampling
                                             method clearly described?
                                            [sbull] Is a complete
                                             biological data set
                                             included?
                                            [sbull] Are results clearly
                                             and completely documented?
-------------------------------------------
Uncertainty and Variability...............  [sbull] Does the study
                                             identify potential
                                             uncertainties or mitigating
                                             factors such as those due
                                             to environmental
                                             conditions?
-------------------------------------------
Evaluation and Review.....................  [sbull] What is the source
                                             of the document?
                                            [sbull] Is the document a
                                             primary study?
                                            [sbull] Has the document
                                             been peer reviewed?
                                            [sbull] Was the purpose of
                                             the study to evaluate the
                                             performance of a specific
                                             technology?
------------------------------------------------------------------------

    EPA is seeking comment on the applicability, quality, and quantity 
of the information and analyses in this database upon which EPA is 
relying. More specifically, EPA requests comment on whether these data 
are of sufficient quantity and quality to support the determination 
that the proposed performance standards are best technology available 
and that the existing facilities can meet these standards by 
implementing design and construction technologies either singly or in 
conjunction with other design and construction technologies (including 
operational and restoration measures). In addition, EPA requests 
comment on limitations of the data and identification of other relevant 
information available to be included in this database. Based on a 
preliminary review of the available data, the Agency continues to 
believe that an 80-95% reduction in impingement mortality and a 60-90% 
reduction in entrainment are achievable.

B. Streamlined Technology Option for Certain Locations

    EPA received a number of comments expressing concern that the 
proposed Comprehensive Demonstration Study requirements at Sec.  
125.95(b) would impose a significant burden on permit applicants. As 
proposed, the Comprehensive Demonstration Study would have as many as 
seven different components: (1) A Proposal for Information Collection, 
(2) Source Waterbody Flow Information; (3) an Impingement Mortality and 
Entrainment Characterization Study; (4) a Design and Construction 
Technology Plan; (5) Information to Support any Proposed Restoration 
Measures; (6) Information to Support Site-Specific Determination of 
Best Technology Available for Minimizing Adverse Environmental Impact; 
and (7) a Verification Monitoring Plan.\20\ The proposed Comprehensive 
Demonstration Study requirement would allow a permit applicant to 
either identify and compile available existing data, or to perform new 
site-specific studies to characterize the waterbody within the 
influence of the cooling water intake structure and the efficacy of 
proposed technologies.
---------------------------------------------------------------------------

    \20\ Information to support the use of restoration measures and/
or the use of site-specific determinations would be required to be 
collected and submitted only by permit applicants that choose to use 
restoration measures or demonstrate that a site-specific 
determination of best technology available is appropriate for their 
facility.
---------------------------------------------------------------------------

    Some commenters suggested that EPA provide an additional, more 
streamlined compliance option under which a facility could implement 
certain specified technologies that are deemed highly protective in 
exchange for not having to perform, or greatly reducing the scope of, 
the proposed Comprehensive Demonstration Study required at Sec.  
125.95(b). In response to these comments EPA is considering, and 
invites the public to comment on two variations of a streamlined 
compliance option that would reduce the information collection burden 
imposed on permit applicants.
    Under the first variation, EPA would evaluate the effectiveness of 
specific technologies using the impingement mortality and entrainment 
performance standards specified in the proposed rule as assessment 
criteria. Specifically, EPA would require that the demonstrated 
efficacy of the control technology would at least reduce impingement 
mortality by 80 to 95 percent for fish and shellfish. If it was also to 
be used by facilities with an additional requirement to reduce 
entrainment by 60 to 90 percent for all life stages of fish and 
shellfish, then EPA would ensure that the technology would also satisfy 
this requirement. Evaluation of the level of impingement mortality or 
entrainment reduction would be based on review and analysis of 
available data, studies, and literature. The Agency also would assess 
the conditions where such technologies are effective (e.g., location, 
whether a technology reduces impingement or entrainment or both, flow, 
velocity, species, life stage, etc.). If, based on such an assessment, 
the Agency identifies technologies that are sufficiently protective and 
for which applicability conditions can be defined, EPA would promulgate 
regulations (either as part of the 316(b) Phase II rule or at some 
later date) that allow for their use as a means of complying with Phase 
II section 316(b) requirements.
    EPA is in the process of assessing this option and has not 
completed a comprehensive review of control technology efficacy data 
for the purpose of identifying and delineating technologies that might 
qualify under this option. However, the efficacy data

[[Page 13540]]

currently available to EPA do seem to support the use of a streamlined 
technology option for certain limited locations. Such a technology 
would be used to treat the entire cooling water intake flow and would 
not be used in combination with restoration measures to meet the 
performance standards. EPA is considering whether the following 
technology operated in the following locations would qualify for 
streamlined application requirements:

    Use of submerged wedge-wire screens where the cooling water 
intake structure is located in a freshwater river or stream, 
sustained countercurrents exist to promote cleaning of the screen 
face, and the design intake velocity is 0.5 feet per second (ft/s) 
or less.

    EPA believes that sufficient data exist in the record to 
demonstrate that all facilities that meet the criteria (e.g., cooling 
water intake structure is located in a freshwater river or stream, 
facility proposes to use wedge-wire screen technology only, technology 
has a design intake velocity of 0.5 ft/s or less, and sustained 
countercurrents exist) and employ this technology would meet both the 
impingement mortality and entrainment reduction performance standards 
and that the record would thus justify limiting the amount of site-
specific information required to be collected to support the use of 
this technology in freshwater systems (See DCN 1-3075, 1-5069, 1-5070, 
3-0002, and 4-4002B). Facilities that choose to comply under this 
compliance option would still be required to meet the proportional flow 
standards in Sec.  125.94(b)(2), (3), or (4).
    At a minimum, the permitting authority would require each facility 
applying to use this technology to provide documentation that the 
facility's cooling water intake meets the applicability conditions 
specified for the technology and that, once installed, the facility 
will properly operate and maintain the technology. In addition, at a 
minimum, monitoring would be required as necessary to verify that the 
technology is in fact achieving an acceptable level of performance.
    Under the second variation of this option, the Phase II regulations 
would establish the criteria and process for approving cooling water 
intake structure control technologies, but would allow the approval 
process to be carried out by the Director, perhaps with EPA oversight 
or approval. Under this option, the rule would define the criteria that 
a control technology must meet to be approved, and the process for 
approval. The criteria would focus on reducing impingement mortality 
and/or entrainment levels consistent with the proposed performance 
standards (see Sec.  125.94), as appropriate under specified 
conditions. This option would also specify the data requirements and 
process required to have a control technology approved. Under the 
option, the requisite data would be submitted to the Director who would 
determine whether the technology satisfied the applicable performance 
criteria. If so, the technology would be approved for use by any 
eligible facility (i.e., any facility that meets the applicability 
criteria) under the jurisdiction of the Director. The Director's draft 
determinations would likely be published and an opportunity for public 
comment would be provided. The Director would then modify the State's 
implementing regulations to include the other technology as one 
eligible for a streamlined comprehensive demonstration study. This 
option could create an incentive for the regulated community to develop 
and document both existing and new innovative technologies to reduce 
cooling water structure impacts.
    The two variations are not mutually exclusive. If EPA implemented 
both, it might adopt regulatory language similar to that provided below 
as a new Sec.  125.94(a)(4). Note that 4(i) corresponds to the first 
approach and 4(ii) to the second.

    (4)(i) You may demonstrate to the Director that your Phase II 
existing facility meets the conditions in (A), (B) and (C), and you 
will properly install, operate, and maintain submerged wedge-wire 
screen technology;
    (A) Your cooling water intake structure is located in a 
freshwater river or stream;
    (B) Your cooling water intake structure is situated such that 
sufficient ambient counter currents exist to promote cleaning of the 
screen face; and
    (C) Your design intake velocity is 0.5 ft/s or less.
    (ii) Any interested person may submit a request that a 
technology be approved for use under the compliance option in Sec.  
125.94(a)(4). If the Director approves, the technology may be used 
with compliance option Sec.  125.94(a)(4) by all facilities under 
their jurisdiction. Requests for alternative technologies for 
compliance under Sec.  125.94(a)(4) must be submitted to the 
Director and include the information in paragraphs (A), (B), and (C) 
below:

    (A) A detailed description of the technology;
    (B) A list of design criteria for the technology and site 
characteristics and conditions that each facility must posses in order 
to ensure that the technology can consistently meet the appropriate 
impingement mortality and entrainment performance standards in Sec.  
125.94(b); and
    (C) Information and data sufficient to demonstrate that all 
facilities under the jurisdiction of the Director can meet the 
applicable impingement mortality and entrainment performance standards 
in Sec.  125.94(b) if the applicable design criteria and site 
characteristics and conditions are present at the facility.
    Another paragraph could be added as Sec.  125.95(c) that would 
establish the streamlined information collection requirements for the 
new compliance option at Sec.  125.94(a)(4). The language might read as 
follows:
    (c) You must submit to the director the application information 
required by 40 CFR 122.21(r)(2), (3), and (5) and the Verification 
Monitoring Plan in 125.95(b)(7).

    Both options discussed above pose several implementation issues. 
There is the question of how, and on what basis, should technology 
effectiveness be assessed? Because each control technology is being 
assessed in a general context (i.e., not as applied to a specific 
facility, but as applied in specified conditions), it is not clear that 
an appropriate baseline can be established. Thus, EPA is considering 
using available data, studies, and literature to establish the 
performance levels of specific control technologies. Such an approach 
presents additional issues, such as which data are of sufficient 
quality to be considered, how much data are needed to make a national 
determination, whether actual data or modeled data suffice, and whether 
sufficient data exist to pursue such an approach. Another issue is 
determining what factors beyond impingement mortality and entrainment 
reduction efficacy are most critical to determining when a specific 
control technology can be used effectively. As noted above, many 
factors influence control technology efficacy. Additionally, EPA would 
have to determine how broadly applicable a technology must be before it 
could qualify as ``pre-approved.'' Finally, where a facility plans to 
implement an approved technology, EPA expects that Directors would 
retain discretion to impose permit conditions necessary to ensure the 
technology meets applicable standards, as well as the ability to add 
permit conditions as necessary to ensure all Phase II existing 
facilities that pursue this compliance option meet section 316(b) 
standards.
    EPA requests comment on both variations of this option for Phase II 
section 316(b) compliance. The Agency is interested in comments on the 
overall approach, as well as on the specific issues each option 
presents, as discussed above. In addition, EPA is

[[Page 13541]]

interested in comments on the criteria used to determine eligibility 
for the streamlined technology option presented above, the availability 
of data needed to make technology determinations in general, as well as 
in receiving actual data that may support such determinations.

VIII. Cost Tests

    Under the proposed rule, a facility may choose a site-specific 
alternative to demonstrate use of best technology available for 
minimizing adverse environmental impact at its site. If a facility 
chooses this alternative, the facility must demonstrate to the Director 
that the costs of compliance with the applicable performance standards 
would be ``significantly greater'' than the costs considered by the 
Administrator when establishing the performance standards, or that 
costs would be ``significantly greater'' than the benefits of complying 
with the applicable performance standards at its site. As discussed in 
the proposed rule, EPA's new facility rule required costs to be 
``wholly out of proportion'' to the costs EPA considered when 
establishing the requirement at issue rather than ``significantly 
greater'' as proposed for existing facilities (see 67 FR 17146). This 
difference in standards for new and existing facilities is based on (1) 
the greater flexibility available to new facilities for selecting the 
location of their intakes and installing technologies at lower costs 
relative to the costs associated with retrofitting existing facilities 
and (2) the desire to avoid economically impracticable impacts on 
energy prices, production costs, and energy production that could occur 
if large numbers of Phase II existing facilities incurred costs that 
were more than ``significantly greater'' than but not ``wholly out of 
proportion'' to the costs in EPA's record. At proposal, EPA invited 
comment on whether a ``significantly greater'' cost test was 
appropriate for evaluating requests for alternative requirements by 
Phase II existing facilities but did not specify what degree of 
difference in cost or cost as compared to benefit is ``significant''. 
Many commenters requested that ``significantly'' be explicitly defined 
for the purposes of this rulemaking.
    At this time, EPA requests comment on whether the Agency should 
adopt a quantitative definition of ``significantly greater,'' and if 
so, what specific ratio would be appropriate.

IX. Biology--Supporting Information

A. Entrainment Survival

    Following publication of the proposed rule, EPA reviewed an 
additional 23 facility reports that evaluated entrainment survival. To 
date, EPA has reviewed a total of 36 entrainment survival studies. The 
additional facility studies examined by EPA after publication of the 
proposed rule include studies from the following facilities: Anclote 
Power Plant, Bergum Power Station, Bowline Point Generating Station, 
Connecticut Yankee Atomic Power Company, Contra Costa Power Plant, 
Danskammer Point Generating Station, Fort Calhoun Nuclear Station, 
Ginna Generating Station, Indian Point Generating Station, Muskingum 
River Plant, Northport Generating Station, Pittsburg Power Plant, and 
Roseton Generating Station.
    Based on its review, EPA believes that the entrainment survival 
studies support the use of a default assumption of zero percent 
survival in the benefits assessment. The studies reviewed are 
characterized by significant uncertainty and variability which 
complicates efforts to synthesize the various results in a manner that 
would provide useful generalizations of the results or application to 
other particular facilities. The primary issue with regard to these 
studies is whether the results can support a defensible estimate of 
survival substantially different from the value of zero percent 
survival assumed by EPA. The review of the studies has shown that while 
some individual organisms may be alive in the discharge samples, the 
proportion of the organisms that are alive in the samples is highly 
variable and unpredictable. The current state of knowledge would not 
support reliable predictions of entrainment survival for the range of 
species, life stages, regions, and facilities involved in EPA's 
national benefits estimates. Therefore, EPA believes that the reported 
results do not provide a clear indication as to the extent of 
entrainment survival above zero percent to be used as a defensible 
assumption to calculate national benefits for this rule. EPA requests 
comment on this issue.
    The revised version of Chapter A7: Entrainment Survival from the 
Case Study Analysis for the Section 316(b) Phase II Existing Facilities 
Rule provides more detailed information on the scientific basis for 
this position and has been added to the docket. EPA plans to conduct a 
formal, external peer review of this document prior to the final rule, 
and results from the peer review will be added to the docket when 
complete.
    As at proposal, EPA notes that the proposed rule language does not 
preclude the use of estimates of entrainment mortality and survival 
when presenting a fair estimation of the monetary benefits achieved 
through the installation of the best technology available, instead of 
assuming 100 percent entrainment mortality. In EPA's view, estimates of 
entrainment mortality and survival used for this purpose should be 
based on sound scientific studies. EPA believes such studies should 
address times of both full facility capacity and peak abundance of 
entrained organisms. EPA requests comment on whether it is appropriate 
to allow consideration of entrainment mortality and survival in benefit 
estimates, and if so, should EPA set minimum data quality objectives 
and standards for a study of entrainment mortality and survival used to 
support a site-specific determination of best technology available for 
minimizing adverse environmental impact. EPA also requests comment on 
how an applicant can design and implement an entrainment mortality and 
survival study to properly account for those organisms which may 
disintegrate upon passage through a facility. EPA may decide to specify 
data quality objectives and standards either in the final rule language 
or through guidance.

B. Restoration

    Restoration projects, when successful, can recreate otherwise lost 
natural resources. The Agency proposed in Sec.  125.94(d) (67 FR 17221) 
that a facility may implement restoration measures in lieu of or in 
combination with reductions in impingement mortality and entrainment 
upon demonstration to the Director that such efforts will maintain fish 
and shellfish in the waterbody, including the community structure and 
function, at a level comparable to that which would be achieved through 
compliance with standards proposed in Sec. Sec.  125.94(b) and (c) (67 
FR 17221).
    The Agency believes restoration projects have the potential to 
mitigate harm to fish and shellfish from cooling water intake 
structures. However, careful execution of these projects is vital to 
their successful use (see ``Note to Docket on Restoration Information 
Sources.'') Use of good practices drawn from historical experiences 
with restoration increases the probability of restoration project 
success, and therefore, reduces environmental and compliance costs 
associated with project failure. Therefore, EPA is considering 
requiring the following

[[Page 13542]]

practices during the development of restoration projects:

[sbull] Documentation of sources and magnitude of uncertainty in 
expected restoration project performance
[sbull] Creation and implementation of an adaptive management plan
[sbull] Use of an independent peer review to evaluate restoration 
proposals

These practices are described in greater detail below. This discussion 
supplements the discussions and requirements for restoration found in 
the Phase II proposal.
1. Documentation of Sources and Magnitude of Uncertainty
    A clear and thorough documentation of the sources and nature of 
uncertainty in predictions of a project's ability to meet performance 
targets is vital to fully evaluating the capabilities of a project and 
subsequently taking, as necessary, the appropriate steps to prevent or 
compensate for potential performance shortfalls. Restoration projects 
in particular require careful documentation because of the 
uncertainties found in the current state of the art. Documentation of 
uncertainty must be quantitative wherever possible, qualitative 
otherwise, and make use of sound statistical techniques. The Agency is 
considering requiring permittees to submit documentation of uncertainty 
as part of the information required under proposed Sec.  125.95(b)(5).
    Because of the complexity and evolving nature of restoration 
projects as an environmental management tool, most will have several 
areas of uncertainty in descriptions of their performance. These areas 
may include project organism productivity, time lag before full 
productivity, and comparison of compensatory project performance with 
adverse environmental impact measurements, among others. The Agency 
solicits comment on these and other areas of uncertainty in restoration 
projects and on appropriate methods for their characterization. Sample 
regulatory language is offered below (new language is in italic):
    Add to Section 125.95(b)(5):

    (ii) A quantification of the combined benefits from implementing 
design and construction technologies, operational measures and/or 
restoration measures and the proportion of the benefits that can be 
attributed to each. This quantification must include: the percent 
reduction in impingement mortality and entrainment that would be 
achieved through the use of any design and construction technologies 
or operational measures you have selected (i.e., the benefits you 
would achieve through impingement and entrainment reduction); a 
demonstration of the benefits that could be attributed to the 
restoration measures you have selected; a demonstration that the 
combined benefits of design and construction technologies, 
operational measures, and/or restoration measures will maintain fish 
and shellfish at a level comparable to that which would be achieved 
under Sec.  125.94. If it is not possible to demonstrate 
quantitatively that restoration measures such as creation of new 
habitats to serve as spawning or nursery areas or establishment of 
riparian buffers will achieve comparable performance, you may make a 
qualitative demonstration that such measures will maintain fish and 
shellfish in the waterbody at a level substantially similar to that 
which would be achieved under Sec.  125.94. To the extent that 
restoration measures are relied upon, the documentation should 
include a discussion, and quantification where feasible, of 
uncertainty associated with the implementation and results of these 
measures.

2. Adaptive Management

    Under adaptive management, an approach is chosen to address a 
problem and its effectiveness monitored during its implementation. 
Information from this monitoring is then used to make adjustments, 
as necessary, to the approach. Adaptive management is a particularly 
useful method when the outcome of a chosen approach is uncertain. 
Because of the uncertainty and evolving nature of restoration 
projects as an environmental management tool, the Agency is 
considering requiring permittees who choose to utilize restoration 
projects to create and implement an adaptive management plan. 
Permittees would submit this plan to the Director as part of the 
information required under Sec.  125.95(b)(5).
    The adaptive management plan would outline, to the extent 
possible, the actions a permittee would take should monitoring of 
project performance indicate deviation of performance from 
acceptable levels. The plan would describe, quantitatively where 
possible, the performance levels at which project adjustment would 
be necessary.
    The adaptive management process relies heavily on adequate 
performance measurement methods and metrics to alert project 
managers to project deviations from expected performance levels or 
to indicate that a project is meeting performance goals. It is 
important for these reasons that project planners choose performance 
metrics that reflect attainment of project goals (i.e., maintenance 
of fish and shellfish levels in a waterbody) as accurately and 
directly as possible. Proxy measurement methods should be used with 
adequate caution. Project planners should also, where feasible, 
monitor for information useful for making corrections, as needed, in 
a project's performance. The Agency is considering requiring that 
permittees would stipulate performance measurement methods and 
metrics in their monitoring plan. (See proposed Sec.  125.95(b)(7) 
(67 FR 17178, 17224)). Sample regulatory language is offered below 
(new language is in italic):
    Add to Sec.  125.95(b)(5):

    (iii) A plan utilizing the adaptive management method for 
implementing and maintaining the efficacy of the restoration 
measures you have selected and supporting documentation to show that 
the restoration measures, or the restoration measures in combination 
with design and construction technology(is) and operational 
measures, will maintain the fish and shellfish in the waterbody, 
including the community structure and function, to a level 
comparable or substantially similar to that which would be achieved 
through Sec.  125.94(b) or (c).

    EPA requests comment on requiring an adaptive management plan for 
restoration projects.
3. Independent Peer Review
    One challenge of successful restoration planning is the 
coordination of information from a large number of scientific 
disciplines, particularly hydrology, landscape ecology, and organismal 
biology. The Agency believes a thorough, multi-disciplinary review of 
restoration proposals would help to ensure their quality and therefore 
maximize the probability of project success. The Agency is concerned, 
however, that thorough review of restoration proposals may place a 
significant additional burden on the review capacities of permit 
writers, the majority of whom are trained primarily in the engineering 
sciences. To aid permit writers in their review of restoration 
proposals and to aid permittees in ensuring that the full range of 
pertinent expertise is brought to bear upon project plans, the Agency 
is considering requiring that the information a facility develops under 
proposed Sec. Sec.  125.95(b)(5) and (7) in support of its restoration 
plan undergo an independent peer review prior to the plan's submission 
to the Director. EPA is considering whether a facility should be 
required to choose the members of the peer review panel in consultation 
with Federal, State, and Tribal fish and wildlife management agencies 
with responsibility for fish and shellfish potentially affected by the 
facility cooling water intake structure. The peer reviewers would be 
scientists who are otherwise independent of the permitting process for 
the facility and who, as a panel, have the appropriate multi-
disciplinary expertise for the review of the restoration proposal. Peer 
reviewers would be charged with evaluating specific elements of each 
restoration proposal (e.g., the quantitative or qualitative 
descriptions of the uncertainty associated with restoration goals and 
projected outcomes, delays between project initiation and when a 
restoration program shows measurable success, and the nexus between 
impingement and entrainment losses and the productivity of the proposed 
restoration program.). If permittees

[[Page 13543]]

decided to combine restoration measures with technologies or 
operational measures, they would provide peer reviewers, for background 
information purposes, with access to materials for submission to the 
Director under proposed Sec. Sec.  125.95(b)(2)-(4). EPA requests 
comment on whether adding a peer review requirement may add expense and 
delay to the permitting process and, if so, what might be the extent of 
the expense or delay. EPA also requests comment on whether a peer 
review may result in cost savings by ensuring that restoration projects 
are effective and cost-effective. If EPA were to add such a 
requirement, regulatory language might be modified as follows:
    Add to Section 125.95(b)(5):

    (vi) The final report from an independent peer review of the 
items you submit under (b)(5)(I), (ii), (iii), (iv), (v), and (b)(7) 
of this section. You must choose the peer reviewers in consultation 
with Federal, State, and Tribal fish and wildlife management 
agencies with responsibility for fish and wildlife potentially 
affected by your cooling water intake structure.

    EPA requests comment on adding such a requirement.

C. Request for Impingement and Entrainment Data

    EPA solicits data on additional impingement and entrainment at 
facilities withdrawing cooling water from surface waters of the U.S. 
Facilities responding to EPA's questionnaire surveys reported studies 
of impingement or entrainment at the following water sources: estuary 
or tidal river, 98 facilities; freshwater stream or river, 201 
facilities; the Great Lakes, 20 facilities; lake or reservoir, 74 
facilities; ocean, 21 facilities. Despite the large number of 
facilities reporting studies in freshwater, EPA has received relatively 
few such studies. To date, EPA has received approximately 20 studies 
from inland facilities. Thus, EPA especially requests recent 
impingement and entrainment studies and data for freshwater sources 
(streams, rivers, lakes, and reservoirs). Please see the section 
entitled FOR FURTHER INFORMATION CONTACT at the beginning of this 
notice for technical points of contact to whom studies and/or data may 
be submitted.

X. National Benefits

A. Case Study Clarifications and Corrections

    EPA had numerous lengthy telephone conferences with industry and 
environmental groups to respond to questions on the cost-benefit 
analysis presented at proposal. EPA also provided detailed written 
responses to these questions in a series of memoranda provided to 
commenters during the summer of 2002. These materials are entitled: 
``Appendix 2: Summary of CBI and Non-CBI Facilities from 
Questionnaires,'' ``Response to UWAG Questions Re: Phase II Proposal 
Record, Revised December 2, 2002,'' ``Appendix 1: Additional Detail on 
Extrapolation,'' ``Appendix 3: Tables 1-4,'' ``Response to Riverkeeper 
Questions Regarding Phase II Proposal Record, Revised July 31, 2002,'' 
``Example calculations for national extrapolation,'' ``Responses to 
Riverkeeper Questions on Sec.  316(b) Phase II Case Study Benefits 
Analyses,'' ``Responses to PG&E Questions about the Sec.  316(b) Phase 
II Brayton Point Case Study,'' ``Responses to Riverkeeper Follow-Up 
Questions on Sec.  316(b) Phase II Case Study Benefits Analyses,'' 
``Responses to Riverkeeper Questions on Sec.  316(b) Phase II Case 
Study Benefits Analyses,'' and ``Responses to Riverkeeper Questions 
About the Sec.  316(b) Phase II Case Study I&E Analyses.'' The 
memorandum entitled ``Analytical and Clerical Errors in the Sec.  
316(b) Phase II Case Study Document, Preamble, and Economic and 
Benefits Analysis'' is an additional memorandum that corrects any 
clerical or analytical errors that were identified subsequent to 
proposal.

B. Regional Approach to Developing Benefits Estimates

1. Objectives of Regional Approach
    In its analysis for section 316(b) Phase II proposal, EPA relied on 
nine case studies to estimate the potential economic benefits of 
reduced impingement and entrainment. EPA extrapolated facility-specific 
estimates to other facilities located on the same waterbody type and 
summed the results for all waterbody types to obtain national 
estimates. A number of commenters expressed concern about this method 
of extrapolation, noting that even within the same water body type, 
there are important ecological and socioeconomic differences among 
different regions of the country. For example, commercial and 
recreational fisheries of Atlantic Coast estuaries are substantially 
different from those of Pacific Coast estuaries.
    To address this concern, EPA has revised the design of its analysis 
to examine cooling water intake structure impacts at the regional-
scale. The regional approach to developing national benefits estimates 
involves evaluating changes in impingement and entrainment losses and 
the associated monetary values for improved recreational and commercial 
catch and nonuse value of these changes in impingement and entrainment, 
at the regional level. The estimated benefits will then be aggregated 
across all regions to yield the national benefit estimate. For this 
analysis, coastal regions are fisheries regions defined by National 
Oceanic and Atmospheric Administration (NOAA) National Marine Fisheries 
Service (NMFS). Freshwater facilities are grouped into either the Great 
Lakes region or the interior region of the U.S. (The regional approach 
is further discussed in the document entitled ``Regional Methodology 
Used in the section 316(b) Phase II Notice of Data Availability.'') EPA 
believes that these regional definitions are both ecologically and 
economically meaningful, and offer a better scale of resolution upon 
which to base estimates of national impacts and benefits.
    EPA is proposing this regional analytical approach for this 
national rulemaking effort, but is not advocating this approach for 
impact and/or benefits analyses that might be conducted for individual 
National Pollution Discharge Elimination System (NPDES) permits. At the 
individual permit level it should be generally necessary to conduct a 
more detailed, site-specific analysis of the environmental 
ramifications of the cooling water intake structures governed by the 
permit in question than is necessary or feasible for this national-
level rulemaking analysis. Such a site-specific analysis to support a 
permit might, for example, consider detailed, species specific 
information on impingement mortality and entrainment, different 
factors, or use different approaches in estimating total benefits.
    In addition, EPA received a number of comments on the valuation 
approaches applied to evaluate the proposed rule. In estimating 
benefits of the proposed rule for each case study, the Agency used 
several valuation approaches that are the focus of this NODA: (1) 
Commercial fishery benefits were valued using market data; (2) 
recreational fishery benefits were valued using both primary research 
and benefit transfer from other nonmarket valuation studies; (3) nonuse 
benefits were estimated based on benefits transfer using the ``50 
percent rule'' (i.e., 50 percent of use value).
    Several commenters posed questions or expressed concern with how 
the Agency at proposal attempted to convert projected changes in 
commercial landings into suitable measures of producer and consumer 
surplus. Most commenters agreed that properly executed benefits 
transfer is an

[[Page 13544]]

appropriate method for valuing nonmarket goods, and they pointed out 
that original travel cost analysis is one of the most appropriate 
approaches for estimating recreational use benefits. Most commenters 
agreed that nonuse values are difficult to estimate. Stated preference 
methods have been the most commonly used methods for estimating nonuse 
benefits. With these methods, people are asked through surveys to state 
their willingness to pay for particular ecological improvements, such 
as increased protection of aquatic species or habitats with particular 
attributes. According to these commenters, benefits transfer is the 
second best approach if conducting an original stated preference study 
is not feasible. Some commenters recommended that EPA use benefits 
transfer for valuing improved protection of threatened and endangered 
species.
    EPA notes that there are advantages and disadvantages associated 
with using stated preference studies to value non-use benefits. On the 
one hand, there are no other generally accepted methods available for 
identifying and measuring non-use benefits for a non-market good or 
service. Benefit transfer methods used for estimating non-use benefits 
must ultimately rely on stated preference studies that independently 
assess non-use benefits. On the other hand, there is evidence that 
stated preference methods can over-estimate or misrepresent values 
because of a number of difficulties linked to the hypothetical nature 
of the survey instrument. These difficulties include (1) the absence of 
a real budget constraint (though survey respondents are often requested 
to think about their income constraints and purchases prior to stating 
their preferences), and (2) a frequent focus in the survey instrument 
on a limited number of resources or amenities to the exclusion of 
others. However, substantial research has been conducted to show that 
potential bias associated with hypothetical bids, lack of income 
constraint consideration, complex amenities, and whole/part 
complications is often manageable through careful survey design and 
pretesting, and/or may be accounted for through adjustments to utility-
theoretic values derived from stated preference studies (see, e.g., 
Carson, et al., 1996).
    In order to address some of the sources of bias in stated 
preference studies, a number of ``best practices'' for conducting 
stated preferences surveys and using them in policy analysis have 
evolved over the past decade. In 1992, the National Oceanic and 
Atmospheric Administration convened a panel of economic and survey 
research experts, who had no vested interest in stated preference 
methods, to conduct hearings on the validity of the contingent 
valuation (CV) method (form of stated preference) (FR 58:19, 4601-14, 
1993). This panel issued proposed guidelines, consisting of a number of 
recommendations about survey design and implementation, ``compliance 
with which would define an ideal CV survey.''
    The panel's general guidelines address the following issues: Sample 
type and size; minimizing nonresponses; use of personal interviews; 
pretesting for interviewer effects; reporting; careful pretesting of a 
CV questionnaire; conservative design; elicitation format; referendum 
format; accurate description of the program or policy; pretesting of 
photographs; reminder of undamaged substitute commodities; adequate 
time lapse from the accident; temporal averaging; ``no-answer'' option; 
yes/no follow-ups; cross-tabulations; checks on understanding and 
acceptance; alternative expenditure possibilities; deflection of 
transaction value; steady state or interim losses; present value 
calculations of interim losses; advance approval; burden of proof; and 
reliable reference surveys.
    The NOAA panel concluded that (1) non-use (referred to by the panel 
as passive-use) losses are a meaningful component of environmental 
damages; (2) it is plausible that the results of CV surveys may be 
variable, sensitive to details of the survey instrument used, and 
vulnerable to upward bias; (3) under the suggested guidelines and 
conditions, CV studies convey reliable information--``the more closely 
the guidelines are followed, the more reliable the result will be. It 
is not necessary, however, that every single injunction be completely 
obeyed;'' (4) ``To the extent that the design of CV instruments makes 
conservative choices * * *, this intrinsic [upward] bias may be offset 
or even over-corrected;'' and (5) a well-conducted CV survey ``contains 
information that judges will wish to use, in combination with other 
evidence, including the testimony of expert witnesses.''
    In addition to the guidelines generated by the NOAA panel, The 
Office of Management and Budget (OMB), in its recent Draft 2003 Report 
to Congress on the Costs and Benefits of Federal Regulations (68 FR 
5492, Feb. 3, 2003), comments on the use of stated preference studies 
as it relates to policy/regulatory analysis. OMB notes that ``the 
contingent valuation instrument must portray a realistic choice 
situation for respondents--where the hypothetical choice situation 
corresponds closely with the policy context to which estimates will be 
applied.'' (68 Fed. 5519.) OMB also provides specific guidelines for 
sampling, survey design, transparency and replicability of results, and 
benefit transfer.
    In response to comments, EPA made the following changes to the 
analysis: (1) Developed original or used available region-specific 
recreational angler behavior models to estimate recreational fishing 
benefits from reduced impingement and entrainment; (2) refined its 
commercial fishery analysis; and (3) developed a revised benefit 
transfer approach to estimate total value (including nonuse values) of 
impingement and entrainment losses for commercial, recreational, and 
forage species. In addition, EPA also carefully examined available 
evidence concerning total benefits, including use and nonuse values 
from the surface water valuation studies that are potentially 
applicable to the section 316(b) regulation. Section E.2 of today's 
notice summarizes EPA's findings from the review of the surface water 
valuation studies and outlines further steps in developing an approach 
for analyzing nonuse value of the aquatic resources affected by 
impingement and entrainment for the final rule analysis.
    In this NODA, EPA presents its regional methodology and use 
benefits estimates for two regions, Northern California and the North 
Atlantic. Regional definitions are provided in the following section, 
followed by a summary of methods and results for commercial and 
recreational fishing. Discussion of a possible methodology for 
estimating nonuse benefits and some preliminary results are presented 
in Section E.
2. Study Regions
    The Agency identified eight study regions based on similarities in 
the physical characteristics of the affected water bodies, aquatic 
species present in the area, and characteristics of commercial and 
recreational fishing activities in the area. EPA used NMFS definitions 
of marine fishery regions to define the six coastal regions. Table X-1 
presents these geographic areas and the number of facilities included 
in each marine fishery region. A total of 124 Phase II facilities are 
withdrawing water from the nation's estuaries and oceans. Facilities in 
the Great Lakes region include all those that withdraw water from Lakes 
Ontario, Erie, Michigan, Huron, and Superior or are located on a 
waterway with open passage of Great Lakes fishery species to a Great 
Lake and within 30 miles of the lake. There

[[Page 13545]]

are 55 facilities in the Great Lakes Region. The remaining 372 
facilities were included in the Interior region of the U.S.

                                    Table X-1.--Definition of Coastal Regions
----------------------------------------------------------------------------------------------------------------
                                                                     Number of       Number of
               Region                      Geographic area           estuarine         ocean       Total number
                                                                    facilities      facilities     of facilities
----------------------------------------------------------------------------------------------------------------
North Atlantic.....................  Maine, New Hampshire,                    19               2              21
                                      Massachusetts, Rhode
                                      Island, Connecticut.
Mid Atlantic.......................  New York, New Jersey,                    43               1              44
                                      Delaware, Maryland and
                                      Virginia.
South Atlantic.....................  North Carolina, South                    13               1              14
                                      Carolina, Georgia, East
                                      Florida.
Gulf of Mexico.....................  West Florida, Alabama,                   20               3              23
                                      Missouri, Louisiana, Texas.
Northern California................  All Counties North of Point               6               2               8
                                      Conception.
Southern California................  All Counties South of Point               2               9              11
                                      Conception.
                                                                 -----------------
    Total Number of Estuarine and    ...........................             103              18            121
     Ocean Facilities a.
----------------------------------------------------------------------------------------------------------------
a In addition, there are 3 ocean facilities in Hawaii that are not included in the NMFS-defined regions.

    The analysis of direct use benefits for each region proceeds in 
three steps: (1) Estimating regional impingement and entrainment 
losses; (2) estimating benefits to recreational anglers from improved 
fishing opportunities due to reduced impingement and entrainment based 
on a region-specific valuation function; and (3) estimating benefits 
from improved commercial fishery yield. The following sections discuss 
each of these steps in detail.
3. Estimating Regional Impingement and Entrainment Losses
a. Species Groups
    For the case studies presented at proposal, EPA conducted species-
specific analyses of impingement and entrainment on a facility-specific 
basis. For the new regional studies, EPA is evaluating species groups 
comprised of species with similar life histories. Groups are based on 
family groups or groups used by NMFS for landings data. For example, 
bay goby, blackeye goby, yellowfin goby, and other gobies are grouped 
together as ``gobies.'' For the regional studies, EPA evaluated 
impingement and entrainment rates for such species groups and developed 
a regional total impingement and entrainment estimate by summing 
results for each group. An exception was made for species of 
exceptionally high commercial or recreational value (e.g., striped 
bass). Such species were evaluated as single species.
    Aggregation of species into groups of similar species facilitated 
parameterization of the fisheries models used by EPA to evaluate 
facility impingement and entrainment monitoring data. As noted by many 
commenters and by EPA in the section 316(b) Phase II Case Study 
Document, life history data are very limited for many of the species 
that are impinged and entrained. As a result, there are many data gaps 
for individual species. To overcome this limitation, in its new studies 
EPA used the available life history data for closely related species to 
construct a single representative life history for a given species 
group. For previously completed case studies, EPA used the species-
specific life history information that was previously developed and 
then aggregated impingement and entrainment results for the species 
within a given group to obtain a group estimate. The document, 
``Regional Methodology Used in the section 316(b) Phase II Notice of 
Data Availability,'' summarizes the regional methodology. The 
documents, ``Appendix 1: Life History Parameter Values Used to Evaluate 
I and E in the North Atlantic Region,'' and ``Appendix 2: Life History 
Parameter Values Used to Evaluate I and E in the Northern California 
Region,'' provide tables of all of the life history data and data 
sources used by EPA for the two regional analyses presented in this 
NODA.
    EPA believes that the species group approach is appropriate for the 
national rulemaking given the many data limitations associated with our 
lack of knowledge of specific fish life histories, particularly the 
growth and mortality rates of early life stages. At the individual 
permit level, more detailed information should be available based on 
the data collected to support a permit application (see, for example, 
the proposed permit application requirements at Sec.  122.21 (r) and 
Sec.  125.95).
b. Impingement and Entrainment Methods
    EPA evaluated facility impingement and entrainment monitoring data 
for all individual fish species with losses over one percent of the 
facility total. EPA converted annual impingement and entrainment losses 
for each species group into (1) age 1 equivalents, (2) fishery yield, 
and (3) biomass production foregone using standard fishery modeling 
techniques (Ricker, 1975; Hilborn and Walters, 1992; Quinn and Deriso, 
1999). Details of these methods are provided in Chapter A5 of Part A of 
the section 316(b) Phase II Case Study Document, except for the 
corrections given in the preceding section ``Case Study Corrections and 
Clarifications'' and the changes noted below. Section A5-4 of Chapter 
A5 discusses data uncertainties. For all analyses, EPA assumed 100% 
entrainment mortality based on the analysis of entrainment survival 
studies presented in Chapter A7 of Part A of the section 316(b) Phase 
II Case Study Document
(1) Yield Equation
    As several commenters pointed out, the equation for yield presented 
in Chapter A5 of the section 316(b) Phase II Case Study Document, 
contains a typographical error. The correct equation is:

Yk = [Delta]j [Delta]a Ljk 
Sja Wa (Fa / Za ) (1 - 
e-Z a )

where:

Yk = foregone yield (pounds) due to impingement and 
entrainment losses in year k
Ljk = losses of individual fish of stage j in the year k
Sja = cumulative survival fraction from stage j to age a
Wa = average weight (pounds) of fish at age a
Fa = instantaneous annual fishing mortality rate for fish of 
age a

[[Page 13546]]

Za = instantaneous annual total mortality rate for fish of 
age a

    EPA would like to note that it verified that the correct equation 
was used for the case study analyses. The error was only in the 
transcription of the equation in Chapter A5.
(2) Trophic Transfer Rates Used To Model Production Foregone
    For the case studies submitted at proposal, EPA used a simple model 
of trophic structure and trophic transfer efficiency to estimate the 
yield of harvested species that is lost because of the loss of forage 
species to impingement and entrainment (see Chapter A5 of Part A of the 
section 316(b) Phase II Case Study Document for details). The net 
trophic transfer efficiency in that model was 2.5 percent. Based on 
additional review of the scientific literature, EPA has modified the 
model so that the net trophic transfer efficiency is 20 percent. This 
transfer efficiency is used in natural resource damage assessments 
involving injuries to fish, as discussed in Reed et al. (1994). 
Although this change in transfer efficiency increases the portion of 
the total yield attributable to the consumption of forage fish, the net 
effect is insignificant because the trophic transfer pathway accounts 
for a very small portion of the total foregone yield.
(3) Impingement and Entrainment Extrapolation
    To obtain regional impingement and entrainment estimates, EPA 
extrapolated losses from facilities with impingement and entrainment 
data to facilities without data. These results were then summed to 
obtain a regional total. This analysis was done separately within each 
region for different water body types (estuaries/tidal rivers, oceans, 
Great Lakes, inland freshwater rivers and lakes).
    Average annual results for facilities with impingement and 
entrainment data were averaged and extrapolated on the basis of 
operational flow, in millions of gallons per day (MGD), to facilities 
without data. The extrapolation method used, by region, is:

    (Total losses at case study facilities/Flow at case study 
facilities) * Total flow in the region

    The flow values used in this calculation have been weighted 
(weighted flow = average daily flow * weight) using the same facility 
weights applied in the cost analysis. The purpose of this weighting is 
to calculate costs and benefits for all 551 in-scope facilities, based 
on surveys received from 540 facilities.
    The regional analyses incorporated data for many more facilities 
than were evaluated for proposal, and thus improved the basis for EPA's 
national benefits estimates.
(4) Impingement
    In the case studies prepared for proposal, EPA determined that all 
impinged fish are age 1 because of a lack of data on the actual ages of 
impinged fish. As several commenters pointed out, this biases estimates 
low because impinged fish may include older individuals that are closer 
to harvestable age. This is confirmed by data on the ages of impinged 
fish presented in studies conducted at Salem (PSEG, 1999) and Millstone 
(Northeast Utilities Environmental Laboratory, 1992). To address this 
concern, the current studies relax the assumption that all impinged 
fish are age 1, and assume instead that the ages of impinged fish are 1 
and older, and follow an age distribution that is implied by the 
associated survival rates. This approach takes into consideration the 
common observation that relatively few older, larger fish are impinged. 
The effect of this adjustment is that a higher proportion of impinged 
fish are assumed to survive until harvest. As a result of this 
adjustment, the estimate of foregone yield associated with impingement 
increases by a factor ranging from about three to ten, depending on a 
species` age-specific survival rates.
4. Recreational Fishing Benefits
    For the final rule analysis, EPA's analysis of recreational fishing 
benefits from reduced impingement and entrainment will be based on 
region-specific models of recreational anglers' behavior for seven of 
the eight study regions: North Atlantic, Mid-Atlantic, South Atlantic, 
Gulf of Mexico, Northern California, Southern California, and Great 
Lakes. EPA's analysis of benefits for the interior U.S. region will 
combine an original random utility model (RUM) for the Ohio River and a 
benefit transfer approach for other rivers, lakes, and reservoirs 
affected by impingement and entrainment. Additional detail on the 
methods EPA will use throughout the recreational benefits analysis are 
provided in DCN 5-1008 and DCN 5-1009. These methods are similar to the 
methods used for the Delaware Bay, Tampa Bay, and Ohio River case study 
analyses, but EPA developed the travel coast models at the regional 
levels.
    For the NODA, EPA developed recreational anglers' behavior models 
for three of the six coastal regions including Northern and Southern 
California and the Mid-Atlantic. Today's notice presents results only 
for the Northern California Region because impingement and entrainment 
data are not available for the Mid-Atlantic and Southern California 
regions at this time. For the final rule analysis, the Agency intends 
to expand the Tampa Bay case study used in the proposed rule analysis 
to include the whole Gulf of Mexico region and to develop an original 
travel coast model for the Great Lakes region. For the South Atlantic 
EPA is considering using the recreational anglers' behavior models 
developed by NMFS. The NMFS model is appropriate for benefit function 
transfer for the North Atlantic region, because it estimates region-
specific values for the most important species affected by impingement 
and entrainment (e.g., winter flounder). The Agency will further assess 
the applicability of the South Atlantic NMFS model for estimating 
benefits from reduced impingement and entrainment in the South Atlantic 
region when impingement and entrainment data for this region become 
available. If necessary, EPA will estimate a recreational behavior 
model for the South Atlantic region to support valuation of the most 
important species affected by impingement and entrainment in this 
region.
    The regional recreational fishing studies use information on 
recreational anglers' behavior to infer anglers' economic value for the 
quality of fishing in the case study areas. The model's main assumption 
is that anglers will get greater satisfaction, and thus greater 
economic value, from sites where the catch rate is higher due to 
reduced impingement and entrainment, all else being equal. This benefit 
may occur in two ways: First, an angler may get greater enjoyment from 
a given fishing trip when catch rates are higher, and thus get a 
greater value per trip; second, anglers may take more fishing trips 
when catch rates are higher, resulting in greater overall value for 
fishing in the region.
    EPA will rely on the following primary data sources in the regional 
analyses of recreational fishing benefits:
    [sbull] For the six coastal regions, EPA intends to use the NMFS 
Marine Recreational Fishing Statistics Survey (MRFSS) combined with the 
Add-On MRFSS Economic Survey (AMES) (NMFS, 1994; 1997; 2000);
    [sbull] For the Great Lakes region the Agency is considering using 
the 1995 Michigan Recreational Anglers survey to develop a RUM model. 
The Agency will

[[Page 13547]]

apply estimated values from Michigan sites to Great Lakes sites in 
other affected states. To transfer values from the Michigan study to 
other Great Lakes states, EPA is considering using information from 
state-level anglers' surveys on recreational fishing participation, 
targeted species, and site-specific catch rates at Great Lakes 
recreational fishing sites.
    [sbull] For the interior U.S. region, the Agency is also 
considering using the 2000 National Survey of Recreation and 
Environment and the National Survey of Fishing, Hunting and Wildlife-
Associated Recreation (U.S. Fish and Wildlife Service, 1996; 2001) to 
estimate the value of recreational fishery losses from impingement and 
entrainment at cooling water intake structures located on rivers, 
lakes, and reservoirs. DCN 5-1310 and DCN 5-1311 provide further 
information on these data sources.
    These data sets provide information on where anglers fish, what 
fish they catch, and their personal characteristics. When anglers 
choose among fishing sites they reveal information about their 
preferences.
    The Agency uses standard assumptions and specifications of the RUM 
model that are readily available in the recreation demand literature. 
Among these assumptions are that anglers choose a fishing mode and then 
the site at which to fish; and that anglers' choice of target species 
is exogenous to the model. EPA modeled an angler's decision to visit a 
site as a function of site-specific cost, fishing trip quality, and 
additional site attributes such as presence of boat launching 
facilities at the site.
    The Agency uses the 5-year historical catch rates per hour of 
fishing as a measure of fishing quality in the case studies. Catch rate 
is one of the most important attributes of a fishing site from the 
angler's perspective. This attribute is also a policy variable of 
concern because catch rate is a function of fish abundance, which may 
be affected by fish mortality caused by impingement and entrainment.
    The Agency uses the estimated model coefficients in conjunction 
with the estimated impingement and entrainment losses at the cooling 
water intake structures located in the relevant region to estimate per 
trip welfare losses from impingement and entrainment to recreational 
anglers.
    The random utility models generate welfare measures for changes in 
catch rates on a per trip basis. To capture the effect of changes in 
catch rates on the number of fishing trips taken per recreational 
season, EPA will combine regional RUM models and a trip frequency 
model.\21\ The trip frequency model estimates the number of trips that 
an angler will take annually. The Agency is considering developing trip 
frequency models for those regions for which sufficient data on 
anglers' socioeconomic characteristics are available. For the proposed 
rule analysis, the Agency developed trip frequency models for the three 
case studies used in the proposed rule analysis--Delaware Estuary, 
Tampa Bay, and the Ohio River. For the final rule analysis, the Agency 
will re-estimate these models to include all recreational anglers in a 
given region. The Agency also plans to estimate trip frequency models 
for the Great Lakes, North Atlantic, and South Atlantic regions for the 
final rule analysis. EPA will not estimate trip frequency models for 
the Northern and Southern California regions due to the lack of 
socioeconomic data for these regions. The Agency will use an average 
percentage increase in trip frequency from other regions to approximate 
changes in trip frequency for the Northern and Southern California 
regions due to improved fishing opportunities. However, in the regions 
where changes in trip participation can be calculated for the proposed 
rule, the increase in the number of trips was very small.
---------------------------------------------------------------------------

    \21\ The trip frequency model is also called a trip 
participation model.
---------------------------------------------------------------------------

    To estimate the economic value to recreational anglers of changes 
in catch rates resulting from changes in impingement and entrainment in 
a given region, EPA combines fishing participation estimates for a 
given region with the estimated per trip welfare gain (loss) under each 
policy scenario. The welfare estimates presented in the following 
sections are based on the estimates of baseline recreational fishing 
participation provided by NMFS. Thus, welfare estimates presented in 
today's notice do not account for changes in recreational fishing 
participation due to improved quality of the fishing sites, but these 
changes are likely to be small.
5. Commercial Fishing Benefits Methods
    EPA will estimate the commercial fishing benefits expected under 
the final Phase II regulation for each region in the final analysis: 
the North Atlantic, Mid-Atlantic, South Atlantic, Gulf of Mexico, 
Northern California, Southern California, and Great Lakes. Additional 
detail on the regions is provided above. Additional detail on the 
methods EPA uses for this NODA and additional methods EPA is 
considering are provided in ``Chapter A13: Methods For Estimating 
Commercial Fishing Benefits'' that accompanies this NODA. These methods 
are similar to the methods used for the analysis for the proposed rule, 
but EPA has made some changes and clarification to these methods as 
indicated in the following steps.
    1. Estimate losses to commercial harvest (in pounds of fish) 
attributable to impingement and entrainment under current conditions. 
EPA models these losses using the methods presented in Chapter A5 of 
Part A of the section 316(b) Phase II Case Study Document. Changes in 
these methods for the NODA and subsequent analyses are provided in the 
preceding sections ``Case Study Corrections and Clarifications'' and 
``Impingement and Entrainment Methods.'' The basic approach is to 
assume linearity between stock and harvest, such that if, for example, 
10% of the current commercially targeted stock is harvested, then 10% 
of any increase in stock due to this rule would be harvested.
    2. Estimate gross revenue of lost commercial catch. The approach 
EPA uses to estimate the value of the commercial catch lost due to 
impingement and entrainment relies upon landings and dockside price ($/
lb) as reported by NMFS for the period 1991-2001. These data are used 
to estimate the revenue of the lost commercial harvest under current 
conditions (i.e., the increase in gross revenue that would be expected 
if all impingement and entrainment impacts were eliminated). Note that 
EPA currently assumes current prices when estimating changes in gross 
revenue, however, EPA will explore options for predicting new prices 
(e.g., based on available elasticities), and solicits comment on the 
availability of information or data to assist in this matter.
    3. Estimate lost economic surplus. The conceptually suitable 
measure of benefits is the sum of any changes in producer and consumer 
surplus. As detailed in ``Chapter A13: Methods For Estimating 
Commercial Fishing Benefits'' that accompanies this NODA, the methods 
used for estimating the change in surplus depends on whether the 
physical impact on the commercial fishery market appears sufficiently 
small such that it is reasonable to assume there will be no appreciable 
price changes in the markets for the impacted fisheries.
    3a. Estimate lost surplus when no change in price anticipated. For 
the 2 regions analyzed to date by EPA, it is reasonable to assume no 
change in

[[Page 13548]]

price, which implies that the welfare change is limited to changes in 
producer surplus. As described in ``Chapter A13: Methods For Estimating 
Commercial Fishing Benefits,'' this change in producer surplus is 
currently assumed to be equivalent to a portion of the change in gross 
revenues, as developed under step 2. Currently, EPA is using a range of 
0% to 40% of the gross revenue losses estimated in step 2 as a means of 
estimating the change in producer surplus. This is based upon a review 
of empirical literature (restricted to only those studies that compared 
producer surplus to gross revenue) and is consistent with 
recommendations made in comments on the EPA analysis at proposal. This 
represents a change from the analysis for the proposed rule, which 
assumed a range of 40% to 70%.
    EPA will continue to review this approach for the final analysis. 
In particular, EPA believes this is a conservative approach to 
estimating producer surplus when there are no anticipated price 
changes, because it does not account for shifts in marginal cost 
curves. If greater abundance of fish is assumed to imply that the same 
quantity of fish can be caught (i.e., no change in managed quota) at a 
lower cost, then these cost savings may be over or underestimated using 
this method, depending on the slope and magnitude of shift of the 
marginal cost curve for harvesters. If a management council increases 
the optimal quota to account for greater stock size (and the cost of 
harvesting fish again decreases), then it is possible that the 
corresponding increase in producer surplus is equal to or greater than 
100% of gross revenue change. EPA solicits comment on these approaches 
for assessing producer surplus.
    3b. Estimate economic surplus if a change in price anticipated. EPA 
currently relies on the methodology in Step 9a above for estimating 
benefits for the two regional examples in this NODA, but EPA will 
explore alternative methods if changes in price are anticipated. As 
described in ``Chapter A13: Methods For Estimating Commercial Fishing 
Benefits'' that accompanies this NODA, if the impact on commercial 
fisheries in other regions analyzed for the final regulation are 
sufficiently large that a change in market prices becomes a likely 
outcome, then a more complex approach may be considered by the Agency. 
This approach would include estimates of consumer and other post 
harvest surplus, plus any net change in producer surplus (noting that 
one of the important aspects would be to net out potential transfers of 
surplus from producers to consumers, so as to avoid potential double-
counting). This analysis would be conducted primarily to determine the 
distribution of surplus between consumers and producers. Joint 
estimation of consumer and producer surplus can lead to potential 
double counting as follows. If no price change is assumed when 
estimating gross revenue in step 2 above, then, theoretically, there is 
no consumer surplus. If however, change in gross revenue in Step 2 is 
based on a predicted price decrease, then change in producer surplus is 
not capturing changes in consumer surplus, assuming transfers on infra-
marginal production are netted out.
    EPA anticipates that the net change in producer surplus result can 
be added to consumer and post-harvest surplus estimated in the manner 
outlined by Bishop and Holt (2003). The work to date by Dr. Richard 
Bishop of the University of Wisconsin-Madison and Dr. Matthew Holt of 
North Carolina State University suggests that for the fishery markets 
they have studied, the percent change in consumer and post-harvest 
surplus roughly equals the percent change in gross revenue (as 
estimated in step 2), and this result may be refined in light of their 
recommendations and future work by EPA. EPA recognizes, however, that 
it would not be appropriate to add this change to an independently 
estimated change in producer surplus that already captures part or all 
of potential consumer surplus.
    EPA will continue to review this approach for the final analysis, 
and in particular is examining and soliciting comment on using 
empirical information from the literature to (1) estimate price change 
for revenue calculations and netting out surplus transfers, (2) adjust 
existing estimates of normal profit so that they might better reflect 
the more suitable measure of producer surplus, (3) model changes in 
harvest cost that may result from increased stock size.
    In conjunction with this NODA, EPA is asking for comment on the 
issues and approaches discussed above and as discussed in further 
detail in ``Chapter A13: Methods For Estimating Commercial Fishing 
Benefits'' that accompanies this NODA. Specific input is sought 
regarding assumptions and approaches including: (1) The likelihood that 
supply curves will shift, thereby creating the context for generating 
greater net surplus; (2) how best to incorporate fishery management 
regimes into the analysis; (3) estimates of normal profit and how to 
interpret them to estimate a more suitable measure of producer surplus; 
and (4) the likelihood and magnitude of price changes that may result 
from increased harvest.
6. Discounting Future Use Benefits
    Discounting refers to the economic conversion of future benefits 
and costs to their present values, accounting for the fact that 
individuals tend to value future outcomes less than comparable near-
term outcomes. Discounting is important when benefits and costs may 
occur in different years, and enables a comparison of benefits to costs 
across time periods.
    For the section 316(b) rulemaking, discounting arises because some 
fishery benefits are realized a year or more after costs are borne. The 
issue of time lags between implementation of BTA and resulting 
increased fishery yields stems from the fact that one or more years may 
pass between the time an organism is spared impingement and 
entrainment, and the time of its ultimate harvest. For example, a 
larval fish spared from entrainment (in effect, at age 0) may be caught 
by a recreational angler at age 3, meaning that a 3-year time lag 
arises between the incurred cost of BTA and the realization of the 
estimated recreational benefit. Likewise, if a 1 year old fish is 
spared from impingement and is then harvested by a commercial waterman 
at age 2, there is a 1-year lag between the incurred BTA cost and the 
subsequent commercial fishery benefit.
    At proposal, EPA did not apply any discounting to the beneficial 
fishery impacts from the reduced impingement and entrainment attributed 
to regulatory options, and instead assumed a steady state scenario (in 
effect, applying a discount rate of zero). The Agency approach at 
proposal was limited by the lack of age-specific monitoring data 
provided by the industry and the complexity of estimating appropriate 
species-specific and facility-specific discounting. As discussed above, 
the Agency also assumed at proposal that all impinged organisms were 
age 1, which decreased the fishery yield impacts estimated at proposal. 
For the new regional analysis, EPA will apply discounting by species 
groups in each regional study, as described below.
    Two key factors determine how much the discounting will affect the 
benefit-cost results: the range of ages at which different types of 
fish are typically landed by commercial or recreational anglers, and 
the discount rate applied in the analysis. EPA uses the best available 
estimates of commercial fishing mortality rates to estimate the 
proportion of each species group, by age, that is caught annually 
following

[[Page 13549]]

implementation of BTA. This provides an estimate of the time-path of 
increases in future landings attributable to the rule. EPA discounts 
these future changes using two discount rates: a real rate of 3% and a 
real rate of 7%. Additional detail on EPA's discounting methods is 
provided in the document entitled ``Discounting Commercial and 
Recreational Fishing Benefits.'' The Agency notes that discounting is 
applied to recreational and commercial fishing benefits only. Nonuse 
benefits are independent of fish age and size and, thus, start as soon 
as impingement and entrainment ceases.
    EPA recognizes that, by addressing species groups rather than 
individual species, potentially important species-specific differences 
cannot be accounted for. However, the lack of life history data, 
fishing mortality rates, and other information necessary to calculate 
foregone yield and other endpoints of interest at the regional and 
national level makes it necessary to group species in this way.

C. North Atlantic Regional Study

1. Background: Marine Fisheries of the North Atlantic
    Commercial and recreational fisheries of the North Atlantic Region 
are managed by the New England Fisheries Management Council (NEFMC) 
according to Fishery Management Plans (FMP's) developed by NEFMC (NMFS, 
2002). The NMFS Northeast Fisheries Science Center provides scientific 
and technical support for management, conservation, and fisheries 
development.
    The multispecies groundfish fishery is the most valuable commercial 
fishery of the North Atlantic region, followed by American lobster 
(Homarus americanus) (NMFS, 1999a). Important groundfish species 
include Atlantic cod (Gadus morhua), haddock (Melanogrammus 
aeglefinus), yellowtail flounder (Pleuronectes ferrugineus), windowpane 
flounder (Scophthalmus aquosus), and winter flounder (Pleuronectes 
americanus). Atlantic pelagic fisheries are dominated by Atlantic 
mackerel (Scomber scombrus), Atlantic herring (Clupea harengus), 
bluefish (Pomatomus saltatrix), and butterfish (Peprilus triacanthus) 
(NMFS, 1999a). Important recreational fisheries of the region include 
Atlantic cod, winter flounder, Atlantic mackerel, striped bass (Morone 
saxatilis), bluefish, and bluefin tuna (Thunnus thynnus) (NMFS, 1999a).
    Fifteen groundfish species making up 25 stocks are managed under 
the Northeast Multispecies FMP of the NEFMC (NMFS, 2002). Table X-2 
summarizes the stock status of these species, indicating which stocks 
are subject to overfishing (the harvest rate exceeds threshold) and 
which stocks are overfished (stock size is below threshold). 
Overfishing refers to a level of fishing mortality that jeopardizes the 
long term capacity of the stock to produce the potential maximum 
sustainable yield on a continuing basis. In some cases, heavy fishing 
in the past may have reduced a stock to low abundance, so that it is 
now considered overfished even though the stock is not currently 
subject to overfishing.

   Table X-2.--Summary of Stock Status for Harvested Species of the North Atlantic Region Included in Federal
                                            Fishery Management Plans
----------------------------------------------------------------------------------------------------------------
  Stock  (Species in bold are major        Overfishing?  (Is         Overfished?  (Is
  stocks, with annual landings over     fishing mortality above       biomass below             Approaching
           200,000 pounds)                    threshold?)              threshold?)         Overfished Condition?
----------------------------------------------------------------------------------------------------------------
Cod:
    Gulf of Maine....................  Yes.....................  Rebuilding.............  No.
    Georges Bank.....................  No......................  Rebuilding.............  No.
Haddock:
    Gulf of Maine....................  Yes.....................  Rebuilding.............  No.
    Georges Bank.....................  No......................  Rebuilding.............  No.
American Plaice......................  Yes.....................  No.....................  No.
Redfish (ocean perch)................  No......................  Yes....................  N/A.
Witch Flounder.......................  No......................  No.....................  No.
Yellowtail Flounder:
    Georges Bank.....................  No......................  No.....................  No.
    Southern New England.............  No......................  Yes....................  N/A.
    Cape Cod.........................  No......................  Rebuilding.............  No.
    Middle Atlantic..................  Yes.....................  Yes....................  N/A.
White Hake...........................  Yes.....................  Yes....................  N/A.
Pollock..............................  Unknown.................  Unknown................  Unknown.
Ocean Pout...........................  No......................  Yes....................  N/A.
Atlantic Halibut.....................  Unknown.................  Yes....................  N/A.
Windowpane Flounder:
    Gulf of Maine/Georges Bank.......  No......................  No.....................  No.
    Southern New England/Middle        No......................  No.....................  Yes.
     Atlantic.
Winter Flounder:
    Gulf of Maine....................  Unknown.................  Undefined..............  Unknown.
    Georges Bank.....................  No......................  Rebuilding.............  No.
    Southern New England.............  No......................  No.....................  No.
Silver Hake:
    Gulf of Maine/Northern Georges     Unknown.................  Rebuilding.............  No.
     Bank.
    Southern Georges Bank/Middle       Unknown.................  Yes....................  N/A.
     Atlantic.
Offshore Hake........................  Unknown.................  Unknown................  Unknown.
Red Hake:
    Gulf of Maine/Northern Georges     No......................  No.....................  No.
     Bank.
    Southern Georges Bank/Middle       No......................  .......................  Unknown.
     Atlantic.
----------------------------------------------------------------------------------------------------------------
Source: Table 4 in NMFS (2002).


[[Page 13550]]

    As indicated in Table X-2, seven of the stocks managed under the 
Northeast Multispecies FMP are classified as overfished, including 
redfish (Sebastes spp.), the southern New England and Middle Atlantic 
stocks of yellowtail flounder, white hake (Urophycis tenuis), ocean 
pout (Macrozoarces americanus), Atlantic halibut (Hippoglossus 
hippoglossus), and the Southern Georges Bank stock of silver hake 
(Merluccius bilinearis). Other stocks are in the process of being 
rebuilt from levels below the maximum sustainable yield, including the 
Gulf of Maine and Georges Bank stocks of Atlantic cod and haddock, the 
Cape Cod stock of yellowtail flounder, the Georges Bank stock of winter 
flounder, and the Gulf of Maine/Northern Georges Bank stock of silver 
hake (NMFS, 2002).
    Stocks of another 12 North Atlantic species are under the 
jurisdiction of the Atlantic States Marine Fisheries Commission (ASMFC) 
and are not included in federal FMPs. These stocks and their status are 
given in Table X-3.
    Offshore fisheries for crustaceans and molluscs, particularly 
American lobster (Homarus americanus) and sea scallop (Placopecten 
magellanicus), are among the most valuable fisheries in the Northeast 
(NMFS, 1999a). Surfclams (Spisula solidissima), ocean quahogs (Arctica 
islandica), squids (Loligo pealeii and Illex illecebrosus), northern 
shrimp (Pandalus borealis), and red crab (Chaceon quinquedens) also 
provide important invertebrate fisheries.

 Table X-3.--Summary of Stock Status of Harvested Species of the North Atlantic Region Under AFSMC Jurisdiction
                              and Not Included in Federal Fishery Management Plans
----------------------------------------------------------------------------------------------------------------
  Stock  (species in bold are major    Overfishing?  (fishing
  stocks, with annual landings over       mortality above        Overfished?  (stock     Approaching  overfished
           200,000 pounds)                   threshold)         size below threshold)          condition?
----------------------------------------------------------------------------------------------------------------
American Eel........................  Unknown................  Unknown................  Unknown
American Lobster....................  Yes....................  Undefined..............  Unknown
Atlantic Croaker....................  Unknown................  Unknown................  Unknown
Atlantic Menhaden...................  No.....................  No.....................  Unknown
Atlantic Sturgeon...................  No.....................  Yes....................  N/A
Horseshoe Crab......................  Unknown................  Unknown................  Unknown
Northern Shrimp.....................  Yes....................  Undefined..............  Unknown
Spot................................  Unknown................  Unknown................  Unknown
Spotted Seatrout....................  Unknown................  Unknown................  Unknown
Striped Bass........................  No.....................  No.....................  Unknown
Tautog..............................  Yes....................  Undefined..............  Unknown
Weakfish............................  Undefined..............  No.....................  No
----------------------------------------------------------------------------------------------------------------
Source: Table 6 in NMFS (2002).

    The Northeast lobster fishery is second in commercial value after 
the multispecies groundfish fishery. The most recent comprehensive 
stock assessment, completed in 1996, indicated that lobster fishing 
mortality rates for both inshore and offshore populations greatly 
exceed the levels needed to provide maximum yields (NMFS, 1999a). 
Lobster fishing mortality in the Gulf of Maine was almost double the 
overfishing level. Inshore from Cape Cod through Long Island Sound 
fishing mortality was three times the overfishing level.
    2. Impingement and Entrainment Results
    Table X-4 provides a list of impinged and entrained species for the 
North Atlantic region that EPA was able to evaluate at the time of the 
NODA. The life history data used in EPA's analysis and associated data 
sources are provided in ``Appendix 1: Life History Parameter Values 
Used to Evaluate I & E in the North Atlantic Region.''

                 Table X-4.--Species Groups and Associated Species for the North Atlantic Region
----------------------------------------------------------------------------------------------------------------
                           Species                                Commercial      Recreational        Forage
----------------------------------------------------------------------------------------------------------------
Alewife......................................................               X   ...............  ...............
American fourspot flounder...................................  ...............  ...............               X
American plaice..............................................               X   ...............  ...............
American sand lance..........................................  ...............  ...............               X
American shad................................................               X                X   ...............
Atlantic tomcod..............................................  ...............  ...............               X
Atlantic cod.................................................               X                X   ...............
Atlantic seasnail............................................  ...............  ...............               X
Atlantic silverside..........................................               X   ...............  ...............
Atlantic menhaden............................................               X   ...............  ...............
Atlantic mackerel............................................               X                X   ...............
Atlantic herring.............................................               X   ...............               X
Bay anchovy..................................................  ...............  ...............               X
Blackspotted stickleback.....................................  ...............  ...............               X
Blue mussel..................................................               X                X   ...............
Blueback herring.............................................               X                X   ...............
Bluefish.....................................................               X                X   ...............
Butterfish...................................................  ...............  ...............               X
Clearnose skate..............................................               X   ...............  ...............
Cunner.......................................................               X                X   ...............
Cusk.........................................................  ...............  ...............               X
Fourbeard rockling...........................................  ...............  ...............               X

[[Page 13551]]

 
Fourspine stickleback........................................  ...............  ...............               X
Grubby sculpin...............................................  ...............  ...............               X
Gulf snailfish...............................................  ...............  ...............               X
Haddock......................................................               X   ...............  ...............
Hickory shad.................................................               X   ...............               X
Hogchoker....................................................  ...............  ...............               X
Lined seahorse...............................................  ...............  ...............               X
Little skate.................................................               X   ...............  ...............
Longhorn sculpin.............................................  ...............  ...............               X
Lumpfish.....................................................  ...............  ...............               X
Lumpsucker...................................................  ...............  ...............               X
Moustache sculpin............................................  ...............  ...............               X
Mummichog....................................................  ...............  ...............               X
Ninespine stickleback........................................  ...............  ...............               X
Northern kingfish............................................  ...............  ...............               X
Northern pipefish............................................  ...............  ...............               X
Northern searobin............................................  ...............               X   ...............
Pollock......................................................               X                X   ...............
Radiated shanny..............................................  ...............  ...............               X
Rainbow smelt................................................               X                X   ...............
Red hake.....................................................               X   ...............  ...............
Rock gunnel..................................................  ...............  ...............               X
Round herring................................................               X   ...............  ...............
Scup.........................................................               X                X   ...............
Sea raven....................................................               X   ...............  ...............
Seaboard goby................................................  ...............  ...............               X
Seahorse.....................................................  ...............  ...............               X
Searobin.....................................................  ...............               X   ...............
Shorthorn sculpin............................................  ...............  ...............               X
Silver hake..................................................               X   ...............  ...............
Smallmouth flounder..........................................  ...............  ...............               X
Smooth flounder..............................................  ...............  ...............               X
Spot.........................................................  ...............  ...............               X
Spotted hake.................................................               X   ...............               X
Striped bass.................................................               X                X   ...............
Striped killifish............................................  ...............  ...............               X
Striped searobin.............................................  ...............               X   ...............
Summer flounder..............................................  ...............  ...............               X
Tautog.......................................................               X                X   ...............
Threespine stickleback.......................................  ...............  ...............               X
Weakfish.....................................................               X                X   ...............
White hake...................................................               X   ...............  ...............
White perch..................................................               X                X   ...............
Windowpane...................................................               X                X   ...............
Winter flounder..............................................               X                X   ...............
Witch flounder...............................................               X   ...............  ...............
Yellowtail flounder..........................................               X                X   ...............
----------------------------------------------------------------------------------------------------------------

    Sixteen of a total of 67 distinct species (24%) that are known to 
be impinged and entrained by facilities of the North Atlantic region 
are harvested species for which some stock assessment has been 
conducted. These include several stocks that are currently overfished, 
stocks that have been overfished and are rebuilding, or stocks that are 
approaching an overfished condition (Atlantic cod, haddock, silver 
hake, windowpane flounder, and winter flounder) and stocks for which 
stock size is uncertain (American lobster, spot, and tautog). Table X-5 
summarizes the stock status of the 16 impinged and entrained species of 
the North Atlantic that are harvested. Note that status is uncertain 
for nearly half of the stocks listed.

   Table X-5.--Summary of Stock Status of Harvested Species of the North Atlantic Region That Are Impinged and
                                                    Entrained
----------------------------------------------------------------------------------------------------------------
                                         Overfishing?  (Is
 Stock  (All are major stocks, with   fishing mortality above   Overfished?  (Is stock   Approaching  overfished
annual landings over 200,000 pounds)        threshold?)         size below threshold?)         condition?
----------------------------------------------------------------------------------------------------------------
American lobster....................  Yes....................  Undefined..............  Unknown.
American plaice.....................  Yes....................  No.....................  No.
Atlantic cod-Gulf of Maine..........  Yes....................  Rebuilding.............  No.
Atlantic cod-Georges Bank...........  No.....................  Rebuilding.............  No.
Atlantic croaker....................  Unknown................  Unknown................  Unknown.
Atlantic haddock-Gulf of Maine......  Yes....................  Rebuilding.............  No.

[[Page 13552]]

 
Atlantic haddock-Georges Bank.......  No.....................  Rebuilding.............  No.
Atlantic herring....................  No.....................  No.....................  No.
Atlantic menhaden...................  No.....................  No.....................  Unknown.
Pollock.............................  Unknown................  Unknown................  Unknown.
Red hake-Gulf of Maine/Northern       No.....................  No.....................  No.
 Georges Bank.
Red hake-Southern Georges Bank/       No.....................  .......................  Unknown.
 Middle Atlantic.
Silver hake-Gulf of Maine/Northern    Unknown................  Rebuilding.............  No.
 Georges Bank.
Silver hake-Southern Georges Bank/    Unknown................  Yes....................  N/A.
 Middle Atlantic.
Spot................................  Unknown................  Unknown................  Unknown.
Striped bass........................  No.....................  No.....................  Unknown.
Tautog..............................  Yes....................  Undefined..............  Unknown.
Weakfish............................  Undefined..............  No.....................  No.
Windowpane flounder-Gulf of Maine/    No.....................  No.....................  No.
 Georges Bank.
Windowpane flounder-Southern New      No.....................  No.....................  Yes.
 England/Middle Atlantic.
Winter flounder-Gulf of Maine.......  Unknown................  Undefined..............  Unknown.
Winter flounder-Georges Bank........  No.....................  Rebuilding.............  No.
Winter flounder-Southern New England  No.....................  No.....................  No.
----------------------------------------------------------------------------------------------------------------
Source: Table 3 in NMFS (2002).

3. Impingement and Entrainment Losses Expressed as Age 1 Equivalents, 
Foregone Yield, and Production Foregone
    At the outset, it should be noted that many of the species for 
which impingement and entrainment estimates are provided are presently 
at or near historic low levels of abundance. As a result, EPA's 
estimates of impingement and entrainment may reflect lower totals than 
would be produced by healthy populations. With ongoing fisheries 
management efforts by federal and state government and fisheries 
management councils designed to increase fish populations, impingement 
and entrainment numbers may increase in the future. For example, NMFS 
has spent approximately $150 million in the New England fishing vessel 
buy-back program to reduce fishing pressure on groundfish stocks. In 
addition, extensive fishing restrictions, habitat restoration projects, 
and other efforts are also being carried out to help rebuild groundfish 
stocks.
    Table X-6 provides EPA's estimate of the annual age 1 equivalents, 
foregone fishery yield, and production foregone resulting from the 
impingement of aquatic species at facilities located on estuaries/tidal 
rivers in the North Atlantic Region. Table X-7 displays this 
information for entrainment. Table X-8 provides EPA's estimate of the 
annual age 1 equivalents, foregone fishery yield, and biological 
production foregone resulting from the impingement of aquatic species 
at ocean facilities in the North Atlantic Region.

 Table X-6.--Total Annual Impingement Losses for All Estuary/Tidal River Facilities in the North Atlantic Region
                 Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
                                                                       Age 1                        Production
                             Species                                equivalents     Total yield      foregone
                                                                   (s)        (lbs)           (lbs)
----------------------------------------------------------------------------------------------------------------
Alewife.........................................................         164,315               0          15,240
American sand lance.............................................       3,288,738               0           9,226
Atlantic cod....................................................          19,771           6,506          20,031
Atlantic herring................................................             619             138             161
Atlantic mackerel...............................................             121              30              33
Atlantic menhaden...............................................          25,320           3,239           6,078
Atlantic silverside.............................................          33,187               0             134
Bay anchovy.....................................................          58,826               0              90
Bluefish........................................................           1,118             706             954
Butterfish......................................................           9,915             401             900
Cunner..........................................................          14,593              73             954
Fourbeard rockling..............................................              18               0               2
Grubby..........................................................          48,273               0          11,756
Hogchoker.......................................................         790,907               0           7,293
Northern pipefish...............................................          13,040               0              71
Pollock.........................................................             525             817           1,601
Radiated shanny.................................................              35               0               0
Rainbow smelt...................................................          22,041              46             655
Red hake........................................................           1,414             306             488
Rock gunnel.....................................................             435               0               9
Scup............................................................           1,030             129             541
Searobin........................................................           1,683              99             559
Silver hake.....................................................          81,196          31,094          81,393
Skate species...................................................           4,575           1,000           1,844

[[Page 13553]]

 
Striped bass....................................................              81             128             234
Striped killifish...............................................           7,767               0             202
Tautog..........................................................          12,435           5,679          22,039
Threespine stickleback..........................................          78,481               0              92
Weakfish........................................................          10,829           7,882          13,033
White perch.....................................................          31,126             389           4,079
Windowpane......................................................          16,074           1,774           2,881
Winter flounder.................................................         572,714          61,802         283,550
                                                                 -----------------
    Total.......................................................       5,311,206         122,238         486,124
----------------------------------------------------------------------------------------------------------------


 Table X-7.--Total Annual Entrainment Losses for All Estuary/Tidal River Facilities in the North Atlantic Region
                 Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
                                                                       Age 1                        Production
                             Species                                equivalents     Total yield      foregone
                                                                   (s)        (lbs)           (lbs)
----------------------------------------------------------------------------------------------------------------
Alewife.........................................................           1,643               0           2,032
American sand lance.............................................       2,538,069               0         225,821
Atlantic menhaden...............................................          46,389           6,886         429,124
Atlantic silverside.............................................          28,589               0          32,912
Bay anchovy.....................................................       4,399,749               0       5,163,216
Cunner..........................................................       1,892,973           8,981         153,386
Grubby..........................................................       3,197,585               0         899,274
Hogchoker.......................................................         122,044               0         280,069
Rainbow smelt...................................................         176,933           1,255          20,408
Scup............................................................           1,820             777          16,903
Seaboard goby...................................................       5,410,421               0         191,385
Silver hake.....................................................               6             190             396
Tautog..........................................................         152,431          67,949     243,253,891
Threespine stickleback..........................................           2,332               0             128
Weakfish........................................................           1,757           1,265       8,420,351
White perch.....................................................               0               0             638
Windowpane......................................................          26,337           2,705       1,088,284
Winter flounder.................................................       8,114,448         876,449      22,039,724
                                                                 -----------------
    Total.......................................................      26,113,529         966,457     282,217,941
----------------------------------------------------------------------------------------------------------------


 Table X-8.--Total Annual Impingement Losses for All Ocean Facilities in the North Atlantic Region Expressed as
                       Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
                                                                       Age 1                        Production
                             Species                                equivalents     Total yield      foregone
                                                                   (s)        (lbs)           (lbs)
----------------------------------------------------------------------------------------------------------------
Alewife.........................................................          19,507             100           3,179
American plaice.................................................               0               0               0
American sand lance.............................................           4,134               0             111
Atlantic cod....................................................             893             311             905
Atlantic herring................................................          36,716           5,119           9,538
Atlantic mackerel...............................................              27              13               7
Atlantic menhaden...............................................          16,581           5,718           6,611
Atlantic silverside.............................................          39,296              22             123
Bay anchovy.....................................................             147               0               0
Blueback herring................................................           1,457              13             317
Bluefish........................................................              98              56              84
Butterfish......................................................             775              48             192
Cunner..........................................................           2,464              15             161
Fourbeard rockling..............................................              22               0               2
Grubby..........................................................           7,745               0           1,886
Hogchoker.......................................................              33               0               8
Little skate....................................................             870             209             351
Lumpfish........................................................             910               0             941
Northern pipefish...............................................           1,402               0               8
Pollock.........................................................           2,356           3,485           7,186
Radiated shanny.................................................             283               0               3

[[Page 13554]]

 
Rainbow smelt...................................................          25,005             190           4,854
Red hake........................................................           7,054           1,287           2,434
Rock gunnel.....................................................           1,883               0              38
Sculpin species.................................................           1,704               0             415
Scup............................................................             764             154             500
Searobin........................................................             234              17              78
Striped bass....................................................             581             815           1,679
Striped killifish...............................................             458               0              12
Tautog..........................................................             370             429           1,003
Threespine stickleback..........................................             880               0               0
White perch.....................................................             310               0              12
Windowpane......................................................           2,063             181             299
Winter flounder.................................................           6,981           2,224           5,375
                                                                 -----------------
    Total.......................................................         184,004          20,406          48,312
----------------------------------------------------------------------------------------------------------------

    Table X-9 displays this information for entrainment. In these 
tables, ``total yield'' includes direct losses of harvested species as 
well as the yield of harvested species that is lost due to losses of 
forage species. As discussed in detail in Chapter A5 of Part A of the 
section 316(b) Phase II Case Study Document, EPA used a simple model of 
trophic structure and trophic transfer efficiency to estimate the yield 
of harvested species that is lost because of the loss of forage to 
impingement and entrainment. The conversion of forage to yield 
contributes only a very small fraction to total yield.

 Table X-9.--Total Annual Entrainment Losses for All Ocean Facilities in the North Atlantic Region Expressed as
                       Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
                                                                       Age 1                        Production
                             Species                                equivalents     Total yield      foregone
                                                                   (s)        (lbs)           (lbs)
----------------------------------------------------------------------------------------------------------------
Alewife.........................................................               0               0           1,119
American plaice.................................................           1,388             952             859
American sand lance.............................................       4,513,770               0         267,006
Atlantic cod....................................................           4,468           2,887           4,827
Atlantic herring................................................          34,143           5,837          20,037
Atlantic mackerel...............................................           7,716           1,441          13,253
Atlantic menhaden...............................................           8,124           3,729          14,845
Atlantic silverside.............................................           5,087               3             600
Bluefish........................................................               5              62              13
Butterfish......................................................              27              81              10
Cunner..........................................................       1,177,927           5,584          92,933
Fourbeard rockling..............................................         576,339               0          69,754
Grubby..........................................................         252,098               0          70,899
Lumpfish........................................................           6,094               0          36,035
Northern pipefish...............................................             782               0              33
Pollock.........................................................             499           1,050           6,617
Radiated shanny.................................................       1,789,347               0          20,033
Rainbow smelt...................................................       1,330,867           9,997         386,647
Red hake........................................................           2,539           1,005           3,379
Rock gunnel.....................................................       8,080,717               0         214,957
Sculpin species.................................................         764,165               0         214,910
Searobin........................................................           3,925             527           1,563
Tautog..........................................................             882           2,417           2,537
Windowpane......................................................          27,575           3,788           5,418
Winter flounder.................................................         287,616          92,710         227,283
                                                                 -----------------
    Total.......................................................      18,876,100         132,070       1,675,567
----------------------------------------------------------------------------------------------------------------

4. Recreational Fishing Valuation
    As noted above, anglers will get greater satisfaction, and thus 
greater economic value, from sites where the catch rate is higher, all 
else being equal. Recreational fishery losses due to impingement and 
entrainment may reduce recreational catch rates and thus negatively 
impact angler welfare. To estimate welfare losses to recreational 
anglers in the North Atlantic region from impingement and entrainment 
at cooling water intake structures in North Atlantic, the Agency used a 
model developed by R. Hicks et al. (NMFS, August 1999). For details see 
`` The Economic Value of New England and

[[Page 13555]]

Mid-Atlantic Sportfishing in 1994'' provided in DCN 5-1271.
    To estimate per trip welfare losses to recreational anglers from 
impingement and entrainment in the North Atlantic region, the Agency 
combined the Hicks' model coefficients with the estimated impingement 
and entrainment losses at cooling water intake structures located in 
the North Atlantic and NMFS data on recreational landings. The Hicks' 
model includes three fishing modes--boat, shore, and charter boat--and 
five species groups--big game, small game, flatfish, bottom fish, and 
``no target catch''. The ``no target catch'' group includes all species 
caught by anglers not targeting any specific fish species. For details 
on species groupings, see Table 1.3 in the ``The Economic value of New 
England and Mid-Atlantic Sportfishing in 1994'' report provided in DCN 
5-1271. EPA used Hicks' definition of species groups to estimate 
changes in the average historical catch rate from eliminating 
impingement and entrainment.
    Table X-10 shows the total average recreational landings for each 
species group, the number of fish impinged and entrained, and the 
estimated percent change in recreational landings if impingement and 
entrainment effects are eliminated. Eliminating impingement and 
entrainment would increase flatfish catch rates by 12.5%; small game 
catch rates by 0.01%; bottom fish catch rates by 1.05%; and no target 
catch rates by 1.45%. Table X-10 also shows the reductions in 
impingement and entrainment losses that would result from installation 
of the preferred option at each facility in the North Atlantic region, 
as well as the resulting increases in catch rates. Reductions in 
baseline impingement and entrainment losses due to the preferred option 
will result in a 3.64% increase in catch rates for flounders; a 0.23% 
increase in bottom fish catch rate; and a 0.4% increase in catch rate 
for no target anglers.

  Table X-10.--Estimated Change in the Total Recreational Catch for North Atlantic Under the Baseline and Post-
                                              Compliance Scenarios
----------------------------------------------------------------------------------------------------------------
                                                             Baseline                    Preferred option
                                                 ---------------------------------------------------------------
                                                                                     Change in
                                    Avg. total         Total        Impingement    recreational       Reduced
             Species               catch  1997-    recreational         and         losses from     impingement
                                       2001         losses from   entrainment as      reduced           and
                                                    impingement     % of total      impingement   entrainment as
                                                        and            catch            and         % of total
                                                    entrainment                     entrainment        catch
----------------------------------------------------------------------------------------------------------------
Flatfish........................       2,525,530         315,703           12.50          91,995            3.64
Small Game......................      15,678,352           1,020            0.01             105            0.00
Bottom Fish.....................       8,869,064          93,111            1.05          20,535            0.23
No Target Catch.................      28,280,214         409,960            1.45         112,652            0.40
----------------------------------------------------------------------------------------------------------------

    Table X-11 presents the willingness to pay (WTP) values for 
anglers, regardless of fishing mode, for catching an additional fish 
per trip. Table X-11 also presents the estimated per trip welfare 
losses from the baseline impingement and entrainment levels at cooling 
water intake structures in the North Atlantic region, and the estimated 
welfare gain from the post-compliance impingement and entrainment 
reduction. The estimated per trip welfare losses from baseline 
impingement and entrainment at the cooling water intake structures are 
$0.34, $0.02, and $0.02 for flatfish, bottom fish, and no target catch, 
respectively (all in 2002$). Per trip welfare gains from the preferred 
option are $0.10, $0.005, and $0.004 for flatfish, bottom fish, and no 
target catch, respectively (all in 2002$). As shown in Table X-11, the 
greatest welfare gain from reducing impingement and entrainment losses 
at cooling water intake structures in the North Atlantic region results 
from improved opportunity for catching flatfish (i.e., flounders).

 Table X--11.--Per Trip Welfare Gain From Various Improvements in Fishing Quality at All Sites in North Atlantic
                                                     (2002$)
----------------------------------------------------------------------------------------------------------------
                                                                           All Fishing Modes/All Anglers
                                                                 -----------------------------------------------
                                                                                     Reducing
                                                                    Eliminating     impingement
                          Species group                              baseline           and
                                                                    impingement     entrainment       +1 Fish
                                                                        and          under the
                                                                    entrainment      preferred
                                                                      losses          option
----------------------------------------------------------------------------------------------------------------
Big Game........................................................              NA              NA            5.90
Small Game......................................................         $0.0003        $0.00003            2.53
Flatfish........................................................           $0.34           $0.10            3.57
Bottom Fish.....................................................           $0.02          $0.005            1.06
No Target Catch.................................................           $0.02          $0.004            1.66
----------------------------------------------------------------------------------------------------------------

    EPA combined these estimates of per trip welfare change with 
fishing participation estimates from NMFS to estimate the annual value 
to recreational anglers of improved catch rates resulting from post-
compliance reductions in impingement and entrainment at cooling water 
intake structures in the North Atlantic. Table X-12 provides the total 
number of angler days in the North Atlantic.

[[Page 13556]]



         Table X-12.--Total North Atlantic Fishing Trips in 2001
------------------------------------------------------------------------
                                                            All fishing
                                                               modes
------------------------------------------------------------------------
Total North Atlantic Trips, 2001........................      8,084,261
------------------------------------------------------------------------
Source: Marine Recreational Fishery Statistics Survey, NMFS, 2001.

    EPA calculated total recreational losses to North Atlantic anglers 
by multiplying the estimated per trip welfare loss from baseline 
impingement and entrainment for a given species group by the number of 
recreational fishing trips in 2001. Table X-13 summarizes the results 
of this calculation. The total value of recreational losses for all 
species impinged and entrained at the cooling water intake structures 
in the North Atlantic is $3.1 million per year (2002$), for all anglers 
before discounting. Discounting the baseline losses at three percent 
and seven percent yields total recreational losses of $2.6 million, and 
$2.3 million, respectively, for all anglers (2002$). Table X-13 also 
presents estimates of the total welfare gain to recreational anglers 
from the post-compliance impingement and entrainment reduction. The 
estimated welfare gain from reduction in baseline losses resulting from 
the preferred option is $0.88 million, before discounting, for all 
anglers (2002$). Applying the discount factors for three and seven 
percent yield total losses of $0.76 million and $0.65 million, 
respectively (2002$).

   Table X-13.--Estimated Annual Welfare Change to Recreational Anglers in the North Atlantic Region Under the Baseline and Post-Compliance Scenarios
                                                                         (2002$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Total baseline welfare losses                     Welfare gain from reduction in baseline
                                           -----------------------------------------------------------         impingement and entrainment losses
              Species groups                                                                          --------------------------------------------------
                                                 Before        Discounted  using 3%      Discounted         Before         Discounted       Discounted
                                                discount                                  using 7%       discounting        using 3%         using 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Big Game..................................               NA                       NA               NA               NA               NA               NA
Small Game................................        $2,425.28                $1,527.93        $1,358.16          $242.53          $184.32          $169.77
Flat Fish.................................     2,748,648.74             2,418,810.89     2,061,486.56       808,426.10       711,414.97       606,319.58
Bottom Fish...............................       161,685.22                88,926.87        77.608.91        40,421.31        21,019.08        18,189.59
No Target Catch...........................       151,685.22               129,348.18       111,562.80        32,337.04        26,193.01        22,312.56
                                           ------------------
    All Species...........................     3,074,444.46             2,638,613.86     2,252,016.42       881,426.98       758,811.37       646,991.49
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Commercial Fishing Valuation
    Table X-14 provides EPA's estimate of the value of gross revenues 
lost in commercial fisheries resulting from the impingement of aquatic 
species in the North Atlantic region. Table X-15 displays this 
information for entrainment. As described above, EPA estimates that 0 
to 40% of these revenue losses represent surplus losses to producers, 
assuming no change in prices or fishing costs. EPA will refine these 
assumptions for the final rule.

   Table X-14a.--Annual Commercial Fishing Gross Revenues Lost Due to Impingement at Estuary Facilities in the
                                              North Atlantic Region
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated value of harvest lost (in dollars)
                                                     Estimated   -----------------------------------------------
                     Species                         pounds of                      Discounted      Discounted
                                                   harvest lost    Undiscounted      using 3%        using 7%
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Atlantic cod....................................           3,253          $2,928          $2,657          $2,349
Atlantic herring................................             138               8               7               7
Atlantic mackerel...............................              23               7               6               5
Atlantic menhaden...............................           3,236             153             145             135
Bluefish........................................              77              19              18              16
Butterfish......................................             401             249             244             237
Pollock.........................................             409             286             245             203
Rainbow smelt...................................              46              24              23              22
Red hake........................................             305              64              60              56
Scup............................................              64              53              46              40
Searobin........................................              16              33              30              27
Silver hake.....................................          31,094          10,496           9,281           7,952
Skate species...................................           1,000             140             131             122
Tautog..........................................             443             331             240             159
Weakfish........................................           6,729           5,474           4,926           4,324
White perch.....................................              82              92              84              75
Windowpane......................................           1,774             993             925             845
Winter flounder.................................          30,901          39,524          34,738          29,657
                                                 -----------------

[[Page 13557]]

 
    Total.......................................          79,991          60,874          53,806          46,231
----------------------------------------------------------------------------------------------------------------


 Table X-14b.--Annual Commercial Fishing Gross Revenues Lost Due to Impingement at Ocean Facilities in the North
                                                 Atlantic Region
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated value of harvest lost (in dollars)
                                                     Estimated   -----------------------------------------------
                     Species                         pounds of                      Discounted      Discounted
                                                   harvest lost    Undiscounted      using 3%        using 7%
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
American plaice.................................               0              $0              $0              $0
Atlantic cod....................................             156             129             117             104
Atlantic herring................................           5,113             256             231             204
Atlantic mackerel...............................              10               3               2               2
Atlantic menhaden...............................           5,712             228             216             200
Atlantic silverside.............................              22              12              12              12
Blueback herring................................              13               1               1               1
Bluefish........................................               6               2               1               1
Butterfish......................................              48              23              22              21
Little skate....................................             208              40              37              34
Pollock.........................................           1,743           1,202           1,031             854
Rainbow smelt...................................             189              38              35              32
Red hake........................................           1,285             283             267             248
Scup............................................              77              80              70              60
Searobin........................................               3               6               5               5
Tautog..........................................              33              21              19              17
White perch.....................................               0               0               0               0
Windowpane......................................             181             103              96              87
Winter flounder.................................           1,112           1,535           1,330           1,114
                                                 -----------------
    Total.......................................          15,910           3,962           3,492           2,995
----------------------------------------------------------------------------------------------------------------


   Table X-15a.--Annual Commercial Fishing Gross Revenues Lost Due to Entrainment at Estuary Facilities in the
                                              North Atlantic Region
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated value of harvest lost (in dollars)
                                                     Estimated   -----------------------------------------------
                     Species                         pounds of                      Discounted      Discounted
                                                   harvest lost    Undiscounted      using 3%        using 7%
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Atlantic menhaden...............................           6,878            $326            $299            $267
Rainbow smelt...................................           1,253             244             226             206
Scup............................................             389             315             269             221
Silver hake.....................................             190              62              53              44
Tautog..........................................           5,299           3,966           2,786           1,779
Weakfish........................................           1,080             806             705             595
White perch.....................................               0               0               0               0
Windowpane......................................           2,705           1,514           1,369           1,204
Winter flounder.................................         438,225         560,512         478,280         393,062
                                                 -----------------
    Total.......................................         456,019         567,746         483,987         397,377
----------------------------------------------------------------------------------------------------------------


 Table X-15b.--Annual Commercial Fishing Gross Revenues Lost Due to Entrainment at Ocean Facilities in the North
                                                 Atlantic Region
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated value of harvest lost (in dollars)
                                                     Estimated   -----------------------------------------------
                     Species                         pounds of                      Discounted      Discounted
                                                   harvest lost    Undiscounted      using 3%        using 7%
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
American plaice.................................             951          $1,142            $957            $770
Atlantic cod....................................           1,444           1,198           1,056             899

[[Page 13558]]

 
Atlantic herring................................           5,831             292             255             217
Atlantic mackerel...............................           1,121             314             280             242
Atlantic menhaden...............................           3,725             149             137             122
Atlantic silverside.............................               3               2               2               2
Bluefish........................................               7               2               2               1
Butterfish......................................              80              38              35              32
Pollock.........................................             525             362             302             241
Rainbow smelt...................................           9,987           1,997           1,810           1,599
Red hake........................................           1,004             221             202             181
Searobin........................................              85             174             155             133
Tautog..........................................             188             121             106              90
Windowpane......................................           3,788           2,159           1,940           1,692
Winter flounder.................................          46,355          63,970          53,829          43,393
                                                 -----------------
    Total.......................................          75,094          72,142          61,067          49,613
----------------------------------------------------------------------------------------------------------------

6. Total Recreational and Commercial Losses From Baseline Impingement 
and Entrainment in the North Atlantic Region
    Table X-16 presents EPA's estimates of total baseline recreational 
and commercial fishing losses from impingement and entrainment at 
cooling water intake structures in the North Atlantic region. Total 
commercial and recreational fishing losses are $3.3 million per year 
for all species and fishing modes, before discounting. Discounting 
these total baseline welfare losses by three and seven percent yield 
total losses of $2.8 million and $2.4 million, respectively.

   Table X-16.--Estimated Discounted Commercial and Recreational Baseline Welfare Losses in the North Atlantic
                                Region from Impingement and Entrainment (2002$) a
----------------------------------------------------------------------------------------------------------------
                                                                                    Discounted      Discounted
                          Benefit type                                Before         using 3%        using 7%
                                                                    discounting    discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Recreational....................................................      $3,074,444      $2,638,614      $2,252,016
Commercial b....................................................         281,889         240,941         198,487
                                                                 -----------------
    Total.......................................................       3,356,333       2,879,555      2,450,503
----------------------------------------------------------------------------------------------------------------
a Welfare losses represent losses due to both impingement and entrainment because recreational estimates cannot
  be presented separately for these categories.
b Based on 40 percent of gross revenues, or upper bound of 0-40 percent range assumed to represent producer
  surplus.

7. Estimated Use Benefits of Proposed Regulatory Option in the North 
Atlantic Region
    Table X-17 presents EPA's estimates of the gain from the post-
compliance reduction in impingement and entrainment at cooling water 
intake structures in the North Atlantic region. The total reduction in 
commercial and recreational fishing is $ 0.96 million per year for all 
species and fishing modes, before discounting. Discounting these total 
reduced welfare losses by three and seven percent yields total losses 
of $0.83 million and $0.70 million, respectively. These numbers may 
change for final if additional impingement and entrainment data become 
available.

   Table X-17.--Estimated Discounted Commercial and Recreational Reduced Welfare Losses in the North Atlantic
                                Region from Impingement and Entrainment (2002$) a
----------------------------------------------------------------------------------------------------------------
                                                                                    Discounted      Discounted
                  Benefit type                      Expected %        Before         using 3%        using 7%
                                                     reduction      discounting    discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Recreational....................................           28.7%        $881,426        $758,811        $646,991
Commercial b....................................            29.2          82,222          70,256          57,860
                                                 -----------------
    Total.......................................            28.7         963,648         829,067        704,851
----------------------------------------------------------------------------------------------------------------
a Welfare losses represent losses due to both impingement and entrainment because recreational estimates cannot
  be presented separately for these categories.
b Based on 40 percent of gross revenues, or upper bound of 0-40 percent range assumed to represent producer
  surplus.


[[Page 13559]]

D. Northern California Regional Study

1. Background: Marine Fisheries of Northern California
    The Northern California NMFS region extends from Point Conception 
north to the Oregon border. The oceanic transition zone off Point 
Conception creates a natural ecological separation between northern and 
southern California. North of Point Conception, coastal waters are cold 
and oceanic conditions are harsh, whereas to the south waters are 
warmer and conditions are moderate. As a result, the fish species 
composition differs between the two regions (Leet et al., 2001). 
Fisheries of the Northern California Region are managed by the Pacific 
Fishery Management Council (PFMC), which governs commercial and 
recreational fisheries in federal waters from 3-200 nautical miles off 
the coasts of Washington, Oregon and California. The NMFS Northwest 
Fisheries Science Center provides scientific and technical support for 
management, conservation and fisheries development.
    There are 83 species of groundfish included under PFMC's Groundfish 
FMP, including nearly 50 species of rockfish (Sebastes spp.) (Table 3 
in NMFS, 2002). Pacific whiting (Merluccius productus) dominates the 
commercial catch, accounting for 78% of Pacific Coast landings (NMFS, 
1999a). During the 1990's a major fishery developed for nearshore 
species, including rockfishes, cabezon, and sheephead (Leet et al., 
2001). Rockfishes are important for both commercial and recreational 
fisheries (NMFS, 1999a). In 1994, a limited entry program was 
implemented for the groundfish fishery due to concerns about 
overfishing (NMFS, 1999a).
    There are five species of anadromous Pacific salmon supporting 
coastal and freshwater commercial and recreational fisheries along the 
Pacific Coast, including chinook (Oncorhynchus tshawytscha), coho (O. 
kisutch), sockeye (O. nerka), pink (O. gorbuscha), and chum (O. keta) 
salmon (NMFS, 1999a).
    Since 1991, NMFS has listed 20 Evolutionary Significant Units 
(ESU's) \22\ of Pacific Coast salmon and steelhead trout (O. mykiss) 
under the federal Endangered Species Act (ESA) (NMFS, 1999b). In NMF's 
Northern California region, listed species include steelhead, coho 
salmon, and chinook salmon of the central California Coast and 
steelhead and chinook salmon of California's Central Valley.
---------------------------------------------------------------------------

    \22\ An Evolutionarily Significant Unit (ESU) is a term 
introduced by NMFS in 1991 to refer to the Endangered Species Act 
(ESA) interpretation of ``distinct population segment.'' A stock 
must satisfy two criteria to be considered an ESU: (1) ``it must be 
substantially reproductively isolated from other conspecific 
population units,'' and (2) ``it must represent an important 
component in the evolutionary legacy of the species.''
---------------------------------------------------------------------------

    Ocean fisheries for chinook and coho salmon are managed by the PFMC 
under the Pacific Coast Salmon FMP. In Puget Sound and the Columbia 
River, chinook and coho fisheries are managed by the states and tribal 
fishery agencies. Declines in chinook and coho salmon coast-wide have 
led to reductions and closures of ocean fisheries in recent years 
(NMFS, 1999a).
    The Pacific Salmon FMP contains no fishery management objectives 
for sockeye, chum, even-year pink, and steelhead stocks because fishery 
impacts are considered inconsequential (Table 3 in NMFS, 2002). Pink, 
chum, and sockeye salmon are managed jointly by the Pacific Salmon 
Commission, Washington state, and tribal agencies (NMFS, 1999a).
    Pacific Coast pelagic species managed by the PFMC include Pacific 
mackerel (Scomber japonicus), jack mackerel (Trachurus symmetricus), 
Pacific sardine (Sardinops sagax), northern anchovy (Engraulis mordax), 
and California market squid (Loligo opalescens) (NMFS, 2002). These 
species typically fluctuate widely in abundance, and currently most 
stocks are low relative to historical levels (NMFS, 1999a). Pacific 
mackerel and Pacific sardine are not overfished, but the stock size of 
the other species governed by the Coastal Pelagic FMP is unknown (Table 
3 in NMFS, 2002). Due to increases in abundance in recent years, 
Pacific mackerel now accounts for over half of recent landings of 
Pacific Coast pelagic species (NMFS, 1999a).
    Pacific Coast shellfish resources are important both commercially 
and recreationally (NMFS, 1999a). Shrimps, crabs, abalones, and clams 
command high prices and contribute substantially to the value of 
Pacific Coast fisheries, even though landings are small.
2. Impingement and Entrainment Results
    Table X-18 provides a list of impingement and entrainment species 
in the Northern California region and the species groups that were 
evaluated in EPA's analysis of regional impingement and entrainment. 
The life history data used in EPA's analysis and associated data 
sources are provided in ``Appendix 2: Life History Parameter Values 
Used to Evaluate I & E in the Northern California Region.''

                              Table X-18.--Species groups and associated species for the Northern California Regional Study
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Group evaluated                   Species           Commercial          Recreational                 Forage                Special status
--------------------------------------------------------------------------------------------------------------------------------------------------------
Anchovies..........................  Northern anchovy.....              X                         X   ........................
Bay shrimps........................  Bay shrimp...........  ..............                        X   ........................
                                     Other bay shrimp \a\.  ..............                        X   ........................
Cabezon............................  Cabezon..............              X                         X   ........................
California halibut.................  California halibut...              X                         X   ........................
Drums/croakers.....................  Queenfish............              X                         X   ........................
                                     White croaker........              X                         X   ........................
                                     Other croakers.......  ..............                        X   ........................
Dungeness crab.....................  Dungeness crab.......              X                         X   ........................
Flounders..........................  Dover sole...........              X                         X   ........................
                                     English sole.........              X                         X   ........................
                                     Pacific sanddab......              X                         X   ........................
                                     Rock sole............              X                         X   ........................
                                     Sand sole............              X                         X   ........................
                                     Starry flounder......              X                         X   ........................
                                     Other flounders \B\..              X                         X   ........................
Gobies.............................  Bay goby.............  ..............  ........................                        X
                                     Blackeye goby........  ..............  ........................                        X
                                     Blind goby...........  ..............  ........................                        X
                                     Longjaw mudsucker....  ..............  ........................                        X

[[Page 13560]]

 
                                     Shadow goby..........  ..............  ........................                        X
                                     Yellowfin goby.......  ..............  ........................                        X
Herrings...........................  Pacific herring......              X                         X   ........................
                                     Pacific sardine......              X                         X   ........................
                                     Other herrings.......  ..............                        X   ........................
Rock crabs.........................  Slender crab.........  ..............  ........................                        X
                                     Brown rock crab......  ..............                        X   ........................
                                     Hairy rock crab......  ..............  ........................                        X
                                     Red rock crab........              X                         X   ........................
                                     Slender rock crab....  ..............  ........................                        X
                                     Yellow crab..........  ..............                        X   ........................
Rockfishes.........................  Aurora rockfish......              X                         X   ........................
                                     Black and yellow                   X                         X   ........................
                                      rockfish.
                                     Black rockfish.......              X                         X
                                     Blue rockfish........              X                         X   ........................
                                     Boccacio.............              X                         X   ........................
                                     Brown rockfish.......              X                         X   ........................
                                     California                         X                         X   ........................
                                      scorpionfish.
                                     Chilipepper..........              X                         X   ........................
                                     Copper rockfish......              X                         X   ........................
                                     Gopher rockfish......              X                         X   ........................
                                     Grass rockfish.......              X                         X   ........................
                                     Kelp rockfish........              X                         X   ........................
                                     Olive rockfish.......              X                         X   ........................
                                     Shortbelly rockfish..              X                         X   ........................
                                     Yellowtail rockfish..              X                         X   ........................
                                     Other rockfish.......              X                         X   ........................
Sculpins...........................  Other sculpins\c\....              X                         X   ........................
Silversides........................  Jacksmelt............  ..............                        X   ........................
                                     Other silversidesd...  ..............                        X   ........................
Smelts.............................  Surf smelt...........              X                         X   ........................
                                     Other smelts \e\.....              X                         X   ........................
Surfperches........................  Barred surfperch.....              X                         X
                                     Black surfperch......              X                         X
                                     Pile surfperch.......              X                         X
                                     Shiner perch.........              X                         X
                                     Striped surfperch....              X                         X
                                     Walleye surfperch....              X                         X
                                     White surfperch......              X                         X
                                     Other surfperch \f\..              X                         X
Chinook salmon.....................  Chinook salmon.......  ..............  ........................  ........................  X (FT, ST, FE, SE, FCT)
Delta smelt........................  Delta smelt..........  ..............  ........................  ........................  X (FT, ST)
Green sturgeon.....................  Green sturgeon.......  ..............  ........................  ........................  X (SOC)
Longfin smelt......................  Longfin smelt........  ..............  ........................  ........................  X (SOC)
Sacramento splittail...............  Sacramento splittail.  ..............  ........................  ........................  X (FT)
Steelhead..........................  Steelhead............  ..............  ........................  ........................  X (FT)
Striped bass.......................  Striped bass.........  ..............                        X   ........................
Herrings...........................  American shad........  ..............                        X   ........................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Other bay shrimp includes Alaskan bay shrimp, black tailed bay shrimp, blackspotted bay shrimp, Franciscan bay shrimp, smooth bay shrimp, and
  spotted bay shrimp.
\b\ Other flounders includes CO Turbot, curlfin turbot, diamond turbot, fantail sole, horneyhead turbot, slender turbot, and speckled turbot.
\c\ Other sculpin includes bonyhead sculpin, brown Irish lord, buffalo sculpin, coralline sculpin, fluffy sculpin, manacled sculpin, pacific staghorn
  sculpin, prickly sculpin, rosy sculpin, roughcheek sculpin, smoothhead sculpin, snubnose sculpin, staghorn sculpin, tidepool sculpin, and wooly
  sculpin.
\d\ Other silversides includes topsmelt.
\e\ Other smelts includes night smelt and popeye blacksmelt.
\f\ Other surfperch includes dwarf surfperch, kelp surfperch, rainbow surfperch, and spotfin surfperch.
FT = federally listed as threatened
ST = state listed as threatened
FE = federally listed as endangered
SE = state listed as endangered
FCT = federal candidate for listing as threatened
SOC = species of concern

    Available impingement and entrainment data indicate that 20 of a 
total of 92 distinct species that are impinged and entrained by 
northern California facilities are harvested species subject to FMP's 
developed by the PFMC. Table X-19 summarizes information on the stock 
status of these species. Note that stock status is known for only 4 of 
these species. Most of the species listed are rockfish species. 
Northern anchovy falls under the

[[Page 13561]]

Coastal Pelagic FMP and the other species in the table are included in 
the Groundfish FMP. Although under the jurisdiction of the PFMC, there 
are no fishery management objectives for Central Valley chinook salmon 
and Central California Coast coho salmon because of their ESA listing 
(NMFS, 2002). There are also no fishery management goals for steelhead 
because fishery impacts are considered inconsequential (NMFS, 2002).

  Table X-19.--Summary of Stock Status of Harvested Species of the Northern California Region That Are Impinged
                                 and Entrained and Are Included in Federal FMP's
----------------------------------------------------------------------------------------------------------------
  Stock  (species in bold are major    Overfishing?  Is fishing
  stocks, with annual landings over         mortality above       Overfished?  (Is stock        Approaching
           200,000 pounds)                    threshold?)         size below threshold?)   overfished condition?
----------------------------------------------------------------------------------------------------------------
Aurora rockfish......................  Unknown.................  Unknown.................  Unknown
Black rockfish.......................  No......................  No......................  No
Black-and-yellow rockfish............  Unknown.................  Unknown.................  Unknown
Blue rockfish........................  Unknown.................  Unknown.................  Unknown
Bocaccio.............................  No......................  Yes.....................  N/A
Cabezon..............................  Unknown.................  Unknown.................  Unknown
California scorpionfish..............  Unknown.................  Unknown.................  Unknown
Central California Coast coho          N/A.....................  N/A.....................  N/A
 salmon\a\.
Central Valley chinook salmon\a\.....  N/A.....................  N/A.....................  N/A
Chilipepper rockfish.................  No......................  No......................  No
Copper rockfish......................  Unknown.................  Unknown.................  Unknown
Gopher rockfish......................  Unknown.................  Unknown.................  Unknown
Grass rockfish.......................  Unknown.................  Unknown.................  Unknown
Kelp rockfish........................  Unknown.................  Unknown.................  Unknown
Northern anchovy-central               ........................  Undefined...............  Unknown
 subpopulation.
Olive rockfish.......................  Unknown.................  Unknown.................  Unknown
Shortbelly rockfish..................  No......................  No......................  No
Starry flounder......................  Unknown.................  Unknown.................  Unknown
Steelhead\b\.........................  N/A.....................  N/A.....................  N/A
Yellowtail rockfish..................  No......................  No......................  No
----------------------------------------------------------------------------------------------------------------
Source: Table 4 in NMFS (2002).
\a\ There are no fishery management goals for Central Valley chinook salmon and Central California Coast coho
  salmon because of their ESA listing (NMFS, 2002).
\b\ There are no fishery management goals for steelhead because fishery impacts are considered inconsequential
  (NMFS, 2002).

3. Impingement and Entrainment Losses Expressed as Age 1 Equivalents, 
Foregone Yield, and Production Foregone
    Table X-20 provides EPA's estimate of the annual age 1 equivalents, 
foregone fishery yield, and production foregone resulting from the 
impingement of aquatic species at facilities located on estuaries/tidal 
rivers in the Northern California Region. Table X-21 displays this 
information for entrainment. Table X-22 provides EPA's estimate of the 
annual age 1 equivalents, foregone fishery yield, and production 
foregone resulting from the impingement of aquatic species at ocean 
facilities in the Northern California Region. Table X-23 displays this 
information for entrainment.

 Table X-20.--Total Annual Impingement Losses for All Estuary/Tidal River Facilities in the Northern California
             Region Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
                                                                       Age 1
                          Species group                             equivalents     Total yield     Production
                                                                   (s)        (lbs)         foregone
----------------------------------------------------------------------------------------------------------------
Anchovies.......................................................       6,483,908          10,156          86,487
Bay shrimps.....................................................         310,400              22             169
Cabezon.........................................................             968           1,882           4,569
Chinook salmon..................................................           1,880               0          50,674
Croakers........................................................           6,737             390             710
Delta smelt.....................................................          18,454               0              25
Dungeness crab..................................................           1,028             404             995
Flounders.......................................................          56,767           4,652          16,970
Gobies..........................................................          10,819               0              47
Herrings........................................................         545,982          25,560          65,791
Longfin smelt...................................................         189,940               0           6,553
Rock crabs......................................................         840,492             165         115,125
Rockfishes......................................................         257,596          62,420         164,021
Sacramento splittail............................................          24,188               0          11,166
Sculpins........................................................         128,009           1,304           9,151
Silversides.....................................................         888,074          39,672         202,453
Smelts..........................................................          71,279           1,620          13,400
Striped bass....................................................         762,529         277,119       1,270,930
Surfperches.....................................................         725,358          45,156         109,915
                                                                 -----------------
    Total.......................................................      11,324,407         470,522       2,129,153
----------------------------------------------------------------------------------------------------------------


[[Page 13562]]


 Table X-21.--Total Annual Entrainment Losses for All Estuary/Tidal River Facilities in the Northern California
             Region Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
                                                                       Age 1                        Production
                          Species group                             equivalents     Total yield      foregone
                                                                   (s)        (lbs)           (lbs)
----------------------------------------------------------------------------------------------------------------
Anchovies.......................................................         332,963             525          47,178
Bay shrimps.....................................................       5,820,260             419           4,164
Cabezon.........................................................              20              46           2,868
California halibut..............................................             717           2,686           5,476
Chinook salmon..................................................              88               0           3,033
Croakers........................................................               0               0             476
Delta smelt.....................................................         268,874               0           3,894
Dungeness crab..................................................          80,574          37,273         184,655
Flounders.......................................................           1,984             193           2,602
Gobies..........................................................       2,874,204               0          44,209
Herrings........................................................       1,495,230          69,974         257,242
Longfin smelt...................................................             333               0              19
Rock crabs......................................................       2,491,669             490       1,406,358
Rockfishes......................................................              63              17           5,512
Sacramento splittail............................................              39               0              87
Sculpins........................................................          78,819           4,731          32,034
Silversides.....................................................           5,744             321           1,948
Smelts..........................................................             386              16             565
Striped bass....................................................       1,950,593         708,904       3,383,949
                                                                 -----------------
    Total.......................................................      15,402,559         825,595       5,386,270
----------------------------------------------------------------------------------------------------------------


     Table X-22.--Total Annual Impingement Losses for All Ocean Facilities in the Northern California Region
                 Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
                                                                       Age 1                        Production
                          Species group                             equivalents     Total yield      foregone
                                                                   (s)        (lbs)           (lbs)
----------------------------------------------------------------------------------------------------------------
Anchovies.......................................................              63               0               1
Bay shrimps.....................................................          17,240               1               9
Cabezon.........................................................              20              39              94
Croakers........................................................             581              34              61
Dungeness crab..................................................           3,431           1,583           3,322
Flounders.......................................................           2,583             212             772
Rock crabs......................................................           3,841               1             526
Rockfishes......................................................           3,938             949           2,497
Sculpins........................................................             935              10              67
Silversides.....................................................             841              30             192
Surfperches.....................................................           2,802             122             425
                                                                 -----------------
    Total.......................................................          36,275           2,981           7,965
----------------------------------------------------------------------------------------------------------------


     Table X-23.--Total Annual Entrainment Losses for All Ocean Facilities in the Northern California Region
                 Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
                                                                       Age 1                        Production
                          Species group                             equivalents     Total yield      foregone
                                                                   (s)        (lbs)           (lbs)
----------------------------------------------------------------------------------------------------------------
Anchovies.......................................................           5,382               8          87,011
Bay shrimps.....................................................       1,410,174             101           3,721
Cabezon.........................................................             170             331          24,314
California halibut..............................................           5,413          19,617          42,161
Croakers........................................................               1               0           1,892
Flounders.......................................................           5,198             431           6,817
Gobies..........................................................         415,594               0           6,392
Herrings........................................................         847,884          39,634         215,090
Rock crabs......................................................      63,433,607          12,467      38,249,035
Rockfishes......................................................           1,620             390         142,462
Sculpins........................................................         539,868           5,523          38,624
Silversides.....................................................              19              13               6
Smelts..........................................................             778              19           1,140
                                                                 -----------------
    Total.......................................................      66,665,707          78,534      38,818,665
----------------------------------------------------------------------------------------------------------------


[[Page 13563]]

In these tables, ``total yield'' includes direct losses of harvested 
species as well as the yield of harvested species that is lost due to 
losses of forage species. As discussed in detail in Chapter A5 of Part 
A of the section 316(b) Phase II Case Study Document, EPA used a simple 
model of trophic structure and trophic transfer efficiency to estimate 
the yield of harvested species that is lost because of the loss of 
forage to impingement and entrainment. The conversion of forage to 
yield contributes only a very small fraction to total yield.
4. Recreational Fishing Valuation
    This notice presents results for the Northern California regional 
analysis, including benefits calculations for this region. Details of 
the Northern California study are presented in DCN 5-1009. As noted 
above, the Northern California region is defined based on NMFS regional 
boundaries. Northern California includes all northern counties to, and 
including, San Luis Obispo County. EPA included anglers and sites from 
the counties on each regional border in the model, to allow anglers to 
travel to substitute sites in the bordering region. For example, EPA 
added Santa Barbara County from the Southern California region to allow 
anglers from Northern California to travel to all substitute sites 
located within a one day travel distance limit.
    The Northern California model focuses on the following species and 
species groups: salmon, sturgeon, flounders, small game fish, big game 
fish, bottom fish, and other species. The flounder category includes 
flounders and halibut; the small game group includes striped bass and 
small tuna and mackerel; the big game category includes large tuna, 
sharks, marlin, and dolphin fish; the bottom fish category includes 
greenlings, sculpins, surfperches, croakers, rockfishes and other 
bottom species; and the other species category includes only anchovies, 
smelts, silversides and herrings. Approximately 20 percent of anglers 
fishing from boats and 47 percent of anglers fishing from shore target 
no particular species. These anglers (hereafter, no-target anglers) 
caught fish in all species groups. Therefore, EPA used average catch 
rates for all species caught by no-target anglers to define fishing 
site quality for no-target anglers.
    The methodology used in the Northern California study follows 
closely that of McConnell and Strand (1994) and Hicks (1999) work for 
NMFS. EPA maintained most important aspects of the methodologies used 
in the previous recreational NMFS studies. The Agency, however, 
estimated separate models for boat and shore anglers for the Northern 
California region. The Agency attempted to estimate a nested RUM model 
for Northern California, including both boat and shore anglers. 
However, preliminary model results indicated that nesting was not 
appropriate for the data. The Agency did not estimate a model for the 
charter boat mode for the NODA, however, because charter boat trips 
represent only thirteen percent of the total angling trips in this 
region. For the NODA analysis, the welfare gain from improved catch 
rates to charter boat anglers is approximated based on the regression 
coefficients developed for boat anglers.
    The Agency combined the estimated model coefficients with the 
estimated impingement and entrainment losses at the cooling water 
intake structures in the Northern California Region to estimate per 
trip welfare losses from impingement and entrainment. Table X-24 shows 
the total average recreational landings for each species group, the 
number of fish impinged and entrained, and the estimated percent change 
in recreational landings from impingement and entrainment elimination. 
Eliminating impingement and entrainment is expected to increase 
flounders catch rates by 0.58%; small game catch rates by 56.02%; 
bottom fish catch rates by 6.6%; and other species catch rates by 5.5%.

           Table X-24.--Impingement and Entrainment as Percent of Total Catch for Northern California
----------------------------------------------------------------------------------------------------------------
                                                                                   Change in
                                                                                  recreational       Reduced
                                                                  Avg. total      losses from    impingement and
                           Species                             catch 1996-2000      reduced       entrainment as
                                                                                impingement and     % of total
                                                                                  entrainment         catch
----------------------------------------------------------------------------------------------------------------
Flounders....................................................          238,394            1,377            0.578
Small Game...................................................          459,563          257,431           56.016
Bottom Fish..................................................        3,665,520          241,089            6.595
Other........................................................        1,442,356           79,047            5.480
All Species..................................................        5,795,833          578,944            9.989
----------------------------------------------------------------------------------------------------------------

    Table X-25 shows the impingement and entrainment reductions that 
would result from installation of the preferred option at each facility 
in Northern California, as well as the resulting increases in catch 
rates. The preferred option will result in a 0.32% reduction in 
impingement and entrainment losses for flounders; a 14.9% reduction in 
losses for small game fish; a 5% reduction in losses for bottom fish; 
and a 4.4% reduction in losses for other species.

    Table X-25.--Estimated Change in Catch Rates Resulting from the Preferred Option for Northern California
----------------------------------------------------------------------------------------------------------------
                                                                                                    Change in
                                                                                     Total         recreational
                                                                                  recreational     losses from
                           Species                                Avg. total      losses from    impingement and
                                                               catch 1996-2000  impingement and   entrainment as
                                                                                  entrainment       % of total
                                                                                                      catch
----------------------------------------------------------------------------------------------------------------
Flounders....................................................          238,394              762            0.320
Small Game...................................................          459,563           68,615           14.931
Bottom Fish..................................................        3,665,520          183,651            5.024

[[Page 13564]]

 
Other........................................................        1,442,356           62,760            4.351
All Species..................................................        5,795,833          315,788            5.449
----------------------------------------------------------------------------------------------------------------

    The willingness to pay values for boat and shore anglers for an 
additional fish per trip, and for the expected benefits from reducing 
impingement and entrainment at cooling water intake structures in the 
Northern California region are shown in Table X-26. Table X-26 shows 
that boat anglers value most highly the improvements in catch rates for 
sturgeon and salmon, followed by flounder and big game fish. Boat and 
shore anglers show a few notable differences in values. For example, 
the value for flounders is higher for boat anglers. This can be 
explained by the fact that most boat anglers target and catch halibut, 
a larger species; most shore anglers catch the smaller flounders. The 
value for flounders is also higher for boat anglers. This can be 
explained by the fact that most boat anglers target and catch halibut, 
a larger species; most shore anglers catch the smaller flounders.

                   Table X-26.--Per Trip Welfare Gain from Improvements in Fishing Quality at All Sites in Northern California (2002$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Per trip welfare gain (2002$)                   WTP for an additional fish per
                                                       ------------------------------------------------------------------          trip (2002$)
                                                          Eliminating impingement and        Reducing impingement and    -------------------------------
                Targeted species group                            entrainment               entrainment with preferred
                                                       ---------------------------------            technology
                                                                                        ---------------------------------  Boat anglers    Shore anglers
                                                         Boat anglers    Shore anglers    Boat anglers    Shore anglers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Flounders.............................................           $0.32           $0.96            $0.02           $0.01            $2.97           $0.99
Small Game fish.......................................            1.19            3.37             0.32            0.96             0.76            3.55
Bottom fish...........................................            0.24            0.11             0.18            0.08             0.75            0.54
Other fish............................................              NA            0.58               NA            0.46               NA            1.10
No Target.............................................            2.66            0.02             2.48            0.00             8.53            0.76
Salmon................................................              NA              NA               NA              NA             9.40           10.66
Sturgeon..............................................              NA              NA               NA              NA             33.5              NA
Big Game fish.........................................              NA              NA               NA              NA             4.05              NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As shown in Table X-26, the estimated welfare gains from 
impingement and entrainment reduction are $0.02, $0.32, and $0.24 per 
trip for boat anglers targeting flounders, small game and bottom fish, 
respectively; and $0.01, $0.96, $0.08, and $0.46 per trip for shore 
anglers targeting flounders, small game, bottom fish and other specie, 
respectively (all in 2002$). Anglers targeting small game are expected 
to experience the greatest welfare gain from reducing impingement and 
entrainment at cooling water intake structures in Northern California.
    EPA then combined the estimated per trip welfare gain from 
eliminating impingement and entrainment at Northern California cooling 
water intake structures with NMFS fishing participation estimates to 
estimate the annual value to recreational anglers of improved catch 
rates resulting from reduced impingement and entrainment in the 
Northern California region. Table X-27 provides the total number of 
angler days in Northern California by fishing mode and targeted 
species.

                    Table X-27.--Total Northern California Fishing Trips by Mode, 2001 and Percent of Anglers Targeting Each Species
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Total Northern California trips, 2001                      Boat mode
                                                                    Shore mode
                                                                   Charter mode
                                                                      920,196
                                                                      864,178
                                                                      193,007
=========================================================
                                                             Percent of Anglers Targeting Each Species by Mode and Number of Trips by Mode and Species
                                                         -----------------
Salmon..................................................          34.93%         321,424           1.41%          12,185          27.54%          53,154
Sturgeon................................................           8.73%          80,333           1.41%              NA           0.00%               0
Flounders...............................................          13.86%         127,539           1.86%          16,074           0.00%               0
Small Game..............................................           7.28%          66,990           22.2%         191,848           1.32%           2,548
Big Game................................................           2.12%          19,508           0.83%              NA           0.00%               0
Bottom Fish.............................................          13.27%         122,110           23.1%         199,625          57.97%         111,886
Other Fish..............................................           0.03%              NA           1.86%          16,074           0.00%               0
No Target...............................................          19.77%         181,923          47.34%         409,102          13.18%          25,438
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 13565]]

    EPA calculated total baseline recreational losses to Northern 
California anglers by multiplying the estimated per trip welfare gain 
from impingement and entrainment elimination for a given species group 
by the relevant number of recreational fishing trips in 2001. 
Similarly, EPA calculated the total gains resulting from the preferred 
technology. Table X-28 summarizes results of these calculations. The 
total value of baseline recreational losses for all species impinged 
and entrained is $1,432,645 per year (2002$), for boat, shore, and 
charter anglers. The total annual value of reduced recreational losses 
with the preferred option is $790,560 per year (2002$), for boat, 
shore, and charter anglers. Table X-28 also presents the discounted 
values, using EPA's preferred 3% discount rate and OMB's 7% discount 
rate.

 Table X-28.--Estimated Annual Welfare Change to Recreational Anglers in Northern California Under the Baseline and Post-Compliance Scenarios (2002$) --
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Total baseline welfare losses             Total welfare gain from reductions in
                                                              -------------------------------------------------   impingement and entrainment baseline
                                                                                                                    losses under the preferred option
                           Species                                                                             -----------------------------------------
                                                                   Before        3% Discount     7% discount                                       7%
                                                                 discounting        rate             rate           Before        3% discount   discount
                                                                                                                  discounting        rate         rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Salmon \a\...................................................             N/A             N/A             N/A              N/A             N/A   N/A
Sturgeon \a\.................................................             N/A             N/A             N/A              N/A             N/A   N/A
Flounders....................................................         $56,634         $45,307         $35,679           $2,702          $2,189  $1,729
Small Game...................................................         728,909         634,151         532,104          206,584         183,860  157,004
Big Game.....................................................             N/A             N/A             N/A              N/A             N/A   N/A
Bottom Fish..................................................          77,312          71,900          67,261           59,041          54,908  51,366
Other Fish...................................................           9,276           7,699           6,772            7,376           5,975  5,458
No Target....................................................         560,514         465,227         409,175          514,857         471,034  390,994
                                                              -----------------
    Totals...................................................       1,432,645       1,224,284       1,050,991          790,560         663,965  596,551
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Impingement and entrainment data are not available for these species.

5. Commercial Fishing Valuation
    Table X-29 provides EPA's estimate of the value of gross revenues 
lost in commercial fisheries resulting from the impingement of aquatic 
species in the Northern California region. Table X-30 displays this 
information for entrainment. As described above, EPA estimates that 0 
to 40% of these revenue losses represent surplus losses to producers, 
assuming no change in prices or fishing costs. EPA will refine these 
assumptions for the final rule.

   Table X-29a.--Annual Commercial Fishing Gross Revenues Lost Due to Impingement at Estuary Facilities in the
                                           Northern California Region
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated Value of Harvest Lost (in dollars)
                                                     Estimated   -----------------------------------------------
                     Species                         pounds of                      Discounted      Discounted
                                                   harvest lost    Undiscounted      using 3%        using 7%
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Anchovies.......................................          10,156            $812            $781            $744
Cabezon.........................................           1,019           3,383           2,899           2,401
Croakers........................................              97              55              48              40
Dungeness.......................................             404             623             588             546
Flounders.......................................           4,606           1,428           1,368           1,294
Herrings........................................          25,560           5,368           4,840           4,257
Rock crabs......................................             165             188             171             151
Rockfishes......................................          38,955          21,425          16,863          12,547
Sculpins........................................             147             384             367             345
Smelts..........................................           1,520             395             375             352
Surfperches.....................................           3,198           5,020           4,650           4,219
                                                 -----------------
    Total.......................................          85,826          39,082          32,949          26,897
----------------------------------------------------------------------------------------------------------------


    Table X-29b.--Annual Commercial Fishing Gross Revenues Lost Due to Impingement at Ocean Facilities in the
                                           Northern California Region
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated Value of Harvest Lost (in dollars)
                                                     Estimated   -----------------------------------------------
                     Species                         pounds of                      Discounted      Discounted
                                                   harvest lost    Undiscounted      using 3%        using 7%
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Anchovies.......................................               0              $0              $0              $0
Cabezon.........................................              21              69              59              49
Croakers........................................               8               5               4               3
Dungeness.......................................           1,583           2,438           2,301           2,137

[[Page 13566]]

 
Flounders.......................................             210              65              62              59
Rock crabs......................................               1               1               1               1
Rockfishes......................................             592             325             256             191
Sculpins........................................               1               3               3               3
Surfperches.....................................               9              13              12              11
                                                 -----------------
    Total.......................................           2,424           2,920           2,699           2,454
----------------------------------------------------------------------------------------------------------------


   Table X-30a.--Annual Commercial Fishing Gross Revenues Lost Due to Entrainment at Estuary Facilities in the
                                           Northern California Region
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated value of harvest lost (in dollars)
                                                      Estimated  -----------------------------------------------
                      Species                         pounds of                     Discounted      Discounted
                                                       harvest     Undiscounted      using 3%        using 7%
                                                         lost                      discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Anchovies..........................................          525             $42             $39             $36
Cabezon............................................           25              82              69              55
California halibut.................................        1,076           2,701           2,145           1,600
Croakers...........................................            0               0               0               0
Dungeness..........................................       37,273          57,400          52,594          47,024
Flounders..........................................          192              59              55              50
Herrings...........................................       69,974          14,695          12,864          10,893
Rock crabs.........................................          490             558             492             419
Rockfishes.........................................           10               6               4               3
Sculpins...........................................        2,096           5,490           5,087           4,612
Smelts.............................................           15               4               4               3
                                                    --------------
    Total..........................................      111,675          81,039          73,353          64,696
----------------------------------------------------------------------------------------------------------------


    Table X-30b.--Annual Commercial Fishing Gross Revenues Lost Due to Entrainment at Ocean Facilities in the
                                           Northern California Region
----------------------------------------------------------------------------------------------------------------
                                                                   Estimated value of harvest lost (in dollars)
                                                      Estimated  -----------------------------------------------
                      Species                         pounds of                     Discounted      Discounted
                                                       harvest     Undiscounted      using 3%        using 7%
                                                         lost                      discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Anchovies..........................................            8              $1              $1              $1
Cabezon............................................          179             595             495             394
California halibut.................................        2,816           7,067           5,604           4,177
Croakers...........................................            0               0               0               0
Flounders..........................................          427             132             123             112
Herrings...........................................       39,634           8,323           7,286           6,170
Rock crabs.........................................       12,467          14,212          12,532          10,659
Rockfishes.........................................          243             134             102              73
Sculpins...........................................          621           1,627           1,507           1,366
Smelts.............................................           18               5               4               4
                                                    --------------
    Total..........................................       56,413          32,096          27,655          22,956
----------------------------------------------------------------------------------------------------------------

6. Total Recreational and Commercial Losses from Baseline Impingement 
and Entrainment in the Northern California Region
    Table X-31 presents EPA's estimates of total baseline welfare 
losses from impingement and entrainment at cooling water intake 
structures in the Northern California region. Total commercial and 
recreational fishing losses are 1.5 million per year for all species 
and fishing modes, before discounting. Discounting these total baseline 
welfare losses by 3% and 7% yields total losses of $1.3 million and 
$1.1 million, respectively.

[[Page 13567]]



     Table X-31.--Estimated Commercial and Recreational Baseline Welfare Losses in Northern California from
                                      Impingement and Entrainment (2002$) a
----------------------------------------------------------------------------------------------------------------
                                                                                    Discounting     Discounted
                          Benefit type                                Before         using 3%        using 7%
                                                                    discounting    discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Recreational....................................................      $1,432,645      $1,224,284      $1,050,991
Commercial b....................................................          62,055          54,662          46,801
                                                                 -----------------
    Total.......................................................       1,494,700       1,278,946      1,097,792
----------------------------------------------------------------------------------------------------------------
a Welfare losses represent losses due to both impingement and entrainment because recreational estimates cannot
  be presented separately for these categories.
b Based on 40 percent of gross revenues, or upper bound of 0-40 percent range assumed to represent producer
  surplus.

7. Estimated Use Benefits of Proposed Regulatory Options for the 
Northern California Region
    Table X-32 presents EPA's estimates of total welfare gain from 
post-compliance impingement and entrainment reduction at cooling water 
intake structures in the Northern California region. Total commercial 
and recreational fishing gains are $0.85 million per year for all 
species and fishing modes, before discounting. Discounting the 
estimated welfare gain by 3% and 7% yields total losses of $0.71 
million and $0.64 million, respectively.

Table X-32.--Estimated Discounted Commercial and Recreational Reduced Welfare Losses in Northern California From
                                     Impingement and Entrainment (2002$) \a\
----------------------------------------------------------------------------------------------------------------
                                                                                    Discounted      Discounted
                    Benefit type                      Expected %      Before         using 3%        using 7%
                                                      reduction     discounting    discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
Recreational.......................................        55.2%        $790,560        $663,965        $596,551
Commercial \b\.....................................         36.7          22,755          19,514          16,208
                                                    --------------
    Total..........................................         54.4         847,448         712,749        637,080
----------------------------------------------------------------------------------------------------------------
\a\ Welfare losses represent losses due to both impingement and entrainment because recreational estimates
  cannot be presented separately for these categories.
\b\ Based on 40 percent of gross revenues, or upper bound of 0-40 percent range assumed to represent producer
  surplus.

E. Nonuse Benefits

    Reducing impingement and entrainment losses of fish and shellfish 
results in both use and nonuse benefits. Impingement and entrainment 
losses to commercial and recreational fish that are harvested by 
fishermen can be valued as direct use benefits. Methodologies for 
estimating use values for recreational and commercial species are well 
developed, and some of these species have been extensively studied. As 
a result, these values are relatively easy to estimate. The portion of 
impingement and entrainment losses consisting of fish that are 
recreationally and commercially landed, however, represented only 
approximately 0.15 percent of the total age one equivalent impingement 
and entrainment losses at five estuary/tidal river and ocean case study 
facilities evaluated for the section 316(b) Phase II proposal (See 
Appendix 4 of Estimating Total and Nonuse Values for Fish, Based on 
Habitat Values for Coastal Wetlands and Eelgrass (SAV) DCN 5-1010.) 
\23\ The remaining impingement and entrainment losses at these five 
facilities are distributed as follows:
---------------------------------------------------------------------------

    \23\ The estuary/tidal river facilities incorporated in this 
estimate include Salem, Big Bend, and Brayton Point. The ocean 
facilities are Seabrook and Pilgrim.
---------------------------------------------------------------------------

    [sbull] Unharvested recreational and commercial fish represent 0.77 
percent of the total age one equivalent impingement and entrainment 
losses,
    [sbull] Forage fish represent 99.08 percent of the total age one 
equivalent loss.
    Neither forage species nor the unlanded portion of recreational and 
commercial species have direct uses; therefore, they do not have direct 
use values. The lack of use values for the unlanded fish means that EPA 
did not directly value approximately 99.85 percent of the total age one 
equivalent impingement and entrainment losses at the five cooling water 
intake structures discussed above.\24\ Although individuals do not use 
these resources directly, they may nevertheless care about and be 
affected by changes in their status or quality. Monetary expression of 
individuals' preferences for these resources is known as nonuse value. 
Both commercial and recreational fishermen, as well as those who do not 
use the resource, may have nonuse values for these species.
---------------------------------------------------------------------------

    \24\ Although the percentages vary by case study, the same trend 
occurs in the other case studies. For example, the total percentage 
unvalued in the Great Lake case study (J. R. Whiting and Monroe) was 
99.92 percent. For example, the total percentage unvalued in the 
Great Lake case study (J. R. Whiting and Monroe) was 99.92 percent. 
Note that some use value for forage fish is accounted for in the 
commercial and recreational fishing benefits through trophic 
transfer. However, trophic transfer accounts for a small percentage 
of total recreational and commercial yield.
---------------------------------------------------------------------------

    Given that aquatic species without any direct uses account for the 
majority of cooling water intake structure losses, it is important to 
try to account for nonuse values in the benefits analysis. Stated 
preference methods, or benefit transfers based on stated preference 
studies, are the only generally accepted techniques for estimating 
nonuse values. Stated preference methods rely on surveys, which ask 
people to state their willingness to pay for particular ecological 
improvements, such as increased protection of aquatic species or 
habitats with particular attributes. Benefits transfer involves 
adapting research conducted for another purpose, from the available 
literature, to address the policy questions at hand. It is not feasible 
to conduct a primary stated-preference study for the section 316(b) 
rule, because of the regulatory schedule and the time and significant 
resources

[[Page 13568]]

necessary to properly perform such a study. Thus, EPA's analysis of 
nonuse benefits of the section 316(b) regulation relies on benefits 
transfer. As noted above, however, stated preference methods have 
several limitations that must be considered when conducting benefits 
transfer. EPA recognizes that benefits transfer of stated preference-
based WTP estimates to a policy context that differs from the study 
context can be problematic, given the significant influence of context 
on stated-preference values. EPA is still considering whether the 
underlying studies in the current analysis are close enough to the 
policy context to warrant benefits transfer and requests comment on 
this issue.
    For the proposed rule analysis, EPA used a ``50 percent'' rule to 
estimate nonuse benefits from reducing impingement and entrainment 
losses (see the proposed rule Case Study Analysis for detail, available 
at http://www.epa.gov/waterscience/316b/). The Agency received numerous 
comments on this approach. Specifically, commenters argued that the 
``50 percent rule'' is outdated and that EPA needs to revise this 
approach based on more recent studies of use and nonuse benefits 
associated with environmental quality improvements.
    In response to public comments, EPA has developed a revised 
analysis of nonuse benefits and is requesting comment in the NODA on 
this revised methodology. First, the Agency developed a benefit 
transfer approach that combines an estimate of the amount of habitat 
required to offset impingement and entrainment losses (including forage 
species and the unlanded portion of commercial and recreational 
species) by means of wild fish production with a benefits transfer 
estimate of WTP for aquatic habitat preservation/restoration. The 
following section briefly summarizes this approach. Second, EPA 
reviewed available evidence concerning total benefits (including use 
and nonuse values) from the surface water valuation studies that are 
potentially applicable to the section 316(b) regulation. Section E.2 
below discusses EPA's review of these studies and outlines further 
steps in analyzing nonuse and use benefits from available economic 
literature.
1. Benefit Transfer Approach
    The methodology used in this analysis uses values that survey 
respondents indicated for preservation/restoration of eelgrass 
(submerged aquatic vegetation, SAV), and wetlands to evaluate losses of 
fishery resources. Because one of the results of aquatic habitat 
preservation/restoration is increased production of fish and shellfish, 
it may be appropriate to use valuation of habitat restoration as a 
proxy for the value of the fish and shellfish lost due to impingement 
and entrainment. The method used by EPA in this NODA for such indirect 
valuation first assesses respondents' values for habitats that play a 
significant role in the production of fish or shellfish, and then 
estimates the quantity of such habitat required to replace fish and 
shellfish lost to impingement and entrainment. These data are then 
combined to yield an indirect estimate of household values for fish and 
shellfish. Survey respondents were asked to value acres of habitat 
(e.g., eelgrass or wetlands) without knowing the exact quantities of 
each species produced by the habitat. These values per acre were then 
translated, using estimates of fish abundance in these habitats, into 
values for specific species and quantities of fish or shellfish. The 
habitat valuation study used in this analysis specifically described 
eelgrass as ``habitat for fish and shellfish.'' The authors of this 
study concluded, based on comments made by participants in focus 
groups, that the survey population was familiar with both eelgrass and 
wetlands, and that they associated both of these habitats with 
production of and habitat for fish and shellfish. Another study 
(Johnston et al., 2002) found that ecological improvements to statewide 
fish and shellfish populations were among the attributes that affected 
respondents' relative valuation of various wetlands restoration 
projects. This suggests that respondents in the habitat valuation study 
were aware of the fish production ``services'' provided by SAV 
(eelgrass), and may have been aware of the fish production ``services'' 
provided by wetlands.
    EPA's approach to estimating values for fish and shellfish habitats 
needed to offset impingement and entrainment losses of fish involves 
three general steps:
    [sbull] Estimate the amount of wetland and eelgrass habitat needed 
to produce organisms to the level necessary to offset impingement and 
entrainment losses for the subset of species for which production 
information is available;
    [sbull] Develop willingness to pay (WTP) values for the fish 
production services of the relevant habitat types; and
    [sbull] Estimate the value of impingement and entrainment losses, 
based on values for the restored habitat required to offset impingement 
and entrainment losses, by multiplying the WTP values for the fish and 
shellfish production services per acre of restored eelgrass and wetland 
habitat by the required number of restored acres of each habitat type.
    The Agency solicits comments on whether this approach provides a 
more comprehensive value that addresses all impingement and entrainment 
losses.
    The following NODA sections briefly summarize this benefits 
transfer approach and its application to estimating the value of the 
fish habitat required to offset impingement and entrainment losses in 
the North Atlantic Region. Additional detail on the methods and data 
EPA will use throughout this analysis are provided in ``Estimating 
Total and Nonuse Values for Fish, Based on Habitat Values for Coastal 
Wetlands and Eelgrass'' (DCN 5-1010) that accompanies this NODA.

a. Estimating the Amount of Different Habitat Types Needed To Offset 
Impingement and Entrainment Losses for Specific Species

    The first step in the analysis involves calculating the area of SAV 
or wetland habitat needed to offset impingement and entrainment losses, 
for the subset of species for which restoration of these habitats was 
identified by local experts as the preferred restoration alternative, 
and for which production information is available; i.e., the habitat 
that will produce the equivalent quantity of fish impinged and 
entrained. Details on this analysis are provided in Estimating Total 
and Nonuse Values for Fish, Based on Habitat Values for Coastal 
Wetlands and Eelgrass, DCN 5-1010, that accompanies this NODA.
    Table X-33 presents lower and upper bound estimates of the total 
wetland and SAV restoration required to offset North Atlantic 
impingement and entrainment. These estimates reflect the acreage needed 
for the species requiring the maximum quantity of habitat restoration 
to offset its impingement and entrainment losses. The amount of tidal 
wetland restoration in the North Atlantic region is based on the 
acreage required for winter flounder. The lower bound estimate is 
winter flounder restoration estimate derived for Brayton Point and the 
upper bound estimate is the estimate for Pilgrim. The lower bound 
estimate for regional SAV restoration is based on the acreage needed 
for northern pipefish at Pilgrim and the upper bound estimate is based 
on the acreage needed for scup at Brayton Point.

[[Page 13569]]



  Table X-33.--Lower and Upper Bound Estimates of Total Wetland and SAV
      Restoration Required To Offset North Atlantic Impingement and
                               Entrainment
------------------------------------------------------------------------
                                                Lower bound  Upper bound
                                                on required  on required
         Habitat restoration category            number of    number of
                                                   acres        acres
------------------------------------------------------------------------
Tidal wetland restoration.....................       25,589       43,813
SAV restoration...............................          151        1,205
------------------------------------------------------------------------

    These estimates are derived from abundance data for these species 
in wetland and SAV habitats. Abundance data were used because estimates 
of production rates in these habitats are not available for the species 
of interest. Individuals were counted within subsampling areas of the 
habitats (e.g., 100 square meters), and the resulting counts were 
scaled up to derive per acre density estimates by species. Usable data 
were available for three species for which impingement and entrainment 
data were also available that were found in wetlands (winter flounder, 
Atlantic silverside, and striped killifish) and for three species that 
were found in SAV (threespine stickleback, northern pipefish, and 
scup). The amount of wetlands acreage needed to restore impingement and 
entrainment losses ranged from 11-12 acres for killifish to 25,589-
48,813 acres for winter flounder. While it is not known how many acres 
would be needed for the many other species found in wetlands, it 
appears from the available data that the acreage needed for winter 
flounder significantly overstates the acreage needed for other species, 
and restoring this many acres would lead to more than offsetting 
increases in these other species. For SAV, the acreage estimated ranged 
from 105-180 acres for threespine stickleback, to 1205 acres for scup. 
EPA requests comment on using abundance data for these analyses. EPA 
also requests comment on using the species that require the maximum 
quantity of habitat to offset impingement and entrainment losses as the 
basis for estimating the total habitat required to offset regional 
losses. Finally, EPA requests comment on using estimates of fish 
production per acre as the basis for benefits transfer, given that 
respondents were likely not aware of the quantitative relationship 
between habitat and fish production when they provided valuation 
information.

b. Developing WTP Values for Fish Production Services Provided by 
Submerged Aquatic Vegetation and Wetlands for the North Atlantic Region

    For the North Atlantic Region, EPA based the benefit transfer of 
both total and nonuse values for fish habitat provided by eelgrass and 
wetlands on a site-specific study of the Peconic Estuary, located on 
the East End of Long Island, New York (Johnston et al., 2001a, Opaluch 
et al., 1995, 1998; Mazzotta, 1996). For detail on the Peconic Estuary 
study used in this analysis see DCN's 5-1275, 5-1292, 5-1293, and 5-
1284. Conducted in 1995, the study provides information for the Peconic 
Estuary Program's Comprehensive Conservation and Management Plan (see 
http://www.savethepeconicbays.org/ccmp/).
    Both eelgrass and wetlands located in the Peconic Estuary support 
aquatic species that are found throughout the North Atlantic region and 
that are likely to be affected by impingement and entrainment (e.g.,bay 
anchovy, Atlantic silverside, scup, summer flounder, winter flounder, 
windowpane flounder, weakfish, tautog, bay scallops, and hard 
clams).\25\ The Peconic Estuary study thus provides values for eelgrass 
and wetlands that may be representative of habitat needed to produce 
many of the species affected by impingement and entrainment at power 
plants. EPA will further evaluate applicability of the habitat in the 
Peconic study to other study regions such as the mid-Atlantic. EPA will 
also evaluate other aquatic habitat valuation studies for their 
applicability to the analysis of benefits of the section 316(b) rule in 
other regions.
---------------------------------------------------------------------------

    \25\ Further detail on fish SAV in the North and mid-Atlantic 
can be found in Wyda, et al, 2002 ``The response of fishes to 
submerged aquatic vegetation complexity in two ecoregions of the 
Mid-Atlantic Bight: Buzzards Bay and Chesapeake Bay'' (see DCN 5-
1318).
---------------------------------------------------------------------------

    EPA re-estimated the Peconic model with separate coefficients for 
users and nonusers of fishery resources in order to separate out nonuse 
values. The Agency defined users as those who stated that they either 
fish or shellfish. These individuals have both nonuse and indirect use 
values from the fish habitat services of eelgrass and wetlands. EPA 
estimated nonuse values only for those who do not fish or 
shellfish.\26\ Table X-34 presents the Peconic model results. For 
eelgrass, the value for nonusers is 77.7 percent of the total value for 
users. For wetlands, the value for nonusers is 94.4 percent of the 
total value for users. Nonuse values, defined here as total values for 
nonusers of the fishery resources, represent a large portion of the 
total value estimated in the study. Nonusers assigned similar values to 
both types of habitat, while users assigned a slightly higher value to 
eelgrass, perhaps because it was explicitly identified on the survey as 
fish and shellfish habitat. It is difficult to determine ex post why 
the values for eelgrass and wetlands are similar for nonusers. However, 
the fact that non-users assigned similar values to both types of 
habitat may indicate that they did not significantly differentiate the 
two habitat types on dimensions affecting valuation or, alternatively, 
they differentiated among habitat types, but assigned similar values. 
Since SAV was explicitly identified as fish and shellfish habitat and 
wetlands was not, this may mean that fish and shellfish services were 
not a significant attribute affecting respondents' valuation, or, 
alternatively that they were aware that wetlands also provide habitat 
for fish and shellfish based on knowledge external to the survey.
---------------------------------------------------------------------------

    \26\ Note that this is not strictly true for wetlands, because 
other services exist that allow for use values such as birdwatching. 
The value of wetlands is adjusted to reflect fish production 
services only in the section on wetlands below.

 Table X-34.--Estimated WTP Values Per Household from the Peconic Study
                                (2002$) a
------------------------------------------------------------------------
                                        Wetlands b       Eelgrass (SAV)
                                   -------------------------------------
                                     $/HH/              $/HH/
                                     Acre/    Nonuse    Acre/    Nonuse
                                     Year c   value %   Year c   value %
------------------------------------------------------------------------
All Residents.....................    0.056     95.80    0.063     82.40
Users.............................    0.057     94.40    0.067     77.70
Nonusers d........................    0.054    100.0     0.052    100.0
------------------------------------------------------------------------
a EPA made dollar value adjustments using the Consumer Price Index for
  all urban consumers for the first half of 2002.

[[Page 13570]]

 
b Note that wetlands values presented here are WTP for all wetland
  services, not just fish habitat services. The adjustment for fish
  habitat values appears below.
c Values shown are WTP per household per additional (i.e, marginal) acre
  per year.
d Nonusers are defined as respondents who neither fish nor shellfish.

    Because coastal wetlands provide a number of services (e.g., 
habitat, water purification, storm buffering, and aesthetics), EPA 
attempted to separate values for fish habitat from values for other 
wetland services. Given survey data available from the Peconic Study, 
however, there is no direct means to estimate the proportion of total 
wetland value associated with fish and shellfish habitat services 
alone. EPA therefore used a stated preference study from Narragansett 
Bay, Rhode Island to adjust wetland values to reflect fish and 
shellfish habitat services (Johnston et al., 2002, (DCN 5-1273 ). Based 
on the Johnston et al. (2002) study, the proportion of saltwater 
wetland value associated with fish habitat is 0.2564; and the 
proportion of value associated with shellfish habitat is 0.2778. For 
detail on estimating the proportion of wetland value associated with 
fish and shellfish habitat services see Estimating Nonuse Values for 
Fish Based on Habitat Values for Coastal Wetlands and Eelgrass (SAV), 
provided in DCN 5-1010.
    Briefly, the Johnston et al. study asked survey respondents to 
choose among different hypothetical restoration projects based on 
attributes of these projects. Attributes of hypothetical restoration 
plans characterized relative statewide improvement in bird populations, 
fish populations, shellfish populations, and mosquito control. On 
average these attributes received roughly equal weight in the 
valuations (with bird populations being weighted a little less heavily, 
and mosquito control a little more heavily than the other two). Based 
on model results, the authors concluded that roughly one-fourth of the 
value derived from each project was attributable to each type of 
services.
    The Peconic survey described eelgrass specifically as fish and 
shellfish habitat. EPA is not aware of other direct uses of eelgrass. 
Based on focus groups during survey development and pretesting, the 
authors concluded that individuals were aware of eelgrass and its 
importance for fish and shellfish production. Thus, EPA assigned all of 
the estimated WTP for SAV restoration to fish and shellfish production 
services. Based on these same focus groups and pretests the authors 
also concluded that, individuals were aware of and valued a number of 
functions of wetlands, including fish and other wildlife habitat, storm 
buffering, and aesthetics. Therefore, EPA assigned only a portion of 
the estimated WTP for wetlands restoration to fish habitat services, 
based on results from the Johnston et al. study described above. EPA 
requests comment on its methodology for assigning a share of WTP to 
``fish production services'' for each habitat type.
    EPA estimated the value of saltwater wetlands associated with fish 
and shellfish habitat services by multiplying the proportions presented 
above by the total wetland values from the Peconic Estuary study. Table 
X-35 presents the final per household values for an acre of wetlands 
that were ascribed to fish and shellfish habitat services. Because the 
overall values of Peconic Estuary residents for eelgrass and wetlands 
are similar, once adjustments are made to wetlands values to ascribe a 
portion to fish habitat services, the values for fish and shellfish 
habitat of eelgrass are estimated as four times higher than those for 
fish habitat only for wetlands. EPA requests comments on whether such 
adjustments are appropriate and whether further adjustments are needed 
for eelgrass values.

Table X-35.--Estimated WTP Values per Household for Fish and Shellfish Habitat Services of Wetlands (2002$) From
                                                the Peconic Study
----------------------------------------------------------------------------------------------------------------
                                                                                 $/HH/Acre/            $/HH/Acre/
                                                           $/HH/Acre/    Fish     Yearfor   Shellfish   Year for
                                                             Year a   habitat %     fish    habitat %  shellfish
                                                                                 habitat b             habitat c
----------------------------------------------------------------------------------------------------------------
All Residents............................................      0.056      25.64      0.014      27.78      0.016
Users....................................................      0.057      25.64      0.015      27.78      0.016
Nonusers d...............................................      0.054      25.64      0.014      27.78     0.015
----------------------------------------------------------------------------------------------------------------
a Values shown are WTP per household per additional (i.e, marginal) acre per year.
b Total value per acre per year times 25.64 percent.
c Total value per acre per year times 27.78 percent.
d Note that wetland values for fish and shellfish services are not linearly additive within the same acreage,
  due to the functional form use in Johnston et al (2002).

c. Estimating Total and Nonuse Values for Fish Production Services 
Provided by Submerged Aquatic Vegetation and Wetlands in the North 
Atlantic Region

    The SAV and wetland values from the Peconic study presented in 
Table X-34 and Table X-35 are per household values for individuals 
residing in towns bordering the Peconic Estuary. Estimating the total 
value per acre of SAV and wetlands requires defining and using the 
affected population for the study area. The Peconic study defined the 
affected population as the total number of households (both year-round 
and seasonal) in the towns bordering the Peconic Estuary. Similarly, 
EPA defines the affected population as households residing in the 
counties that abut the water bodies in the North Atlantic Region. These 
households are likely to value gains of fish or shellfish in the nearby 
water body due to their close proximity to the affected resource.
    Analysis of data from the Rhode Island Salt Marsh Restoration 
Survey (Johnston et al. 2002) reveals that values were ascribed to even 
relatively small-scale salt marsh restoration actions (i.e., 3-12 
acres) were stated by respondents from various parts of the state. EPA 
thus assumed for the current analysis that residents within a similar 
distance from the coast as residents in the Johnston et al. (2002) 
study would have positive values for improving fish habitat. EPA 
calculated the average distance from Johnston's studied locations to 
the farthest edges of Rhode Island, which totaled 32.43 miles. The 
Agency then assumed that all households living within the same distance 
of the affected

[[Page 13571]]

resource as Rhode Island residents from the studied resource would also 
value fish habitat improvements in their affected water body.
    Additionally, EPA notes that a study by Pate and Loomis (1997) 
found that respondents outside the political jurisdiction in which a 
study site is located were also willing to ascribe stated preference 
values to the amenity being studied. The study was designed to 
determine the effect of distance on WTP for public goods with large 
nonuse values. Specifically, the study evaluated environmental programs 
designed to improve wetlands habitat and wildlife in the San Joaquin 
Valley. It compared WTP values for households residing in the San 
Joaquin Valley, California, to values for California households outside 
the Valley, and to households in Washington State, Oregon, and Nevada. 
The study found that WTP values for California residents outside the 
Valley were 97.7 percent of the WTP of the Valley residents. WTP values 
for Oregon residents were approximately 27 percent of the WTP of the 
Valley residents. As with the Rhode Island study, care should be taken 
in interpreting these results.
    In this analysis, EPA calculated per acre WTP values using two 
different definitions of affected populations: (1) The average number 
of households residing in counties abutting the affected water body and 
(2) the average number of households living within the 32.4 mile radius 
of each affected water body in the region. Average per acre values for 
SAV and wetlands were calculated based on these estimates of the 
average affected population for each facility. The average number of 
affected households in counties abutting affected water bodies is 
210,357 and the average number of households within a 32.4 mile radius 
of each facility is 737,711. Detailed information used in calculating 
the average number of affected households in counties abutting affected 
water bodies and the average number of households within a 32.4 mile 
radius of each facility is provided in DCN 5-1008.
    Table X-36 presents an average value per acre per year for restored 
SAV for households in the counties abutting the affected water bodies 
and for households within the larger radius (32.4 miles), for the North 
Atlantic Region. The total annual value per acre for eelgrass (SAV) for 
households living in counties abutting the region's affected water 
bodies is $13,341 for all residents; and the total nonuse only value is 
$10,993. The table also shows two estimates of the values for 
households living within the larger area. EPA calculated these values 
based on the findings of Pate and Loomis (1997), as shown below. EPA 
assigned the value per household from the Peconic study to the average 
number of households residing in the counties abutting the affected 
water bodies in the North Atlantic Region (210,357 households). For 
households beyond these coastal counties (an additional 527,354 
households), EPA multiplied the Peconic values by 97.7 percent and 27 
percent to provide a range of WTP values.

 Table X-36.--Household WTP Values for SAV for the North Atlantic Region
                                 (2002$)
------------------------------------------------------------------------
                                        Total WTP/   Total WTP/Acre/Year
                                        Acre/Year    for HH within 32.4
                                        for HH in      mile radius of
                               $/HH/     Counties    affected water body
       Value category          Acre/     abutting             c
                               Year a    affected  ---------------------
                                          water
                                         bodies b     97.7%      27.0%
------------------------------------------------------------------------
Total Value.................   $0.063      $13,341    $45,949    $22,371
Nonuse Value d..............    0.052       10,993     37,863    18,434
------------------------------------------------------------------------
a Values shown are WTP per household per additional (i.e, marginal) acre
  per year from the Peconic study.
b Total WTP per acre is calculated as household WTP per acre times the
  average of 210,357 households in the counties abutting affected water
  bodies.
c Total WTP per acre is calculated as household WTP per acre times
  737,711, the average number of households within a 32.43-mile radius
  of affected water bodies. Adjustments to WTP values are described in
  the text.
d Total nonuse value is calculated as value per acre for nonusers only
  times all households in the study area.

    Table X-37 presents the values per acre per year for the fish and 
shellfish habitat services of wetlands for the total affected 
population for the regional study area. For the counties abutting the 
affected water bodies, the total annual value per acre for fish habitat 
services provided by wetlands is $3,017 for all households, whereas the 
total nonuse only value is $2,891. For the larger area, the total 
annual value per acre for fish habitat services provided by wetlands 
ranges from $5,059 to $10,390 for all households, whereas the total 
nonuse only value ranges from $4,848 to $9,958.
    The table also shows the corresponding values if the estimated WTP 
share for ``shellfish production services'' rather than the WTP for 
``fish production services'' is used.

Table X-37.--Estimated WTP Values for Fish and Shellfish in Wetlands for
                    the North Atlantic Region (2002$)
------------------------------------------------------------------------
                                        Total WTP/   Total WTP/Acre/Year
                                        Acre/Year    for HH within 32.4
                               $/HH/    for HH in      mile radius of
                               Acre/     Counties    affected water body
                               Year a    abutting             c
                                         affected  ---------------------
                                       waterbody b    97.7%       27%
------------------------------------------------------------------------
                                  Fish
------------------------------------------------------------------------
Total Value.................   $0.014       $3,017    $10,390     $5,059
Nonuse Value c..............    0.014        2,891      9,958      4,848
-----------------------------

[[Page 13572]]

 
                                Shellfish
------------------------------------------------------------------------
Total Value.................   $0.016       $3,268    $11,258     $5,481
Nonuse Value d..............    0.015        3,132     10,789     5,253
------------------------------------------------------------------------
a Values shown are WTP per household per additional (i.e, marginal) acre
  per year from the Peconic study.
b Total WTP per acre is calculated as household WTP per acre times the
  average of 210,357 households in the counties abutting affected water
  bodies.
c Total WTP per acre is calculated as household WTP per acre times
  737,711, the average number of households within a 32.43-mile radius
  of affected water bodies.
d Total nonuse value is calculated as value per acre for nonusers only
  times all households in the region.

d. Estimates of the Value of Baseline Impingement and Entrainment 
Losses for the North Atlantic Region

    EPA multiplied the estimated number of acres of SAV and wetlands 
needed to offset impingement and entrainment losses for the North 
Atlantic region by the estimated per acre values of SAV and wetlands to 
assess the value of baseline impingement and entrainment losses. As 
discussed above, EPA performed this analysis on the SAV--and wetlands-
dependent species requiring the maximum restoration acres among these 
for which productivity estimates are available.
    Table X-38 presents the estimated values for SAV restoration for 
the North Atlantic Region. EPA estimated that between 151 and 1,204 
acres of revegetated SAV (eelgrass) is required to offset average 
annual impingement and entrainment losses of scup and northern 
pipefish, depending on whether Brayton Point or Pilgrim is used for the 
productivity estimates. Based on the estimated value per acre to 
residents of counties abutting the affected water bodies, the total 
value of restoring 151 acres of eelgrass is $2,014,450. Nonuse only 
value is $1,659,930. The estimated total value to all households 
residing within 32.43 miles from the affected water bodies, ranges from 
$3,377,982 to $6,938,316 per year. Nonuse only value ranges from 
$2,783,496 to $5,717,253. Figures are given in 2002 dollars.

            Table X-38.--WTP Values for SAV Restoration of Fish for the North Atlantic Region (2002$)
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
    Species benefitting from SAV       Acres of required SAV       Total willingness to pay per acre per year
            restoration                      restoration
------------------------------------
                                     Counties Abutting Affected Water Bodies
----------------------------------------------------------------------------------------------------------------
Scup                                 .........................  Total Value..................         $2,014,450
                                                               --------------------------------
Threespine stickleback               151 acres                  Nonuse Value.................          1,659,243
                                    ----------------------------
Northern pipefish                    .........................  Total Value..................         16,075,574
                                                               --------------------------------
                                     1,205 acres                Nonuse Value.................         13,246,458
------------------------------------
                     All Households Residing Within 32.43 Miles of Affected (High Estimate)
----------------------------------------------------------------------------------------------------------------
Scup                                 .........................  Total Value..................         $6,938,316
                                                               --------------------------------
Threespine stickleback               151 acres                  Nonuse Value.................          5,717,253
                                    ----------------------------
Northern pipefish                    .........................  Total Value..................         55,368,683
                                                               --------------------------------
                                     1,205 acres                Nonuse Value.................         45,624,433
------------------------------------
               All Households Residing Within 32.43 Miles of Affected Water Bodies (Low Estimate)
----------------------------------------------------------------------------------------------------------------
Scup                                 .........................  Total Value..................         $3,377,982
                                                               --------------------------------
Threespine stickleback               151 acres                  Nonuse Value.................          2,783,496
                                    ----------------------------
Northern pipefish                    .........................  Total Value..................         26,956,743
                                                               --------------------------------
                                     1,205 acres                Nonuse Value.................         22,212,667
----------------------------------------------------------------------------------------------------------------


[[Page 13573]]

    Table X-39 presents the estimated values for wetlands restoration 
for the North Atlantic Region. EPA estimated that between 25,589 and 
43,813 acres of restored tidal wetlands is required to offset average 
annual impingement and entrainment losses to winter flounder. Based on 
the estimated value per acre to residents of counties abutting affected 
water bodies, the total value of restoring 25,589 acres of coastal 
wetlands (after adjusting for the estimated portion attributable to 
fish production services) is $77 million per year, whereas nonuse only 
value is $74 million. For all households residing within 32.43 miles of 
affected water bodies, the total value of restoring 25,589 acres of 
coastal wetlands ranges from $129 million to $266 million per year, 
whereas the nonuse only value ranges from $124 million to $254 million 
for fish habitat only. Figures are given in 2002 dollars.
    Based on the estimated value per acre to residents of counties 
abutting affected water bodies, the total value of restoring 43,813 
acres of coastal wetlands is $132 million per year, whereas nonuse only 
value is $127 million, adjusted to fish production services only. For 
all households residing within 32.43 miles of affected water bodies, 
the total value of restoring 43,813 acres of coastal wetlands ranges 
from $222 to $455 million per year, whereas the nonuse only value 
ranges from $212 to $436 million, adjusted to fish production services 
only. Figures are given in 2002 dollars. This analysis does not include 
fish or shellfish losses caused by thermal discharges which are covered 
under section 316(a).
    EPA estimated the total WTP value for the amount of habitat 
required to offset baseline impingement and entrainment losses in the 
North Atlantic region by adding the SAV and wetland values presented in 
Table X-38 and Table X-39. Based on the estimated value per acre to 
residents of counties abutting the affected water bodies, the total 
value of habitat required to offset impingement and entrainment losses 
in the North Atlantic region ranges from $79 million to $511 million 
per year, whereas nonuse only value ranges from $76 million to $482 
million.

         Table X-39.--WTP Values for Wetlands Restoration of Fish for the North Atlantic Region (2002$)
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
   Species Benefitting from tidal        Acres of required         Total willingness to pay per acre per year
        wetlands restoration            wetlands restoration
------------------------------------
                                     Counties Abutting Affected Water Bodies
----------------------------------------------------------------------------------------------------------------
Winter flounder                      .........................  Total Value..................        $77,194,196
                                                               --------------------------------
Atlantic silverside                  25,589 acres               Nonuse Value.................         73,982,015
                                    ----------------------------
Striped killifish                    .........................  Total Value..................        132,170,436
                                                               --------------------------------
                                     43,813 acres               Nonuse Value.................        126,670,601
------------------------------------
                      All Households Residing Within 32.43 Miles of Affected (Low Estimate)
----------------------------------------------------------------------------------------------------------------
Winter flounder                      .........................  Total Value..................       $265,877,962
                                                               --------------------------------
Atlantic silverside                  25,589 acres               Nonuse Value.................        254,814,331
                                    ----------------------------
Striped killifish                    .........................  Total Value..................        455,231,200
                                                               --------------------------------
                                     43,813 acres               Nonuse Value.................        436,288,260
------------------------------------
               All Households Residing Within 32.43 Miles of Affected Water Bodies (Low Estimate)
----------------------------------------------------------------------------------------------------------------
Winter flounder                      .........................  Total Value..................       $129,445,085
                                                               --------------------------------
Atlantic silverside                  25,589 acres               Nonuse.......................        124,058,656
                                    ----------------------------
Striped killifish                    .........................  Total Value..................        221,633,417
                                                               --------------------------------
                                     43,813 acres               Nonuse Value.................        212,410,876
----------------------------------------------------------------------------------------------------------------

    The values in Table X-39 do not account for all species lost to 
impingement and entrainment in the North Atlantic Region (e.g., tautog) 
and include benefits for species not affected by impingement and 
entrainment. EPA continues to evaluate this approach as an alternative 
for estimating comprehensive non-use benefits associated with this 
regulation.

e. Estimates of the Value of the Preferred Option for the North 
Atlantic Region

    Table X-40 shows the percent reduction in impingement and 
entrainment losses for each of the affected species included in this 
analysis. The preferred option is expected to reduce impingement and 
entrainment losses by 18.4 to 23.8 percent, depending on species. EPA 
applied the percent reduction for the species that determined the 
number of acres of restoration required. For tidal wetlands, winter 
flounder required the largest number of acres of restoration. 
Accordingly, EPA used the 18.73% reduction in impingement and 
entrainment for winter flounder to calculate the benefits of the 
preferred technology. Similarly, EPA used the 18.97% reduction for 
northern pipefish to estimate benefits of the lower bound estimate of 
SAV restoration, and the 23.75% reduction for scup to estimate upper 
bound benefits for SAV.

 Table X-40.--Reductions in Impingement and Entrainment Losses With the
                            Preferred Option
------------------------------------------------------------------------
                                                               Percent
                          Species                             reduction
------------------------------------------------------------------------
Winter flounder............................................        18.73
Atlantic silverside........................................        21.78

[[Page 13574]]

 
Striped killifish..........................................        18.43
Threespine stickleback.....................................        31.17
Northern pipefish..........................................        18.97
Scup.......................................................        23.75
------------------------------------------------------------------------

    Table X-41 gives the range of WTP values for the preferred option 
for the North Atlantic region. Summing the values for wetlands and SAV 
restoration, the total benefits of the preferred option for the six 
species identified above range from $15 to $98 million (2002$). Nonuse 
value only ranges from $14 to $92 million (2002$).

Table X-41.--WTP Values for Wetlands and SAV Restoration of Fish for the
      North Atlantic Region, Based on the Preferred Option (2002$)
------------------------------------------------------------------------
                                            Lower bound     Upper bound
------------------------------------------------------------------------
                 Counties Abutting Affected Water Bodies
------------------------------------------------------------------------
Total Value.............................     $14,840,614     $28,573,472
Nonuse Value............................      14,171,720      26,871,437
-----------------------------------------
   All Households Residing Within 32.43 Miles of Affected Water Bodies
                             (High Estimate)
------------------------------------------------------------------------
Total Value.............................     $51,115,141     $98,414,866
Nonuse Value............................      48,811,287      92,552,594
-----------------------------------------
All Households Residing Within 32.43 Miles of Affected Water Bodies (Low
                                Estimate)
------------------------------------------------------------------------
Total Value.............................     $24,885,868     $47,914,165
Nonuse Value............................      23,764,215      45,060,065
------------------------------------------------------------------------

f. Per Household Values of Changes in Impingement and Entrainment 
Losses for the North Atlantic Region

    Another way of presenting these results is to calculate the implied 
per household WTP for households residing in the two different 
definitions of the study area. Table X-42 presents results of these 
calculations. A total of 3.65 million households live in the counties 
abutting affected water bodies while 4.2 million households live within 
a 32.4 mile radius of affected water bodies. This implies a total WTP 
to eliminate all I&E losses of $21.70 to $40.62 and non-use WTP of 
$20.73 to $33.97 per household residing in the counties abutting 
affected water bodies.
    If a 32.4 mile radius is used in these calculations, the implied 
WTP values to reduce all I&E losses range from $31.62 to $121.57 and 
non-use WTP range $29.92 to $113.68 per household residing in the 32.4 
mile-radius area. All values are given in 2002$.

   Table X-42.--Values Per Household for Total Affected Population of the North Atlantic, for SAV and Wetlands
                                                   Restoration
----------------------------------------------------------------------------------------------------------------
                                                          Baseline losses                Preferred option
                                                 ---------------------------------------------------------------
                                                    Lower bound     Upper bound     Lower bound     Upper bound
----------------------------------------------------------------------------------------------------------------
                                        Households in Bordering Counties
---------------------------------------------------------------------------------
Total Value (nonuse + use)......................     $79,208,646    $148,246,010     $14,840,614     $28,573,472
Total value/hh..................................           21.70           40.62            4.07            7.83
Total non-use value.............................      75,641,944     139,917,060      14,171,720      26,871,437
Non-use value/hh................................           20.73           33.97            3.44            6.52
-------------------------------------------------
                               Households Within 32.4 Mile Radius (high estimate)
---------------------------------------------------------------------------------
Total Value (nonuse + use)......................    $272,816,278    $510,599,883     $51,115,141     $98,414,866
Total value/hh..................................           64.96          121.57           12.17           23.43
Total non-use value.............................     260,531,584     481,912,693      48,811,287      92,552,594
Non-use value/hh................................           61.46          113.68           11.51           21.83
-------------------------------------------------
                                Households Within 32.4 Mile Radius (low estimate)
---------------------------------------------------------------------------------
Total Value (nonuse + use)......................    $132,823,067    $248,590,160     $24,885,868     $47,914,165
Total value/hh..................................           31.62           59.19            5.93           11.41
Total non-use value.............................     126,842,152     234,623,543      23,764,215      45,060,065
Non-use value/hh................................           29.92           55.35            5.61           10.63
----------------------------------------------------------------------------------------------------------------


[[Page 13575]]

    This calculation implies a total WTP to reduce impingement and 
entrainment losses of $4.07 to $7.83 and non-use WTP of $3.44 to $6.52 
per household residing in the counties abutting affected water bodies. 
If a 32.4 mile radius is used in these calculations, the implied WTP 
values to reduce all I&E losses range from $5.63 to $23.43 and non-use 
WTP range from $5.61 to $21.83 per household residing in the 32.4 mile-
radius area. All values are provided in 2002$.
2. Future Steps in Analyzing Nonuse Values
    In addition to the nonuse valuation approach summarized in the 
preceding sections, EPA is also exploring and soliciting comment on 
alternative methodologies for estimating nonuse benefits for the Final 
rule.

a. Nonuse and Use Values: Literature Review

    In response to public comments regarding the analysis of non-use 
values in the proposed rule, the Agency continues to review and 
summarize surface water valuation studies that estimate non-use and 
total use values for water resources. The purpose of this review is to 
report on the range of nonuse values for water resources in the 
economic literature, to compare estimates of use and nonuse values for 
users and nonusers, and explore the feasibility of deriving nonuse 
values based on these comparisons.
    Based on comments received, EPA is re-evaluating past studies and 
their applicability to this rule. These studies summarized and compared 
nonuse and use values (e.g., Fisher and Raucher's (1984) and Brown's 
(1993)). The Fisher and Raucher's (1984) comparison of nonuse and use 
values relies on eight contingent valuation studies of benefits of 
improved water quality published from 1974 to 1983. This analysis 
served as a basis for developing the 50 percent rule used for 
estimating non-use benefits in the proposed rule analysis. Brown (1993) 
conducts a similar assessment of nonuse and use values that relies on 
31 contingent valuation studies published from 1980 to 1992.
    EPA is also identifying a set of new studies that may contain 
information about the relative magnitude of use and nonuse values for 
aquatic resources affected by this rule. As of the publication of this 
NODA, EPA is reviewing 18 surface water valuation studies that meet a 
set of criteria for suitability and reliability (e.g., the resource 
amenities valued in the study must be water bodies that provide 
recreational fishing, U.S. populations are surveyed in the study, 
research methods in the study are supported by literature). As a 
consequence of these criteria, EPA has identified fewer applicable 
studies than Brown (1993). These studies use either stated preference 
or a combination of stated and revealed preference techniques to elicit 
nonuse and use values associated with aquatic habitat improvements (see 
document ``Comparison of Nonuse and Use Values from Surface Water 
Valuation Studies'' (See DCN 5-1011)). These studies vary in several 
respects, including the specific environmental change valued, the types 
of values estimated, the magnitude of the change, the geographic region 
affected by environmental changes and survey administration methods. 
EPA is qualitatively analyzing these studies and interpreting relevant 
characteristics to determine their relevance for the analysis of nonuse 
values resulting from this rule.
    These 18 valuation studies provide 27 observations of use and non-
use values associated with various aquatic habitat improvements, 
because six studies generated more than one nonuse value estimate. A 
list of the studies being considered by EPA is provided in Table X-43; 
Appendix A in the document ``Comparison of Nonuse and Use Values from 
Surface Water Valuation Studies'' (See DCN 5-1011)'' that accompanies 
this NODA presents key information from each study compiled by EPA.

              Table X-43.--Examples of Studies That Provide Information About Use and Nonuse Values
----------------------------------------------------------------------------------------------------------------
            Author                   Year                    Title                            Source
----------------------------------------------------------------------------------------------------------------
Clonts & Malone...............  1990.........  Preservation Attitudes and        In: Social Science and Natural
                                                Consumer Surplus in Free          Resource Recreation
                                                Flowing Rivers.                   Management, Joanne Vining,
                                                                                  editor. Westview Press,
                                                                                  Boulder, CO. pp. 301-317.
Croke et al...................  1986-87......  Estimating the Value of Improved  Journal of Environmental
                                                Water Quality in an Urban River   Systems. Vol. 16, No. 1. pp.
                                                System.                           13-24.
Cronin........................  1982.........  Valuing Nonmarket Goods Through   Pacific Northwest Laboratory,
                                                Contingent Markets.               PNL-4255, Richland, WA.
Desvousges et al..............  1983.........  Contingent Valuation Design and   In: A Comparison of Alternative
                                                Results: Option and Existence     Approaches for Estimating
                                                Values.                           Recreation and Related
                                                                                  Benefits of Water Quality
                                                                                  Improvements. U.S.
                                                                                  Environmental Protection
                                                                                  Agency, Economic Analysis
                                                                                  Division, Washington, D.C.
Huang et al...................  1997.........  Willingness to Pay for Quality    Journal of Environmental
                                                Improvements: Should Revealed     Economics and Management Vol.
                                                and Stated Preference Data Be     34, No. 3. pp. 240-255.
                                                Combined?.
Kaoru.........................  1993.........  Differentiating Use and Nonuse    Environmental and Resource
                                                Values for Coastal Pond Water     Economics. Vol. 3. pp. 487-
                                                Quality Improvements.             494.
Lant & Roberts................  1990.........  Greenbelts in the Cornbelt:       Environment and Planning. Vol.
                                                Riparian Wetlands, Intrinsic      22. pp. 1375-1388.
                                                Values, and Market Failure.
Magat et al...................  2000.........  An Iterative Choice Approach to   Journal of Risk and
                                                Valuing Clean Lakes, Rivers,      Uncertainty. Vol. 21, No. 1.
                                                and Streams.                      pp. 7-43.
Mitchell & Carson.............  1981.........  An Experiment in Determining      Preliminary Draft of a report
                                                Willingness to Pay for National   to the U.S. Environmental
                                                Water Quality Improvements.       Protection Agency. Resources
                                                                                  for the Future, Inc.,
                                                                                  Washington, D.C.
Olsen et al...................  1991.........  Existence and Sport Values for    Rivers. Vol. 2, No. 1. pp. 44-
                                                Doubling the Size of Columbia     56.
                                                River Basin Salmon and
                                                Steelhead Runs.
Roberts & Leitch..............  1997.........  Economic Valuation of Some        Agricultural Economics Report
                                                Wetland Outputs of Mud Lake.      No. 381, Department of
                                                                                  Agricultural Economics, North
                                                                                  Dakota Agricultural Experiment
                                                                                  Station, North Dakota State
                                                                                  University.
Rowe et al....................  1985.........  Economic Assessment of Damage     Energy and Resource
                                                Related to the Eagle Mine         Consultants, Inc., Boulder,
                                                Facility.                         CO.

[[Page 13576]]

 
Sanders et al.................  1990.........  Toward Empirical Estimation of    Water Resources Research. Vol.
                                                the Total Value of Protecting     26, No. 7. pp. 1345-1357.
                                                Rivers.
Sutherland & Walsh............  1985.........  Effect of Distance on the         Land Economics. Vol. 61, No. 3.
                                                Preservation Value of Water       pp. 282-291.
                                                Quality.
Walsh et al...................  1978.........  Option Values, Preservation       EPA-600/5-78-001, Socioeconomic
                                                Values and Recreational           Environmental Studies Series,
                                                Benefits of Improved Water        Office of Research and
                                                Quality: a Case Study of the      Development, U.S.
                                                Southe Platte River Basin,        Environmental Protection,
                                                Colorado.                         Research Triangle Park, NC.
Welle.........................  1986.........  Potential Economic Impacts of     Dissertation, University of
                                                Acid Deposition: A Contingent     Wisconsin-Madison.
                                                Valuation Study of Minnesota.
Whitehead & Groothuis.........  1992.........  Economic Benefits of Improved     Rivers. Vol. 3. pp. 170-178.
                                                Water Quality: a case study of
                                                North Carolina's Tar-Pamlico
                                                River.
Whitehead et al...............  1995.........  Assessing the Validity and        Journal of Environmental
                                                Reliability of Contingent         Economics and Management. Vol.
                                                Values: A Comparison of On-Site   29. pp. 238-251.
                                                Users, Off-Site Users, and Non-
                                                users.
----------------------------------------------------------------------------------------------------------------

    The Agency is considering applying the results of this type of 
review and analysis to estimate nonuse value for aquatic resources 
potentially affected by impingement and entrainment for the final rule 
analysis, and recognizes that this approach requires careful accounting 
of factors that are likely to affect nonuse values of aquatic resources 
such as the geographic scale of environmental improvements, regional or 
national importance of the affected resources, and the magnitude of 
environmental quality changes. The Agency seeks comment on this general 
approach as well as the applicability and feasibility of estimating 
nonuse values that are based on (1) a percent or fraction of use values 
per household (see Section X B 4 of this preamble for summary of 
methods for assessing recreational use values) and/or (2) specific user 
and nonuser populations for this rule. The agency also solicits 
feedback about the studies reviewed by EPA as well as other studies 
that might be suitable.

b. Meta Analysis

    In addition to simply reviewing available information about the 
relative magnitudes of nonuse and use values, EPA is also considering 
regression-based meta-analysis of nonuse WTP for water resources. 
Depending on the suitability of available data, a meta-analysis can 
provide information on the relative influence of various study, 
economic, and natural resource characteristics on nonuse willingness to 
pay. Economic literature characterize meta analysis as a rigorous 
alternative to the more casual, narrative discussion of research 
studies which typify many attempts to summarize available information 
about environmental values. The primary advantage of a regression-based 
approach is that it may account for differences among study sites that 
may contribute to changes in nonuse values, to the extent permitted by 
available data. The following discussion briefly summarizes EPA's 
approach to this analysis. DCN 5-1011 provides further detail.
    The dependent variable in the regression-based meta-analysis may be 
either the estimated nonuse value or the total value (including use and 
nonuse value) of aquatic habitat improvements. The total value can be 
modeled as a function of explanatory variables that include (1) core 
economic variables and (2) study design effects variables. The core 
economic variables are used to characterize specifics of the 
resource(s) valued (e.g. whether they are estuarine or freshwater); the 
geographic scale of resource improvements (e.g., single water body 
versus multiple water bodies); the estimated use values for 
environmental quality improvement, quantitative or categorical measures 
of environmental quality improvements, and survey respondents' 
characteristics such as mean income of survey respondents. Study design 
effects characterize the year in which a study was conducted, the 
elicitation format of the survey (e.g., telephone and mail); the 
elicitation method (e.g., open ended WTP method). DCN 5-1011 provides 
information on key variables available from the 18 studies reviewed by 
EPA.
    EPA also notes potential limitations of this approach. Limitations 
of the regression analysis approach specifically stem from the number 
of studies that meet criteria for inclusion, the number of variables 
that could be included in the regression analysis (which depends on the 
number of and information available from the original studies), as well 
as degrees of freedom and statistical significance. For example, study 
differences often prevent the use of a single measure of the degree of 
environmental quality improvements. Prior meta-analyses of this type, 
including Woodward and Wui (2000) and Poe et al. (2001), lack a 
continuous and quantified measure of environmental quality improvement. 
The use of other economic variables that might be desirable from a 
theoretical perspective (e.g., information on substitute goods) may 
complicate extraction of suitable data from the underlying studies. EPA 
also recognizes that clear and objective criteria are needed to 
determine which studies are suitable for inclusion in meta analysis; 
criteria should acknowledge issues related to potential bias associated 
with stated preference studies, and steps that the researchers should 
take to minimize bias, as noted in Section X B 1 of this preamble. One 
key challenge of both of the approaches discussed in this section is to 
determine the applicability of study results to the policy case of 
interest (i.e., fish impacts due to impingement and entrainment in this 
rule) because of significant variations in study objectives and 
methodologies. The use (and interpretation) of the value estimates to 
predict WTP in specific cases will follow the methodologies from the 
benefits transfer literature (e.g., Vandenberg et al. 2001; Desvousges 
et al., 1998).
    EPA seeks comments on appropriateness of the meta-analysis approach 
for calculating nonuse values for aquatic habitat improvements 
associated with reduced impingement and entrainment in this rule.

F. Regional-Level Benefit Cost Analysis

    This section presents EPA's estimates of the total monetary value 
of the baseline impingement and entrainment losses at cooling water 
intake structures located in the North Atlantic and Northern California 
study regions. A comprehensive estimate of the value of the resource 
should include both use

[[Page 13577]]

and nonuse values. However, EPA was able to estimate nonuse values for 
the North Atlantic region only due to data limitations. ``Nonuse 
values, like use values, have their basis in theory of individual 
preferences and the measurement of welfare changes. According to 
theory, use values and nonuse values are additive'' (M. Freeman, 1993). 
The following sections present the estimated monetary value of 
impingement and entrainment losses under the baseline scenario and the 
estimated impingement and entrainment reduction benefits under the 
preferred option for the two study regions. The Agency, however, points 
out the estimate of benefits for the Northern California region is 
incomplete and includes recreational and commercial fishing benefits 
only.
1. Benefit-Cost Analysis of the Preferred Option for the North Atlantic 
Region

a. Total Monetary Value of Baseline Impingement and Entrainment Losses 
in the North Atlantic Region

    Table X-44 presents EPA's estimates of the total value of baseline 
impingement and entrainment losses at cooling water intake structures 
in the North Atlantic region. The estimated nonuse value of fishery 
resources lost to impingement and entrainment ranges from $75.64 
million to $139.92 million per year (2002$). Note that EPA has provided 
two different estimates of total value in Table X-44. The first total 
value is the sum of aggregate use value and the nonuse component of 
restoration-based value. The second total value (i.e., restoration-
based total value) is simply the total value (including nonuse) for SAV 
and wetland restoration acres as presented in Section X E d of this 
preamble. The estimated total value of impingement and entrainment 
losses in the North Atlantic region ranges from $79 to $143 million 
(2002$) per year when commercial/recreational use values are added to 
the nonuse component of restoration-based values. The total value based 
on the total restoration-based value is similar in range ($79 to $148 
million).

   Table X-44.--Annual Value of Baseline Losses From Impingement and Entrainment in the North Atlantic Region
                                                (Millions 2002$)
----------------------------------------------------------------------------------------------------------------
                                       Before discounting        Discounted using 3%       Discounted using 7%
                                   --------------------------       discount rate             discount rate
                                                             ---------------------------------------------------
                                        Low          High         Low          High         Low          High
----------------------------------------------------------------------------------------------------------------
                                           Use Value of Resources Lost
----------------------------------------------------------------------------------------------------------------
Commercial Use \a,b\..............        $0.28        $0.28        $0.24        $0.24        $0.20        $0.20
Recreational Use \a,b\............         3.07         3.07         2.64         2.64         2.25         2.25
Aggregate Use Benefits............         3.36         3.36         2.88         2.88         2.45         2.45
-----------------------------------
                                       Nonuse Value of Resources Lost \c\
----------------------------------------------------------------------------------------------------------------
Restoration-based nonuse value....        75.64       139.92        75.64       139.92        75.64       139.92
-----------------------------------
                                     Total Monetary Value of Resources Lost
----------------------------------------------------------------------------------------------------------------
Total value (aggregate use +              79.00       143.28        78.52       142.80        78.09       142.37
 restoration-based non-use).......
Restoration-based total value \d\.        79.21       148.25        79.21       148.25        79.21      148.25
----------------------------------------------------------------------------------------------------------------
 Note: Sum of components may not equal totals due to rounding.
\a\ Welfare losses represent losses due to both impingement and entrainment because recreational estimates
  cannot be presented separately for these categories. Commercial/recreational use values are annual values
  derived in Section X C.
\b\ Commercial and recreational losses are presented undiscounted, and discounted at 3% and 7%. There are no low
  or high estimates for welfare losses.
\c\ Nonuse values are not discounted. Values are based on nonuse values for SAV and wetland restoration for the
  populations in counties abutting affected water bodies. Low values assume lower bound restoration acreage and
  high values assume upper bound restoration acreage amounts (see Section X E d of this preamble).
\d\ Total monetary value based on total values associated with restoration is not discounted (see Section E.2
  for detail).

b. Estimated Benefits and Costs of the Preferred Option

    Table X-45 presents the total annual costs of the preferred 
regulatory option for the North Atlantic region. The estimated pre-tax 
cost for facilities located on estuaries or tidal rivers is $17.58 
million and, for ocean-located facilities, $0.57 million. The total 
annual cost is $18.15 million.

     Table X-44.--Total Annual Costs for the North Atlantic Region (Pre-Tax) as of 2005 (in 2002$, millions)
----------------------------------------------------------------------------------------------------------------
                                                                Estuary/Tidal/
                                                                 Total River         Ocean            Total
----------------------------------------------------------------------------------------------------------------
North Atlantic...............................................          $17.58            $0.57           $18.15
----------------------------------------------------------------------------------------------------------------

    Table X-46 presents EPA's estimates of the total benefits from 
impingement and entrainment reduction in the North Atlantic region 
under the preferred option. The estimated impingement and entrainment 
reduction benefits under the preferred option range from $14.84 to 
$28.57 million per year (2002$).
    Combining the estimated cost and benefit values, the estimated net 
benefits of installing the preferred option range from negative $3.31 
million to positive $10.42 million (2002$).

[[Page 13578]]



   Table X-46.--Analysis of Costs and Benefits of the Preferred Option for the North Atlantic Region (millions
                                                     2002$)
----------------------------------------------------------------------------------------------------------------
                                       Before discounting        Discounted using 3%       Discounted using 7%
                                   --------------------------       discount rate             discount rate
                                                             ---------------------------------------------------
                                        Low          High         Low          High         Low          High
----------------------------------------------------------------------------------------------------------------
                                               Annual Use Benefits
----------------------------------------------------------------------------------------------------------------
Commercial \a,b\..................        $0.08        $0.08        $0.07        $0.07        $0.06        $0.06
Recreational \a,b\................         0.88         0.88         0.76         0.76         0.65         0.65
Aggregate Use Benefits............         0.96         0.96         0.83         0.83         0.71         0.71
-----------------------------------
                                           Annual Nonuse Benefits \c\
----------------------------------------------------------------------------------------------------------------
Restoration-Based Nonuse Benfits          14.17        26.87        14.17        26.87        14.17        26.87
 \d\..............................
-----------------------------------
                                              Total Annual Benefits
----------------------------------------------------------------------------------------------------------------
Total Benefits (aggregate use +           15.13        27.83        15.00        27.70        14.88        27.58
 restoration-based nonuse values).
Total Restoration-based Benefits          14.84        28.57        14.84        28.57        14.84        28.57
 \d\..............................
-----------------------------------
                                                Annualized Costs
----------------------------------------------------------------------------------------------------------------
Total Costs.......................        18.15        18.15        18.15        18.15        18.15        18.15
-----------------------------------
                                      Net Annual Benefits (Benefits--Costs)
----------------------------------------------------------------------------------------------------------------
Net Benefits......................       (3.02)         9.68       (3.15)         9.55       (3.27)         9.43
Restoration-based Net Benefits....       (3.31)        10.42       (3.31)        10.42       (3.31)       10.42
----------------------------------------------------------------------------------------------------------------
 Note: Sum of components may not equal totals due to rounding.
\a\ Welfare losses represent losses due to both impingement and entrainment because recreational estimates
  cannot be presented separately for these categories. Commercial/recreational use values are annual values
  derived in Section X C.
\b\ Commercial and recreational losses are presented undiscounted, and discounted at 3% and 7%. There are no low
  or high estimates for welfare losses.
\c\ Nonuse values are not discounted. Values are based on nonuse values for SAV and wetland restoration for the
  populations in counties abutting affected water bodies. Low values assume lower bound restoration acreage and
  high values assume upper bound restoration acreage amounts (see Section X E d of this preamble).
\d\ Total monetary value based on total values associated with restoration is not discounted (see Section E.2
  for detail).

2. Benefit-Cost Analysis of the Preferred Option for the Northern 
California Region

a. Total Monetary Value of Baseline Impingement and Entrainment Losses 
in the Northern California Region

    Table X-47 presents EPA's estimates of the monetary value of 
baseline impingement and entrainment losses at cooling water intake 
structures in the Northern California region. As noted above, EPA did 
not estimate nonuse values of impingement and entrainment losses for 
the Northern California region analysis; data aren't available to 
support use of the restoration-based approach for the North California 
region. The estimated use value of fishery resources lost to 
impingement and entrainment in the Northern California region ranges 
from $1.1 million to $1.49 million per year (2002$).

     Table X-47.--Annual Values of the Baseline Fishery Losses From
 Impingement and Entrainment in the Northern California Region (millions
                                 2002$)
------------------------------------------------------------------------
                                                 Discounted    Discount
                                      Before      using 3%     using 7%
                                    discounted    discount     discount
                                                    rate         rate
------------------------------------------------------------------------
                     Use Value of the Resources Lost
------------------------------------------------------------
Commercial Use a b...............        $0.06        $0.05        $0.05
Recreational Use a b.............         1.43         1.22         1.05
Total Use Benefits...............         1.49         1.27        1.10
------------------------------------------------------------------------
 Note: Sum of components may not equal totals due to rounding.
a Welfare losses represent losses due to both impingement and
  entrainment because recreational estimates cannot be presented
  separately for these categories.
b Commercial and recreational losses are presented undiscounted, and
  discounted at 3% and 7%. There are no low or high estimates for
  welfare losses.


[[Page 13579]]

b. Estimated Benefits and Costs of the Preferred Option for the 
Northern California Region

    Table X-48 presents the total annual costs of the preferred 
regulatory option for the Northern California region. The estimated 
pre-tax cost for facilities located on estuaries or tidal rivers is 
$6.6 million and, for ocean-located facilities, $13.5 million. The 
total annualized cost is $20.1 million.

 Table X-48.--Total Annual Costs for the Northern California Region (Pre-
                  Tax) as of 2005 (in 2002$, millions)
------------------------------------------------------------------------
                                  Estuary/
                                 Tidal River      Ocean         Total
------------------------------------------------------------------------
Northern California...........        $6.60        $13.50        $20.10
------------------------------------------------------------------------

    Table X-49 presents EPA's estimates of the total use benefits from 
impingement and entrainment reduction at cooling water intake 
structures in the Northern California region under the preferred 
option. The estimated use benefits of impingement and entrainment 
reduction under the preferred option range from $0.62 to $0.81 million 
per year (2002$), depending on the factor for discounting the use value 
of lost resources. EPA did not estimate net benefits in CA due to the 
lack of information on nonuse.

 Table X-49.--Analysis of Costs and Benefits of the Preferred Option in
             the Northern California Region (millions 2002$)
------------------------------------------------------------------------
                                                 Discounted   Discounted
                                      Before      using 3%     using 7%
                                   discounting    discount    discounted
                                                    rate         rate
------------------------------------------------------------------------
                           Annual Use Benefits
------------------------------------------------------------------------
Commercial a b...................        $0.02        $0.02        $0.02
Recreational a b.................         0.79         0.66         0.60
Total Use Benefits...............         0.81         0.68         0.62
Nonuse Benefits..................          (c)  ...........  ...........
----------------------------------
                            Annualized Costs
------------------------------------------------------------------------
Total Costs......................        20.10        20.10        20.10
----------------------------------
                  Net Annual Benefits (Benefits--Costs)
------------------------------------------------------------------------
Total Net Benefits...............          (c)          (c)         (c)
------------------------------------------------------------------------
 Note: Sum of components may not equal totals due to rounding.
a Welfare losses represent losses due to both impingement and
  entrainment because recreational estimates cannot be presented
  separately for these categories.
b Commercial and recreational losses are presented undiscounted, and
  discounted at 3% and 7%. There are no low or high estimates for
  welfare losses.
c Not estimated.

G. Break-Even Analysis

    Estimating nonuse values is an extremely challenging and uncertain 
exercise, particularly when primary research using stated preference 
methods is not a feasible option (as is the case for this rulemaking). 
In the preceding section, EPA described possible alternative approaches 
for developing nonuse benefit estimates based on benefits transfer and 
associated methods. Due to the uncertainties of providing estimates of 
the magnitude of nonuse values associated with the regulation, this 
section provides an alternative context with which to consider the 
potential magnitude of nonuse values. The approach used here applies a 
``break-even'' analysis to identify what nonuse values would have to be 
in order for the proposed option to have benefits that are equal to 
costs.
    The break-even approach uses EPA's estimated commercial and 
recreational use benefits for the rule and subtracts them from the 
estimated annual costs. The resulting ``net cost'' enables one to work 
backwards to estimate what nonuse values would need to be (in terms of 
willingness to pay per household per year) in order for total annual 
benefits to equal annualized costs. Table X-50 provides such an 
assessment for the marine resources impacted in the two regions for 
which commercial and recreational benefit estimates are available to 
date. The table shows the values using a seven percent discount rate.

[[Page 13580]]



Table VII-50.--Implicit Non-use Value--Break-even Points for Regional Benefit-Cost Analysis, Using a 7% Discount
                                                      Rate
----------------------------------------------------------------------------------------------------------------
                                                                                         Number of    Break-even
                                                     Use       Compliance   Net costs    households   nonuse WTP
                  Study region                     benefits    costs \1\       \2\       (millions)      per
                                                     \1\                                    \3\       household
----------------------------------------------------------------------------------------------------------------
North Atlantic.................................        $0.70       $18.15       $17.45
    Abutting Counties..........................  ...........  ...........  ...........         3.65        $4.78
    Within 32.4 Diles..........................  ...........  ...........  ...........         4.20         4.15
    Statewide..................................  ...........  ...........  ...........         5.14         3.39
Northern California............................         0.64        20.10        19.46
    Abutting Counties..........................  ...........  ...........  ...........         2.38         8.18
    Within 32.4 Miles..........................  ...........  ...........  ...........         2.50         7.78
    All N. CA Counties.........................  ...........  ...........  ...........         4.99         3.90
    Statewide..................................  ...........  ...........  ...........        11.51        1.69
----------------------------------------------------------------------------------------------------------------
\1\ Millions of 2002$s per year, from 2/19/03 NODA: Tables X-53 and X-56
\2\ Annualized compliance costs minus annual use benefits only (millions 2002$s)
\3\ Millions of households:(a) in abutting counties only (b) within 32 miles of impacted marine resources, (c)
  and (d) statewide (or, for northern half of CA). Sources: US Census 2000 (BLS): http://factfinder.census.gov;
\4\ Dollars per household per year that, when added to use benefits, would yield a total annual benefit (use
  plus nonuse) equal to the annualized costs.

    As shown in Table X-50, nonuse values per household for the 
affected marine resources in the region would have to amount to at 
least $4.78 per year to residents in the North Atlantic region--if 
assuming that only households in abutting counties have nonuse values 
for the affected marine resources--in order for the proposed option to 
have total benefits (annual use plus nonuse values) that would equal or 
exceed the estimated annual compliance costs for the proposed option. 
For households within 32.4 miles of the impacted resources, nonuse 
values would have to equal $4.15 per year to have total benefits equal 
the costs of the proposed option. If nonuse values are considered for 
all households in the coastal states of the region (CT, ME, MA, NH, and 
RI), then the break-even nonuse value would need to be only $3.39 per 
household.
    For the Northern California region, the ``break-even'' nonuse 
willingness to pay (WTP) per household would need to be $8.18, based 
solely on households in coast-abutting counties only. For households 
within 32.4 miles of the impacted resources, nonuse values would have 
to equal $7.78 per year to have total benefits equal the costs of the 
proposed option. This level of break-even nonuse value would decline to 
$3.90 if all households in the northern part of California are 
considered, and declines further to $1.69 per household per year if the 
costs are spread over all households statewide.
    While this approach of backing out the ``breakeven'' nonuse value 
per household does not directly answer the question of what nonuse 
values might actually be worth for the 316b rulemaking, these results 
do frame the question with a useful perspective that appeals to common 
sense and facilitates policy-making decisions. The break-even approach 
poses the question: ``are the implicit non-use WTP estimates per 
household at plausible levels, given empirical evidence available from 
the existing body of empirical research?''. EPA requests comment on 
whether these values are plausible as an average across all households 
in the target area, and data or research that addresses this question.

XI. Implementation and Other Regulatory Refinements

A. Definition and Methods for Determining the ``Calculation Baseline''

    EPA received a number of comments on the definition and methods 
associated with the calculation baseline during the comment period for 
the proposed Phase II rule. This calculation baseline sets a 
hypothetical baseline against which compliance with the proposed 
technology-based performance standards in Sec.  125.94 is determined 
(see 67 FR 17176). The calculation provides facilities a consistent 
basis for determining compliance and allows them to take credit for 
fish protection technologies already in place at their facility. EPA 
proposed in Sec.  125.93 (see 67 FR 17221) that the ``calculation 
baseline was an estimate of impingement mortality and entrainment that 
would occur at your site assuming you had a shoreline cooling water 
intake structure with an intake capacity commensurate with a once-
through cooling water system and with no impingement and/or entrainment 
reduction controls.'' Some commenters stated that, in general, the 
proposed definition was too vague. They added that the regulated 
industry as well as the permitting authority would be better served if 
there were more specific design criteria included in the definition. In 
response to these comments, EPA is considering and is requesting 
comments on adding the following specifications to the definition:
    [sbull] Baseline cooling water intake structure is located at, and 
the screen face is parallel to, the shoreline. EPA is considering that 
it may be appropriate to allow credit in reducing impingement mortality 
from screen configurations that employ angling of the screen face and 
currents to guide organisms away from the structure before they are 
impinged.
    [sbull] Baseline cooling water intake structure opening is located 
at or near the surface of the source waterbody. This may be appropriate 
to allow credit in reducing impingement mortality or entrainment due to 
placement of the opening in the water column.
    [sbull] Baseline cooling water intake structure has a traveling 
screen with the standard \3/8\ inch mesh size commonly used to keep 
condensors free from debris. This would allow a more consistent 
estimation of the organisms that are considered ``entrainable'' vs. 
``impingeable'' by specifying a standard mesh size that can be related 
to the size of the organism that may potentially come in contact with 
the cooling water intake structure.
    [sbull] Baseline practices and procedures are those that the 
facility would maintain in the absence of any operational controls 
implemented in whole or in part for the purpose of reducing impingement 
mortality and entrainment. This would recognize and provide credit for 
any operational measures, including flow or velocity

[[Page 13581]]

reductions, a facility had adopted that reduce impingement mortality or 
entrainment.
    If all of the above specifications are determined to be appropriate 
for the baseline cooling water intake structure that is used to 
determine the calculation baseline, EPA would modify the regulatory 
definition at proposed Sec.  125.93 to read as follows:

    Calculation baseline means an estimate of impingement mortality 
and entrainment that would occur at your site assuming (1) the 
cooling water system has been designed as a once-through system; (2) 
the opening of the cooling water intake structure is located at, and 
the face of the standard \3/8\-inch mesh traveling screen is 
oriented parallel to, the shoreline near the surface of the source 
waterbody; and (3) the baseline practices and procedures are those 
that the facility would maintain in the absence of any operational 
controls, including flow or velocity reductions, implemented in 
whole or in part for the purposes of reducing impingement mortality 
and entrainment.''

    EPA also considered whether basing the calculation baseline on a 
shoreline intake would penalize facilities with constructed waterways 
such as intake canals or intake bays, if these configurations had a 
higher potential for impingement and entrainment than a ``shoreline'' 
intake located on the open waterbody. Basing calculations on this 
hypothetical open waterbody intake could potentially result in such 
facilities having to reduce impingement and entrainment by more than 
the specified performance ranges. This is not EPA's intent. Rather, 
facilities should demonstrate they have (or will) reduce impingement 
mortality or entrainment by the percentages established in the proposed 
performance ranges when compared to an intake at which no measures have 
been taken to reduce impingement mortality and entrainment. In the case 
of an intake located on the ``shoreline'' of an intake canal or intake 
bay, EPA would consider the intake's location on the constructed 
waterway to be the shoreline for purposes of the calculation baseline.
    EPA solicits comment on these design specifications for inclusion 
or exclusion in the definition of the calculation baseline. In 
particular, EPA is interested in whether it would be redundant to 
include all of the hypothetical design criteria. EPA requests comments 
on any other design criteria that may be appropriate to set a 
consistent and reproducible baseline upon which to determine compliance 
with the proposed performance standards. EPA also requests comment on 
whether these design criteria will provide the intended credit in the 
compliance analyses to those facilities which have implemented 
technologies or operational measures that reduce impingement mortality 
and/or entrainment, without creating unintended consequences such as 
the opportunity to seek credit for hypothetical ``reductions'' from 
unreasonable claims regarding baseline operational measures.
    One commenter suggested that determination of the calculation 
baseline for entrainment be supplemented with an optional alternative, 
``As Built'' approach. Under this approach, a facility would determine 
the baseline for calculating entrainment reduction by either: (1) Using 
actual historical measurements of entrained organisms before 
installation of the new intake technology; or (2) sampling immediately 
in front of the new technology and enumerating organisms of a size that 
will pass through a standard \3/8\-inch screen. To determine 
entrainment reduction, the facility would then sample and enumerate 
entrained organisms behind the new technology or at the outfall. This 
second option would eliminate the need for predictive estimates of 
baseline entrainment occurring at a facility and would not require 
collection of historical data nor the use of estimations that may 
increase uncertainty.
    Potential benefits cited for using this alternative ``As Built'' 
approach for estimating compliance with performance included that (1) 
the facility would demonstrate entrainment reductions directly in an 
easily verifiable manner that does not rely on hypothetical 
calculations; (2) facilities could install new technologies sooner than 
they would under the other calculation baseline approach, because pre-
deployment studies would not be necessary; and (3) the baseline numbers 
would be actual samples of entrained or entrainable organisms. EPA 
requests comments on providing this approach as an optional alternative 
for determining the calculation baseline for entrainment.
    It should be noted that the commenter states that the ``As Built '' 
approach for determining the calculation baseline would not be 
appropriate for impingement as it is highly species-specific and life-
stage specific with no reliable way to measure ``impingeable'' 
organisms outside of the cooling water intake structure. The commenter 
suggests that to determine the calculation baseline for impingement 
mortality the only valid approach would be to collect samples before 
the new intake technology is deployed so that the baseline impingement 
(pre-deployment) can be compared to the post-deployment impingement to 
estimate the percent reduction in impingement mortality attributable to 
the technology. EPA requests additional comment on the applicability of 
an ``As Built'' approach to estimate the calculation baseline for 
impingement mortality.
    The proposed Phase II preamble language (see 67 FR 17176) stated 
that the calculation baseline could be estimated by evaluating existing 
data from a nearby facility. Some commenters requested that the 
calculation baseline be allowed to be estimated using data from 
facilities that are not located nearby or that are located on another 
waterbody as long as the two facilities had closely comparable 
environmental conditions including similar locations and similar 
species that would be impinged and entrained. These same commenters 
also requested that the proposed rule retain flexibility for the 
facility in choosing the location of the hypothetical shoreline intake 
as long as the location is one where an intake might have been placed 
in the exercise of sound engineering judgment, without regard for fish 
protection. Another commenter stated that assessing the mere presence 
or absence of organisms at a nearby facility or in the same waterbody 
may not accurately characterize the potential for impingement and 
entrainment at a future cooling water intake structure. This commenter 
also indicated that site-specific interactions of organisms with the 
hydrology of the source waterbody and the cooling water intake 
structure configuration would confound the assessment and that 
composition and abundance of impingement of organisms can be very 
different for two cooling water intake structures located close to one 
another.
    EPA requests additional comment on the appropriateness of allowing 
facilities to define the calculation baseline using data from other 
facilities, what types of other facilities might be appropriate for 
this purpose, and whether the variability introduced due to site-
specificity is greater than that due to normal fluctuations in natural 
systems.

B. Options for Evaluating Compliance With Performance Standards

    EPA received numerous comments requesting clarification on how 
compliance with the proposed performance standards for reducing 
impingement mortality by 80-95% and entrainment by 60-90% would be 
determined. For both impingement mortality and entrainment, EPA is 
evaluating two basic methods for

[[Page 13582]]

determining a percent reduction: (1) Consideration of all fish and 
shellfish species that have the potential to be impinged or entrained, 
or (2) consideration of fish and shellfish from only a subset of 
species determined to be representative of all the species that have 
the potential to be impinged or entrained. For either approach, species 
impinged or entrained may be measured by counting the total number of 
individual fish and shellfish, or by weighing the total wet or dry 
biomass of the organisms. These approaches are described in more detail 
below. EPA invites comments on these approaches and whether EPA should 
require facilities to use a specific method or only provide guidance.
All Species Approach
    For determining compliance with the impingement mortality and 
entrainment standards, EPA is considering requiring that all species of 
fish and shellfish present at the cooling water intake structure and 
having the potential to be impinged be included in the measurement. 
Under this approach, the permittee would measure either the total 
number or the total biomass of the fish and shellfish impinged (without 
regard to their taxonomic grouping) and use this number to compare to 
the calculation baseline to determine compliance with the impingement 
mortality reduction performance standards. This approach would be the 
simplest conceptually to implement since only the total number or mass 
of impinged organisms would need to be measured. However, this approach 
would have the limitation that information on efficacy of the 
technology related to each species would not be collected, and all 
species would be treated as equivalent, without regard to their 
relative ecological, economic, recreational, or cultural importance.
    EPA is similarly considering requiring that entrainment losses also 
be measured by counting the total numbers of organisms entrained. This 
approach has been commonly used in freshwater rivers and streams and 
produces either a total number of undifferentiated eggs and larvae 
entrained, or an identification of the entrained eggs and larvae by 
species or family. Several commenters emphasized that a permittee 
should not be required to prove reduced entrainment of every entrained 
species by at least 60 percent. These commenters also stated that the 
difficulty and cost of taxonomic classifications makes species-specific 
monitoring unreasonable, and that classification is not possible for 
early life stages of some species.
    If EPA were to require the use of an approach that considers the 
total number of all fish and shellfish that have the potential to be 
impinged or entrained, regardless of species, language similar to the 
following would be added at proposed Sec.  125.94(b)(5):

    (5) Compliance with impingement mortality and entrainment 
performance standards in paragraphs (b)(1) through (4) above must be 
determined based on a comparison of the enumeration of all fish and 
shellfish impinged and killed and entrained with those estimated to 
be impinged and killed and entrained at the calculation baseline.

EPA requests comment on the approach of enumerating all fish and 
shellfish, regardless of their taxonomy in determining compliance with 
the performance standards for impingement mortality and entrainment and 
the regulatory language above. EPA is also accepting comment on the 
advantages and disadvantages of using the absolute number of organisms 
impinged or entrained as opposed to using wet or dry total weights of 
biomass.
    For measuring compliance with the entrainment reduction performance 
standard, several commenters suggested that the entrained biomass could 
be measured by collecting entrained organisms from the outfall or other 
appropriate monitoring location where a representative sample can be 
taken. This mass would then be compared to the mass of eggs and larvae 
that would have been entrained at the calculation baseline to determine 
if there is a 60 percent reduction or better. However, EPA is concerned 
that if a facility uses biomass, the weights may not be substantial 
enough to yield useable data since most entrained organisms are at the 
egg or larval stage. EPA requests comment on the feasibility of using 
biomass for measuring compliance with the entrainment reduction 
standard.
Representative Species Approach
    Another approach to determine compliance with the impingement 
mortality and entrainment performance standard involves considering a 
subset of the species that are representative of all species that are 
susceptible to impingement or entrainment in the waterbody that needs 
to be protected. This approach would require the permittee to identify 
representative important/indicator species (RIS), as opposed to 
considering all species present at the cooling water intake structure, 
for use in calculating compliance with the performance standards. If 
this approach were allowed, EPA is considering requiring that the list 
of RIS be developed by the facility, in consultation with the Director 
and Federal, State and Tribal fish and wildlife management agencies 
using available data. EPA might also require the concurrence of the 
Director.
    Historically, the term RIS has been defined in different ways. 
EPA's 1977 Draft Guidance for Evaluating the Adverse Impact of Cooling 
Water Intake Structures on the Aquatic Environment: Section 316(b) P.L. 
92-500 uses the concept of ``critical aquatic organisms.'' This term is 
used in a manner similar to RIS. The 1977 Guidance states that 
``critical aquatic organisms'' are ``those species which would be 
involved with the intake structure and are: (1) Representative, in 
terms of their biological requirements, of a balanced, indigenous 
community of fish, shellfish, and wildlife; (2) commercially or 
recreationally valuable (e.g., among the top ten species landed--by 
dollar value); (3) threatened or endangered; (4) critical to the 
structure and function of the ecological system (e.g., habitat 
formers); (5) potentially capable of becoming localized nuisance 
species; (6) necessary, in the food chain, for the well-being of 
species determined in 1-4; (7) one of 1-6 and have high potential 
susceptibility to entrapment-impingement and/or entrainment; and (8) 
critical aquatic organisms based on 1-7, are suggested by the 
applicant, and are approved by the appropriate regulatory agencies `` 
(see DCN 4-0006).
    In EPA's section 316(a) regulations, the term ``representative 
important species (RIS)'' is used and defined as ``species which are 
representative, in terms of their biological needs, of a balanced, 
indigenous community of shellfish, fish and wildlife in the body of 
water into which a discharge of heat is made'' (see 40 CFR 125.71). 
Under these same regulations, the term ``balanced, indigenous 
community'' is defined as ``a biotic community typically characterized 
by diversity, the capacity to sustain itself through cyclic seasonal 
changes, presence of necessary food chain species and by lack of 
domination by pollutant tolerant species.''(See 40 CFR 125.71). The 
section 316(a) regulations require that in selecting RIS, special 
consideration be given to species mentioned in applicable water quality 
standards. It further requires that after the discharger submits its 
detailed plan of study, the Director either approve the plan or specify 
any necessary revisions to the plan (see 40 CFR 125.72).
    Other entities, including some States, use the concept of RIS 
defined as those species selected by a discharger and

[[Page 13583]]

approved by the state that exhibit one or more of the following 
characteristics: Species that are sensitive to adverse harm from 
operations of the facility (for example, heat-sensitive species); 
species that use the local area as spawning or nursery grounds, or 
both, including those species that migrate past the facility to spawn; 
species of commercial or recreational value or both; species that are 
habitat formers and are critical to the functioning of the local 
ecosystem; species that are important links in the local food web; 
rare, threatened, or endangered species; or potential nuisance 
organisms likely to be enhanced by plant operations. In some cases, the 
permitting authority allows the permittee to identify RIS on a site-
specific basis (see State of Maryland comments on proposed Phase II 
rule).
    EPA is considering an approach that employs a RIS or ``critical 
aquatic organisms'' approach to determine compliance with the 
impingement mortality performance standards. Facilities would be 
required to identify all species being impinged (or having the 
potential to be impinged) by the cooling water intake structure. From 
that total list of species, the facility would then choose a limited 
number of organisms based on a definition of ``critical aquatic 
organisms'' provided in the regulations. EPA requests comment on 
whether 10 to 15 species might be an appropriate number to protect the 
types of species and ecosystem functions discussed in the above 
discussions of representative indicator species and critical aquatic 
organisms. EPA is considering using the same term ``critical aquatic 
organisms'' since it has been associated with section 316(b) 
requirements in the past. EPA is concerned that the RIS term, which has 
been used in other regulatory programs, may have conflicting 
programmatic issues and definitions associated with it that could not 
be anticipated. EPA would consider using the portions of the above 
language from the definition provided in the 1977 Guidance as it 
provides a reasonable, but flexible, framework for determining a list 
of fish and shellfish that are representative of all the species that 
have the potential to be impinged or entrained at cooling water intake 
structures. Changes to the language above might include modifying 
criteria number 8 to require the following:

    (8) critical aquatic organisms based on 1-7, are developed by 
the applicant, with the concurrence of the Director and in 
consultation with Federal, State, and Tribal fish and wildlife 
management agencies with responsibility for fisheries and wildlife.

The definition would be added to the proposed rule at Sec.  125.93. As 
discussed above, EPA is also considering a consultation role for the 
Director rather than one of concurrence.
    Compliance with the impingement mortality and entrainment 
performance standards could then be measured by either counting the 
total number of individuals of all the critical aquatic organisms 
impinged and killed or entrained, or by measuring the total biomass 
(wet or dry) of the critical aquatic organisms impinged and killed or 
entrained. This value would then be compared to the calculation 
baseline to determine compliance with the performance standard.
    EPA is also considering two options for making the compliance 
determination using the critical aquatic organism approach. The first 
option would be to determine compliance based on a total enumeration of 
individuals from all of the listed critical aquatic organism species, 
and the second option would be to base compliance on a separate 
analysis to determine the reduction in impingement mortality and 
entrainment for each species. If this critical aquatic organism 
approach is used, EPA might adopt regulatory language at Sec.  
125.94(b)(5) for Option 1 as follows:

    (5) Compliance with the applicable impingement mortality and 
entrainment performance standards in paragraphs (b)(1) through (4) 
above must be determined based on a comparison of the enumeration of 
individuals from all of the listed critical aquatic organism species 
impinged and killed and entrained with the total number of listed 
critical aquatic organism species estimated to be impinged and 
killed and entrained at the calculation baseline.

If this critical aquatic organism approach is used for Option 2, EPA 
might adopt regulatory language at Sec.  125.94(b)(5) for Option 2 as 
follows:

    (5) Compliance with the applicable impingement mortality and 
entrainment performance standards in paragraphs (b)(1) through (4) 
above must be determined based on a comparison of the enumeration of 
individuals from each of the listed critical aquatic organism 
species impinged and killed and entrained with each of those 
estimated to be impinged and killed and entrained at the calculation 
baseline.

EPA invites comments on the use of critical aquatic organism approach, 
the above definition for critical aquatic organisms, the above 
regulatory language above, and the two options (a total enumeration of 
all organisms from the critical aquatic organism species or a separate 
analysis for each species) for determining compliance with the 
impingement mortality and entrainment performance standards. In 
addition to the potential refinements discussed above EPA is also 
considering and requests comment on whether the Agency should allow the 
Director to determine how best to measure compliance, either 
programmatically or as part of individual permit decisions.
    EPA recognizes that a challenge in determining compliance with both 
the impingement mortality and entrainment performance standards is how 
to address the number of moribund or dead fish that wash up against the 
intake structure or become entrained. Under ideal circumstances, fish 
that were previously injured or killed from weather-related phenomena, 
or other episodic fish kills, would be removed from the measurement in 
order to more accurately determine the control technology performance. 
To ensure consistency with the use of the term moribund among 
permittees, EPA is considering adding the following definition of 
moribund (A Dictionary of Ecology, Evolution, and Systematics, 
Cambridge University Press, 1982) to Sec.  125.93:

    Moribund means dying; close to death.

    EPA is considering placing in the regulatory language the ability 
for a facility to take into account moribund fish and shellfish for 
determining compliance with the impingement mortality and entrainment 
performance standard using actual or historical data (if representative 
of current conditions). If EPA allowed the exclusion of already 
moribund fish and shell fish in determining compliance with the 
performance standards, the Agency might adopt regulatory language at 
Sec.  125.94(b)(5) as follows:

    (5) Compliance with the applicable impingement mortality and 
entrainment performance standards in paragraphs (b)(1) through (4) 
above must be determined based on a comparison of * * *. The number 
of moribund organisms that were previously injured or killed prior 
to encountering the intake structure must be removed from the 
calculation if data are available.

EPA invites comments on including this regulatory language in the 
regulation at Sec.  125.94 to allow facilities to exclude already 
moribund fish and shellfish, if data are available. EPA also invites 
comment on whether a facility should have the opportunity to remove the 
number of moribund organisms from the calculation but not be required 
to do so (as in the sample regulatory language above).
Other Issues
    To calculate the mass of organisms entrained for the calculation 
baseline

[[Page 13584]]

facility and the existing plant with new intake technology installed, 
several commenters proposed the following approach: The entrained 
biomass could be measured by sampling the waterbody near the intake 
(the hypothetical shoreline intake for the baseline plant and the 
existing or relocated intake for the future complying plant). To 
calculate the mass of organisms that would be entrained both by the 
hypothetical shoreline intake without any protective technology and by 
whatever new proposed intake technologies are being assessed, the 
density of entrainable organisms present in the samples would be used 
(number/volume). An important consideration in evaluating entrainment 
is the element of time, i.e., the density of entrainable organisms will 
fluctuate. EPA is soliciting comment on the use of total biomass or 
density in predicting or determining the entrainment reduction that 
would occur at a cooling water intake structure.
    EPA received numerous comments requesting clarification of the 
averaging period for determining the percent reduction required by the 
impingement mortality and entrainment performance standards. The 
commenters stated that due to significant natural temporal and spatial 
variability in fish abundance and distribution, a short-term averaging 
period may not be appropriate. Entrainment may be near zero during 
months when there are no entrainable organisms near the intake. 
Additionally, the density of aquatic populations varies naturally over 
the longer term. Some commenters suggested that the averaging period 
for determining reductions should be two to five years to verify that 
the technology is achieving reductions within the ranges specified for 
the performance standards. This could involve measuring the percent 
reductions over the entire monitoring period. EPA is considering 
specifying an averaging time for determining compliance with 
performance standards over 1 year, 3 years, or a running average over 
the entire permit term (5 years). In addition, EPA is considering 
requiring the use of basic arithmetic means as the averaging 
methodology. EPA is requesting comment on the time frames and averaging 
method discussed above. In addition, EPA requests comment on the 
appropriate methodology for determining the averaging period. EPA is 
also considering leaving it to the Director to determine appropriate 
averaging periods and methodologies, either programmatically or on a 
site-specific basis, and requests comment on this approach.

C. Compliance Timelines, Schedules, and Determination

    The proposed rule states that Phase II existing facilities would 
have to comply with the proposed rule requirements when a NPDES permit 
containing requirements consistent with the proposed Subpart J 
requirements is issued to the facility (see proposed Sec.  125.92). 
Under existing NPDES program regulations, this would occur following 
publication of the final rule when an existing NPDES permit is 
reissued, or when an existing permit is modified, or revoked and 
reissued. EPA is considering options that would require full compliance 
with the rule after the effective date, similar to what EPA did in the 
Concentrated Animal Feeding Operations Rule, to the extent the best 
technologies will not be available immediately after promulgation of 
the final rule. As discussed below, the nature of this regulation is 
such that facilities may need to test and verify the efficacy of the 
technology option that they choose. ( 68 FR 7176, 7214 Feb. 12, 2003). 
EPA requests comment on this approach.
    Commenters raised numerous issues regarding the proposed 
implementation and compliance schedules. Key comments include concern 
that the proposed rule does not provide sufficient time for permittees 
to develop necessary information, prepare the permit application, and 
come into compliance; suggestions that each permit renewal need not 
encompass a complete re-application and re-development of the permit; 
questions regarding how the proposed requirements will be enforced 
(i.e., what constitutes compliance); and a general request for 
additional clarification about implementation timing issues (e.g., 
effective date).
    Several commenters indicated that the proposed requirement to 
submit data associated with the Comprehensive Demonstration Study at 
least 180 days prior to permit renewal is unrealistic. These commenters 
indicated that sufficient time is needed to collect data and prepare 
the permit application, as well as to design and test equipment. 
Commenters suggested various means by which time could be built into 
the implementation schedule, including allowing for the use of 
compliance schedules, phased compliance requirements, and providing a 
fixed period of time for facilities to evaluate how they will comply 
and submit an application.
    The proposed 180-day requirement is based on the existing NPDES 
permit program requirement for renewal of existing permits (40 CFR 
122.21(d)(2)). EPA proposed this time period, in part, to ensure 
consistency with the existing NPDES program. The 180-day time period 
ensures that permit writers have sufficient time to review NPDES permit 
applications, which for Phase II existing facilities will often be 
complex and include considerable amounts of information.
    Some commenters have suggested EPA allow for the use of compliance 
schedules for Phase II existing facilities to conform to newly 
promulgated section 316(b) requirements. NPDES regulations at Sec.  
122.47 allow for the use of compliance schedules in NPDES permits by 
allowing permittees additional time to achieve compliance with the CWA 
and applicable regulations. Examples of situations where compliance 
schedules have been used include, but are not limited to, where new or 
revised effluent limitations guidelines were promulgated prior to 1989, 
or where new water quality standards are developed. EPA believes that 
the use of compliance schedules in the context of section 316(b) 
warrants consideration because such schedules are intended to allow 
permittees additional time where it clearly is necessary to achieve 
compliance. Compliance schedules, in association with the proposed 
Phase II regulations, would allow facilities whose NPDES permit would 
be reissued within the first few years after promulgation, additional 
time during the term of the permit to collect the information needed 
for the analyses required for the permit application, and/or to design, 
install, and optimize technologies to meet the performance standards. 
For example, facilities that would be issued a revised NPDES permit six 
months after the Phase II rule was published may not have provided the 
Director with information on their cooling water intake structure, and 
even if they had, it may not have contained the regulation-specific 
information such as the Impingement Mortality and Entrainment 
Characterization Study, the Design and Construction Technology Plan, or 
the Verification Monitoring Plan. In addition, the facility may not 
have assessed feasibility and certainly would not have begun 
construction of technologies. Use of compliance schedules under the 
NPDES permit program would require that the permit writer develop a 
schedule that is reasonable and that will ensure that the

[[Page 13585]]

facility is brought expeditiously towards compliance.
    Some commenters suggested that EPA provide for a delayed or phased 
compliance date that would allow Phase II existing facilities to have, 
at least, a specified, minimum period of time to conduct their study 
and implement appropriate technologies. Commenters questioned whether 
facilities with permit renewal dates shortly after the Phase II rule 
becomes final would have sufficient time to conduct the required 
characterization studies and implement enhanced control technologies. 
As a result, they suggested that some specified period of time be 
provided to all Phase II existing facilities under the rule. Generally, 
suggestions regarding the specific amount of time necessary ranged from 
two or three years to a full 5-year permit term (i.e., allow applicants 
to collect data and perform analyses within the term of the 
permit).\27\
---------------------------------------------------------------------------

    \27\ For example, one commenter suggested allowing two years for 
baseline ecological studies and economic studies; one year to 
proposed and install technologies; and two years to monitor 
effectiveness of changes.
---------------------------------------------------------------------------

    EPA is considering and requests comment on whether the final rule 
should allow facilities required to apply for a permit renewal shortly 
after promulgation of the Phase II rule additional time to complete the 
studies associated with submitting a permit application. EPA is 
considering the following options: (1) Allowing applicants whose 
permits must be renewed in the first year after promulgation of the 
Phase II rule to submit application materials required by the Phase II 
rule one year after their current permit expires; and (2) allowing a 
two-year extension in the deadline for submitting Phase II application 
materials.
    Commenters also questioned whether the study and data requirements 
specified under the proposed Phase II rule will be fully applicable to 
all subsequent 316(b) permit renewals for a given facility (i.e., the 
second, third, or subsequent rounds of 316(b) permit renewals that take 
place following publication of the final Phase II rule). Some suggested 
that neither the preamble nor the proposed rule covering the 
Comprehensive Demonstration Study make clear whether the information 
required to be submitted is required with each NPDES permit renewal. 
Generally, commenters asserted that detailed permit evaluations should 
not be required every 5 years (i.e., with each renewal cycle). One 
commenter suggested that a full re-assessment should only be required 
every third permit term (every 15 years).
    EPA did not discuss alternative permit application requirements for 
permit renewals in the proposed Phase II rule. The proposed Phase II 
rule specifies that with each permit renewal the Director must review 
the application materials and monitoring data to determine whether 
requirements, or additional requirements, for design and construction 
technologies or operational measures should be included in the permit 
(see proposed Sec.  125.98(a)(1)). EPA does not generally specify 
reduced permit application requirements for permit renewals under the 
NPDES program. Rather, permitted facilities and permit writers normally 
exchange the information specified in the relevant permit application 
requirements and the permit writer determines when the application is 
complete (see 40 CFR 122.21(d)). It is not uncommon, however, that some 
existing information (i.e., information submitted as part of an earlier 
permit application) remains part of a renewal application. EPA expects 
this to be true for Phase II existing facilities as well.
    Under the proposed Phase II rule, EPA has identified several 
categories of permit application data and information requirements. 
These requirements, which are reasonably general in nature, provide 
certain flexibility to applicants to update only the key parts of the 
application that reflect changes in environmental conditions or 
operations. For example, the proposed rule would allow Phase II 
existing facilities to submit a proposal for information as the first 
step in identifying the scope of the Comprehensive Demonstration Study 
(see proposed Sec.  125.95(b)(1)). This proposed requirement would 
provide applicants with an opportunity to identify the information in 
the study that has changed and must be updated, as well as existing 
information that remains representative of current conditions. In fact, 
it specifically provides for inclusion of historical studies where 
relevant. It also provides for the use of historical impingement and 
entrainment data, provided they are representative of the current 
operation and biological conditions. The proposed requirements do 
ensure that the Director retains sufficient flexibility to require 
Phase II existing facilities to submit data needed to assess source 
waterbody conditions and design and operational conditions at the 
facility. EPA is evaluating an additional option that it believes would 
maintain the Director's ability to obtain the information needed to 
make informed decisions when writing NPDES permits for existing 
facilities with cooling water intake structures. The proposed rule 
requires that facilities submit all of the information required in 
Sec.  122.21(r) and Sec.  125.95 (as applicable). EPA is considering 
whether to develop additional regulatory language that would allow the 
Director to relax the application information requirements if 
conditions at the facility and in the waterbody remain unchanged since 
the facility submitted their previous NPDES permit application, such 
that the information that they would submit would remain unchanged. 
Should this new regulatory language be implemented, the facility would 
be required to submit evidence that the conditions remain unchanged. 
This would serve to lessen the burden for information collection 
activities on the facility after the initial permit where section 
316(b) requirements are placed in the NPDES permit as long as 
conditions remain unchanged. To demonstrate that operational conditions 
remain unchanged, the facility may rely upon data collected during the 
permit term, including facility operational data, monitoring, design 
information, and other data. To demonstrate that conditions in the 
waterbody remain unchanged, the facility may rely on monitoring and 
studies conducted by the facility, or data collected by other sources 
such as universities, federal, State, or local environmental and 
resource agencies, or other facilities located in close proximity. 
Determinations of unchanged conditions may rely upon demonstrations 
that there is no statistically significant changes in impingement and 
entrainment at the facility or in the densities of organisms in the 
vicinity of the cooling water intake structures, for example. If EPA 
decides to relax application requirements for permit renewals after a 
facility's initial permit implementing the Phase II regulations, the 
regulatory language of Sec.  125.95(a) might be revised as follows:

    (a)(1)You must submit to the Director the application 
information required by 40 CFR 122.21(r)(2), (3) and (5) and the 
Comprehensive Demonstration required by paragraph (b) of this 
section at least 180 days before your existing permit expires, in 
accordance with Sec. 122.21(d)(2).
    (2) In subsequent permit terms, the Director may approve a 
request to reduce the information required to be submitted in your 
permit application on the cooling water intake structure and the 
source waterbody, if conditions at your facility and in the 
waterbody remain unchanged since your previous application. You 
should submit your request for reduced cooling water intake 
structure and waterbody application

[[Page 13586]]

information to the Director at least 1 year prior to the expiration 
of the permit term. Your request must contain a list and 
justification for each information item in Sec.  122.21(r) or Sec.  
125.95 that you determine has not changed since the previous permit 
application.

EPA requests comment on the two options described above. EPA 
specifically requests comments on whether an option like that in the 
suggested regulatory language above is appropriate to reduce the burden 
for NPDES permit applicants in subsequent permit terms or whether the 
option that would provide guidance and allow resubmittal of existing 
data and hence a reconfirmation of the data through the application 
process is needed to ensure accurate data for the Director. There would 
be companion language in Sec.  125.98 requiring the Director to review 
and approve, approve with comments, or disapprove the request within 60 
days of submittal by the applicant. EPA also requests comment on the 
specific time frames that would be appropriate for this option, and 
whether they should be specified by EPA or left up to the discretion of 
the Director.
    In addition to the concerns discussed above regarding the timing 
and content of application materials, some commenters also voiced 
concerns regarding how Directors will determine if a facility is in 
compliance with the requirements of the proposed rule. These commenters 
expressed concern that, given the difficulty of predicting the 
performance of distinct cooling water intake control technologies, it 
is not reasonable to expect every Phase II existing facility to be able 
to ensure that it will achieve reductions in impingement and 
entrainment that are consistent with the proposed performance standards 
within the first permit term and, therefore, it would be unfair to 
enforce the proposed standards until each facility has had a reasonable 
period to achieve compliance. One comment expressed by these groups is 
that proper design, installation, operation, and maintenance of 
technologies reasonably likely (based on appropriate characterization 
and study) to meet the performance standards should satisfy the permit 
terms and conditions (i.e., be deemed compliance), at least until the 
second round of permitting occurs. Stated another way, commenters 
maintain that Phase II existing facilities should not be subject to 
immediate enforcement actions in the first permit term for failing to 
meet the proposed performance ranges (i.e., a facility that properly 
designs, installs, operates and maintains cooling water intake 
structure control technologies but discovers, at or near the end of the 
first permit term, that it has not achieved the requisite level of 
impingement and entrainment reduction, should not be subject to 
enforcement for violating the section 316(b) requirements). EPA 
recognizes that significant variability in biological communities over 
seasons and other time periods (for example, a period of peak larval 
abundance that typically occurs in the spring months), may complicate 
optimization of the performance of technologies for reducing 
impingement mortality and entrainment. EPA is considering the need for 
regulatory language that would allow facilities time to come into 
compliance if they choose to install technologies to meet the 
performance standards in proposed Sec.  125.94. This would allow 
facilities a period of time to optimize technology(ies) so that they 
operate to minimize impingement mortality and entrainment. EPA is 
currently evaluating and considering allowing six months, one year, two 
years, or five years (one permit term) for a facility to come into 
compliance after issuance of its permit. Example regulatory language 
for a new paragraph (e) in Sec.  125.94 might read as follows:

    (e) If you propose to implement design and construction 
technologies or operational measures to meet the performance 
standards in Sec.  125.94(b) or (c), you will have an optimization 
period of [six months/one year/two years/five years] from the 
issuance of a permit requiring compliance with Sec.  125.94(b) or 
(c) after which you must comply with the standards.

In this case, the proposed paragraphs Sec.  125.94(e) and (f) would 
then become (f) and (g), respectively. EPA requests comments on these 
time frames and the suggested regulatory language above. EPA also 
requests comment on whether EPA should specify the length of the 
optimization period or whether the Director should make this decision.

D. Determining Capacity Utilization Rates

    At Sec.  125.94(b)(2), the proposed rule would require facilities 
with a capacity utilization rate of less than 15 percent to meet 
performance standards for reducing impingement mortality. Sec.  
125.94(b)(3) would require facilities with a capacity utilization rate 
of 15 percent or more to meet performance standards both for reducing 
impingement mortality and for reducing entrainment. (See 67 FR 17221.) 
As discussed in Section III above, the proposed Phase II rule defined 
capacity utilization based on the generation and capacity of the entire 
facility, including steam electric and non-steam generators. (See the 
proposed definition of ``capacity utilization rate'' at Sec.  125.93, 
67 FR 17220.) EPA is considering whether, for the purposes of 
implementing Section 316(b), defining capacity utilization based on the 
steam electric part of a facility better reflects a facility's 
potential for adverse environmental impact because only the steam 
electric generators use cooling water. Thus, EPA is considering 
refining its regulatory definition for ``capacity utilization rate'' at 
the proposed Sec.  125.93 to reflect use of the steam electric part of 
a facility. If EPA were to make this change, the definition of 
``capacity utilization rate'' in Sec.  125.93 might be revised as 
follows (new language is underlined):

    Capacity utilization rate means the ratio between the average 
annual net generation of the steam electric part of a facility (in 
MWh) and the total net capability of the steam electric part of a 
facility (in MW) multiplied by the number of available hours during 
a year. The average annual generation must be measured over a five 
year period (if available) of representative operating conditions.

EPA requests comment on this suggested refinement.

E. Clarifications and Corrections

1. Implementation Burden for Studies and Biological Data Collection
    EPA received comments concerning the information collection, study, 
and monitoring costs presented in the supporting Information Collection 
Request for Cooling Water Intake Structures for the Phase II Existing 
Facility Proposed Rule (US EPA ICR No. 2060.01) (February 2002). 
Commenters stated that the format was confusing and the detail provided 
in the ICR was insufficient to enable them to review and comment on 
these costs. To assist reviewers, EPA has placed additional information 
into the record summarizing the general derivation of information 
collection, study, and monitoring activity costs associated with the 
Phase II rule. Labor categories, labor rates, monitoring components, 
and associated costs are outlined and additional cost details are 
presented in summary tables to facilitate ease of review and 
understanding.
    Commenters also pointed out that EPA had inadvertently transposed 
the labor figures for statisticians and biological technicians when 
putting together the summary tables of costs. EPA has recalculated the 
ICR costs to rectify this error and has determined that costs will not 
change substantially. Labor costs associated with monitoring activities 
in the ICR were significantly higher than the labor for writing final 
reports and studies. Therefore, when the

[[Page 13587]]

correction to the labor rates was made, the overall facility costs 
decreased.
    However, the decrease in facility costs due to the correction to 
the labor rates was offset by other changes that EPA has made to the 
ICR costs since proposal. Some commenters stated that the burdens for 
impingement and entrainment monitoring were too low. EPA has reviewed 
these burden estimates and has increased the burdens associated with 
impingement and entrainment monitoring associated with the Impingement 
Mortality and Entrainment Characterization Study. In addition, EPA has 
revised capital and O&M costs associated with the pilot-scale studies 
some facilities may perform to reflect the assumption that only 
facilities which are projected to install new technologies will perform 
pilot studies, and to be proportional to the projected capital costs 
for installing these new technologies to comply with the rule. The 
following provides a summary of the effects of these corrections and 
updates on labor costs and overall costs for facilities, as well as 
total combined costs for States and facilities.
    [sbull] Facility labor costs increased by 65% from $66,399,819 to 
$109,346,909 annually.
    [sbull] Facility capital and O&M costs decreased by 61% from 
$63,633,640 to $24,801,777 annually.
    [sbull] Total costs for facilities increased by 3.2% from 
$130,033,459 to $134,148,685 annually.
    [sbull] Total facility and State costs increased by 2.8% from 
$135,990,706 to $139,820,531 annually.
    The effects of the recalculation are summarized in more detail in a 
memorandum placed in the record (see ``Updated Information Collection 
Costs for the 316(b) Phase II Notice of Data Availability, January 31, 
2002).
2. San Onofre Impacts Discussion
    In response to comments received about inaccuracies related to 
facility-specific impacts caused by impingement and entrainment 
discussed in EPA's Information Collection Request (ICR), EPA provides 
the following clarification. Specifically, the ICR for the proposed 
rule described entrainment losses at San Onofre Nuclear Generating 
Station (SONGS). EPA received updated information from SONGS facility 
scientists that clarified actual entrainment losses in normal (non-El 
Nino) years and described trends in shallow-water and deepwater fish 
species affected by entrainment. In addition, prior to publication of 
the proposed rule, EPA concluded that kelp bed losses in proximity to 
the SONGS intake were attributable to turbidity increases caused by 
cooling water discharges, not cooling water withdrawals. The updated 
information for SONGS was placed in the preamble to the proposal (see 
67 FR 17138-17139), but was inadvertently omitted from the ICR. The 
final ICR will reflect the changes described above.

XII. General Solicitation of Comments

    EPA encourages public participation in this rulemaking and requests 
comments on this notice of availability supporting the proposed rule 
for cooling water intake structures for existing Phase II facilities. 
As stated in section II of this NODA, EPA is also reopening the comment 
period on all aspects of the proposal. EPA invites all parties to 
coordinate their data collection activities with the Agency to 
facilitate mutually beneficial and cost-effective data submissions.
    Please refer to the FOR FURTHER INFORMATION CONTACT section at the 
beginning of this preamble for technical contacts at EPA.

    Dated: March 12, 2003.
G. Tracy Mehan,
Assistant Administrator, Office of Water.
[FR Doc. 03-6453 Filed 3-18-03; 8:45 am]
BILLING CODE 6560-50-P