[Federal Register Volume 68, Number 156 (Wednesday, August 13, 2003)]
[Proposed Rules]
[Pages 48472-48513]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20524]



[[Page 48471]]

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Part III





Environmental Protection Agency





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40 CFR Part 432



Effluent Limitations Guidelines and New Source Performance Standards 
for the Meat and Poultry Products Point Source Category; Notice of Data 
Availability; Proposed Rule

  Federal Register / Vol. 68, No. 156 / Wednesday, August 13, 2003 / 
Proposed Rules  

[[Page 48472]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 432

[FRL-7543-2]
RIN 2040-AD56


Effluent Limitations Guidelines and New Source Performance 
Standards for the Meat and Poultry Products Point Source Category; 
Notice of Data Availability

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of data availability.

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SUMMARY: On February 25, 2002 (67 FR 8582), EPA published a proposal to 
establish technology-based effluent limitations guidelines and 
standards for the meat and poultry products (MPP) point source category 
(formerly the meat product point source category). The proposal would 
apply to approximately 300 facilities that have wastewater discharges 
directly to surface waters from the operation of new and existing meat 
processing, poultry processing and independent rendering facilities. 
EPA developed the proposal to address changes in the meat processing 
industry over the last 30 years, and to include measures that reduce 
pollution from nutrients. Also, the proposal would establish national 
regulations for the poultry processing industry for the first time.
    In the proposal, EPA specifically solicited comment on 20 issues. 
EPA received comments on these and other issues from various 
stakeholders, including State and local regulatory authorities, 
environmental groups, individual industrial facilities and industry 
groups, and private citizens. This notice of data availability presents 
a summary of data received in comments since the proposal and 
additional data collected by EPA and describes how these data may be 
used by EPA in developing final regulations.
    EPA is evaluating how the comments and new data may change certain 
aspects of the regulatory analysis presented at proposal and how this 
information might affect the regulatory options considered for the 
proposal. This includes an evaluation of the underlying data and 
methodology used to estimate the costs, pollutant load reductions, and 
financial impacts associated with the proposed regulation in light of 
the comments and new information. This document describes EPA's current 
thinking on these subjects and presents information on how the new data 
and information received since proposal could affect the proposed 
limitations and standards. Today, EPA is making these data and new 
information available for public review and comment. The new data and 
analyses on non-small red meat and poultry slaughterhouses (the largest 
industry subcategories) are summarized and discussed in this notice. 
Due to time constraints in preparing the NODA the new costs and 
loadings for processing-only red meat and poultry facilities, 
independent rendering facilities, and small facilities are not 
presented in this document, but this information will be available in 
the public docket for public review at the time of the NODA 
publication. EPA solicits public comment on the issues and information 
presented in this notice of data availability and in the public docket 
supporting this document.
    This document also serves to clarify the distinction between an MPP 
facility and a CAFO, and specifically discusses the possible changes to 
the MPP rule as a result of the clarification.

DATES: You must submit comments by September 29, 2003.

ADDRESSES: Public comments regarding this document should be mailed to 
Water Docket, Environmental Protection Agency, Mailcode 4101T, 1200 
Pennsylvania Avenue, NW., Washington, DC 20460, Attention Docket ID No. 
OW-2002-0014, or submitted electronically at http.epa.gov/edocket. For 
additional information on how to submit comments see section B, 
``SUPPLEMENTARY INFORMATION, How and To Whom Do I Submit Comments?''

FOR FURTHER INFORMATION CONTACT: For additional information, contact 
Ms. Samantha Lewis at (202) 566-1058 or at the following e-mail 
address: [email protected] or Ms. Shari Barash at (202) 566-0996 
or at the following e-mail address: [email protected].

SUPPLEMENTARY INFORMATION:

A. Regulated Entities

    Entities potentially regulated by this action include:

----------------------------------------------------------------------------------------------------------------
                 Category                    Examples of regulated entities       Primary SIC and NAICS codes
----------------------------------------------------------------------------------------------------------------
Industry.................................  Facilities engaged in first        ..................................
                                            processing, further processing,
                                            or rendering of meat and poultry
                                            products, which may include the
                                            following sectors:
                                              Meat Packing Plant............  2011 (SIC)
                                              Animal (except Poultry)         311611 (NAICS)
                                               Slaughtering.
                                              Meat Processed from Carcasses.  311612 (NAICS)
                                              Sausages and Other Prepared     2013 (SIC)
                                               Meat Products.
                                              Poultry Slaughtering and        2015 (SIC)
                                               Processing.
                                              Poultry Processing............  311615 (NAICS)
                                              Rendering and Meat By-Product   311613 (NAICS)
                                               Processing.
                                              Support Activities for Animal   11521 (NAICS)
                                               Production.
                                              Prepared Feed and Feed          2048 (SIC)
                                               Ingredients for Animals and
                                               Fowls, Except Dogs and Cats.
                                              Dog and Cat Food..............  2047 (SIC)
                                              Dog and Cat Food Manufacturing  311111 (NAICS)
                                              Other Animal Food               311119 (NAICS)
                                               Manufacturing.
                                              All Other Miscellaneous Food    311999 (NAICS)
                                               Manufacturing.
                                              Animal and Marine Fats and      2077 (SIC)
                                               Oils.
                                              Poultry Hatcheries............  11234 (NAICS)
                                              Livestock Services, Except      0751 (SIC)
                                               Veterinary.
----------------------------------------------------------------------------------------------------------------

    The preceding table is not intended to be exhaustive, but rather 
provides a guide for readers regarding entities likely to be regulated 
by the proposed rule. This table lists the types of entities that EPA 
is now aware could potentially be regulated by promulgation of the 
proposed rule. Other types of entities not listed in the table could 
also be regulated. To determine whether your facility would be 
regulated by promulgation of the proposed rule, you

[[Page 48473]]

should carefully examine the applicability subsection of each proposed 
subpart of part 432. You should also examine the description of the 
proposed scope of each subpart in section VI.B of the proposed rule. If 
you have questions regarding the applicability of this proposed rule to 
a particular entity, please contact the person listed for technical 
information in the preceding FOR FURTHER INFORMATION CONTACT section.

B. 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-2002-0014. 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. For access to docket materials, please call ahead to schedule an 
appointment. Every user is entitled to copy 266 pages per day before 
incurring a charge. The Docket may charge 15 cents a page for each page 
over the page limit plus an administrative fee of $25.
    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 the 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 section B.1. 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 in paper, 
will be made available for public viewing in EPA's electronic public 
docket as EPA receives them and 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.
    For additional information about EPA's electronic public docket 
visit EPA Dockets online or see 67 FR 38102, May 31, 2002.

C. How and To Whom Do I Submit Comments?

    You may submit comments electronically, by mail, or through hand 
delivery/courier. 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. If you wish to submit CBI or 
information that is otherwise protected by statute, please follow the 
instructions in section D. 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-
2002-0014. 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-2002-0014. 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

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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 section C.2. These 
electronic submissions will be accepted in Word Perfect, Microsoft 
Word, or ASCII file format. Avoid the use of special characters and any 
form of encryption.
    2. By Mail. Send an original and three (3) copies of your comments 
and enclosures as well as any references cited in your comments to 
Water Docket, Environmental Protection Agency, Mailcode: 4101T, 1200 
Pennsylvania Avenue, NW., Washington, DC 20460, Attention Docket ID No. 
OW-2002-0014.
    3. By Hand Delivery or Courier. Deliver your comments to Water 
Docket, EPA Docket Center, EPA West, Room B102, 1301 Constitution 
Avenue, NW., Washington, DC, Attention Docket ID No. OW-2002-0014. Such 
deliveries are only accepted during the Docket's normal hours of 
operation, as identified in section B.1.

D. 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 identified as CBI by mail only to the following 
address: Engineering & Analysis Division, Mail Code 4303T, U.S. 
Environmental Protection Agency, 1200 Pennsylvania Ave., NW., 
Washington, DC 20460, Attention: Samantha Lewis, Docket ID No. OW-2002-
0014.
    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 
one of the people identified in the FOR FURTHER INFORMATION CONTACT 
section.

E. What Should I Consider as I Prepare My Comments for EPA?

    You may find the following suggestions helpful for preparing your 
comments:
    1. Explain your views as clearly as possible.
    2. Describe any assumptions that you used.
    3. Provide any technical information and/or data you used that 
support your views.
    4. If you estimate potential burden or costs, explain how you 
arrived at your estimate.
    5. Provide specific examples to illustrate your concerns.
    6. Offer alternatives.
    7. Make sure to submit your comments by the comment period deadline 
identified.
    8. To ensure proper receipt by EPA, identify the appropriate docket 
identification number in the subject line on the first page of your 
response. It would also be helpful if you provided the name, date, and 
Federal Register citation related to your comments.

Contents of This Document

I. Purpose of this Document
II. New Analytical Data and Complete Survey Data
    A. Post-Proposal Analytical Wastewater Sampling Data
    B. Discharge Monitoring Report Data
    C. Information from EPA Regions and States
    D. Data Submitted by Industry
    E. Incorporation of All Surveys and Additional Survey Follow-Up
III. Revisions to the Cost Model
    A. Proposed Costing Approach
    B. Revised Costing Approach
IV. Revised Pollutant Loadings and Reductions Methodology
    A. Proposed Pollutant Loadings Approach
    B. Revised Pollutant Loadings Approach
V. Changes Considered to Applicability, Definitions, and Regulated 
Pollutants
    A. Changes Considered to Applicability and Definitions
    B. Changes Considered to the Pollutants Selected for Regulation
    C. Concerns Regarding Fecal Coliforms Limitations and Standards
    D. Concerns About Total Nitrogen Limitations and Standards
    E. Data Selection for Oil and Grease Loadings and Limitations/
Standards
VI. New Information and Consideration of Revision to Economic 
Methodologies
    A. Closure Analysis
    B. Trade Elasticity Methodology
VII. Changes to EPA's Environmental Assessment
    A. Water Quality Modeling: What Changes and Information are 
Being Considered?
    B. Recreational Benefits: What Changes and Information are Being 
Considered?
    C. Toxicity Assessment: What Changes and Information are Being 
Considered?
    D. Other Benefits Categories Being Considered
VIII. Possible Changes to the Proposed Limitations and Standards
    A. Revision of Statistical Methodology for Long-Term Averages 
and Loadings
    B. Consideration of Assumed Monitoring Frequency
    C. Data Review for Final Limitations and Standards
    D. Evaluation of Final Variability Factors
    E. Evaluation of Achievability of Final Limitations and 
Standards
    F. Errors in 40 CFR part 432 and Recodification
IX. Consideration of Options
    A. Description of Modified Options
    B. Options Being Considered for Best Practicable Control 
Technology Currently Available (BPT)
    C. Options Being Considered for Best Available Technology 
Economically Achievable (BAT)
    D. Options Being Considered for New Source Performance Standards 
(NSPS)
X. Revised Estimates of Costs, Loadings, Economic Impacts, and Cost-
Effectiveness
    A. Revised National Estimates of Costs, Loadings, and Economic 
Impacts
    B. Revised National Estimates of Cost Reasonableness and Cost-
Effectiveness
    C. Results of Barrier to Entry Analysis for New Sources
XI. Solicitation of Comment

I. Purpose of This Document

    Today's document has several purposes. First, EPA is presenting a 
summary of new data and information submitted during the public comment 
period on the proposed MPP regulations as well as data collected by EPA 
since proposal. Second, EPA discusses major issues raised in comments 
on the proposal and revisions in the data analyses resulting from these 
comments and the additional data. Third, the document summarizes EPA's 
current thinking on how this new information and suggestions made by 
commenters affect the analyses of the proposed rule. The document also 
summarizes several changes from the proposed regulatory requirements 
that EPA is considering for the final rule in light of the new 
material. The document includes revised target effluent concentrations 
for each model technology that incorporate post-proposal data 
collections and submissions that EPA used for developing revised 
compliance cost and pollutant loading reduction estimates.

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Finally, the document discusses how incorporation of the new data and 
information would affect the cost and removals estimates associated 
with various treatment options.
    Since proposal, EPA has incorporated a significant amount of 
additional technical and economic data (from fully analyzing all of the 
previously collected industry survey information as well as newly 
submitted/collected data) into the database used for developing the 
proposed MPP effluent limitations and standards. New data that EPA has 
used in the revised cost and economic models discussed in this NODA 
include data from screener surveys and detailed surveys that were not 
received in time to be incorporated into the analysis for the proposal 
and data from EPA and industry wastewater sampling of MPP raw 
wastewater, influent to treatment and wastewater effluent. In addition, 
EPA has modified certain assumptions used in its cost and pollutant 
loadings models. The new analyses presented in this NODA provide EPA's 
current thinking on how the analyses of regulatory options for the 
final rule may change as a result of the additional information 
obtained.
    For a number of the subcategories proposed for regulation, these 
modifications have resulted in changes in the estimated cost and 
pollutant removals associated with the treatment options considered at 
proposal. As a consequence, the estimated economic impacts and cost 
effectiveness of the treatment options have changed as well. In light 
of these new results, EPA is seeking further comment on the regulatory 
options considered for the proposal as well as several modifications to 
these options that are based in part on new information regarding 
technology in place in the industry.
    Through this notice of data availability, EPA seeks further public 
comment on any and all aspects of the specific data and issues it has 
identified here. However, EPA is seeking public comment only on these 
specific data and issues. Nothing in today's document is intended to 
invite further discussion of other issues discussed in the MPP proposal 
or to reopen the proposal in general for additional public comments. 
EPA continues to review the comments already submitted on the proposed 
rule and will address those comments, along with comments submitted on 
the data and issues identified in today's document, in the final 
rulemaking.

II. New Analytical Data and Complete Survey Data

    There are five general areas of new analytical data and 
information: (1) EPA post-proposal sampling, (2) discharge monitoring 
report (DMR) data, (3) information from EPA Regional offices and 
States, (4) data submitted by industry, and (5) incorporation of all 
surveys and additional survey follow-up. EPA has incorporated much of 
this data into its analyses for this NODA. However, some data has not 
been included in the new analyses. As discussed elsewhere, analyses for 
non-small meat and poultry slaughterhouses are presented in this notice 
while analyses for further processors, renderers and small slaughterers 
are presented in the rulemaking docket. EPA has placed this data in the 
docket and although it has not incorporated the information into its 
analyses for the NODA, the Agency intends to use it for the final rule 
as appropriate. The detailed discussion below indicates which data have 
been incorporated into the NODA analysis at this juncture and which 
have not. Sections II.A-E discuss each of the five areas in more 
detail.

A. Post-Proposal Analytical Wastewater Sampling Data

    In response to public comments, EPA has performed a number of 
analytical wastewater sampling episodes since the publication of the 
proposed rule to collect additional data on raw wastewater loadings, 
treatment efficiencies, and treatment variability for certain treatment 
options. EPA also performed a holding time study for the bacterial 
pollutant parameters (e.g. fecal coliforms).
1. EPA Site Visits and Sampling Episodes
    During the comment period and at the public meetings on the 
proposal, commenters raised concerns over the representativeness of 
EPA's database for certain types of MPP facilities and whether the 
treatment systems at facilities sampled as ``BPT'' (Best Practicable 
Technology) or ``BAT'' (Best Available Technology) were accurately 
represented in the cost model. Based on these concerns, EPA worked with 
a coalition of industry representatives to identify types of facilities 
in these groups that would be good candidates for EPA's post-proposal 
wastewater sampling program. EPA then selected two poultry facilities 
identified by EPA regional personnel as being good sampling candidates 
and performed a pre-sampling site visit at each. During the poultry 
site visits EPA collected detailed information on the sampling 
logistics, production schedules, and processes the treatment systems 
employed. This information allowed EPA to determine whether the site 
was employing technology considered to be ``Best Available 
Technology.'' Based on this information, EPA selected one poultry 
facility for analytical wastewater sampling. This facility performs 
first processing, further processing and rendering. EPA has 
incorporated data from this sampling episode into the analyses 
presented in today's notice.
    In addition, based on comments concerning facility operations and 
analytical results during the pre-proposal sampling episodes, EPA also 
decided to conduct an additional sampling episode at two of the six red 
meat facilities that were sampled prior to proposal. In response to 
comments regarding background levels of metals and other pollutants, 
EPA collected source water samples during each post-proposal sampling 
episode. EPA collected characterization samples of wastewater from 
production operations and paired influent and effluent samples from 
these facilities' treatment systems over five days. EPA notes that it 
did not use the earlier data from the pre-proposal sampling episodes at 
these two facilities in the analyses presented in today's notice, due 
to certain data quality issues. However, following completion of an 
evaluation of these issues, EPA may use these episodes along with the 
post-proposal sampling data, for the analyses supporting the final rule 
(see Section VIII for discussion of these data issues and solicitation 
of comment).
    In addition, EPA conducted a post-proposal site visit to a poultry 
further processing facility (i.e., a poultry processing facility where 
first processing and rendering are not performed on-site) that it had 
not sampled previously and obtained grab samples to characterize 
treatment system influent (i.e., raw influent prior to preliminary 
treatment steps) and effluent wastewater. EPA has incorporated the 
results from this episode into its revised analysis of poultry further 
processing facilities. Analyses for further processors can be found in 
Section 21.1, DCNs 125606 and 126002 of the public record.
    EPA also sampled for Ultimate BOD at one red meat and one poultry 
facility. The results of the Ultimate BOD analysis have not been 
incorporated in the analyses for the NODA (See Section V.D for a 
discussion on the issues associated with use of these data). Non-
confidential versions of all new Site Visit Reports (SVRs) and Sampling

[[Page 48476]]

Episode Reports (SERs) can be found in Section 19.1.4.2 the public 
record for this notice.
    EPA previously indicated that it would sample at an independent 
renderer after proposal (see 67 FR 8606). However, EPA subsequently 
decided that other data sources provided adequate information and 
instead evaluated information on three independent renderers provided 
by the industry. This information included data on the size of each 
facility, the wastewater treatment in-place and the wastewater 
characteristics of the influent to the treatment system and treated 
effluent. Two of the three facilities also provided data collected from 
wastewater sampled at intermediate points in the wastewater treatment 
system. In EPA's view, this data combined with (or evaluated in 
comparison with) data from sampling which included rendering wastewater 
(e.g., data from a facility that performs slaughtering, further 
processing, and rendering) provide an appropriate basis for evaluating 
the baseline loadings and treatment-in-place at rendering facilities. 
EPA has used this data in the NODA analysis for developing default 
baseline concentrations and assessing treatment-in-place for facilities 
in Subcategory J (Independent Renderers). EPA's estimates of costs and 
pollutant loadings for Subcategory J are presented in Section 21.1, 
DCNs 125606 and 126002 of the public record.
2. Holding Time Study
    When EPA conducted its own sampling episodes at the facilities, it 
exceeded the required holding time for some samples. While laboratories 
qualified to conduct total coliforms, fecal coliforms, and E. coli 
analyses may have been within driving distance of the facilities being 
evaluated, laboratories qualified to perform fecal streptococcus, 
Salmonella, and Aeromonas analyses generally were not available, as 
analysis for these analytes is more complex than coliforms analyses. As 
a result, for most sampling episodes, EPA decided samples should be 
shipped overnight to a laboratory capable of performing all of the 
bacterial analyses. Because these samples would exceed the holding time 
requirements in 40 CFR part 136, EPA performed a holding time study to 
evaluate the possible effects of analyzing samples at different holding 
times.
    To determine if results for samples with longer holding times were 
consistent with results for samples analyzed within eight hours (i.e., 
the time period consistent with 40 CFR part 136 for compliance 
sampling) for total coliforms, fecal coliforms, E. coli, Aeromonas, 
fecal streptococcus, and [Salmonella from MPP facilities, EPA conducted 
a study to evaluate sample concentrations at 8, 24, 30, and 48 hours 
after sample collection for wastewater effluent samples from a beef 
facility (before disinfection and final effluent), a pork facility 
(final effluent prior to discharge into the sewer system), and a 
poultry facility (final effluent). The study report which contains 
results for all target bacteria is located at DCN 165311 in Section 
22.6 in the public record for this NODA. This NODA discusses only the 
results for fecal coliforms and E. coli as EPA is not intending to 
establish numeric limitations for other target indicators in the 
holding time study. As holding times increase, the fecal coliforms and 
E. coli concentrations may change. EPA's intent in conducting the study 
was to provide some insights about the length of time that would still 
provide comparable results to samples held for eight hours.
    For red meat (e.g., beef and pork) effluent, the results of this 
study indicate that samples for fecal coliforms and E. coli 
measurements can be held for 24 hours and still produce results 
comparable to analyses conducted at 8 hours after sample collection, 
provided that samples are stored on ice until analysis and not frozen. 
For poultry wastewater effluent, the study results indicate that 
samples held longer than the 8 hours do not provide comparable results 
to results at 8 hour holding times.

B. Discharge Monitoring Report Data

    As discussed further in Sections III and VIII, EPA is considering 
the use of discharge monitoring report (DMR) data, and the supporting 
daily or weekly measurements, to evaluate and revise as necessary the 
proposed MPP limitations and standards (Section VIII) and compliance 
cost and loadings estimates for various technology options for the 
final rule (Section III). EPA used the summary DMR data from detailed 
survey recipients and PCS to supplement its sampling data in the 
development of pollutant loading and reduction estimates presented in 
today's notice. EPA has also incorporated daily/weekly DMR supporting 
data from 16 facilities in the slaughtering subcategories (A-D and K) 
into the revised facility-level long-term averages and variability 
factors, see DCN 165080 and DCN 165160.
    EPA obtained summary DMR data, where available, from: (1) EPA's 
permit compliance system (PCS) for survey facilities (both detail 
survey sites and screener survey sites), (2) EPA Regional offices for 
some screener survey sites, detailed survey sites, and facilities 
identified in PCS as performing meat or poultry processing operations 
(see Section II.C below), and (3) individual further processor screener 
survey sites based on discussions during survey follow-up (see Section 
II.E for additional discussion on survey follow-up). EPA also requested 
detailed DMR data from 24 facilities in the slaughtering subcategories 
(Subcategories A-D and K) as discussed below.
    Following proposal, based on the DMR summary data provided in the 
detailed surveys or PCS, EPA requested individual data points (e.g., 
daily or weekly measurements) from 24 detailed survey sites in 
Subcategories A-D and K for use in evaluating and revising the 
limitations and standards and supporting analyses (See Sections III.B 
and VIII.D of today's notice for more information on how EPA is 
considering using the DMR data). To date, EPA has received complete 
data from16 facilities, partial data from 5 facilities, and no data 
from 3 facilities. EPA has placed all data received to date in the 
public record (Section 19.3.3) and will include any additional data as 
it is received. EPA intends to incorporate all appropriate data from 
this request into the analyses for the final rule including target 
effluent concentrations used for estimating compliance costs and 
pollutant load reductions and for developing or evaluating the long-
term averages and variability factors for the final limitations. For 
this notice, EPA has incorporated the 16 complete daily/weekly data 
sets into its development of facility-level (episode-level) long-term 
averages and variability factors (see DCNs 165080 and 165160), but not 
into the revised analyses of costs and loadings. Summary DMR data has 
been used in the revised cost and loading estimates however.

C. Information From EPA Regions and States

1. Permits, Permit Applications and Fact Sheets
    In an effort to obtain additional information without burdening the 
facilities directly, EPA gathered permits, permit applications and 
permit fact sheets from EPA Regional offices and States for some 
facilities from which EPA did not receive a detailed survey and which 
were identified as meat or poultry processors either in EPA's Permit 
Compliance System (PCS) or in the screener survey database. PCS is a 
database which contains monitoring and NPDES permit data from major and

[[Page 48477]]

some minor point sources which discharge wastewater directly to surface 
water.
    EPA was interested in obtaining information on the permit 
requirements and treatment-in-place at facilities which had specific 
production processes about which we had limited information for the 
proposal (e.g. stand-alone further processors and renderers.) EPA 
identified over 980 facilities in PCS that were classified under SIC 
codes 2011, 2013, 2015 and 2077 (the codes which identify meat or 
poultry processing and rendering), plus some related codes referring to 
different aspects of food processing such as 2091 (Canned and Cured 
Fish and Seafoods) and 2099 (Food Preparations, Not Elsewhere 
Classified). EPA then refined the list by selecting those facilities 
that had data in PCS for at least one of the following pollutant 
parameters: TKN, nitrate + nitrite, total phosphorus, chemical oxygen 
demand (COD), carbonaceous biochemical oxygen demand (CBOD), total 
nitrogen, fecal streptococci, total dissolved solids (TDS), chloride, 
E. coli, oil and grease as hexane extractable material (O&G as HEM), 
copper, chromium, nickel, and zinc. EPA then added to the list all 
further processors and independent renderer that were in the screener 
survey database, but were not currently on the list generated through 
PCS. Detailed survey recipients were then excluded because they 
provided sufficient information in their survey responses. EPA then 
sought permits for all the facilities identified on this refined list, 
which is included in the record (see DCN 100769).
    EPA obtained a copy of the permit, permit application and/or fact 
sheet for 61 facilities (in 20 states) of 104 total facilities (in 27 
states) on the refined list and obtained notice of closure on an 
additional 14 of the 104 facilities. However, EPA intends to include 
this information in its analyses for the final rule as appropriate. 
This information will provide EPA with descriptive information on 
additional MPP facilities which, when combined with the monitoring data 
contained in PCS, may help EPA to further evaluate the baseline level 
of wastewater treatment currently practiced by the industry.
    More specifically, EPA is considering using this data to fill data 
gaps in the information used in EPA's estimates of baseline pollutant 
loadings for certain types of facilities (e.g., further processors and 
independent renderers) and for developing the option-specific target 
effluent concentrations (i.e., long-term averages) used for estimating 
compliance costs and pollutant reductions for these facilities for the 
final rule. For these classes of facilities, EPA would use the permit, 
fact sheet and permit application to expand the information regarding 
production practices and wastewater treatment currently in-place to 
better assess the baseline performance of these facilities and costs to 
comply with the regulatory options considered. See Section 21.1, DCNs 
125606 and 126002 of the public record for EPA's estimates of costs and 
pollutant reductions for further processors and renderers. These 
estimates do include these additional data.
    EPA may also use the data from PCS to assess the achievability of 
the limitations for these types of facilities in the final rule. EPA 
notes that because PCS does not generally contain the weekly/daily 
individual data points, EPA intends, at this time, to rely on other 
more detailed data to develop limitations and standards for these types 
facilities.
2. Summary of POTW Interferences and Upsets
    As discussed in the proposal (67 FR 8637), EPA worked with its 
Regional offices and state pretreatment coordinators to collect 
additional data to determine whether or not national categorical 
pretreatment standards are necessary for the MPP industry. EPA did not 
propose to establish pretreatment standards for existing or new 
facilities in the MPP industry.
    For each Region, EPA listed the indirect discharging screener 
survey facilities and corresponding POTWs according to the survey 
response. EPA requested the Regional Pretreatment Coordinators to 
verify that the screener survey MPP site had correctly identified the 
receiving POTW. EPA also asked the coordinators to identify any 
instances of interference or upsets that were attributed to the listed 
MPP site. The majority of MPP indirect dischargers are located in EPA 
Region 5 (Illinois, Ohio, Indiana, Michigan, Minnesota, and Wisconsin) 
and the majority of responses from this request were also from Region 
5. There were very few reported instances of interference or upset from 
MPP facilities. One state pretreatment coordinator noted that in many 
cases MPP facilities pay a surcharge to the POTW to discharge higher 
than normal strength wastewater. In California, the state with the 
largest number of indirect discharge MPP sites, only two instances of 
POTW problems were identified as related to MPP discharges. Although it 
did not identify any specific instances of problems, the State of 
Oklahoma indicated its belief that not all POTWs can handle the 
conventional pollutant loadings from MPP facilities. For this reason 
and because of the lack of information available to establish local 
limits, the State supported the promulgation of pretreatment standards 
for MPP facilities that discharge to POTWs.
    At this time, EPA does not consider this Regional/State information 
to be sufficient evidence that pretreatment standards are necessary for 
the MPP industry. For further discussion and to review the data listing 
and responses described above, see DCN 115077 in the public record for 
today's notice.

D. Data Submitted by Industry

    In addition, EPA received some estimated summary-level cost data in 
the industry comments on what it may cost for a red meat and a 
rendering facility to upgrade their existing technologies. Also, 
several facilities submitted cost data as part of their detailed survey 
that provided estimated costs specific to installation or upgrade of 
each facility's wastewater treatment system. EPA also obtained upgrade/
retrofit cost information from one red meat site and one poultry 
products site as a follow-up to earlier, pre-proposal sampling and from 
one poultry site that was sampled post-proposal. EPA has used this 
information in the development of the revised cost estimates presented 
in today's notice.
    EPA has also received comment from industry representatives on 
components of its revised costing methodology during meetings with 
stakeholders. These comments and EPA's response, including a summary of 
changes made to the cost models as a result, can be found in the public 
record supporting this NODA (see DCN 115078). Non-confidential cost 
information can be found in Section 19.5 of the public record.
    In general, these industry commenters believed that EPA had 
substantially underestimated the costs of achieving the proposed 
limits, in part because they believed additional treatment steps and/or 
capacity would be needed to reliably and consistently comply with these 
limits. Among the most significant issues raised were the sizing of the 
aerobic tanks, the need for a supplemental carbon source to maintain an 
adequate BOD to TKN ratio in the influent to the aerobic treatment 
stage, the costs for by-passing a portion of the treatment stream 
around the anaerobic lagoon to maintain sufficient BOD for 
denitrification, the level of nitrate/nitrite (as nitrogen) reduction 
achievable in the anoxic tank and the degree of comparability between 
poultry

[[Page 48478]]

and red meat facilities with respect to raw wastewater nitrogen 
concentrations, the level of cost savings attributable to reduced 
chemical additions for alkalinity, the cost and required dosage for 
polymer additions, the need for final holding lagoon to achieve 
consistent compliance, the practicality of achieving a 10 times recycle 
rate in the anoxic tank, and the incremental labor necessary to operate 
the treatment system.
    Using revised assumptions that they believed were more realistic, 
these commenters estimated costs for 9 sample facilities that ranged 
from 4 to 8 times the cost estimates projected by EPA for these same 
facilities. EPA is still reviewing the revised assumptions used by 
these commenters, but preliminarily believes that some of them may be 
overly conservative and thus tend to overstate costs. EPA solicits 
comment and especially real-world data from plants operating the 
various technology options under consideration for the final rule to 
aid in determining realistic parameter estimates and assumptions for 
its cost models.
    EPA received limited wastewater sampling data for seven specific 
facilities in response to its request in the proposed rule. These data 
were submitted by two individual facilities, two companies, one 
provided site-specific data for four facilities and one provided 
generalized data for its facilities, an industry coalition, and an 
industry trade association. The data submitted by the industry 
coalition and the industry trade association were the same, and 
represented data for four pollutants for one of the poultry facilities 
sampled by EPA for the proposal. This data has not been incorporated 
into the analyses for today's notice. Of the seven facilities for which 
data were submitted, data for two of the facilities was the same as the 
data provided in the facilities' detailed surveys (this data was 
provided only for TKN). EPA included this data in the loadings and cost 
analyses in today's notice. EPA did not use data from the remaining 
facilities for its analyses for today's notice because EPA requires 
supporting information about the facilities (e.g., treatment system 
type, production type) before the data can be used in order to classify 
the data properly. Once the supporting information is submitted by the 
facilities, EPA anticipates that it will be able to use this data for 
the final rule. EPA did not incorporate the data submitted by the 
remaining company because it only supplied a typical range of TKN 
values for a number of its poultry facilities, and not for any specific 
facility. EPA has since requested facility-specific data from this 
commenter for each of its facilities (see Section II.B regarding DMR 
data requests).

E. Incorporation of All Surveys and Additional Survey Follow-Up

    As discussed in the preamble to the proposed rule (67 FR 8593), EPA 
was not able to incorporate data from all complete survey responses 
prior to publication. In the proposal, EPA stated that it would use 
information from all screener and detailed surveys, including those 
collected after the cut-off dates (April 24, 2001 and May 29, 2001, 
respectively), in the analyses presented in this Notice of Data 
Availability. For the proposal, EPA was able to include information 
from 961 of 1500 screener survey responses and some of the information 
from 241 of 328 detailed survey responses. EPA notes that not all 
surveys returned to EPA provide complete information (even with EPA 
follow-up). For today's notice, EPA is using responses from 1,254 
screener surveys and 328 detailed surveys. EPA notes that the analyses 
presented in today's notice focus on the 53 (of 328) detailed survey 
recipients who are non-small meat and poultry slaughterhouses 
discharging directly to surface waters. However, EPA included all the 
usable screener surveys and detailed surveys in its calculation of 
survey weights for developing national estimates (see Section III.B.3 
for a discussion of survey weights). EPA has also analyzed detailed 
survey data from 5 additional direct dischargers which include three 
small facilities (two poultry facilities and one red meat facility), 
one poultry further processing facility, and one facility that only 
performs rendering operations. EPA has included data from these 
facilities in its analyses for small slaughterhouses, further 
processors, and renderers in Section 21.1 of the docket and intends to 
use the data from these facilities in developing the final rule. See 
Section X, for a discussion of EPA's revised estimates of compliance 
costs, pollutant reductions and economic impacts.
1. Confirmation of Screener Survey Information
    In addition to incorporating the survey data described above, EPA 
sought to clarify screener survey information and collected additional 
information from screener survey sites in response to comments 
regarding the validity of EPA's database and EPA's characterization of 
the baseline pollutant loadings from the MPP industry. EPA contacted 34 
screener survey facilities that appeared to be direct dischargers based 
on their screener survey responses. These 34 facilities represent 
direct dischargers that were not engaged in slaughtering operations 
(i.e., they only performed further processing or rendering). The 
majority of these sites were identified as further processors, however, 
5 sites were renderers. EPA contacted these facilities to discuss the 
wastewater treatment systems in place at the site in 1999 (the base 
year of the survey) as well as to verify the following information: 
Manufacturing type (e.g., red meat further processor vs. poultry 
further processor); wastewater flows; production classification (small 
vs. non-small); discharge mode/wastewater management type (e.g., 
indirect discharge to POTW, direct discharge to receiving water, land 
application); monitored pollutant parameters; current wastewater 
treatment system and target concentrations; and discharge/receiving 
water body. EPA obtained responses from 30 sites. Of these, 18 were in 
fact direct dischargers, 11 turned out to be indirect dischargers and 
one was not currently operating. EPA has incorporated this information 
into the analyses of further processors and renderers in Section 21.1., 
DCNs 125606 and 126002 of the docket. EPA also received discharge 
monitoring report (DMR) data from three further processing sites in 
response to these follow-up discussions. This DMR data has also been 
incorporated into the analyses of further processors and renderers in 
Section 19.3.3 of the docket. Non-confidential responses are provided 
in Section 19.3.1 of the public record for today's notice.
2. Confirmation of Detailed Survey Information
    EPA conducted several follow-up efforts to ensure that the detailed 
survey data collected from MPP facilities are as complete and accurate 
as possible, including follow-up phone calls to facilities if survey 
responses were incomplete or if there were discrepancies in the data 
reported in the detailed surveys. EPA then made an effort to 
systematically confirm information for all direct discharge detailed 
survey recipients. Specifically, EPA mailed a summary of facility-
specific responses (referred to as a ``fact sheet'') to the 58 detailed 
survey respondents that indicated they were direct dischargers in their 
survey response. EPA did not send ``fact sheets'' to indirect 
dischargers because, as proposed and based on further evaluation as 
discussed above, EPA is not considering further regulation of

[[Page 48479]]

such facilities in the final rule. The fact sheet requested 
confirmation of the following information for 1999 by product type 
(i.e., red meat or poultry): Type of processing (i.e., first 
processing, further processing, rendering), the related production 
volume, and the wastewater flows from various production operations. In 
addition, EPA requested information on the site's wastewater treatment 
system. This included confirmation of the Agency's classification of 
the treatment level of the facility's wastewater treatment system 
according to EPA's treatment option designations as identified in the 
cover letter to the facility; average effluent flow rate; targeted 
pollutant parameters (e.g., BOD removal, nitrification, phosphorus 
removal); and confirmation of the summary of the effluent parameters 
and concentrations from the survey that EPA intends to use in 
developing pollutant loading estimates. Based on the revised fact 
sheets, EPA incorporated changes to its database for today's notice to 
the extent possible (e.g., EPA is still contacting some facilities to 
clarify their response). See Section 19.3.2.4 of the record for copies 
of non-confidential letters and fact sheets.

III. Revisions to the Cost Model

A. Proposed Costing Approach

    EPA proposed to establish effluent limitations based on the 
performance of biological wastewater treatment designed and operated to 
achieve denitrification. For the proposed costs, EPA used a model 
facility approach, applied frequency factors to obtain national 
estimates, and applied the CAPDET computer model.
1. Model Facility Approach
    To determine the economic achievability of this technology EPA used 
a model facility approach to estimate the cost of installing or 
upgrading the wastewater treatment to achieve the limits. As described 
in the preamble to the proposed regulation (67 FR 8607), EPA developed 
19 separate model facility groups based on the different combinations 
of production processes that are possible (for example a meat 
slaughtering, rendering and further processing facility as compared to 
a meat slaughtering and rendering facility). These model facility 
groups were further subdivided according to facility size based on 
annual production. The distribution of facilities by size and the 
production range defining each size group were derived from the 
screener survey responses, and a median wastewater flow for each model 
facility/size category combination was identified.
2. National Estimates Using Frequency Factors
    EPA evaluated the baseline wastewater treatment technologies using 
information provided in response to the detailed survey as described in 
the proposal preamble (67 FR 8609). The number of facilities with 
specific treatment units, as reported in the detailed surveys were 
counted and from these counts EPA developed frequency factors, 
presented as percentages and applied them to the national population to 
represent the baseline level of treatment-in-place. These frequency 
factors were based upon raw counts of survey responses without regard 
to the sample weights, because these weights were not yet available for 
the proposal, due to the fact that EPA had not completed its analysis 
of survey results. See Section III.B.3 for an explanation of the survey 
weights. As an example of the type of frequency factor calculation used 
at proposal, suppose ten facilities reported a specific treatment 
system, then a frequency factor of 3 percent of the industry as a whole 
was calculated by dividing ten by the number of detailed survey 
responses (328), and expressing as a percent. This frequency factor was 
then applied to each model facility group.
3. Use of CAPDET Model
    At proposal, EPA used a commercially available cost model entitled 
the Computer Assisted Procedure For Design And Evaluation Of Wastewater 
Treatment Systems (CAPDET) as one approach to estimate the costs of 
wastewater treatment for meat and poultry processors (67 FR 8609). 
CAPDET designs and estimates the cost of construction, installation and 
annual operation of wastewater treatment from the ground up, but cannot 
evaluate the cost of upgrades to existing equipment. Since all direct 
discharge MPP facilities have wastewater treatment in place, much of 
the costs that would be incurred by MPP facilities would be associated 
with upgrades to their treatment systems. Recognizing that CAPDET is 
not suited for addressing upgrades, EPA developed a second approach for 
the proposal analysis that specifically estimated the retrofit costs 
associated with the required upgrades (67 FR 8610).

B. Revised Costing Approach

    Based on public comments on the proposed costing approach and the 
incorporation of new data, EPA has revised its approach for developing 
national estimates of compliance costs for the MPP industry. For the 
costs presented in today's notice, EPA used a facility-specific 
approach, applied survey weights to obtain national estimates, and 
developed its own computer model specific to the MPP industry.
1. Comments on Proposed Approach
    EPA received several comments critical of the proposed approach for 
developing costs for the MPP industry. Many comments criticized the use 
of the frequency factor approach for estimating national costs. 
Commenters were concerned that this approach identified the frequency 
of a particular treatment technology in place without considering the 
varying levels of performance within that technology.
    EPA also received comments regarding the use of the CAPDET model to 
estimate the costs of compliance. Commenters argued that CAPDET is not 
appropriate for estimating the costs of treating meat and poultry 
products wastewater. Commenters also expressed disagreement over the 
retrofit cost estimate arguing that this approach does not account for 
site specific factors and concerns such as the need to add a source of 
carbon which would result in an increase in the sludge produced. Some 
facilities may need a carbon source, such as methanol, to provide 
enough BOD for denitrification to occur. These aspects of the 
wastewater treatment requirements would result in additional costs. The 
commenters stated that EPA had underestimated the costs by an order of 
magnitude.
2. Facility-Specific Model Approach
    In response to comments and because it was able to incorporate new 
data, EPA has substantially revised the method to estimate compliance 
costs since the proposal by developing a cost model specific to the 
Meat and Poultry Products Category. This new approach considers the 
costs for each facility, rather than the proposed model approach. EPA 
has now estimated facility specific costs for each of the 53 direct 
discharging meat and poultry slaughterers (i.e., first processors) that 
responded to EPA's detailed survey. These estimates are the basis for 
the national estimates of costs for these subcategories. EPA classified 
each detailed survey facility's wastewater treatment system based on 
the description provided in the survey, and the summary of monitoring 
data also submitted with the survey. In some cases, EPA modified a 
facility's discharge status from direct to indirect discharger 
following discussions with

[[Page 48480]]

the facility to clarify the discharge destination of its process 
wastewater versus non-process wastewater. Once the facility's treatment 
system was classified into one of the technology options under 
consideration, the requirements for upgrading the system to comply with 
more stringent options were identified and costs were estimated for 
these upgrades using EPA's MPP Industry Cost Model (see Section 
III.B.4).
3. National Estimates Using Survey Weights
    Instead of using ``frequency factors'' (see Section III.A.2) that 
were used as rough estimates for the proposal, EPA applied survey 
weights to the facility-specific estimates to derive national estimates 
of costs, pollutant removals, and economic impacts associated with the 
MPP rule. The survey weights incorporate the statistical probability 
that a particular facility was selected to receive the detailed 
questionnaire and are adjusted for any nonresponse. For example, a 
survey weight of 3 means that the facility represents itself and two 
others in the sample. Probability samples, which were used to select 
the facilities for the MPP surveys, allow inferences to be made to the 
sampling frame from which the sample was drawn. Numerous textbooks and 
technical journals describe a variety of ways of drawing valid 
probability samples and making inferences to the sampling frame from 
which the sample was selected. EPA determined the size (i.e., number of 
facilities) of the probability samples by applying standard statistical 
equations. These samples provide an adequate database that can be used 
to estimate population characteristics.
    Since the proposal, EPA has incorporated data from additional 
screener and detailed surveys into its analysis. Using this new 
information, EPA has revised the screener survey weights and calculated 
the detailed survey weights. To calculate the screener survey weights, 
EPA used standard survey statistics based upon the sample design and 
nonresponse. Appendix B of the proposal development document provides 
the equations used for these calculations. To calculate the detailed 
survey weights, EPA followed the general methodology described in 
Appendix B which first develops survey weights based upon the sample 
design, then adjusts them for nonresponse, and finally calibrates them 
based upon the screener national estimates. DCN 115115 provides the 
values of the survey weights for the non-small direct discharge 
slaughtering facilities in Subcategories A-D and K. This section of the 
NODA provides more details about the calibration step used to calculate 
the final detailed survey weights.
    By using data from either the screener questionnaire or the 
detailed questionnaire, EPA could categorize the survey data into one 
of 14 groups described below. The availability of overlapping 
information was an important consideration because the screener 
questionnaire collected data on only a few characteristics. However, 
because the screener has a larger sample size, it provides better 
estimates of the number of eligible facilities in the MPP population. 
Thus, EPA used the screener estimates to calibrate the detailed survey 
weights, as described below, so that the national estimates from the 
two questionnaires would result in the same values for those 
characteristics contained in both surveys.
    As a first step in the calibration, EPA categorized facilities into 
groups using the facility meat type (red meat, poultry, or a mixture) 
and production type (first processing, further processing, first 
processing/further processing, first processing/rendering, further 
processing/rendering, first processing/further processing/rendering). 
In addition, EPA gathered independent renderers into one group. As a 
result of crossing three meat types by six different production types 
and adding rendering, EPA obtained 19 possible groups of facilities. 
EPA further split these groups into non-small and small based on total 
production. As a result, EPA obtained a total of 38 possible groups of 
facilities.
    Within each of the 38 possible groups, EPA then compared the 
estimated number of facilities using the screener weights to the 
estimates using the detailed survey weights. Because the detailed 
questionnaire had data for only a few or no facilities within some 
groups, EPA determined that it was necessary to collapse some groups. 
If a group had less than five respondents to the detailed questionnaire 
or less than 10 respondents to the screener questionnaire, EPA 
collapsed it with another group. Also, if the estimates from the 
screener and the detailed questionnaire differed by more than a factor 
of 2.5, then EPA collapsed that group with another to improve variance 
estimates. By collapsing groups, EPA obtained information about 
facilities with similar characteristics, and improved precision for its 
national estimates based upon data available only from the detailed 
questionnaire (e.g., data about the wastewater treatment components). 
To perform this step, EPA determined that it was appropriate to 
collapse certain production types and sizes within meat type. For 
example, EPA collapsed the two groups for non-small red meat slaughters 
and non-small red meat slaughter/render into a single group. After 
collapsing the groups, EPA obtained the 14 groups shown in Table III.B-
1.
    Within each of the 14 groups, EPA then calibrated the detailed 
survey weights so that the national estimate of facilities using the 
detailed questionnaire database matched the national estimates based 
upon the screener data. To calibrate the survey weight, EPA used the 
ratio of the national estimates based upon the screener database and 
the detailed questionnaire database, respectively. For example, for a 
particular group (such as renderer), suppose that the national estimate 
based on the screener weights and the screener database is 30 
facilities. Further suppose that 20 facilities is the national estimate 
based upon the detailed survey weights and the detailed questionnaire 
database. The ratio of the two estimates is 1.5. Thus, each detailed 
survey weight in the group would be multiplied by 1.5. Therefore, a 
detailed survey weight of 4 for a particular facility would be adjusted 
upward to a final survey weight of 6. Because facilities from different 
sampling strata could be assigned to the same group, it is possible to 
have facilities with different survey weights within a particular 
group.
    Table III.B-1 provides the number of facilities in the screener 
database, the number of facilities in the detailed questionnaire 
database, and the national estimate of the number of facilities. Note 
the national estimates presented here include all MPP facilities (e.g., 
direct dischargers, indirect dischargers, zero dischargers, and all 
facilities regardless of size) and is not the same as the national 
estimate of number of in-scope MPP facilities (e.g., direct dischargers 
above the category-specific production thresholds).

[[Page 48481]]



                                    Table III.B-1.--Number of MPP Facilities
----------------------------------------------------------------------------------------------------------------
                                                                               Number of facilities
                                                                 -----------------------------------------------
                              Group                                                  Detailed
                                                                     Screener      questionnaire     National
                                                                     database        database        estimate
----------------------------------------------------------------------------------------------------------------
Non-small Red Meat Slaughter or Slaughter/Render................              28              23              62
Small Red Meat Slaughter or Slaughter/Render....................              64               7             490
Non-small Red Meat Processor or Processor/Render................              22               5              83
Small Red Meat Processor or Processor/Render....................             311              43            1873
Non-small Red Meat Slaughter/Processor or Slaughter/Processor/                27              25              74
 Render.........................................................
Small Red Meat Slaughter/Processor or Slaughter/Processor/Render             122              16            1012
Non-small Mixed Meat............................................              92              15             270
Small Mixed Meat................................................             344              18            1924
Non-small Poultry Slaughter.....................................              66              22             149
Non-small Poultry Slaughter/Render..............................              10               5              21
Non-small Poultry Slaughter/Processor, Processor, or Processor/               72              35             162
 Render.........................................................
Non-small Poultry Slaughter/Processor/Render....................              10               9              24
Small Poultry Slaughter, Slaughter/Render, Slaughter/Processor,               56               6             344
 Slaughter/Processor/Render, Processor, or Processor/Render.....
Render Only.....................................................              29              20             132
----------------------------------------------------------------------------------------------------------------

4. MPP Industry Cost Model
    Instead of using the CAPDET model (see Section III.A.3), EPA 
developed cost equations for treatment units that were derived from a 
combination of vendor supplied information, data and information 
provided in the detailed surveys, and the comments on the proposal. 
Because the detailed survey did not collect information about many of 
the specific parameters used in the production process and treatment 
system of individual facilities, EPA has supplemented the facility-
specific information with typical specifications or parameters derived 
from literature, survey results, and industry comments. For example, 
EPA has assumed that facilities have pipes of typical sizes for their 
operations. As a consequence of such assumptions, a particular facility 
might need a somewhat different engineering configuration from what was 
modeled if it has installed equipment that varies from the typical 
equipment or specifications used to estimate costs. However, because 
EPA has applied typical specifications and parameters that are broadly 
representative of the industry to a range of processes and treatment 
systems and has contacted facilities, as follow-up, to identify the 
site specific configuration information to the extent that the facility 
can furnish it, EPA considers that costs for these detailed survey 
facilities are reasonably accurate.
    Some of the areas that EPA paid particular attention to in revising 
the estimates of cost, include issues associated with the pretreatment 
of wastewater prior to reaching the biological wastewater treatment 
system, such as BOD levels, the generation of sludge, and the type of 
disinfection.
    The type of pretreatment may affect the levels of BOD entering the 
biological treatment system. Commenters said that pretreatment with 
anaerobic lagoons is so effective at reducing BOD that if facilities 
were required to denitrify, a source of carbon would have to be added 
to the wastewater to ensure that denitrification would take place. 
Based on industry-supplied data and a review of the literature, EPA has 
estimated that an influent BOD:TKN ratio of at least 3:1 is preferable 
for effective denitrification. EPA has thus included costs for 
facilities to bypass some of the wastewater around the anaerobic 
lagoons to supplement BOD if data indicate that the concentration of 
BOD leaving the anaerobic lagoon is not at least three times the 
concentration of TKN. Anaerobic lagoon bypass was observed at one 
facility EPA sampled. Because flows may be too low for effective bypass 
during periods of no or low operations (e.g., weekends) at some 
facilities, EPA costed those facilities for the purchase and operation 
of a system to use methanol as a carbon source for denitrification. To 
ensure facilities can meet the low nitrogen concentrations in Option 4, 
EPA also costed for methanol use in the second anoxic tank during 
regular activity (e.g., weekdays) if BOD supplementation is needed.
    In conjunction with the higher BOD concentrations in the biological 
wastewater treatment system, EPA has also accounted for increased 
sludge generation and estimated costs for additional sludge dewatering 
and hauling. EPA has estimated the cost to upgrade the biological 
wastewater treatment to accomplish nutrient removals for a variety of 
different baseline treatment configurations, including activated sludge 
systems, sequencing batch reactors (SBR), oxidation ditch systems, 
Schreiber reactors, and Biolac systems. For each different type of 
biological system, EPA identified the equipment and construction that 
would be necessary to achieve the long-term average concentrations 
(i.e., target effluent concentrations) considered for each option. 
Upgrades could include additional reaction tanks, chemical addition 
requiring a mixing tank and chemical storage area, piping to provide a 
waste stream bypass of the anaerobic lagoon, and increased sludge 
handling capacity.
    EPA also notes that for the proposal EPA estimated compliance costs 
for disinfection based on ultraviolet (UV) technology because of 
possible concerns with the discharge of disinfection byproducts from 
the treatment system. However, for today's notice, EPA is instead 
assuming that chlorination will be the primary means of achieving fecal 
coliforms limits and is thus not including disinfection costs for 
facilities that have any type of disinfection technology in place, and 
is costing chlorination for the facilities that do not. EPA is also not 
including costs for dechlorination technology because EPA expects that 
facilities with water quality based limits for chlorine and/or 
chlorinated by-products already have dechlorination in place and that 
additional limits for chlorine and/or chlorinated by-products will be 
rare. There are no national technology based limits for these 
parameters (and EPA is not proposing any). EPA solicits comment on 
costing for disinfection using chlorination only (without 
dechlorination), and information on

[[Page 48482]]

facilities that are or may be required to comply with limits for 
disinfectants and/or disinfection byproducts.

IV. Revised Pollutant Loadings and Reductions Methodology

A. Proposed Pollutant Loading Approach

    For the proposal, EPA established a hierarchy using available data 
from sampling or detailed surveys to develop baseline loads for each of 
the MPP model facility groups (67 FR 8611). The pollutant load 
reductions were calculated by determining the effluent loads that would 
be achieved by each of the regulatory options under consideration and 
subtracting this value from the baseline loading. The effluent loads 
for the regulatory options were derived from the sampling data and 
combined with typical flow values for each model facility group derived 
from the detailed surveys.

B. Revised Pollutant Loading Approach

    EPA received comments which criticized the use of the hierarchy to 
determine baseline loads and objected to how data was transferred to 
derive baseline loads for all of the model facility groups. EPA has 
revised the proposed approach to address these comments and to develop 
pollutant loadings and load reductions which are consistent with the 
revised costing methodology. EPA's revised assessment of pollutant 
loading reductions was developed on a facility level similar to the 
revised analysis of costs. The baseline loadings presented in this 
notice were developed using facility specific effluent data submitted 
with the detailed surveys or obtained from Discharge Monitoring Reports 
(DMRs) from PCS. The baseline loadings in today's notice do not 
incorporate the weekly/daily data from the 16 slaughtering facilities 
that responded to EPA's request as discussed in Section II.B but do 
incorporate the summary DMR data for these 16 facilities. EPA also has 
incorporated the results from its additional sampling episodes into its 
determination of pollutants of concern (POC). Based upon the new data 
and minor modifications to the use of pre-proposal sampling data, EPA 
is no longer considering Salmonella to be a POC for the poultry 
subcategories and Carbaryl to be a POC for the red meat subcategories. 
For facilities without monitoring information for some pollutants, EPA 
developed a default data set which used all data available for a 
subcategory (i.e., all data submitted with the detailed surveys 
supplemented by or in combination with other information from the 
detailed surveys and from EPA's sampling program for this regulation). 
Using this data, EPA developed an average effluent concentration for 
each regulated subcategory (i.e. poultry slaughterers and red meat 
slaughterers) for each pollutant of concern (See Tables IV.B-1 and 
IV.B-2 below) under each regulatory option to be used in the cost and 
loadings methodologies. EPA notes that these average target effluent 
concentrations are not derived using the delta-lognormal distribution 
used for developing the long-term average concentrations used for 
calculating limitations and standards. For the final rule, EPA may use 
the same long term averages for estimating loadings reduction that it 
uses for calculating limitations and standards, and expects these 
values will be close to those used in the NODA analysis.
    Sufficient data was available from detailed surveys and sampling 
episodes to allow EPA to derive default baseline concentrations for 
poultry slaughterers and red meat slaughterers without transferring 
between subcategories. For developing default concentrations for 
baseline loadings for independent renderers, EPA used data from 12 
rendering facilities, including detailed surveys, industry submitted 
data, DMR data from PCS and data obtained in response to screener 
survey follow-up (see Section II.E). However, because of the general 
lack of data for the pollutants of concern for stand-alone poultry or 
red meat further processors, EPA combined baseline data from both 
poultry and red meat further processors. The result was one set of 
default baseline concentrations that applied to all further processors, 
regardless of whether it was a poultry or red meat further processor. 
EPA expects that wastewater characteristics at further processors are 
more likely to be dependent on the processing operation (e.g., 
breading, frying) than on the type of meat. EPA solicits comment on the 
differences in wastewater characteristics at red meat and poultry 
further processors. See DCN 100767 for additional information on the 
default baseline concentration used for today's notice. The target 
effluent concentrations for each regulatory option were transferred 
from meat slaughterers to meat further processors and independent 
renderers. Similarly, the effluent concentrations for each regulatory 
option were transferred from poultry slaughterers to poultry further 
processors. For the final rule, EPA anticipates using the information 
collected from EPA regions and states (See Section II.C.1) in its 
development of effluent concentrations for these types of facilities. 
However, if data for all regulatory options is not available for the 
final rule, EPA anticipates data transfers as presented in this NODA. 
EPA notes that, based on implementation of the revised (more rigorous) 
approach to developing loadings, there are no pollutant reductions 
associated with pesticides.

   IV.B-1.--Average Target Effluent Concentrations for Costs and Loadings for Subcategories A-D, F-I and J by
                                                     Option
                                                     [mg/L]
----------------------------------------------------------------------------------------------------------------
                                     Option 2       Option 2+P      Option 2.5    Option 2.5 + P     Option 4
----------------------------------------------------------------------------------------------------------------
BOD.............................           7.00            7.00            7.00            7.00            6.45
TSS.............................          25.10           25.10           25.10           25.10           18.65
COD.............................         125.04          125.04          125.04          125.04          125.04
CBOD............................           6.00            6.00            6.00            6.00            6.00
Ammonia as Nitrogen.............           0.895           0.895           0.895           0.895           0.185
Total Nitrogen..................         N/A             N/A              34.2            34.2            13.51
Total Phosphorus................         N/A               8.28          N/A               8.28            5.12
Nitrate/Nitrite.................         N/A             N/A              20.87           20.87           10.35
TKN.............................           3.615           3.615           3.615           3.615           3.17
O&G (as HEM)....................          14.05           14.05           14.05           14.05           14.05
----------------------------------------------------------------------------------------------------------------
Note: See Section IX.A for a description of the technology options.
N/A: Not applicable because technology option is not designed to control the pollutant parameter.


[[Page 48483]]


   IV.B-2.--Average Target Effluent Concentrations for Costs and Loadings for Subcategories K and L by Option
                                                     [mg/L]
----------------------------------------------------------------------------------------------------------------
                                     Option 2       Option 2+P      Option 2.5    Option 2.5 + P     Option 4
----------------------------------------------------------------------------------------------------------------
BOD.............................            8.80            8.80            8.80            8.80            7.00
TSS.............................           10.21           10.21           10.21           10.21            5.05
COD.............................           29.60           29.60           29.60           29.60           17.25
CBOD............................            6.00            6.00            6.00            6.00            6.00
Ammonia as Nitrogen.............            1.00            1.00            1.00            1.00            0.17
Total Nitrogen..................             N/A             N/A           32.40           32.40            1.86
Total Phosphorus................             N/A            4.20             N/A            4.20            2.27
Nitrate/Nitrite.................             N/A             N/A           20.87           20.87            0.52
TKN.............................            4.97            4.97            4.97            4.97            1.34
O&G (as HEM)....................            5.90            5.90            5.90            5.90           5.39
----------------------------------------------------------------------------------------------------------------
Note: See Section IV.A for a description of the technology options.
N/A: Not applicable because technology option is not designed to control the pollutant parameter.

V. Changes Considered to Applicability, Definitions, and Regulated 
Pollutants

A. Changes Considered to Applicability and Definitions

    EPA received comment on the size thresholds in the proposed rule, 
as well as a request from permitting authorities to clarify the overlap 
between the Concentrated Animal Feeding Operations (CAFO) rule and the 
MPP rule. This section discusses changes EPA is considering for the 
final rule including: (1) Changes in the production based thresholds; 
and (2) clarification on the distinction between CAFOs and animal 
holding areas in the MPP industry.
    EPA based the proposed production thresholds and its definition of 
``small'' facility on available screener survey data (67 FR 8587). As 
discussed in Section II.E of today's notice, EPA is including 
additional screener surveys as well as detailed surveys in its analysis 
for this NODA. If EPA determines that the economic achievability, cost-
effectiveness, or environmental benefits of the rule can be enhanced by 
revising the production-based thresholds, EPA will consider revising 
the thresholds for the final rule. EPA notes that although one 
commenter requested a higher production threshold for poultry 
facilities (e.g., 100 million versus 10 million pounds per year) for 
determining applicability of the effluent guidelines limitations and 
standards, they did not provide any information that would serve as a 
basis for EPA to revise the proposed production based thresholds.
    Please note that, in error, EPA also solicited comment on its use 
of 100 employees at the facility level for analyzing economic impacts 
on small businesses. In fact, EPA used the SBA size standard of 500 
employees at the company level to perform its small business impact 
analyses for both the proposal and today's notice and will continue to 
do so for the final rule.
    Subsequent to promulgating the final CAFO rule earlier this year 
(68 FR 7176; February 12, 2003), EPA received a request from permitting 
authorities to clarify the distinction between animal feeding 
operations (AFOs) and animal holding areas at MPP facilities to avoid 
any ambiguity about which permit requirements and effluent guidelines 
apply to discharges from the MPP animal holding areas. EPA's NPDES 
regulations at 40 CFR part 122.23(b)(1) define an AFO as ``a lot or 
facility (other than an aquatic animal production facility) where the 
following conditions are met: (1) Animals (other than aquatic animals) 
have been, are, or will be stabled or confined and fed or maintained 
for a total of more than 45 days or more in any 12-month period, and 
(2) Crops, vegetation, forage growth, or post-harvest residues are not 
sustained in the normal growing season over any portion of the lot or 
facility.'' All meat and poultry slaughtering facilities have live 
animal receiving areas. Although the animals at MPPs are not typically 
kept or maintained for more than a day, animals are present for more 
than 45 days in a 12 month period. Therefore, the AFO definition could 
be construed to include animal holding areas at meat and poultry 
slaughtering facilities.
    EPA does not interpret the AFO definition to include animal holding 
areas at meat and poultry slaughtering facilities. Furthermore, the 
CAFO rules do not establish requirements for MPP animal holding areas. 
Meat slaughtering and processing operations currently fall under the 
Meat Products Point Source Category at part 432. The MPP rule, as 
proposed, would add requirements to part 432 for poultry processing 
plants. Wastes from animal holding areas at MPP facilities were 
identified during the original effluent guidelines rulemakings in the 
1970s as being part of the MPP facilities' process wastewater and the 
requirements at part 432 apply to these wastes. NPDES permits have 
historically addressed the animal holding areas at processing 
facilities as part of the meat processing facility rather than as an 
animal feeding operation. Given the effectiveness of this approach, EPA 
does not intend to change the applicability of the MPP rules to animal 
holding areas. Rather this Notice is clarifying that animal holding 
areas at meat and poultry slaughtering facilities are still subject to 
the requirements of the MPP rule codified at 40 CFR part 432 and are 
not subject to the NPDES CAFO requirements codified at 40 CFR part 122 
or the CAFO effluent guidelines codified at 40 CFR part 412.
    To avoid potential confusion, EPA may include regulatory language 
in the applicability section of the MPP rule clarifying that animal 
holding areas at meat and poultry slaughtering facilities are subject 
to the requirements codified at part 432 and not the CAFO requirements 
at parts 122 or 412, and solicits comment on this aspect of the 
applicability language for part 432.

B. Changes Considered to the Pollutants Selected for Regulation

    Based on comments on the proposed rule, EPA is considering a 
revision to the pollutants it proposed for regulation (i.e., Ammonia 
(as N), BOD5, COD, Fecal Coliforms, O&G (as HEM), Total 
Nitrogen, Total Phosphorus, and TSS). EPA notes that the selection of 
pollutants proposed for regulation was subcategory-specific and size-
specific and not all pollutants were proposed for each subcategory, 
facility size, or limitation type (e.g., BPT, BAT). (See rule text of 
the proposed rule for a

[[Page 48484]]

specific list of proposed parameters for each subcategory; 67 FR 8657).
    EPA proposed adding COD to the BPT limitations for non-small 
facilities (i.e., based on subcategory-specific production thresholds) 
in Subcategories A-D and F-J to better reflect the design and operation 
of the existing BPT treatment technology (67 FR 8630). Commenters 
stated that biological treatment systems in place at meat products 
facilities are not designed or operated based upon COD removal and that 
doing so would be financially burdensome. In addition, commenters state 
that BOD or CBOD (carbonaceous BOD) would be a more appropriate measure 
for monitoring biological treatment system performance. EPA agrees that 
COD may not be an appropriate indicator of biological treatment 
technology performance at MPP facilities. Based on EPA's analysis of 
new data and the complete survey information, EPA is more likely to 
retain the current limits for BOD (and other conventional pollutants) 
and add total nitrogen to the BPT limitations for Subcategories A-D and 
F-J to reflect the partial denitrification currently occurring at many 
of these facilities (see Section IX for a discussion of options EPA is 
considering for BPT for the final rule). In this case, EPA would not 
regulate COD or CBOD in the final rule, because COD would not provide 
much useful information and CBOD would be somewhat redundant with the 
current BOD limitations and standards.
    For BAT limitations, EPA is still considering the regulation of 
ammonia (as nitrogen) for small facilities (below the subcategory-
specific production thresholds) in Subcategories A-D, F-I, and K-L and 
all of the facilities in Subcategory J, as proposed. Also, depending on 
the option EPA selects for the final rule, EPA is considering the 
regulation of ammonia (as nitrogen), total nitrogen, and/or total 
phosphorus for non-small facilities (above the production thresholds) 
in Subcategories A-D, F-I, and K-L, as proposed. Note that if EPA does 
not select a model technology for the BAT level of control that 
includes phosphorus removal, EPA would not regulate total phosphorus at 
BAT. The same holds true for the new source performance standards 
(NSPS).

C. Concerns Regarding Fecal Coliforms Limitations and Standards

    For the proposal, EPA retained the existing limitation/standard of 
``Maximum of 400 MPN per 100 ml at any time'' of fecal coliforms for 
BPT and NSPS for Subparts A through I (i.e., red meat subcategories) 
and Subpart J (i.e., independent rendering). In addition, EPA proposed 
the same fecal coliforms values for the BPT limitations and NSPS for 
Subparts K and L (proposed poultry subcategories). Based on analysis 
conducted for the proposal, EPA tentatively determined that this level 
was achievable by poultry facilities. As a result of the proposal, EPA 
received comment on several issues regarding the proposed and existing 
limitations and standards for fecal coliforms. This section addresses 
the major comments that the Agency received.
1. Reporting Units
    Commenters requested EPA to allow for monitoring of fecal coliforms 
to be reported in units of colony forming units (CFU) per 100 
milliliters (mL) in addition to the units of most probable numbers 
(MPN) per 100 mL specified in the existing regulations. To obtain 
results in units of MPN per 100 mL, the laboratory uses the multiple-
tube fermentation technique. To obtain results in units of CFU per 100 
mL, the laboratory uses a membrane filtration which is a direct plating 
method in which samples are filtered through 0.45um membrane filters 
that are subsequently transferred to petri dishes containing a 
selective or differential agar medium. Based on the research of Thomas 
and Woodward in ``Estimation of Coliforms Density by the Membrane 
Filter and the Fermentation Tube Methods'' (DCN 165320), results from 
either technique can be considered comparable, so long as the volume 
analyzed is equivalent. This finding of comparability is consistent 
with documentation for the existing fecal coliforms limitations and 
standards (see, for example, page 154 of the 1974 development document 
for the renderer segment (EPA 440/1-74/031-a) where EPA states ``This 
method [membrane filter procedure] and the multiple-tube technique 
which results in a MPN (most probable number) value, yield comparable 
results.''). Therefore, EPA is considering revising the limitations and 
standards to allow for results to be reported in either MPN units or 
CFU units per 100 ml. EPA solicits comment on this possible revision.
2. Impact of UV Technology
    Several commenters were concerned with the industry's ability to 
consistently achieve the existing and proposed fecal coliforms 
limitation/standard of 400 MPN/100 ml at ``any time'' with the use of 
ultraviolet radiation (UV) technology. Some facilities are using this 
technology as an alternative to treatment using chlorination which is 
itself associated with some environmental concerns. As discussed in 
Section III.B, for the proposal, EPA estimated compliance costs for 
disinfection based on UV technology. However, for today's notice, EPA 
is not including costs for facilities that have any type of 
disinfection technology in place and is costing chlorination for the 
three facilities that do not currently have any type of disinfection. 
The model technology does not include a dechlorination step. For the 
final rule, EPA intends to evaluate the achievability of the fecal 
coliforms limitation/standard using UV treatment. In its preliminary 
review, EPA is investigating whether the samples are likely to be 
extremely turbid for which UV treatment would not sufficiently kill 
fecal coliforms without agitation during the treatment step. As part of 
its preliminary review, EPA considered its sampling episode data from 
the facility with UV technology (episode 6486). This review showed that 
discharges of fecal coliforms are well below the current limitation/
standard, because the concentrations ranged from non-detected to a 
measured value of 166 MPN/100 mL. For the final rule, EPA intends to 
further review these sampling episode data and to consider the self-
monitoring data from facilities that use UV technology. EPA solicits 
comments and data on UV performance and costs for reducing fecal 
coliforms in MPP wastewaters. EPA also solicits comment on the extent 
to which water quality standards are driving the MPP industry to shift 
from chlorination/dechlorination to UV to achieve water quality 
standards for chlorine and whether this shift necessitates a revised 
fecal coliforms limit that is consistently achievable with UV 
technology.
3. Holding Times of EPA Sampling Data
    As explained in Section II.A.2, when EPA conducted its own sampling 
episodes at the facilities, it exceeded the required holding time for 
some samples for fecal coliforms. DCN 165310 in Section 22.6 of the 
public record lists the holding times and fecal coliforms measurements 
from the EPA sampling episodes.
    For red meat facilities, where EPA is retaining the previously 
promulgated limitations and standards, EPA is considering using the 
fecal coliforms data from the EPA sampling episodes for some analyses 
such as (1) calculations for loadings and (2) evaluation of treatment 
performance by comparing influent and effluent data. For the treatment 
technologies that EPA is currently considering, all of the red meat 
data from sampling episodes are associated with holding times of about

[[Page 48485]]

24 hours. Based on the results of the holding time study (see Section 
II.A.2 above), EPA is considering using the 24-hour data for these 
analyses. Note that EPA does not intend to revise the current 
limitations and standards for red meat facilities, and thus, is not 
using these data to develop limitations and standards for fecal 
coliforms. EPA requests comment on the use of the 24-hour holding time 
data for analysis of loadings and treatment performance at red meat 
facilities.
    For poultry facilities, where EPA is transferring the existing 
limitations and standards from the red meat subcategories, EPA will 
only use data associated with the 8-hour holding time for its loading 
analysis because the holding time study indicated that longer holding 
times for poultry processing wastewaters were not comparable to the 8-
hour period. Because only one sampling episode (6304) meets this 
criterion, EPA will base its loadings and other analyses on fecal 
coliforms data from this single sampling episode and any appropriate 
self-monitoring data. EPA will also use these data in evaluating the 
achievability of the limitations that EPA intends to transfer from the 
existing limitations for the red meat subcategory. EPA requests comment 
on the transfer of limitations for the poultry subcategory from the red 
meat subcategory, and on its planned use of data to analyze loadings 
and treatment performance.
4. Extending Holding Times in 40 CFR Part 136
    As discussed in the preamble to the proposed rule (67 FR 8631), EPA 
planned to conduct the holding time study for two purposes: to evaluate 
the use of data in developing loadings estimates and limitations/
standards, and for possible revisions to current holding time 
requirements. The previous section addresses EPA's intended use of the 
data for developing loadings estimates. Because the study collected 
data from only three facilities in the MPP industry, EPA does not 
consider the study results to provide a sufficient basis to revise the 
holding times specified in 40 CFR part 136 which apply to all 
industries.
5. Monitoring of Both Fecal Coliforms and E. coli
    As part of its evaluation of the existing guidelines, EPA has 
reviewed its use of fecal coliforms as a regulated parameter. On page 
68 of the1974 development document for the renderer segment (EPA 440/1-
74/031-a), EPA explained that it selected fecal coliforms as an 
indicator parameter because ``they have originated from the intestinal 
tract of warmblooded animals. Their presence in water indicates the 
potential presence of pathogenic bacteria and viruses.'' However, EPA 
subsequently issued a guidance document for water quality criteria that 
recommends the monitoring of E. coli or enterococci rather than fecal 
coliforms in recreational waters. (See ``Ambient Water Quality Criteria 
for Bacteria--1986,'' January 1986, EPA440/5-84-002.)
    While EPA has not validated an analytical method for E. coli in 
industrial wastewaters, which consist of considerably more complex 
matrices than ambient waters, it has analyzed for E. coli in MPP 
wastewaters using Standard Method 9221F and this appears to have 
provided reasonable estimates of the E. coli concentrations, based upon 
EPA's evaluation of the laboratory reports. However, EPA does not 
consider these data to be appropriate to use in developing limitations 
and standards for E. coli. Instead, EPA considers the E. coli data to 
be appropriate for general comparisons of E. coli and fecal coliforms 
concentrations in MPP wastewaters. For the pork and beef facilities in 
the holding time study, the E. coli and fecal coliforms concentration 
values were identical. For the effluent from the sampling episodes 
corresponding to the model technologies, the values of E. coli and 
fecal coliforms are identical for most samples. Thus, because fecal 
coliforms and E. coli in MPP effluent generally have similar 
concentration values, EPA continues to consider that fecal coliforms 
prove a reliable indicator parameter for E. coli.
    While EPA considers fecal coliforms to be the appropriate parameter 
for regulation for the MPP industry, EPA recognizes that some states 
and tribes may still prefer that facilities monitor directly for E. 
coli. Because concentrations of fecal coliforms and E. coli are 
similar, EPA is considering an alternative that would allow facilities 
to monitor for E. coli instead of fecal coliforms in the effluent. This 
alternative would be available when EPA amends 40 CFR part 136 to 
include an analytical method for E. coli in industrial effluent. EPA 
expects to promulgate such a method in the next few years. EPA is 
currently conducting validation studies of this method, and expects to 
propose this method in 2004.
    In this alternative, EPA would allow a facility to monitor for E. 
coli rather than fecal coliforms after the facility certified that the 
concentrations of the two parameters were similar in the final 
effluent. As part of the application process for this certification, 
the facility would be required to submit data demonstrating the 
similarities of concentrations of fecal coliforms and E. coli in its 
facility's wastewater over an extended period of time (perhaps a month 
or longer). If the permit authority determined that the E. coli 
concentrations had values that, on average, were greater than some 
``cutoff'' percent (for example, 75 or 90 percent) of the fecal 
coliforms concentration values, then the certification would allow the 
facility to monitor for E. coli rather than fecal coliforms. In this 
instance, the permit would contain an E. coli limitation/standard set 
equivalent to the same numerical value as the existing fecal coliforms 
limitation/standard for that facility. If the E. coli concentration 
values, on average, were lower than the cutoff percent of the fecal 
coliforms concentration values, then under this possible approach the 
permitting authority would be able to establish a limitation/standard 
for E. coli in place of fecal coliforms only if the numerical value for 
the E. coli limitation/standard in the facility's permit would be 
reduced by an appropriate amount from the fecal coliforms limitation/
standard for that facility. Note that EPA is not proposing to set 
national limitations for E. coli, because EPA lacks the data necessary 
to set such limitations. EPA believes, however, that the alternate 
approach discussed here could avoid the need to monitor for both E. 
coli and fecal coliforms in cases where the permitting authority 
believes E. coli is the more appropriate indicator.
    EPA solicits comment on this alternative and the specifications it 
is considering. EPA also solicits comments on whether this alternative 
would be beneficial for facilities, even though facilities could not 
use this method until EPA has adopted an approved method for E. coli in 
industrial effluent. Note that EPA is not proposing to set national 
limitations for E. coli as part of the MPP rule, because EPA lacks the 
information necessary to set such limitations at this time.

D. Concerns About Total Nitrogen Limitations and Standards

    At the time of proposal, EPA expressed a tentative view that limits 
based on the performance of poultry products facilities could also be 
achieved by meat products facilities. EPA received comment from 
industry stakeholders indicating that the relative proportions of 
nitrogenous BOD and carbonaceous BOD differ in poultry wastewaters from 
red meat wastewater.

[[Page 48486]]

Because of these differences, commenters were concerned that it would 
be inappropriate to transfer total nitrogen limitations from poultry to 
red meat subcategories. Based on the evaluations discussed below, EPA 
is considering transferring total nitrogen limitations from poultry to 
red meat subcategories for the final rule.
    EPA has performed a comparison of the poultry and meat processing 
wastewaters after anaerobic lagoon treatment (See DCN 100765). In this 
comparison, using data from surveys and sampling episodes, EPA 
evaluated parameters which are commonly used to determine the 
characteristics of wastewater for biologically-based treatment systems. 
These parameters included 5-day biochemical oxygen demand (BOD), 
chemical oxygen demand (COD), oil and grease, nitrogen, phosphorous, 
and total suspended solids (TSS) as well as biokinetic parameters 
(i.e., maximum specific growth rate, the half saturation constant, 
decay rate, and yield coefficient). EPA concluded that wastewater 
strength and biodegradation rates of poultry processing wastewater and 
meat wastewater are similar and fall within the same general ranges 
(e.g., the average concentration for COD in the poultry processing 
wastewater was approximately 851 mg/L compared to 961 mg/L and for meat 
processing wastewater). However, EPA found the average TKN and ammonia 
concentrations of meat processing wastewater are somewhat higher than 
those of poultry processing wastewater (e.g., 265 mg/L TKN for meat 
compared to 109 mg/L TKN for poultry; 162 mg/L ammonia for meat 
compared to 54.5 mg/L for poultry). Nitrogen in poultry processing and 
meat processing wastewaters after anaerobic treatment is primarily 
present as ammonia. Since the substrate in both types of wastewater is 
the same and the nitrification systems are universal, it is reasonable 
to apply treatment systems used for nitrifying poultry wastewater may 
to meat processing wastewater. However, higher ammonia and TKN 
concentrations in meat wastewater after anaerobic treatment may warrant 
modifications in design and operational characteristics of the 
treatment system; therefore, EPA has included costs for such modified 
design and operational characteristics when estimating compliance costs 
for meat products facilities. For example, higher TKN can result in a 
BOD:TKN ratio that is lower than what is needed to achieve 
denitrification and, as discussed in Section III, EPA has included 
costs for an additional carbon source such as methanol, when 
appropriate, to achieve the needed BOD:TKN ratio.
    EPA notes that treatment systems for BOD removal, nitrification, 
denitrification, and phosphorus removal systems are universal. This 
observation is consistent with our review of treatment systems of both 
industries which reveals that many of the treatment processes used to 
treat poultry processing wastewaters are also used to treat meat 
processing wastewaters. Thus, EPA expects that many of the same 
modifications to existing poultry processing plants for enhancing 
biological nutrient removal can be used for meat processing wastewater 
treatment options. However, EPA recognizes that when meat processing 
facilities incorporate these enhancements specific operating parameters 
and treatment effectiveness may be different than for poultry 
facilities, depending on the specific characteristics of the influent 
wastewater. EPA requests comments and data that would help to establish 
the differences and similarities between poultry and meat processing 
wastewater, and the implications of these similarities and differences 
for the relative treatability of each.
    In its consideration of the total nitrogen reductions, EPA thought 
that Ultimate BOD (UBOD) analyses performed on wastewater from poultry 
and meat facilities could be used to determine whether the carbonaceous 
and nitrogenous portions in BOD are similar (or not) at the two types 
of facilities. While EPA has not yet fully evaluated this, EPA 
collected samples and conducted UBOD analyses (using Standard Method 
5210C and EPA Method 353.1) in samples of raw wastewaters and treated 
effluents from one poultry and one meat facility. From the poultry 
facility (episode 6493), EPA analyzed UBOD in eight samples collected 
on two sampling days at four sampling locations. From the meat facility 
(episode 6496), EPA analyzed six samples collected on three days at two 
sampling locations. The analysis of UBOD provides measurement of 
dissolved oxygen (DO), nitrate/nitrite, CBOD, and nitrogenous BOD 
(NBOD) in a sample over a period of 25 days. (NBOD is calculated by 
applying a multiplier of 4.57 to the nitrate/nitrite concentration 
value.) For each sample, there are 16 measurements of each parameter as 
a result of analyzing aliquots every day for the first five days and 
every other day until the end of the 25-day time frame. EPA will use 
these measurements, located at DCNs 165460 and 165470, to evaluate the 
degradation rates of BOD and nitrification in the wastewaters. To 
evaluate these rates, EPA intends to compare the general pattern of the 
degradation curves for the samples for each facility. However, EPA is 
concerned that the UBOD data for the poultry facility may be minimum 
values, because total DO depletion occurred on one or more days for all 
samples, which would artificially limit measured BOD on subsequent 
days. Thus, EPA is not sure how useful this analysis will be in 
comparing poultry and meat processing wastewaters. EPA requests comment 
on this issue.
    EPA may also use the UBOD data to evaluate some other aspects of 
its costing model. For example, for some facilities it was necessary 
for EPA to estimate aerobic volume; in order to do this, EPA needed 
both BOD degradation and nitrification rates. For these estimates, EPA 
derived default biodegradation rates based on literature and some 
limited data submitted as part of the MPP detailed survey. EPA may be 
able to use the UBOD data to evaluate the estimates of the 
biodegradation rates and to develop any appropriate adjustments for MPP 
wastewaters.
    EPA solicits comments on its initial comparison of poultry and meat 
processing wastewaters. In addition, because industry representatives 
have expressed some concerns about the applicability of UBOD analyses 
to total nitrogen performance, EPA solicits comments on the 
appropriateness of using the UBOD data to determine total nitrogen 
performance in the two subcategories and whether other information 
would be more relevant. EPA also solicits comments on the applicability 
of the UBOD data for estimating BOD biodegradation rates and 
nitrification rates for use in its cost model. Further, EPA solicits 
additional data on UBOD in raw wastewaters.

E. Data Selection for Oil and Grease Loadings and Limitations/Standards

    The proposed limitations for oil and grease were based upon data 
from EPA sampling episodes. For these samples, EPA used EPA Method 1664 
to measure the oil and grease concentrations. Method 1664 uses normal 
hexane (n-hexane) as the extraction solvent, instead of Freon which is 
an ozone-depleting agent. Because EPA had developed its proposed 
limitations using Method 1664 data, it expressed the limitations as oil 
and grease measured as n-hexane extractable material (HEM). (Defined at 
67 FR 8658).
    EPA also had two other reasons for expressing the limitations as 
HEM. First, there are environmental concerns associated with the older 
methods that

[[Page 48487]]

use Freon, which is an ozone-depleting agent. Second, EPA expects that 
facilities will choose to use Method 1664 in the future rather than 
Freon methods, because Freon is expected to become more expensive and 
difficult to obtain. For these two reasons, EPA expects to promulgate 
the final limitations for ``oil and grease measured as HEM.'' As a 
consequence, compliance monitoring would require the use of a method, 
such as Method 1664, that measures oil and grease as HEM.
    With the incorporation of industry self-monitoring data, EPA now 
has oil and grease concentration data measured by Freon methods. 
Because these data do not measure oil and grease as HEM, EPA has 
excluded them from its analyses and loadings estimates for the NODA. 
However, EPA acknowledges that at the time of development of Method 
1664, EPA had explained that Method 1664 and Freon methods generally 
provide comparable results for industrial wastewaters (see, for 
example, http://www.epa.gov/waterscience/methods/1664fs.html). However, 
during the development of Method 1664 and subsequently, some industries 
have expressed concerns about potentially differing results from the 
two methods. In response to these comments, EPA has provided guidance 
for facilities to evaluate if the two methods are comparable in their 
own wastewater. (See chapter 2 in ``Analytical Method Guidance for EPA 
Method 1664A Implementation and Use (40 CFR part 136),'' February 2000, 
EPA/821-R-00-003; DCN 165620). EPA solicits data from any MPP 
facilities that may have performed this comparison in the MPP 
wastewaters.
    Before the final rule, EPA may assess whether the oil and grease 
data between the two methods appear to differ within the same model 
technology options. (See DCNs 165011, 165140, 165070, 165150 for the 
data and summary statistics.) Further, if data from both a Freon method 
and Method 1664 are available from the same facility, then EPA intends 
to compare the concentrations from the two methods for that facility. 
Depending on the results of these comparisons, EPA may incorporate the 
Freon-based data into its development of the final limitations/
standards for oil and grease. In this case, EPA would also consider 
allowing the use of Freon-based methods for compliance monitoring. EPA 
solicits comments on whether it should use only Method 1664 data in 
calculating its loadings and final limitations/standards for oil and 
grease measured as HEM.

VI. New Information and Consideration of Revisions to Economic 
Methodologies

A. Closure Analysis

    For the proposed rule, EPA projected facility level economic 
impacts using a probability model derived from Census data because 
detailed survey financial information was not available at proposal. 
See Section II.E for discussion of incorporation of additional survey 
information. However, in the Economic Analysis (EA) document supporting 
the proposal, EPA presented the economic impact methodology it intended 
to use for the final rulemaking. EPA received several comments 
recommending modification to this methodology. EPA intends to use the 
methodology proposed for the final rulemaking with some modifications 
in response to these comments. Additionally, EPA may use some Census 
data to perform analyses in subcategories for which adequate detailed 
survey data are not available. Based on comments and incorporation of 
additional data, EPA is considering revisions to the proposed economic 
analysis methodology in the following areas: projection of future 
facility income, tax shields, and company level aggregation and closure 
analysis. The revisions that EPA is considering are discussed below.
1. Forecasting Future Facility Income
    For the proposal, EPA stated it would use the survey period, 1997 
to 1999, as the baseline for projecting facility and company net income 
for use in the closure model. Commenters objected to the use of this 
period as the baseline because unusual supply and demand conditions 
resulted in unusually large margins for meat companies, and therefore, 
atypically profitable years.
    EPA concurs with this assessment. To address these concerns EPA 
developed a forecasting model that uses historical data on the periodic 
cycles of the relevant markets to generate an index. This index is used 
to forecast net income for MPP facilities, accounting for cyclical 
effects on profits. EPA has used this model for the analyses in today's 
notice and is considering its use for the final MPP rule.
    In the red meat sectors, EPA used U.S. Department of Agriculture's 
Economic Research Service (USDA/ERS) time series on the monthly farm-
to-wholesale price spread to develop its margin forecast. To forecast 
the margin in the poultry sector, EPA developed a new monthly time 
series by subtracting the USDA/ERS broiler wholesale production cost 
time series from its broiler wholesale price time series. These time 
series, which ran from 1970 to 2002 for beef and pork, and from 1990 to 
2002 for poultry, were converted to constant 1999 prices. To 
deseasonalize each time series, EPA calculated each month's value as 
the average price spread for a 12 month period centered on that month 
(i.e., a 12-month centered moving average). The price spread time 
series were deseasonalized because each series reflects cyclical 
behavior within each year as well as over longer time periods (e.g., 
each year the demand for turkey peaks in November and December). 
Deseasonalizing the farm-to-wholesale price spread time series data set 
enables EPA to focus on the longer-run cycles.
    From the time series data for each sector, clear, consistent cycles 
were readily identifiable. EPA used these cycles to develop a 
``normal'' or ``average'' cycle for each meat type. To test the 
validity of the normal cycle pattern, the normal cycle was used to 
remove the cyclical component (de-cycle) from the moving average time 
series for the farm-to-wholesale price spread. After de-cycling, these 
time series showed only random variation and the general trend of the 
original series, indicating that the cyclical variation in these data 
sets had been successfully captured by the model. The cycles were then 
used to forecast the wholesale margin for the 2003 to 2018 time period. 
Complete details of the methodology used to measure and forecast the 
wholesale margin cycles are provided in the docket (see Section 21.2, 
DCN 125502).
    EPA used the historical and projected wholesale margin time series 
to develop indices. These indices are applied to survey net income data 
to forecast facility and company earnings for use in the closure model. 
Net income was projected to vary directly with the farm-to-wholesale 
price spread; as the spread narrows, net income declines. As commenters 
pointed out, the 1997 to 1999 survey period was at or near the peak of 
a cycle, and as a result net income could be expected to decline as 
industry moved toward the cycle trough. Therefore, EPA selected cycle 
high points (largest annual margin) for the base period of its indices. 
Index values for succeeding years were calculated as the proportion of 
each year's margin to the base period margin.
    In addition, EPA had to select a starting value for net income to 
which the indices are applied. EPA ran a series of net income 
projections. Each run used a different combination of net income 
starting point and cycle index. From these combinations, EPA selected

[[Page 48488]]

the following five projection methods for net income:
    [sbull] Using a simple average of 1997, 1998, and 1999 net income 
projected over the 15 year project life to provide an unsophisticated 
baseline;
    [sbull] Using 1999 net income as the start point for projections 
using Cycle 1 in Table VI.A.1 (index initial value is 1999);
    [sbull] Projecting three different net income time series, all 
using Cycle 2 in Table VI.A.1 (index initial value is the largest 
margin in the 1995 and 2002 period), but starting from different 
detailed survey data points: maximum, average, and minimum facility net 
income.
    As described in the proposal EA (Section 3.2.2), EPA uses the 
preponderance of evidence under different forecasting methods to 
determine if a facility is projected to close. Because EPA intends to 
use five forecasting methods for the final rule, a facility is 
projected to close if the present value (PV) of future compliance costs 
exceeds the forecast PV of net income under three of the five 
forecasting methods. EPA notes that the results of these five methods 
are not independent and is considering basing its closure analysis for 
the final rule on a subset of these methods. EPA solicits comment on 
this forecasting model for future facility income in the MPP industry.
    As a sensitivity analysis, EPA also projected closures if the PV of 
future compliance costs exceeds the forecast PV of net income under one 
of the five forecasting methods. The results of this sensitivity 
analysis can be found in the docket at DCN 125607.

                                            Table VI.A.1.--Business Cycle Indices for Forecasting Net Income
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Cycle 1                                                                      Cycle 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Year 1 of Cycle Equals 1999                                        Year 1 of Cycle Equals High Point of 1995-2001
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Year                                 Beef            Pork          Broilers          Beef            Pork          Broilers
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................            1.00            1.00            1.00            1.00            1.00            1.00
2.......................................................            1.05            0.84            0.79            0.96            0.84            0.81
3.......................................................            1.05            0.84            1.64            0.94            0.84            0.63
4.......................................................            1.01            0.83            1.15            0.98            0.83            0.95
5.......................................................            0.99            0.87            1.04            0.86            0.87            0.61
6.......................................................            1.03            0.79            1.61            0.83            0.79            0.48
7.......................................................            0.91            0.67            1.20            0.86            0.67            0.99
8.......................................................            0.88            0.66            1.04            0.91            0.66            0.70
9.......................................................            0.90            0.79            1.61            0.80            0.79            0.63
10......................................................            0.96            0.77            1.20            0.76            0.77            0.97
11......................................................            0.85            0.65            1.04            0.78            0.65            0.73
12......................................................            0.80            0.60            1.61            0.83            0.60            0.63
13......................................................            0.82            0.70            1.20            0.75            0.70            0.97
14......................................................            0.88            0.75            1.04            0.70            0.75            0.73
15......................................................            0.79            0.63            1.61            0.70            0.63            0.63
16......................................................            0.73            0.56            1.20            0.75            0.56            0.97
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Tax Shields
    EPA received comments on its methodology for estimating investment 
tax shields on new wastewater treatment technology. One comment pointed 
out that EPA's methodology apparently failed to deduct interest 
payments from the revenue base used to determine the tax rate 
applicable to tax shields, though it did subsequently subtract out 
interest payments to yield net income. This could produce an 
overestimate of the tax shields the company accrues on its investment 
in wastewater treatment equipment. EPA agrees with this commenter, and 
for the analysis supporting this notice has subtracted interest 
payments from earnings before interest and taxes (EBIT) to determine 
both taxable income and the applicable tax rate.
    A second comment on EPA's method for estimating tax shields stated 
that EPA's methodology would overestimate tax shields if incremental 
compliance costs decrease earnings before taxes to such an extent that 
a facility's marginal tax rate changes. EPA examined estimated 
compliance costs and net income for each facility, and found that in 
practice there would be no effect on estimated tax shields. In the vast 
majority of cases, no change in tax rates would result given the 
magnitude of projected compliance costs. For one facility where the tax 
rate could have changed due to the incremental compliance costs, EPA's 
method of limiting estimated tax shields so they cannot exceed taxes 
actually paid resulted in a smaller estimated tax shield than if EPA 
estimated its tax shield by incorporating the change in rates.
3. Aggregation of Company Level Costs and Company Level Closure 
Analysis
    Following proposal, EPA completed review of the detailed surveys 
(see Section II for discussion on completion of survey review). Less 
than 40 percent of direct discharging facilities provided facility 
level financial data in the detailed survey. Industry has stated that 
many companies in the MPP industry do not maintain financial records at 
the facility level. Instead they maintain their financial records at, 
for example, the company level, division level or product line level. 
As a result, EPA was unable to scale up its facility level closure 
analysis to produce a national-level projection of closures. Rather, 
for each facility for which there was sufficient data, EPA recorded the 
closure status of the associated number of facilities as ``unknown.''
    EPA did collect company level financial data and when necessary 
this data can be supplemented using publicly available data. Therefore, 
EPA is considering a closure analysis at the company level in addition 
to the facility level analysis and has performed that analysis for 
today's notice (see Section VI for estimated economic impacts). This 
requires EPA to estimate compliance costs at the company level as well 
as the facility level. The Altman Z' analysis, described in the 
proposal EA (Section 3.1.3.2) document, is also a company level 
analysis and so EPA used the same method for estimating company level 
costs for both models.

[[Page 48489]]

    The company level closure analysis is identical to the facility 
level closure analysis in that EPA projects the net present value (NPV) 
of each company's net income over the 15 year project life. Salvage 
value is assumed to equal zero, as proposed, for the reasons described 
in DCN 125505. EPA excludes salvage value from the closure analysis 
because academic studies and EPA experience on previous projects both 
demonstrate that it is extremely difficult to estimate accurately. 
Therefore, inclusion of salvage value would add a highly arbitrary 
component to the closure analysis. The NPV of projected compliance 
costs is subtracted from the NPV of projected net income; if this value 
is positive, the company is deemed to remain open, if this value is 
negative, the company is projected to close, with associated losses in 
output and employment.
    To estimate company level compliance costs, EPA reviewed the 55 
non-small detailed survey direct discharging facilities to determine 
their corporate parent, then compiled a list of all other meat 
processing facilities owned by each of those corporate parents. EPA 
primarily relied on the screener survey and the PCS database to 
estimate the number of direct discharging facilities owned by these 
corporate parents that were not represented in the detailed survey 
database. EPA estimates that the 26 corporate parents of those 55 
direct dischargers owned about 345 MPP facilities in 1999. EPA then 
determined the discharge status of these 345 facilities because 
indirect discharging facilities will not incur costs under this 
regulation, and estimated that of the 345 facilities owned by these 
corporate parents, approximately 125 were direct dischargers. Of these 
125 direct dischargers, 55 received detailed surveys, and 70 required 
analysis based on non-survey data.
    To estimate compliance costs attributable to the 70 non-surveyed 
facilities, EPA applied mean compliance costs by meat type (red meat or 
poultry) to each non-surveyed facility. EPA examined alternative means 
of allocating compliance costs to these facilities, such as matching 
costs from detailed survey facilities based on meat type and processes 
performed. EPA determined that applying average costs by meat type to 
non-surveyed facilities resulted in more conservative (i.e., higher) 
cost estimates. See DCN 125501 for additional information on the 
estimation of non-surveyed direct discharge facilities. EPA solicits 
information on the actual number of non-surveyed direct discharging 
facilities that are owned by each parent company identified and the 
production type of these facilities (e.g., first processor, further 
processor, renderer). EPA notes that, for the final rule, it is 
considering using a company-specific mean compliance cost if additional 
financial data is received in response to today's notice. EPA did not 
attempt to scale up the projected company closures to correspond to a 
national estimate because EPA lacks data on which to base sample 
weights for the 26 companies. Thus, the company level analysis reflects 
closures only among the 26 companies analyzed. EPA made an effort to 
determine whether there are additional companies that own direct 
discharging MPP facilities and found three additional companies based 
on the screener survey results that may own direct discharging MPP 
facilities. Therefore, the company level analysis could underestimate 
the number of company closures nationally. EPA solicits comment and 
information on the presence of additional companies that have 
facilities within the scope of the MPP rule.
    In addition, EPA solicits comment on the aggregation of facility 
level compliance costs to the company level, and the use of a company 
level closure analysis. In addition, EPA solicits comment on the 
methodology used to estimate compliance costs for the closure analysis 
for the 70 non-surveyed facilities which are owned by the same parent 
companies as the 55 detailed survey recipients.

B. Trade Elasticity Methodology

    Commenters on the proposed rule raised concerns over EPA's 
assessment of foreign trade impacts for poultry facilities. 
Specifically, the commenters stated that EPA did not adequately address 
the impact of the proposal on poultry exports. Based on these comments, 
EPA has reviewed its methodology and is considering revising it for the 
final rule.
    For the proposed rule, EPA analyzed trade impacts through the 
international trade component of EPA's MPP market model. The primary 
determinant of trade impacts are the trade elasticities specified for 
the model. EPA derived its trade elasticities based on Armington's 
framework in which one country's meat products are an imperfect 
substitute for those of other countries. After review of the proposal 
model, EPA is considering revising its derivation of trade elasticities 
for the final rule, and is using the revised trade elasticities for the 
analyses supporting today's notice. EPA also examined but rejected an 
alternative derivation of trade elasticities based on Orcutt's 
framework in which each country's meat products are perfect substitutes 
for those of any other country for the reasons described below.
    EPA selected the Armington specification based on the fact that the 
U.S. both imports and exports meat products. If U.S. consumers consider 
U.S. meat products and foreign meat products to be perfect substitutes, 
there would be no reason to simultaneously import and export these 
products. This intuitive explanation is supported by econometric 
evidence (Galloway, et al. 2000). In addition, analysts have observed 
that U.S. poultry exports are largely composed of dark meat which is 
considered inferior by U.S. consumers but is preferred by foreign 
consumers (Aylward, 2002; Salin et al., 2002; Standard & Poor's, 2000). 
Thus, EPA determined that the Armington framework is conceptually more 
appropriate for modeling trade in meat and poultry products than a 
framework that treats all meat products as perfect substitutes.
    EPA used Armington's (1969a, 1969b) expressions for partial and 
cross-price elasticities of demand for a traded product to derive trade 
elasticities for meat products. The key data points for this estimation 
are: (1) The price elasticity of domestic demand for meat products 
regardless of the country of origin, (2) relative trade shares between 
the home country and its trading partner(s), and (3) the elasticity of 
substitution between each country's meat products. EPA found suitable 
econometric estimates of the elasticity of substitution, and adequate 
data for estimating trade shares (see Section 3.1.4 and Appendix C of 
the proposal EA).
    For the proposed rule, EPA indirectly derived the price elasticity 
of U.S. demand for meat products regardless of the country of origin 
from the price elasticity of U.S. demand for meat products of U.S. 
origin (assumed to equal the U.S. domestic price elasticity of meat 
demand) using Armington's equations in repeated substitutions. In the 
revisions being considered by EPA, the Agency uses the U.S. domestic 
price elasticity of meat demand as a direct proxy for the price 
elasticity of U.S. demand for meat products regardless of the country 
of origin. This is more consistent with the econometric studies used to 
estimate the U.S. price elasticity of meat demand; such studies do not 
typically distinguish country of origin in measuring U.S. retail meat 
purchases. Details of EPA's derivation of trade elasticities may be 
found in the docket (DCN 125503).

[[Page 48490]]

    Table VI.B.1 summarizes EPA's estimated trade elasticities under 
the methodology used for proposal and for the revised methodology 
described above.

                Table VI.B.1.--Estimates of Armington Trade Elasticities for the MPP Market Model
----------------------------------------------------------------------------------------------------------------
                              Import elasticities a                                    Export elasticties b
----------------------------------------------------------------------------------------------------------------
                    Meat type                       Proposal c        Revised        Proposal         Revised
----------------------------------------------------------------------------------------------------------------
Beef............................................          0.9588          1.9994         -1.5584         -1.5316
Pork............................................          0.8519          1.3337         -1.5745         -1.5711
Broilers........................................          0.8767          1.1458         -1.2017         -1.1903
Turkeys.........................................          0.7145          1.1600         -1.1865        -1.1557
----------------------------------------------------------------------------------------------------------------
a The percent change in U.S. demand for rest of the world (ROW) meat products resulting from a one percent
  change in U.S. price.
b The percent change in ROW demand for U.S. meat products resulting from a one percent change in U.S. price.
c In reviewing the trade elasticities used for proposal, EPA found an error in its calculation. Therefore the
  trade elasticities presented in this table differ from those used in the proposal economic impact analysis.

    Based on the preferred option at the time of proposal (BAT 3), EPA 
compared trade impacts using the proposal elasticities and the revised 
elasticities. Annual imports were projected to be larger using the 
revised elasticities. Beef imports were 1.5 million pounds per year 
larger (a difference of 0.001 percent) under the revised elasticities; 
pork imports were about 280,000 pounds per year larger, while poultry 
imports were less than 20,000 pounds per year larger. Exports were 
slightly smaller using the revised elasticities. Beef exports were 
projected to be about 160,000 pounds per year smaller; the difference 
in pork and poultry exports was less than 100,000 pounds per year for 
each product. The difference in export projections is less than 0.006 
percent of baseline. Revised estimates of market impacts including 
export and import quantities under the modified options using revised 
cost estimates are presented in Table X.A-7. EPA solicits comment on 
its revised trade elasticity methodology.

VII. Changes to EPA's Environmental Assessment

    EPA received comments on the methodologies used to estimate MPP 
pollutant loadings and those used to estimate environmental benefits 
associated with the proposed regulatory options. At proposal, EPA based 
its estimates of monetary benefits of the rule on the suitability, as 
determined by concentrations of four specific water quality variables, 
of affected waters for a range of recreational uses (boating, fishing, 
and swimming). EPA employed the National Water Pollution Control 
Assessment Model (NWPCAM) version 1.1 to derive its benefit estimates. 
Ecological effects such as habitat degradation were noted but not 
quantified to avoid double-counting benefits derived using NWPCAM 
version 1.1.
    Based on public comments received on the proposal and as discussed 
in the proposed rule, EPA is considering possible revisions to its 
approach as described in more detail below. Briefly, these revisions 
include (1) inclusion of nitrate and phosphate in the water quality 
variables modeled by NWPCAM to estimate the water quality index (WQI); 
(2) use of alternative or supplemental environmental models to more 
thoroughly characterize the environmental benefits of the regulation; 
(3) improvements to the algorithm relating changes in water quality to 
households' willingness to pay for improved water quality; and (4) 
consideration of other benefit categories (e.g., reduced adverse human 
health effects from consuming fish and water contaminated by toxic 
compounds in MPP effluents; reduced costs of treatment associated with 
lower total suspended solids (TSS) loads in community water systems' 
(CWSs) intake water; reduced episodic fish kills resulting from 
discharges from MPP facilities; and a Regional Vulnerability Assessment 
(ReVA) that was designed to predict future environmental risk and 
support informed decision-making and prioritization of issues for risk 
management). EPA may consider other approaches for estimating benefits 
that are not specified in this NODA but may be a result of comments on 
today's notice. Note that revised results based on these methodological 
changes are not yet available, but will be placed in the record for 
this rulemaking as they become so. To the extent practicable, EPA will 
consider public comment on these results, even if filed after the 
comment period for the NODA, as it prepares the benefits analysis for 
the final rule.

A. Water Quality Modeling: What Changes and Information Are Being 
Considered?

1. National Water Pollution Control Assessment Model (NWPCAM)
    EPA used NWPCAM version 1.1 to estimate environmental impacts to 
surface water quality resulting from implementation of the proposed 
rule. NWPCAM version 1.1 modeled instream concentrations of dissolved 
oxygen (DO), total Kjedahl nitrogen (TKN), biochemical oxygen demand 
(BOD), TSS, and fecal coliforms (FC). Four of these indicators (DO, 
BOD, TSS, and FC) were combined to generate a water quality index (WQI-
4). The WQI is a 0 to 100 scale structured so that each water quality 
parameter is weighted to reflect its significance in determining the 
suitability of water for progressively more demanding uses. Changes in 
the WQI-4 were converted to monetary values based on a contingent 
valuation survey (Carson and Mitchell, 1993). Commenters remarked that 
this approach was an over-simplification because it may have ignored 
several other classes of pollutants discharged from MPP facilities 
including nitrogen (N) and phosphorous (P). For more details about 
valuation of water quality, see Section VII.B of this NODA.
    NWPCAM version 1.1, used for the proposal, does not model nutrients 
discharged by MPP facilities. Since proposal, EPA has developed NWPCAM 
version 1.6 which simulates concentrations of the nutrients, nitrogen 
and phosphorus. Since the updated model addresses two additional 
components of wastewater discharges from MPP facilities, EPA is 
considering using the updated model to estimate the water quality 
change and the associated monetized benefits for the final MPP rule. 
Commenters also had concerns about the missing sources of loadings in 
the model, especially nonpoint and

[[Page 48491]]

minor point sources that were not captured in NWPCAM version 1.1. 
NWPCAM version 1.6 models water quality using a stream reach network 
with greater resolution and incorporates additional point and nonpoint 
source loadings.
    The NWPCAM version 1.6 generates a water quality index (WQI-6) from 
six indicators of water quality (TSS, DO, BOD5, FC, nitrate 
(NO3-), and phosphate 
(PO43-)). The weights on individual water quality 
parameters are adjusted from WQI-4 to reflect the increased number of 
parameters in WQI-6. The new WQI-6 is a broader measure of water 
quality and is expected to provide a better representation of changes 
in water quality downstream of MPP facilities. A version of NWPCAM 
capable of simulating nitrogen and phosphorus concentrations and 
employing the WQI-6 is described in EPA, 2002.\1\
---------------------------------------------------------------------------

    \1\ U.S. EPA (U.S. Environmental Protection Agency). Estimation 
of National Economic Benefits Using the National Water Pollution 
Control Assessment Model to Evaluate Regulatory Options for 
Concentrated Animal Feeding. December, 2002.
---------------------------------------------------------------------------

    EPA solicits comment on the use of the six-parameter Water Quality 
Index (instead of the four-parameter Index) to assess the environmental 
improvements from revising the current MPP regulation. In particular, 
EPA solicits comment on the inclusion of nitrogen and phosphorous in 
the kinetics model.
    EPA is considering the use of National Water-Quality Assessment 
Program (NAWQA) data to calibrate the baseline predicted by NWPCAM 
version 1.6 for the stream reaches associated with MPP facilities. EPA 
proposes to download NAWQA data for as many of the regions where MPP 
facilities are located as possible. Based on the comparison of NAWQA 
vs. NWPCAM version 1.6 data, EPA plans to estimate the prediction 
errors for each region using the NAWQA data and use the errors to 
adjust the NWPCAM results in each region. EPA then plans to generate a 
probability distribution for the errors for each parameter and then set 
up a Monte Carlo program to simulate variability in the water quality 
index as a function of NWPCAM uncertainty for all parameters at once. 
EPA solicits comment on the use of NAWQA data to calibrate the 
baseline, and solicits other sources of data to use in the calibration 
effort.
2. Site-Specific or Watershed-Specific Models
    In order to more comprehensively simulate detailed water quality 
and aquatic ecosystem responses to MPP loadings and loading reductions, 
EPA is considering the use of other available models to evaluate the 
effects of nutrients and pollutants on receiving waterbodies from 
individual representative MPP facilities at a more site specific level 
either in lieu of or in addition to NWPCAM. In particular, the Agency 
is investigating the use of a simulation model for aquatic ecosystems 
(AQUATOX), an enhanced stream water quality model (QUAL2E), and the 
Better Assessment Science Integrating Point and Nonpoint Sources 
(BASINS) model. One advantage of using these models is their capacity 
to predict impacts of nutrient inputs on dissolved oxygen through 
eutrophication. Detailed information on each of these models can be 
found at http://www.epa.gov/waterscience/wqm/. Output from these 
candidate models could be used to qualitatively and quantitatively 
illustrate potential water quality and aquatic ecosystem responses to 
MPP loads and load reductions, or could be used in conjunction with 
environmental benefits valuation methods to estimate monetized benefits 
of MPP loads reductions. For example, water quality output from one or 
more of these models could be used as the basis for the calculation of 
the WQI-6 described above, and subsequent monetization. Alternatively, 
other output parameters from these models, such as levels of rough, 
forage, and game fish, could be used as the basis for other 
monetization approaches.
    AQUATOX is an ecosystem model that estimates the environmental fate 
and effects of toxic chemicals, conventional pollutants, and nutrients 
from point and non-point sources on a stream-specific basis. In 
particular, AQUATOX allows assessors to model the fate of TSS, ammonia, 
nitrate, phosphate, carbon dioxide, DO, pH, temperature, light, and 
dissolved organic toxicants on the receiving waterbody. AQUATOX also 
provides an assessment of the impacts of these pollutants on assorted 
organisms (e.g., phytoplankton, certain guilds and taxonomic groups of 
invertebrates and fish) and detrital components. AQUATOX can be used to 
investigate pollutant effects on streams, small rivers, ponds, and 
lakes. AQUATOX is relatively applicable to site-specific studies, 
models many conventional pollutants and nutrients, and estimates the 
impacts on a wide range of key aquatic ecosystem variables. Possible 
constraints of using AQUATOX to model the impacts and benefits from 
regulating the MPP industry are that (a) fairly detailed pollutant- and 
reach-specific parameters must be compiled to run the model, (b) it 
does not estimate BOD and FC (pollutants necessary for the water 
quality index (WQI) calculations) concentrations in the receiving 
waterbody, (c) AQUATOX is intended to represent a single stream or 
river reach or an entire pond, lake, reservoir, or estuary. A segmented 
version of AQUATOX, or multiple model runs, would be required to 
evaluate spatially variable conditions downstream of the immediate 
waterbody of interest if this were determined to be necessary.
    QUAL2E simulates the in-stream behavior of toxic chemicals, 
conventional pollutants, and nutrients on a branching, one-dimensional 
stream-specific basis. In particular, QUAL2E models the concentrations 
of DO, BOD, temperature, algae, organic nitrogen, ammonia, nitrite, 
nitrate, organic phosphorus, dissolved phosphorus, FC, up to three 
conservative pollutants (pollutants that remain chemically unchanged in 
the water), and one non-conservative pollutant from point and non-point 
sources. QUAL2E allows a user to model up to 25 reaches on a river and 
25 pollution sources along the river. Like AQUATOX, QUAL2E is 
relatively applicable to a site-specific analysis, and it also models 
many conventional pollutants and nutrients. Possible constraints of 
using QUAL2E to model the MPP industry are that (a) detailed pollutant- 
and reach-specific parameters must be compiled to run the model, (b) it 
does not estimate the TSS (a pollutant necessary for the WQI 
calculations) concentration in the receiving waterbody, and (c) it is 
only applicable for rivers, not lakes or estuaries.
    BASINS is a multipurpose environmental analysis system that allows 
users to perform watershed- and water-quality based studies. This tool 
allows users to investigate river segments and how they may be impaired 
by point source and non-point source discharges. Databases available 
for use with BASINS provide necessary environmental background data, 
environmental monitoring data, and point source loading data. BASINS 
integrates the use of models such as QUAL2E, the Hydrological 
Simulation Program Fortran (HSPF) and Soil and Water Assessment Tool 
(SWAT) to conduct fate and transport assessments of point and non-point 
sources. BASINS models conventional pollutants and nutrients, including 
all the pollutants necessary to calculate a WQI, and (a) all the 
pollutant- and reach-specific parameters are available in the system's 
database files, (b) reach background concentrations for DO, ammonia, 
and BOD are available in the system's

[[Page 48492]]

database files, and (c) it is applicable to rivers, estuaries, and 
lakes.
    If site-specific models are used, EPA will not be able to model 
each regulated MPP facility receiving water or watershed separately due 
to various factors, including data requirements and time constraints. 
One potential scenario is to develop a limited number of ``generic'' 
watersheds that are representative of the topography and hydrology of 
the areas in which MPP facilities are located. Load reduction scenarios 
for each of the facilities with detailed information would then be 
evaluated for water quality improvements using the ``generic'' 
watershed which best represents the geography and flow conditions of 
the discharging facility. Another option being considered is to model a 
small sample of the watershed or reach areas containing MPP facilities 
and extrapolate results to a broader number of areas (see Section 
VII.B.2 of this NODA).
    In determining which of these candidate models to pursue, EPA will 
weigh resource requirements for each model, the availability of data 
required to run each model, and the contribution of the endpoints 
simulated by each model toward best representing the range of 
environmental impacts and benefits of regulation. If EPA uses one or 
more of these models for the final rule, EPA will use the revised final 
loadings estimates along with information on facility location within 
watersheds. A comparison of the advantages and disadvantages of all 
three models is provided in Table VII.A.2-1. EPA solicits comment on 
the applicability of the AQUATOX, QUAL2E and BASINS models to model the 
environmental benefits of the MPP regulation.

Table VII.A.2-1.--Summary of the Features of AQUATOX, QUAL2E, and BASINS
------------------------------------------------------------------------
        AQUATOX                   QUAL2E                  BASINS
------------------------------------------------------------------------
Conventional and         Conventional and         Conventional
 nutrient loadings        nutrient loadings        (including DO, BOD,
 assessed                 assessed                 TSS, FC) and nutrient
                         .......................   loadings assessed
Eciststen effects        Requires specific data   ......................
 (effects on fish and     about reach and         Includes background
 other aquatic life)      pollutant parameters     levels for DO3, NH3,
 estimated               .......................   and BOD
                         Does not model TSS;      ......................
Requires specific data    Only models rivers, no  Reach and pollutant
 about reach and          estuaries or lakes       data easily available
 pollutant parameters    .......................   from BASINS databases
                         Peer reviewed/available  ......................
Does not model BOD, FC;   to public               Models rivers,
 Multiple model runs                               estuaries, and lakes
 required to model                                ......................
 effect of pollutants                             Peer reviewed/
 downstream from reach                             available to public
 
Peer reviewed/available
 to public
------------------------------------------------------------------------

B. Recreational Benefits: What Changes and Information Are Being 
Considered?

    The benefits analysis for the proposed rule used two methods to 
estimate a household's willingness to pay for improvements in water 
quality: (1) A water quality ladder; and (2) a continuous water quality 
index. Both methods are based on results from a stated-preference 
survey conducted by Mitchell and Carson (1993).\2\ Previous 
applications of the Mitchell and Carson survey had focused on the 
household willingness to pay for ``stepped'' improvements in water 
quality from current levels to boatable, fishable, and swimmable 
conditions nationwide. Each step on the ladder, i.e. use level, was 
defined by a set of water quality indicators such that a water body 
must meet minimal criteria for every indicator to be classified into 
the next higher use class. Thus, the stepped willingness to pay could 
only indicate a benefit from an action that resulted in all water 
quality indicators satisfying the next higher use category. The ladder 
approach failed to attribute any benefits to improvements in water 
quality that were insufficient to actually achieve a discrete 
improvement in use. Conversely, a relatively small change in water-
quality could receive a relatively large valuation if it happened to 
push water-quality over the threshold between steps. A ``continuous'' 
method was suggested by Mitchell and Carson (1993) as a means to 
attribute benefits to marginal water quality improvement whether or not 
it happened to be of sufficient improvement to result in 
reclassification to a higher use class. The benefits analysis of the 
proposed MPP regulation presented both methods in order to contrast 
their results.
---------------------------------------------------------------------------

    \2\ Carson, Richard T. and Robert C. Mitchell. 1993. The Value 
of Clean Water: The Public's Willingness to Pay for Boatable, 
Fishable, and Swimmable Quality Water. Water Resources Research 
29(7):2445-2454.
---------------------------------------------------------------------------

    The ``continuous'' method of monetizing water quality benefits from 
WQI changes used in the analysis of the proposed rule was further 
revised in the benefit assessment of the final effluent limitation 
guidelines for CAFO. This revision included the application of a 
benefit transfer function from the Mitchell and Carson survey. Mitchell 
and Carson expressed the results of their survey in several forms. In 
one format, Mitchell and Carson assigned a single value to each change 
in use class, e.g., households were willing to pay $184 (1999 dollars; 
updated household income) to raise all of the nation's waters from 
boatable to fishable conditions. The continuous benefit analysis of the 
MPP proposed rule divided this value by the number of WQI points in the 
step so that each unit change was assigned a portion of the value for 
achieving the whole step. For example, assume the threshold WQI for 
boatable waters was 79 and the threshold for the next higher step, 
fishable waters, was 94.4. Dividing $184 by 15.4 WQI points in the 
boatable range allocates $11.91 to each WQI point gained. Thus, 
household willingness to pay for a three point improvement in WQI in 
this range would be $35.73 (=3x11.91). Mitchell and Carson also 
expressed their results as an equation relating the change in the water 
quality index and household income to the household's willingness to 
pay for improved water quality. For the final rule, EPA is considering 
using this function to value benefits based on the changes in the WQI. 
The continuous equation approach may be superior to the ladder approach 
in that it addresses concerns that benefits from marginal changes in 
the water quality are missed using the discrete ladder. And the 
Mitchell-Carson benefit function approach may be superior to the WQI 
approach used at proposal in that it is less sensitive to the baseline 
use of the waterbody. In contrast, the WQI

[[Page 48493]]

approach used at proposal applies values to water quality index changes 
that are more consistent with expected levels of use as predicted by 
NWPCAM results and the threshold criteria in the ladder. The valuation 
function from the Mitchell and Carson work also demonstrates 
consistency with economic theory in that it exhibits a declining 
marginal willingness to pay for water quality. However, the ladder 
approach captures the discrete changes in uses presented to respondents 
in the survey instrument used to collect the underlying valuation data. 
While EPA recognizes that caution must be used in manipulating 
valuations derived from stated preference surveys, EPA believes the 
WQI-6 and the Mitchell-Carson valuation function may help address some 
concerns associated with the NWPCAM monetization of benefits at 
proposal. Both of these enhancements were incorporated in NWPCAM 
version 1.6 used to analyze benefits for the final CAFO rulemaking (DCN 
350510).
    Since willingness-to-pay (WTP) for water quality improvements was 
assessed by Mitchell-Carson only at a national level (i.e., ``How much 
would you pay to bring all freshwaters in the U.S. from boatable up to 
swimmable?''), NWPCAM needs a methodology for assigning a share of this 
WTP to individual water bodies that may benefit from the rule. 
Generally, EPA assigns this share proportioned based on the ratio of 
affected stream miles to total stream miles. In doing this EPA 
allocates two thirds of willingness to pay to water quality 
improvements that occur in state. It is reasonable to assume that 
individuals will have greater marginal values for water quality 
improvements that occur in state, and Carson and Mitchell results 
appear to support this assumption. The consequences of alternative 
assumptions, such as equal marginal willingness to pay for in state and 
out of state water quality improvements, on final benefit estimates is 
a function of relative populations and ratios of population to total 
stream miles for states with and without stream reaches affected by 
this rule. For the final rule, EPA is considering conducting a 
sensitivity analysis to determine the impacts of these assumptions on 
the monetized benefits estimates.
    EPA solicits comment on the use of Mitchell and Carson's valuation 
function for estimating the monetized benefit for the MPP industry. If 
more site-specific valuation information becomes available, EPA may 
decide to incorporate those site-specific values for estimating the 
monetized benefit.

C. Toxicity Assessment: What Changes and Information Are Being 
Considered?

    Commenters also raised concerns over pollutants of concern (POCs) 
that were not addressed in the proposal. Based on these comments, EPA 
has performed exploratory analysis employing stream dilution modeling 
techniques, which do not take into account fate processes other than 
complete immediate mixing, to assess the potential impacts of releases 
of ten pollutants (ammonia, barium, chromium, copper, manganese, 
molybdenum, nickel, titanium, vanadium, and zinc) from the 53detailed 
survey MPP facilities for which sufficient data were available to 
model. These 53 facilities directly discharge wastewaters to 53 
receiving streams. These simplified stream dilution techniques have 
been used in other promulgated effluent guidelines such as Iron and 
Steel, Metal Products and Machinery, and Transportation Equipment 
Cleaning.
    Using this approach, EPA assessed the potential impacts in terms of 
effects on aquatic life and human health. The impacts to aquatic life 
are projected by comparing the modeled instream pollutant 
concentrations under current (baseline) treatment levels, to published 
EPA aquatic life criteria guidance \3\ or, for pollutants for which no 
water quality criteria have been developed, to toxic effect levels 
(i.e., lowest reported or estimated concentration that is toxic to 
aquatic life).
---------------------------------------------------------------------------

    \3\ In performing this analysis, EPA uses guidance documents 
published by EPA that recommend numeric human health and aquatic 
life water quality criteria for numerous pollutants. States often 
consult these guidance documents when adopting water quality 
criteria as part of their water quality standards. The simplified 
stream dilution techniques are used as a screening analysis for 
priority pollutants and hence EPA uses the national criteria values 
in lieu of more site specific values. It is not intended as a 
comprehensive analysis, but rather as a trigger for potential 
impacts in terms of effects on aquatic life and human health. A more 
site-specific analysis could be undertaken if the simplified stream 
dilution technique projected in-stream exceedences of national 
aquatic life and human health criteria.
---------------------------------------------------------------------------

    Impacts to human health are projected by (1) comparing estimated 
instream pollutant concentrations to health-based toxic effect values 
or criteria, and (2) estimating the potential reductions of 
noncarcinogenic (systemic adverse effects such as reproductive 
toxicity) hazard from consuming contaminated fish and drinking water. 
Systemic hazards are evaluated for the general population (drinking 
water only), sport anglers and their families, and subsistence anglers 
and their families. Potential carcinogenic risks are not evaluated 
since none of the pollutants modeled are classified by EPA as known or 
probable carcinogens.
    EPA projects that modeled instream pollutant concentrations of one 
pollutant (copper) will slightly exceed (1.03 ratio) chronic aquatic 
life criteria or toxic effects levels in only 1 of the 53 receiving 
streams at current discharge levels. No exceedences of acute aquatic 
life criteria or toxic effect levels are projected. In addition, EPA 
projects that one pollutant (manganese) will marginally exceed (1.2 
ratio) human health criteria or toxic effect levels in 1 of the 
receiving streams. No systemic toxicant effects are projected for 
anglers consuming fish caught from any of the receiving streams at 
current discharge levels. Based on these results, EPA projects that 
there are no meaningful health or aquatic life benefits to be obtained 
as a result of the selected BPT or BAT options and no further analyses 
of these types of impacts are being considered.

D. Other Benefits Categories Being Considered

1. Drinking Water Treatment
    Suspended solids can interfere with effective drinking water 
treatment. Specifically, high sediment concentrations that interfere 
with coagulation, filtration, and disinfection increase treatment 
costs. With more than 11,000 public drinking water systems throughout 
the United States relying on surface waters as a primary source, these 
costs can be substantial, though at most only a small fraction of these 
systems could be impacted by MPP facilities.
    For the final rule, EPA is considering estimating the monetary 
value associated with the estimated reductions in TSS stream 
concentrations in terms of reduced drinking water treatment costs. This 
is done by relating the changes in TSS concentrations predicted by 
NWPCAM with the operational and maintenance (O&M) costs associated with 
the conventional treatment technique of gravity filtration at the 
drinking water treatment facility. These estimated cost reductions may 
be subject to a number of uncertainties, such as the use of average 
input values and default treatment design values, resulting in a rough 
approximation of estimated benefits.
    The analytic approach being considered includes: (1) Identifying 
public drinking water systems and their water supplies that are 
potentially impacted by the discharge from MPP facilities; (2) linking 
the water supplies to the TSS concentrations predicted by NWPCAM at 
baseline and the various

[[Page 48494]]

regulatory options; and (3) estimating the reductions in drinking water 
treatment costs.
a. Identification of Public Drinking Water Systems
    Information regarding public water systems is contained in the Safe 
Drinking Water Information System (SDWIS) \4\ Database. There are 
11,403 Community Water Systems (CWSs supply water to the same 
population year-round) that rely on surface water to serve 178.1 
million people. The water supplies of a small number of these CWSs may 
be impacted by the discharge from MPP facilities. The first step in the 
approach that EPA is considering is identifying the subset relevant to 
the MPP rule of CWSs and their associated streams, the populations 
served, and operating status. This will be performed using two EPA 
databases: (1) Water Supply Database (WSDB) \5\ and (2) SDWIS. 
Hydrologic locational information will be obtained from WSDB, and 
populations served by the drinking water systems, as well as operating 
status, will be obtained from SDWIS.
---------------------------------------------------------------------------

    \4\ U.S. EPA (U.S. Environmental Protection Agency). 2000a. Safe 
Drinking Water Information System (SDWIS). Office of Groundwater and 
Drinking Water. Accessed September 2002. www.epa.gov/safewater/pws/factoids.html.
    \5\ U.S. EPA (U.S. Environmental Protection Agency). 2000b. 
Water Supply Database. Office of Water. Downloaded February 2000.
---------------------------------------------------------------------------

b. Application of TSS Concentrations and Water System Data
    To estimate reduced drinking water treatment costs associated with 
TSS reductions, EPA will link the site-specific water system data from 
WSDB and SDWIS with NWPCAM predicted TSS concentration reductions at 
baseline and the various regulatory options (see Section VII.A. for 
discussion of water quality modeling). The median concentrations of TSS 
predicted by NWPCAM will be applied to each of the public water 
utilities located within the watershed. EPA may consider using site-
specific TSS concentrations (i.e., the concentration at the drinking 
water intake) for the final rule. EPA is currently working to determine 
if the appropriate data are available. EPA solicits comment on the use 
of site-specific TSS concentrations for estimating reduced drinking 
water treatment costs.
c. Estimation of Drinking Water Treatment Costs
    EPA is considering employing the Water Treatment Estimation Routine 
(WaTER),\6\ developed in a cooperative effort between the U.S. 
Department of the Interior, Bureau of Reclamation, and the National 
Institute of Standards and Technology, to estimate reduced drinking 
water treatment costs based on projected reductions in TSS stream 
concentrations. Using minimal information such as production capacity 
and raw water composition, WaTER calculates dose rates and cost 
estimates (construction and annual O&M) for 15 standard water treatment 
processes, based on default design values. These default design values 
can be modified, based on the users specific requirements. WaTER 
employs cost indices and the Producer Price Index and derives cost data 
from Estimating Water Treatment Costs (EPA-600/2-79-162a-d, 1979).\7\ 
Cost estimates are derived independently for each selected process.
---------------------------------------------------------------------------

    \6\ U.S. Bureau of Reclamation. 1999. Water Treatment Estimation 
Routine (WaTER). Denver, Colorado. U.S. Department of the Interior. 
August 1999. Accessed September 2002. http://www.usbr.gov/water/desal.html.
    \7\ U.S. EPA (U.S. Environmental Protection Agency). 1979. 
Estimating Water Treatment Costs. EPA-600/2-79-162a-d. August 1979.
---------------------------------------------------------------------------

    EPA is considering using WaTER to estimate reduced O&M costs for 
the standard water treatment process of gravity filtration, based on 
the capacities of drinking water treatment utilities and the estimated 
TSS stream concentration reductions. There are two components to 
gravity filtration: the backwashing system and the gravity filter 
structure. O&M costs are based on the area of the filter bed 
(applicable range 13-2600m2) as determined by the system 
flow rate (production capacity) and TSS concentration. Major O&M costs 
include materials, energy, and labor. Off-site disposal costs and 
pretreatment costs, as well as construction costs, will not be included 
in EPA's estimates. Cost saving estimates will be derived based on the 
change in O&M costs predicted at baseline and the regulatory options.
    EPA solicits comment on this approach to estimating monetized 
benefits associated with reduced TSS concentrations predicted by NWPCAM 
at drinking water intakes.
2. Fish Kills
    Episodic fish kills resulting from nutrients, animal waste spills 
and other discharges from MPP facilities have been documented in the 
Mid-West, and South as well as along the East Coast. Causes for the 
fish kills included increase in the pH, toxic amounts of ammonia and 
chlorine, nutrients and fecal coliforms (see Section 20.4.2, DCN 
145010). In the case of excessive nitrogen and phosphorous discharges, 
these pollutants can trigger increases in algae growth that reduce the 
concentration of dissolved oxygen in water and can eventually cause 
fish to die.
    In addition to killing and harming fish directly, pollution from 
MPP facilities can affect other aquatic organisms that in turn harm 
fish. In particular, the Eastern Shore of the United States has been 
plagued with problems related to Pfiesteria, a dinoflagellate algae 
that, under certain circumstances, can transform into a toxic form that 
stuns fish, making them lethargic. Other toxins are believed to break 
down their fish skin tissue and leave lesions or large gaping holes 
that often result in death. One reason for the transformation of 
Pfiesteria to its toxic form is believed to be high levels of nutrients 
in water (Morrison, 1997).\8\ EPA is gathering evidence on documented 
fish kills resulting from discharges from MPP facilities. EPA may 
either use this estimate of fish kills in its non-quantified benefits 
assessment, or use it to derive a lower bound quantified estimate of 
fish kills attributed to MPP facilities as part of the benefits 
analysis for the final rule. EPA requests information on documented 
fish kills resulting from MPP discharges and comment on the use of this 
information in its benefits assessment.
---------------------------------------------------------------------------

    \8\ Morrison, C. 1997. ``The Cell from Hell and Poultry Farmers: 
Do They Have Anything in Common?'' The Shore Journal. August 31.
---------------------------------------------------------------------------

3. Regional Vulnerability Assessment
    The Office of Research and Development within EPA is developing the 
Regional Vulnerability Assessment (ReVA) program to evaluate 
environmental conditions and known pollutants/stressors within a 
geographic region. Detailed information about ReVA can be found at 
http://www.epa.gov/reva/about.htm. ReVA's purpose is to identify those 
ecosystems most vulnerable to being lost or permanently harmed in the 
next 5 to 25 years and to determine which pollutants/stressors are 
likely to cause the greatest risk. The goal of ReVA is not exact 
predictions, but identification of the types of undesirable 
environmental changes most likely to occur over the coming years. The 
ReVA program will improve environmental assessments for a region by 
using integrative technologies to predict future environmental risk and 
support informed, proactive decision-making and prioritization of 
issues for risk management. Detailed information on

[[Page 48495]]

this program can be found at http://www.epa.gov/reva.
    ReVA is a tool for integrating research on human and environmental 
health, ecorestoration, landscape analysis, regional exposure and 
process modeling, problem formulation, and ecological risk guidelines. 
ReVA develops landscape models that predict probability of impairment 
for individual watersheds given land use and biophysical 
characteristics. ReVA is able to explore hierarchical modeling (broad 
scale, landscape models combined with fine-scale watershed models) and 
grouping of watersheds to assess benefits associated with proposed 
alternative effluent standards against a backdrop of existing non-point 
source pollution and naturally occurring conditions that influence 
watershed vulnerability. EPA may consider using the output from the 
ReVA program as an additional source of information characterizing the 
environmental impacts and potential benefits of MPP facilities. EPA 
solicits comment on the use of a regional vulnerability assessment for 
the MPP environmental assessment.

VIII. Possible Changes to the Proposed Limitations and Standards

    This section describes EPA's plans for revising the proposed 
limitations and standards before the final rule. The NODA record 
contains episode-level summary statistics, including the episode long-
term averages and episode variability factors. (In this context, 
``episode'' refers to either an EPA sampling episode data set or an 
industry-submitted self-monitoring data set.) After EPA completes its 
statistical and engineering review of the episode summary statistics 
and other available information, it will select episode data sets that 
reflect the appropriate performance capabilities of the model 
technologies for each option. EPA then will use these episode data sets 
to calculate the option long-term average as the median of the selected 
episode long-term averages, and the option variability factor as the 
mean of the selected episode variability factors. The final limitation/
standard will be calculated as the product of the option long-term 
average and option variability factor, as explained in Sections 13.8 
and 13.9 of the proposal technical development document.
    Because EPA has not performed its review of the episode data sets, 
the NODA record does not include option long-term averages, option 
variability factors, and limitations/standards. Instead, the following 
discussion provides an overview of EPA's plans for reviewing the 
episode data sets and revising the proposed limitations and standards. 
The first subsection, VIII.A, discusses the revisions to the 
statistical methodology used to develop the limitations/standards and 
loadings. The second subsection, VIII.B, describes EPA's consideration 
of comments on the assumed monitoring frequency used to develop the 
proposed limitations and standards (and for deriving costs for 
complying with the proposed rule). The third subsection, VIII.C, 
describes EPA's plans for reviewing the data that will be used to 
develop the final limitations and standards. The fourth subsection, 
VIII.D, describes EPA's planned review of the variability factors that 
EPA expects to use to derive the final limitations and standards. The 
fifth subsection, VIII.E, describes EPA's plans for assessing the 
achievability of the limitations and standards it is considering 
promulgating. The final subsection, VIII.F, describes EPA's preliminary 
identification of errors in 40 CFR part 432 and the recodification 
included in the proposed rule.

A. Revision of Statistical Methodology for Long-Term Averages and 
Loadings

    In the proposal, EPA used the data from 11 MPP sampling episodes to 
develop the proposed long-term average effluent concentrations, 
variability factors, limitations/standards, and loadings. Since then, 
EPA has completed three additional MPP sampling episodes which operate 
some of the technologies considered as a basis of the limitations and 
standards. Two of the additional sampling episodes were at facilities 
that had been sampled prior to proposal. EPA also has received self-
monitoring data from 16 of the 24 MPP facilities from which EPA 
requested data, as discussed in Section II.B above. The following two 
sections briefly discuss EPA's methodology at proposal and the revised 
methodology EPA is considering for calculating limitations/standards 
and the loadings associated with the various technology options.
1. Estimation of Daily Values and Long-Term Averages in the Proposal
    For the proposal, to the extent possible with available data, EPA 
calculated the limitations/standards and technology option loadings 
using the measured daily effluent concentrations at the sampled 
facilities that were chosen as the basis for each technology option. 
However, when effluent data were unavailable from a particular model 
technology, EPA estimated the daily effluent concentrations by 
combining influent data with removal fractions from facilities with 
components of the model technology. When influent data were not 
available, EPA estimated the daily effluent concentrations using a 
facility pollutant mass balance between the final effluents from 
wastewaters from different processes (e.g., first processing, 
rendering), as explained in Section 9.2.2 of the proposal development 
document. As explained in Section 13 of the proposal development 
document, EPA also adjusted several estimated concentration values 
upward to be more consistent with documented performance values for the 
technology or actual effluent concentrations.
    To derive the proposed limitations and standards, EPA then modeled 
the combined measured and estimated effluent data using the modified 
delta-lognormal distribution to estimate the long-term averages and 
variability factors. After reviewing the estimated long-term averages 
used in calculating limitations, EPA determined that substitutions were 
necessary and appropriate. Sections 9 and 13 of the proposal 
development document describe the substitutions.
2. Revised Approach
    EPA has revised its data selection to incorporate the new data from 
sampling episodes and DMRs (i.e., individual weekly/daily data points, 
not summary data). As a consequence of the new data and the comments 
that it received, EPA intends to use only measured effluent values 
rather than estimated values in developing the final limitations/
standards and loadings. DCNs 165011 and 165140 provides listing of the 
data that EPA is considering using to calculate the final limitations 
and standards. For today's NODA, because of time constraints, EPA has 
used the arithmetic average of the data in calculating the target 
effluent concentrations used for developing costs and loadings. For the 
final rule, EPA intends to use the modified delta-lognormal 
distribution to model the data, and thus, the long term average values 
will be similar but somewhat different than the target effluent 
concentrations presented today. Also, EPA plans to use the daily/weekly 
data, rather than the summary DMR data used today. This delta-lognormal 
distribution was used for the proposal and is described in Appendix G 
of the proposal development document. See Section VIII.D for EPA's plan 
for reviewing variability factors to be used for the final rule.
    For the two facilities that EPA sampled twice (i.e., once prior to 
proposal and once after proposal), EPA's initial assessment is that the 
post-

[[Page 48496]]

proposal sampling episode at each facility provides a better 
demonstration of the model technology, and has included only the post-
proposal episode in the NODA analyses. For the proposal, EPA had 
excluded one of the pre-proposal episodes (6446) and included the other 
pre-proposal episode (6335) in its analyses. For episode 6446, EPA 
continues to exclude these data due to concerns that the facility had 
with the results of its self-sampling (see DCN 15169) in comparison to 
EPA's sampling episode results. For episode 6335, EPA had now excluded 
these data due to a combination of inconsistent laboratory results for 
nitrogen and operational issues at the facility during the sampling 
episode (see DCN 00211). For several POCs both of these pre-proposal 
episodes showed higher effluent concentrations than the post-proposal 
episodes at the same facility. However, for Total Nitrogen, which EPA 
is considering regulating in the final rule, these pre-proposal 
episodes showed lower effluent concentrations than the post-proposal 
episodes at the same facility. EPA solicits comment on the use of data 
from Episodes 6446 and 6335 for use in developing pollutant loading 
estimates and limitations and standards for the final rule.

B. Consideration of Assumed Monitoring Frequency

    In developing the proposed maximum monthly limitations and 
standards, EPA had assumed a monitoring frequency of thirty samples per 
month (i.e., daily monitoring). In the preamble (67 FR 8632), EPA 
solicited comment on whether small poultry facilities should have 
monthly limitations/standards based upon 20 days, rather than 30 days, 
because they would be unlikely to operate on weekends. In response, EPA 
received comments that stated that monitoring every day during the 
month was too frequent for all facilities. In response, EPA is 
considering reducing the assumed monitoring frequency to weekly for any 
new limitations and standards promulgated in this rulemaking. EPA 
incorporated this assumed monitoring frequency into the monitoring 
costs for this notice. EPA solicits comment on such a change in 
monitoring frequency.
    The comments indicate some confusion may exist about the assumed 
monitoring frequency used to develop the existing limitations and 
standards. In the 1975 rule, the monthly limitations and standards 
specified that the ``Average of daily values for thirty consecutive 
days shall not exceed'' the stated value. Thus, EPA assumes that 
facilities perform daily monitoring to comply with the existing 
regulations. As stated by commenters, the monitoring frequency has an 
effect on the probability of exceedences. Thus, a facility should 
monitor at the same frequency that EPA has assumed in developing the 
limitations and standards. Monitoring less frequently results, 
theoretically, in average values that are more variable. As a 
consequence, for example, a facility that collects four monitoring 
samples per month would be likely to exceed, at a relatively high rate, 
the monthly average limitations based upon an assumed monitoring 
frequency of 30 monitoring samples per month. Thus, if facilities 
monitor less frequently, then operators may find they need to design 
treatment systems to achieve an average below the long term average 
basis of the limitations/standards and/or exert more control over 
variability of the discharges in order to maintain compliance with the 
limitations/standards.

C. Data Review for Final Limitations and Standards

    While EPA has preliminarily reviewed the analytical data for the 
NODA, EPA will conduct a more detailed engineering and statistical 
review of the data before the final rule, similar to that performed for 
other rules. The following paragraphs identify specific data reviews 
that EPA typically performs before promulgating a final rule.
    For all pollutants that might be regulated in the final rule, EPA 
plans an engineering review of its data to verify that the limitations 
and standards are reasonable based upon the design and expected 
operation of the control technologies and the facility process 
conditions. As part of that review, EPA plans to examine the range of 
performance represented by the episode data sets with the model 
technology. EPA expects that some episode data sets will demonstrate 
application of the best available technology and report an effluent 
quality that would meeting the limitations EPA is considering. Other 
episode data sets may demonstrate performance from the same types of 
technology, but not reflect the best design and/or operating conditions 
for that technology. For these facilities, EPA will evaluate the degree 
to which the facility can upgrade its design, operating, and 
maintenance conditions to meet the limitations or standards EPA is 
considering. If such upgrades are not possible, then the limitations 
and standards associated with the candidate technology would be 
modified to reflect the lowest levels that the technology can 
reasonably be expected to reliably and consistently achieve. If some 
individual values are greater than the limitations and standards EPA is 
considering, EPA expects to consider whether the facility can eliminate 
those comparatively high values and achieve the limitations under 
consideration through optimization and improved operation of the 
treatment system. If so, EPA might conclude that the limitations 
adequately reflect the treatment capabilities of the model 
technologies. In such cases, EPA expects to adjust its cost estimates 
for the facility to cover any upgrades and improved O&M necessary to 
reliably and consistently meet the limitations. See Section 13.6 of the 
proposal development document for further explanation.
    As part of its engineering and statistical review of the data, EPA 
intends to review the sampling episode and industry self-monitoring 
data for consistency and any unusual patterns (such as all values being 
the same over a period of time which can indicate nondetected values 
rather than measured values, lack of sensitivity in the laboratory 
procedures, or other causes). EPA also intends to evaluate 
discrepancies between concentrations for related pollutant parameters. 
For example, because CBOD theoretically should be less than BOD, EPA 
might investigate CBOD values that exceeded BOD values to determine 
whether any data exclusions are appropriate. In addition, EPA plans to 
reevaluate the engineering and statistical reasons for excluding any 
data that otherwise meet the data review criteria used to assess 
laboratory reports. These data review criteria are used consistently 
for each guideline and are located at DCN 165330 in Section 22.6 in the 
record. EPA also will verify that it has fully documented its reasons 
for excluding any data that otherwise meet the data review criteria for 
the laboratory reports, for example the data from Episodes 6446 and 
6335, as discussed in Section VIII.A.
    EPA intends to review field duplicates and multiple grab 
measurements and investigate extreme discrepancies between values for 
samples collected on the same day. The measurements for the field 
duplicates and grab samples are listed in DCNs 165020 and 165030. EPA 
also intends to review summary statistics for each episode (see DCNs 
165070 and 165150). EPA may further review episodes with patterns such 
as minimum and maximum values far apart. If some episodes appear to 
have data in ranges different from most other episodes in the same 
subcategory, EPA may perform additional engineering evaluation of the

[[Page 48497]]

process conditions and treatment performance. For example, if one 
facility has substantially more concentrated effluent than the others, 
a detailed engineering review might reveal conditions that would 
justify excluding the less concentrated effluent data from other 
facilities from the calculations of limits.
    For the larger self-monitoring data sets, EPA intends to review 
graphical displays of the daily measurements to evaluate patterns in 
the data, such as steadily increasing or decreasing values over time or 
during certain time intervals. The plots may also indicate data values 
that should be reviewed further and possibly excluded if they appear to 
reflect conditions other than normal operations. For example, EPA might 
exclude a value which was substantially lower than the other 
measurements if an extremely high flow value was recorded for that day.
    Where both influent and effluent are available for an episode, EPA 
intends to investigate the impact on the performance of the technology 
due to the influent levels. In this investigation, EPA might evaluate 
whether the influent concentrations are at treatable levels and whether 
the treatment system had efficient removal capability. For the 
proposal, this treatable level was defined as five times the nominal 
quantitation limit that generally was associated with the analytical 
method most frequently used to measure samples collected during EPA's 
sampling episodes. (The nominal quantitation limit is the smallest 
quantity of an analyte that can be reliably measured with a particular 
method. The record items for the proposal generally refer to the 
``nominal quantitation limit'' as the ``baseline value.'') If the 
influent data were below the treatable level or just slightly above, 
EPA may exclude the effluent data from the analyses for the final 
limitations and standards. EPA's purpose in excluding these effluent 
data sets would be to ensure that the effluent concentrations resulted 
from treatment and not simply from the absence or extremely low levels 
of that pollutant passing through a treatment system.
    For most facilities in the MPP concentration database, EPA has data 
from either a sampling episode or the facility's self-monitoring (DMR) 
data. However, for a few facilities, EPA has data from both a sampling 
episode and self-monitoring data. The statistical analyses for the NODA 
treat each sample episode and self-monitoring data set separately. For 
example, if EPA had sampling episode and self-monitoring data sets for 
a facility, it would have calculated two long-term averages from the 
facility's data, one from the sampling episode data set and the other 
from the self-monitoring data set. This practice is consistent with 
other guidelines and is used because the data tend to be associated 
with different time periods and/or analytical methods. For any 
facilities with EPA sampling data and self-monitoring data for the same 
time period, EPA intends to evaluate whether the data should be 
combined into a single data set or continue to be analyzed as two 
separate data sets for the final rule. For facilities that submitted 
self-monitoring data over an extended period, if there are substantial 
differences between certain time intervals, EPA intends to reevaluate 
whether each time interval should be treated separately in the data 
analyses.
    In its review of the self-monitoring data, EPA will verify that the 
concentrations were determined by an analytical method approved for 
compliance monitoring in 40 CFR part 136. If the facility has 
identified a different method, EPA may decide to contact the facility 
for more information about the laboratory analysis to determine if the 
results would be comparable to those generated by approved methods. It 
is likely that EPA would need to perform a full review of the 
laboratory reports such as initial precision and recovery (IPR) 
analyses, instrument tunes, calibrations, blanks, laboratory control 
sample (LCS) analyses, matrix spikes, surrogates, and all sample data. 
Without the necessary information, EPA may choose to exclude 
measurements from non-approved analytical methods.

D. Evaluation of Final Variability Factors

    As explained in the introduction to Section VIII, the NODA record 
does not include the option-level variability factors used to calculate 
limitations/standards. For the final rule, EPA intends to use the same 
data and methodology described in Section VIII.A. The section below 
describes EPA's plans for reviewing and possibly transferring option-
level variability factors for the final limitations and standards.
    To identify situations producing unexpected results, EPA reviews 
all of the episode variability factors and compares daily to monthly 
variability factors. One criterion is that the daily and monthly 
variability factors should be greater than 1.0. A variability factor 
less than 1.0 would result in a unexpected situation where the 
estimated 99th percentile would be less than the long-term average. A 
second criterion is that the daily variability factor should be greater 
than the monthly variability factor so that the daily limitation will 
be numerically greater than the monthly average limitation. A third 
criterion is that not all of the measured (non-censored) results can be 
below the sample-specific detection limits. While such data sets can be 
modeled using statistical techniques, the results can be difficult to 
interpret because the model is generally used for data sets where non-
censored values are expected to be larger than non-detected values. A 
fourth criterion relates to the reasonableness of calculated 
variability factors. For example, EPA may further evaluate data sets 
for daily variability factors less than 1.1 and above 7 to determine if 
any anomalies existed in the data. As a result of this review, EPA may 
determine that a variability factor does not represent a reasonableness 
range of variation from well-operated systems, but rather may indicate 
a situation where better process control is needed. Any reduction in 
variability factors based on tighter operational control would also be 
reflected in higher cost estimates to achieve this control if 
necessary.
    For some subcategories, EPA may be unable to calculate variability 
factors. This could occur for a pollutant in an option where the 
episode data sets had too few noncensored measurements (e.g., the 
pollutant was not detected at measurable levels) or no data were 
available. For example, if a pollutant had all nondetected values for 
all of the episodes in an option, then it would not be possible to 
calculate the variability factors for that option. In such cases, EPA 
will transfer the variability factors from other options, subcategories 
and/or similar pollutants as appropriate.

E. Evaluation of Achievability of Final Limitations and Standards

    If a facility operates the model technology for an option to 
achieve the relevant long-term average, EPA expects that the facility 
will be able to reliably and consistently comply with the limitations 
EPA may promulgate. Because EPA's option variability factors account 
for reasonable excursions above the option long-term average, the 
limitations promulgated by EPA are intended to correspond to levels 
(above the actual long-term averages) that well-operated systems can 
reliably and consistently achieve. In order to meet the monthly average 
limitation, a facility would need to counterbalance a value near the 
daily maximum limitation with one or more values well below the daily 
maximum limitation.

[[Page 48498]]

EPA recognizes the importance of promulgating achievable limitations; 
thus, as described in this section, EPA intends to perform a series of 
steps to compare the available data and information to the limitations 
and standards. The following paragraphs describe those steps.
    First, EPA intends to perform statistical reviews of the data and 
its statistical model. In this step, EPA intends to compare the 
limitations and standards to the data used to calculate the limitations 
and standards. EPA performs this comparison to determine whether it 
used appropriate distributional assumptions for the data used to 
develop the limitations and standards (i.e., whether the curves EPA 
used provide a reasonable ``fit'' to the actual effluent data). This 
comparison should not be interpreted to mean that EPA expects values 
that exceed the limitations to occur at some fixed rate. Furthermore, 
because EPA has used data from facilities that were not required to 
comply with the final limitations at the time the data were collected, 
the observed data cannot be interpreted as supporting estimates of 
compliance rates. Rather, in conjunction with the engineering review 
(step 2 below), the results from this step allow EPA to determine if it 
has used reasonable statistical assumptions in developing the 
limitations. This is also explained in Section 13.6 of the proposal 
development document.
    Second, EPA intends to perform a detailed engineering evaluation of 
the data and facilities used as a basis for the final limitations and 
standards. For facilities with higher or consistently lower discharges 
than the option long-term averages used to calculate the limitations/
standards, EPA will verify that the facilities have the relevant 
treatment technology and are operating it appropriately. For example, 
upon contacting a facility with considerably less concentrated 
discharges, EPA may discover that the facility has a component in its 
treatment train that is not part of the model technology. In such a 
situation, EPA would be likely to exclude the facility's data from its 
final calculation of the limitations and standards, because the 
facility's treatment capabilities are better than the model technology. 
For facilities with more concentrated discharges that are operating the 
model technology, EPA may determine that such values can be eliminated 
through improved operation of the treatment system. In such cases, EPA 
may adjust its cost estimates for the facility for any upgrades and 
improved operations and maintenance (O&M) necessary to reliably and 
consistently meet the final limitations/standards. As part of the 
engineering evaluation, EPA also will investigate excessive variations 
that could indicate exceptional incidents or upsets that are not 
typical of good performance. Based on thorough technical review of the 
data, EPA may exclude data that do not represent proper process 
operations or treatment control and would adjust its cost estimates 
appropriately. For the final rule, the record will clearly state which, 
if any, data points were excluded and the rationale for the exclusion.
    Third, in some cases, EPA calculated the arithmetic average of the 
concentration values from two or more samples to obtain a single daily 
value that could be used in other calculations. EPA's approach of 
averaging multiple analytical results to obtain a single daily value is 
consistent with standard, conventional practice in environmental 
analytical work. This approach also gives one day's sampling 
information appropriate weight in determining effluent limitations and 
is consistent with requirements of NPDES regulations at 40 CFR part 122 
which define the daily discharge. Multiple daily values resulted from 
measurements of field duplicates and grab samples during EPA sampling 
episodes. As explained in Section 13 of the proposal technical 
development document, field duplicates are two samples collected for 
the same sampling point at the same time, and thus, characterize the 
same conditions at that time at a single sampling point. Also as 
explained in Section 13, EPA collected multiple (usually four) grab 
samples for HEM during a sampling day at a sample point, because Method 
1664 requires that grab samples rather than composite samples be used 
in the laboratory analysis. For the final rule, EPA will continue to 
model daily values in calculating the limitations and standards. EPA 
also intends to: (1) review the individual measurements from field 
duplicate pairs and individual grab samples; and (2) compare the 
individual measurements to the final limitations and standards. If EPA 
finds extreme discrepancies, EPA may reevaluate its data aggregation 
procedure (i.e., arithmetic averaging) or data selection used to 
develop the final limitations and standards.
    Fourth, EPA intends to compare the limitations and standards to 
other EPA sampling data that were not used as a basis of the 
limitations and standards. For example, EPA would expect that a more 
sophisticated treatment system would result in effluent concentrations 
that have lower concentration values than the limitations based upon 
the less sophisticated, model technology. If EPA notes a different 
trend, it may perform a more detailed engineering review of the 
treatment technologies and data selection.
    Fifth, EPA intends to verify that 40 CFR part 136 contains approved 
analytical methods that will be appropriate for compliance monitoring 
with the final limitations and standards. If EPA determines that the 
limitations are based upon data from some laboratories that, under 
certain conditions, had measured to levels lower than the nominal 
quantitation limits specified in some methods, EPA will evaluate 
whether those results are quantitatively reliable. In some cases, EPA 
may discover, for example, that the laboratory had used an approved 
technique that can reliably measure lower levels, but might not be 
commonly used. If EPA concludes that the results are quantitatively 
reliable, it will continue to use the data to calculate loadings, long-
term averages and variability factors. To ensure the final limitations 
and standards reflect ``typical'' laboratory reporting levels for 
approved methods, EPA may choose to establish the option long-term 
averages or limitations at values equal to or greater than the nominal 
quantitation limits specified in the analytical methods. Or, EPA may 
instead choose to provide guidance about the appropriate set of method 
options and a calibration range that will provide sufficient 
sensitivity to meet the effluent guideline limitations and standards.
    Sixth, EPA intends to compare the limitations and standards to 
averages and daily values from discharge monitoring reports (DMRs). In 
the preamble to the proposal, EPA referred to this as a ``real-world'' 
check, although it is important to remember that many facilities for 
which DMR data are available may not have the technology installed on 
which the limits were based. For this reason, EPA intends to classify 
the facilities into three groups using the information in the detailed 
surveys and responses to the request for individual weekly/daily DMR 
data. The groups would contain the DMR data from facilities with: (1) 
The model or comparable technologies; (2) more sophisticated 
technologies; and (3) treatment that would require upgrades as a 
consequence of the rule. For the first group, EPA would expect the DMR 
data to have values generally less than the limitations and standards. 
For the second group, EPA would expect generally lower values than 
group 1. For the third group, EPA still intends to evaluate the data, 
although it expects that the data will generally have higher 
concentration values than the

[[Page 48499]]

limitations and standards. (EPA has included costs for these facility 
upgrades as part of the rule.) For any unexpected results, EPA may 
perform a more detailed engineering review of the processes and 
treatment technologies underlying the DMR data. Depending on the 
results of that review, EPA might evaluate whether any additional 
modifications to the model technology and/or limitations and standards 
were necessary.

F. Errors in Current 40 CFR Part 432 and the February 2002 Proposed 
Rule Text

    In researching the derivation of existing limitations and 
standards, EPA has preliminarily identified what appear to be errors in 
the current 40 CFR part 432 and/or the February 25, 2002, proposed rule 
text. EPA intends to evaluate these discrepancies in further detail and 
correct the CFR as part of the MPP final rule. This section describes 
the discrepancies that EPA has identified.
    40 CFR part 432 currently specifies monthly average limitations and 
standards for fecal coliforms and pH, while the text of the final rules 
published in the Federal Register (39 FR 7900; February 28, 1974 and 40 
FR 906; January 3, 1975) includes only daily maximum limitations and 
standards for those parameters. For the subparts regulating the 
discharge of fecal coliforms, the daily maximum limitation/standard is 
``Maximum at any time 400 mpn/100 ml.'' For the subparts regulating pH, 
the daily maximum limitation/standard is ``within the range of 6.0 to 
9.0.'' For Subparts A through J, the current 40 CFR part 432 specifies 
monthly average limitations/standards as well as daily maximum 
limitations/standards for fecal coliforms and pH. The monthly values 
are the same as the daily maximum values. This appears to be incorrect. 
Because the values are the same for the daily maximum limitations/
standards and the monthly average limitations/standards, EPA does not 
expect that any facility will need to change its operations if EPA 
eliminates the monthly average limitations/standards currently codified 
in the CFR for fecal coliforms and pH. Before promulgating the final 
rule, EPA intends to further investigate the derivation of the existing 
limitations/standards.
    EPA also notes that the tables (in the existing CFR) of NSPS in 
sections 432.65 and 432.75, provide different values for the standards 
depending on whether the units are kg/kkg or lb/1000 lbs. For example, 
the TSS daily maximum standard is 0.044 kg/kkg or 0.036 lb/1000 lbs in 
section 432.65, when the two numerical values should be the same, 
regardless of the units. A review of the final rule (40 CFR parts 906-
907; January 3, 1975) and the 1974 development document for the 
processor segment of the meat processor point source category indicates 
that NSPS was set equal to the BPT limitations for all pollutant 
parameters. Based upon this assessment, EPA preliminarily concludes 
that the NSPS in the kg/kkg units are correct because they have the 
same values as the BPT limitations. In sections 432.65 and 432.75 of 
the February 25, 2002, proposed rule, EPA selected the values 
associated with the units of lb/1000 lbs. Thus, after further 
investigation, if these values associated with units of lbs/1000 lbs 
are indeed incorrect, EPA will use the standards in units of kg/kkg in 
its final rule.
    Two errors exist in the current 40 CFR 432.62 for the BPT 
limitations for Subpart F. The first error is in the monthly average 
limitation in units of kg/kkg for oil and grease which has a value of 
``0.000'' which should be ``0.006.'' The second error is in the daily 
maximum limitation for TSS which has a value of ``10.044 lb/1000 lbs'' 
which should be ``0.044 lb/1000 lbs.'' EPA corrected these errors in 
the February 25, 2002, proposed rule.
    EPA has identified three errors in the limitations and standards in 
the proposed rule. First, we inadvertently omitted the existing pH 
limitations and standards. As explained in the preamble to the proposal 
(67 FR 8629), EPA had intended to retain these pH limitations and 
standards. Second, we inadvertently assigned incorrect units of 
measurement in footnote (1) to the values listed in 432.63(b) and 
432.73(b). The units listed in these parts were ``mg/l (ppm)'' and 
should have been ``pounds per 1000 pounds (or g/kg) of finished 
product.'' Finally, in sections 432.82(b) and 432.92(b), the proposed 
rule refers to 432.62(b) for COD limitations in error. The referral 
should be to section 432.72(b).

IX. Consideration of Options

    EPA is presenting revised cost, pollutant reduction, and economic 
impact estimates in Section X of today's notice. These estimates are 
based on the following: additional data from surveys received after the 
initial cut-off date, data received with comments or through requests 
from EPA Regions and States, data revisions to reflect follow-up with 
survey recipients, and changes that result from certain methodological 
revisions. EPA will base its determinations for the final rule on these 
revised results and any further revisions that result from comment on 
today's notice. In the sections below, EPA discusses options it is 
considering for the different regulatory levels of control (e.g., BPT, 
BAT, NSPS) for the subcategories of the MPP industry (See summary in 
Table IX-1).

A. Description of Modified Options

    Commenters requested that EPA consider modifications to the 
preferred options selected as the basis for the proposed limitations 
and standards for certain subcategories. As a result of additional data 
and comments, EPA is reconsidering the technology options for BPT, BAT, 
and NSPS limitations (or standards) that EPA evaluated for the proposed 
rule. EPA is now considering two options for the final limitations that 
represent modifications of those considered in the proposal. In 
addition, EPA is considering not adopting further regulation for 
certain subcategories. EPA notes that all technology-based options it 
considered for the proposal and is evaluating for the final rule (for 
all subcategories) would include primary and secondary biological 
treatment and disinfection.
    The first modified option EPA is considering is based on treatment 
systems employing partial denitrification of the MPP wastewater. This 
option does not achieve the same degree of denitrification as the 
proposed Option 3 (i.e., complete denitrification). EPA defined 
``complete'' denitrification based on achieving a low effluent Nitrate 
+ Nitrite concentration. EPA has designated this modified option as 
Option 2.5. Discussions with industry representatives and evaluation of 
sampling and DMR data led to consideration of Option 2.5. Industry 
representatives commented that they often are able to achieve some 
degree of denitrification, but could not achieve the levels considered 
in the proposal without a significant increase in costs. EPA identified 
several facilities which are achieving partial denitrification by 
evaluating the long-term average Nitrate + Nitrite (or Total Nitrogen) 
effluent concentration and each facility's treatment in place. EPA is 
considering Option 2.5 as a basis for BPT, BAT and NSPS for the final 
rule based on data from these facilities.
    The second modified option under review builds on the partial 
denitrification technology in Option 2.5 by adding chemical phosphorus 
removal to the treatment train. EPA has designated this option as 
Option 2.5 + P. Option 2.5 + P adds a treatment unit consisting of a 
chemical addition using alum which aids in precipitating and settling 
phosphorus. EPA notes that it evaluated phosphorus removal as an

[[Page 48500]]

additional treatment step at proposal under Option 4. EPA is still 
considering Option 4 as a basis for the final limitations and standards 
for certain subcategories. Option 4 includes nitrification, complete 
denitrification and chemical phosphorus removal. There are several 
facilities currently employing Option 4 (or more advanced technology) 
in the MPP industry. EPA is now giving less consideration to Option 3, 
because the only MPP facility (a poultry slaughtering facility) to 
identify Option 3 technology on their survey was not able to provide 
EPA with supporting data (i.e., nitrate/nitrite, TKN, or total nitrogen 
effluent concentrations). Therefore, EPA did not have a facility to use 
as the basis for establishing long-term average concentrations for 
Option 3. The only facilities determined to have complete 
denitrification also used chemicals to remove phosphorus. EPA 
classified these facilities as Option 4. EPA notes that for the 
purposes of comparison it also looked at an option consisting of the 
nitrification treatment system of Option 2 followed by phosphorus 
removal (referred to as Option 2 + P). However, EPA is not considering 
Option 2 + P further for the final rule because of the considerable 
increase in cost as compared to either Option 2 or Option 2.5 (i.e., an 
additional $31 million and $23 million, respectively) without the 
additional nitrogen removals associated with Option 2.5.
    The options EPA is considering for non-small facilities in 
Subcategories A-D and K for the final rule are listed in Table IX-1, 
below. As discussed previously, EPA is not providing the revised 
estimates of costs, pollutant reductions, or economic impacts for small 
slaughtering facilities or meat and poultry further processing 
(Subcategories F-I and L) and independent rendering (Subcategory J) 
facilities in today's notice due to time constraints. However, those 
estimates are provided in, Section 21.1, DCNs 125803, 125606, 126002, 
and 126003 of the public record. EPA notes that it is considering the 
modified options discussed above, in addition to the proposed options, 
for those subcategories as well.

    Table IX-1.--Options Being Considered for Non-Small Facilities in
                         Subcategories A-D and K
------------------------------------------------------------------------
               Option                             Description
------------------------------------------------------------------------
2...................................  Biological Treatment +
                                       Nitrification
2.5.................................  Biological Treatment +
                                       Nitrification + Partial
                                       Denitrification
2.5 + P.............................  Biological Treatment +
                                       Nitrification + Partial
                                       Denitrification + Chemical
                                       Phosphorus Removal
4...................................  Biological Treatment +
                                       Nitrification + Complete
                                       Denitrification + Chemical
                                       Phosphorus Removal
------------------------------------------------------------------------

B. Options Being Considered for Best Practicable Control Technology 
Currently Available (BPT)

    As discussed in the proposal (67 FR 8582), in specifying BPT, EPA 
looks at a number of factors. EPA first considers the total cost of 
applying the control technology in relation to the effluent reduction 
benefits. The Agency also considers the age of the equipment and 
facilities, the processes employed and any required process changes, 
engineering aspects of the control technologies, non-water quality 
environmental impacts (including energy requirements), and such other 
factors as the EPA Administrator deems appropriate (CWA 304(b)(1)(B)). 
Traditionally, EPA establishes BPT effluent limitations based on the 
average of the best performances of facilities within the industry of 
various ages, sizes, processes or other common characteristics 
employing the BPT technology. Where existing performance is uniformly 
inadequate, BPT may reflect higher levels of control than currently in 
place in an industrial category if the Agency determines that the 
technology can be practically applied.
1. Subcategories A-D (Meat Slaughterhouses)
    EPA established BPT for the Meat subcategories (A-I) in 1974 based 
on biological treatment (e.g. aerobic and anaerobic treatment) to 
control five conventional pollutants or pollutant parameters 
(BOD5, TSS, Oil & Grease, fecal coliforms, and pH). The BPT 
technology also provided some nitrification in the course of extended 
aeration. EPA did not, however, develop limits for ammonia based on 
this technology. In 2001, EPA proposed new BPT limitations based on 
Option 2 for non-small facilities in Subcategories A-D (meat 
slaughterhouses). Option 2 consists of biological treatment followed by 
complete nitrification to reduce ammonia. Based on comments and the 
completion of the review and incorporation of data from the detailed 
surveys, EPA is now also considering establishing limits based on 
Option 2.5 for BPT for the final rule. EPA estimates that 38 of 39 
direct discharging facilities in these subcategories are currently 
employing Option 2 technology, while 13 of 39 facilities employ Option 
2.5.
    EPA notes that although more than 97 percent of facilities have the 
components of Option 2 technology in place, many facilities are not 
currently achieving the projected Option 2 target effluent 
concentrations presented in this notice. EPA has calculated the actual 
baseline discharges using each direct discharge survey recipient's 1999 
effluent concentration data (DMR data) and survey information on 
treatment technology in place (see Sections III.B and IV.B for 
additional discussion of the revised cost and loading methodologies). 
When estimating the costs of compliance with Option 2, EPA has included 
costs for treatment optimization for a number of facilities to achieve 
the Option 2 average target effluent concentration. For example, EPA 
has included costs, for example, for increased aeration, increased 
chemical addition, increased sludge handling, additional process 
controls, in-process sampling and analytical testing, and additional 
capacity.
    EPA also notes that even though one-third of the meat slaughtering 
(i.e., first processing) facilities are performing partial 
denitrification (Option 2.5), they are not achieving the target 
effluent concentrations that EPA currently projects for this option. 
EPA believes these facilities may not be optimizing their performance, 
as suggested by reviewing their BOD:TKN ratios (see DCN 100765). Thus, 
for developing the estimates of compliance costs and pollutant loadings 
presented in today's notice, EPA transferred the target effluent 
concentration for Total N from well-operated facilities at Option 2.5 
that slaughter poultry (Subcategory K) to red meat facilities in 
Subcategory A-D. EPA is aware that some commenters believe that red 
meat facilities may not be able to achieve the same limits as poultry 
facilities due to higher influent concentrations of nitrogen. EPA is 
continuing to explore this issue. After reviewing the detailed surveys, 
EPA believes that in many cases facilities may need additional capacity 
(through installation of anoxic tanks) and additional pumping (for 
nitrate recycle) to perform partial denitrification. EPA notes that 
some facilities may also require additional equipment (e.g.,

[[Page 48501]]

carbon source, lagoon bypass). See Section III.B for a discussion on 
the revised cost methodology and Section V.D for a discussion on 
transferring nitrogen data from poultry to red meat facilities. EPA 
notes that references, such as Randall, C., Barnard, J., Stensel, H., 
1992. Design and retrofit of wastewater treatment plants for biological 
nutrient removal. Technomic Publishing Co., Inc., Lancaster, 
Pennsylvania, can provide guidance on how to upgrade treatment systems 
to perform nutrient removal (see DCN 100771 for other references).
    EPA estimates that revising BPT to incorporate limits for Total 
Nitrogen under Option 2.5 will remove an additional 27.7 million 
pounds/year of nitrogen from the discharges of facilities in 
Subcategories A-D. In addition, as compared to the baseline (i.e., 
pollutant loadings in 1999), Option 2.5 would also remove approximately 
755,000 pounds/year of BOD5, 1.06 million pounds/year of 
TSS, and 2.7 million pounds/year of ammonia (as nitrogen). However, 
because Option 2.5 includes the same technology as Option 2 with the 
addition of denitrification for Total Nitrogen removal, the reductions 
of BOD5, TSS, and ammonia (as nitrogen) are the same for 
Option 2.5 and Option 2 (as revised in today's notice).
    In balancing costs against the benefits of effluent reduction, EPA 
considers the volume and nature of expected discharges after 
application of BPT, the general environmental effects of pollutants, 
and the cost and economic impacts of the required level of pollution 
control. For the BPT cost-reasonableness (i.e., BPT cost and removal 
comparison) calculation for this industry EPA chose to measure effluent 
reductions in terms of the sum of removals (in pounds) of 
BOD5, Total Nitrogen, and Total Phosphorus so that it could 
capture the incremental changes between technology options (e.g., 
Option 2 reduces BOD5 but does not reduce Total Nitrogen 
(N), while Option 2.5 additionally reduces Total Nitrogen and Option 
2.5+P additionally reduces Total Phosphorus (P)). EPA has made an 
effort to avoid ``double-counting'' pollutant reductions that would 
occur if, for example, EPA summed removals of COD and BOD. In past 
effluent limitations guidelines and standards, BPT cost and removal 
comparison has been as high as $37/lb-removed in 1999 dollars. As 
presented in Section X, EPA estimates the BPT cost and removal 
comparison for Option 2.5 (incremental to the baseline) to be $0.43/
pound BOD5, Total N, and Total P removed (1999$). The 
incremental BPT cost and removal comparison for moving from Option 2 to 
Option 2.5 is $0.27 per additional pound Total N removed (1999$) 
(BOD5 and Total P would be unchanged from Option 2). Note 
that the only difference between these two options is the level of 
nitrogen removals. EPA solicits comment on the potential selection of 
both Option 2 and Option 2.5 for BPT for the final rule.
    EPA is also considering a no further regulation option that would 
continue to rely on existing limitations and standards, along with any 
more stringent limitations required to attain and maintain water 
quality standards, including those derived from a wasteload allocation 
in a TMDL (total maximum daily load). EPA solicits comment on a no 
further regulation option for facilities in Subcategory A-D.
2. Subcategory K (Poultry Slaughterhouses)
    This section describes the options EPA is considering for 
developing BPT limitations for non-small facilities in the proposed 
Subcategory K. As discussed in Section X.A, EPA is not presenting 
revised costs, pollutant reductions, and economic impacts in today's 
notice for small Subcategory K facilities; however, those results are 
presented in Section 21.1, DCNs 125803 and 126003 in the public record.
    Unlike the meat subcategories discussed in Section IX.B.1, there 
are no existing effluent guidelines for facilities in the poultry 
slaughtering subcategory (Subcategory K). EPA proposed to establish the 
BPT level of control based on Option 3 for non-small facilities and 
Option 1 for small facilities in this subcategory. Option 1 consists of 
primary and secondary biological treatment with partial nitrification 
and disinfection while Option 3 includes primary and secondary 
biological treatment with complete nitrification, complete 
denitrification, and disinfection. As discussed previously in IX.A, EPA 
is now giving less consideration to Option 3. Based on additional 
review and evaluation of the data and comments, EPA is considering 
whether to base BPT limitations on Option 2, Option 2.5 or 2.5 + P for 
non-small facilities in this subcategory for the final rule. EPA is 
also considering a no-regulation option, in which facilities in 
Subcategory K would continue to be regulated based on facility-specific 
BPJ limitations established by the permitting authority, along with any 
more stringent water-quality based limitations that might be required 
to attain and maintain water-quality standards, including limitations 
based on a wasteload allocation in a TMDL.
    EPA estimates that 111 of 118 non-small direct discharging 
facilities in this subcategory currently employ Option 2 technology or 
more advanced technology, while 45 employ Option 2.5 or more advanced 
technology, and 17 facilities employ Option 2.5 + P or more advanced 
technology. As noted above, many of the facilities employing these 
technology options do not currently achieve the target effluent 
concentrations that EPA is projecting and so would likely have to 
undertake additional upgrades, optimization, and process control 
measures.
    EPA estimates that establishing Option 2.5 for BPT would reduce 
discharges of BOD5, TSS, COD, Ammonia, and Total N by 
approximately pounds/year, 1.4 million pounds/year, 6.3 million pounds/
year, 470,000 pounds/year, and 3.5 million pounds/year, respectively. 
Option 2 would remove the same amounts of all pollutants except Total 
N, which Option 2 is not designed to remove (i.e., Option 2 removes 0 
pounds/year of Total N). As discussed above, for the BPT cost and 
removal comparison calculation for this industry EPA chose to measure 
effluent reductions in terms of the sum of removals (in pounds) of 
BOD5, Total Nitrogen, and Total Phosphorus in assessing 
effluent reduction benefits. As presented in Section X, EPA estimates 
the BPT cost and removal comparison for Option 2 (incremental to the 
baseline) to be $12.89/pound BOD5, Total N, and Total P 
removed (1999$). The average BPT cost and removal comparison for Option 
2.5 would be $3.93/pound BOD5, Total N, and Total P removed 
(1999$). While the incremental BPT cost and removal comparison of 
Option 2.5 versus Option 2 would be $2.28 per additional pound of Total 
N (1999$; BOD5 and Total P would be unchanged from Option 
2).
    EPA estimates that establishing Option 2.5 + P for BPT would result 
in the same reductions of BOD5, TSS, COD, Ammonia, and Total 
N as Option 2.5 but would also reduce Total Phosphorus by 3.8 million 
pounds/year. As presented in Section X, EPA estimates the BPT cost and 
removal comparison for Option 2.5 + P (incremental to the baseline) to 
be $5.70/pound BOD5, Total N, and Total P removed (1999$). 
The incremental cost and removal comparison from Option 2.5 to Option 
2.5+P is $7.61/pound Total P removed (1999$) (Total N and 
BOD5 would be the same as under Option 2.5). EPA solicits 
comment on the potential selection of Option 2, Option 2.5, and Option 
2.5 + P for BPT for this subcategory for the final rule, and on a no-
regulation option

[[Page 48502]]

that continues to rely on site-specific BPJ permit limitations.

C. Options Being Considered for Best Available Technology Economically 
Achievable (BAT)

    BAT effluent limitations guidelines represent the best economically 
achievable performance of facilities in the industrial subcategory or 
category. The CWA establishes BAT principally as a means of controlling 
the direct discharge of toxic and nonconventional pollutants. 
Generally, EPA determines economic achievability on the basis of total 
costs to the industry to implement the BAT options and the effect of 
these costs on overall industry and subcategory financial conditions. 
As with BPT, where existing performance is uniformly inadequate, BAT 
may reflect a higher level of performance than is currently being 
achieved based on technology transferred from a different subcategory 
or category. BAT may be based upon process changes or internal 
controls, even when these technologies are not common industry 
practice.
    As discussed in the proposal (67 FR 8619), in recently promulgated 
effluent guidelines, EPA has relied primarily on the toxic pollutant 
cost-effectiveness measure for evaluating BAT, however, that measure is 
less appropriate for evaluating different options to control pollutants 
from the meat and poultry products industry because this industry's 
discharges consist of relatively more conventional pollutants and 
nutrients than toxic pollutants. Therefore, in addition to looking at 
economic impacts, EPA focused primarily on cost-reasonableness (for 
total pounds) for BPT, as described above, and nutrient cost-
effectiveness in evaluating options for BAT.
    EPA calculated the cost-effectiveness of the removal of nutrients 
for the options considered in the proposal and has done so for the 
modified options that EPA is considering for the final rule. As a basis 
of comparison, EPA estimated that the average cost-effectiveness of 
nutrient removal by POTWs with biological nutrient removal to be $4/lb 
for nitrogen and $10/lb for phosphorus (67 FR 8622). This is a rough 
average based on a range of removal costs at POTWs, and is not intended 
to be a bright line CE cutoff. Rather, it provides a general sense of 
how the BAT options under consideration for the MPP rule perform 
relative to POTWs in removing nutrients. The sections below described 
the options being considered for BAT for the final rule.
1. Subcategories A-D (Meat Slaughterhouses)
    EPA proposed to establish the BAT level of regulatory control based 
on Option 3 (complete nitrification). As discussed in Section IX.A, EPA 
is now giving less consideration to Option 3. After review and 
evaluation of the revised and new data, EPA is considering establishing 
BAT for the non-small meat slaughterhouses based on Option 2.5, Option 
2.5 + P or Option 4. EPA is also considering not establishing BAT 
limitations for these subcategories.
    EPA evaluated Option 4 as a basis for establishing BAT more 
stringent than the BPT level of control. EPA estimates that there are 
no direct discharge facilities in these subcategories currently 
operating Option 4 technology. However, there is one indirect 
discharger in these subcategories and 5 poultry slaughtering facilities 
(Subcategory K) operating Option 4 technology (or more advanced 
technology). EPA is considering using data from the indirect discharge 
facility or transferring data (as is allowed by the CWA) from 
Subcategory K Option 4 facilities as the basis for BAT for 
Subcategories A-D. EPA notes that commenters raised concerns over the 
representativeness of the one indirect discharger facility. EPA has 
performed a comparison of the influent wastewater characteristics of 
this facility to the direct discharge facilities in these 
subcategories. This comparison suggests that the wastewater at this 
facility may be sufficiently similar to the wastewater at the direct 
discharge red meat facilities in Subcategories A-D to justify 
transferring data for development of limitations (see DCN 100766). EPA 
has addressed differences in treatment performance between the indirect 
discharger and the direct discharge sites in the cost model through its 
costing methodology. For example, EPA included costs for a lagoon 
bypass and additional anoxic tanks, mixers, pumps for facilities with a 
BOD:TKN ratio below 3 (see Section III.B for additional details on the 
revised cost methodology).
    EPA estimates the pre-tax annualized compliance costs for Option 4 
to be $47.6 million (1999$) (which is $5.6 million more than Option 2.5 
+ P and $35.2 million more than Option 2.5). EPA estimates no closures 
as a result of BAT based on Option 4, using the closure methodology 
discussed in Section VI. As a sensitivity analysis, EPA also estimated 
closures using a less stringent decision rule (closure under 1 out of 5 
methodologies rather than at least 3 out of 5). Using this decision 
rule, EPA estimates one facility closure under Option 4. EPA notes that 
these estimates only include the 18 estimated total facilities in these 
subcategories for which EPA has sufficient data to conduct the closure 
analysis. There may be additional closures in the remaining 21 
facilities.
    EPA estimates that Option 4 removes 31.3 million pounds/year of 
nitrogen (3.7 million more pounds/year than Option 2.5 or Option 2.5 + 
P) and 5.66 million pounds/year of phosphorus (530,000 more pounds/year 
than Option 2.5 + P). As discussed above, in Subcategories A-D, there 
is one indirect discharge facility that currently operates Option 4.
    EPA is also considering nutrient removal cost-effectiveness when 
evaluating potential BAT options for this industry. EPA estimates the 
nutrient cost-effectiveness (based of pounds of nitrogen removed) for 
Option 4 to be $9.68/pound nitrogen removed (incremental to BPT Option 
2.5). EPA estimates the nutrient cost-effectiveness (based on pounds of 
phosphorus removed) for Option 4 to be $10.59/pound phosphorus removed 
(incremental to BPT Option 2.5+P). EPA notes that incremental results 
are presented somewhat differently in this section than in Section X. 
This section specifically compares the potential BAT option with the 
potential BPT option(s). EPA solicits comment on the potential 
selection of Option 4 as the basis of BAT for these subcategories.
    EPA is also considering establishing BAT for these subcategories 
based on Option 2.5 + P. EPA estimates the pre-tax annualized 
compliance costs for Option 2.5 + P to be approximately $42 million 
(1999$). EPA estimates that no facilities (out of the 18 facilities 
analyzed) will close as a result of BAT based on Option 2.5 + P in 
these subcategories. Under the closure sensitivity analysis discussed 
above, one of the analyzed facilities would close as a result of Option 
2.5+P. EPA estimates that Option 2.5 + P removes the same 2.7 million 
pounds/year of ammonia (as nitrogen) and 27.7 million pounds/year of 
total nitrogen as Option 2.5 but removes an additional 5.1 million 
pounds/year of phosphorus. In Subcategories A-D, there are 13 of 39 
direct discharge facilities that currently operate Option 2.5 
technology (though not necessarily achieving the projected Option 2.5 
target effluent concentrations) and there are 6 direct dischargers and 
one indirect discharger that employ phosphorus removal (under option 2 
+ P or Option 4). However, EPA notes there are no facilities that

[[Page 48503]]

employ Option 2.5 + P in these subcategories, although this combination 
is well demonstrated in the poultry industry (10 direct discharge 
facilities operate Option 2.5 + P).
    As discussed above, EPA is also considering nutrient removal cost-
effectiveness when evaluating potential BAT options for this industry. 
EPA estimates the nutrient cost-effectiveness (based on pounds of 
phosphorus removed) for Option 2.5 + P to be $5.78/pound phosphorus 
removed (incremental to BPT Option 2.5). EPA solicits comment on the 
potential selection of Option 2.5 + P as the basis of BAT for these 
subcategories.
    EPA is also evaluating whether it should establish BAT equal to 
Option 2.5. Under this approach, the cost of the BAT limitations would 
be $12.4 million (1999$). Moreover, there are no facility closures (out 
of the 18 facilities analyzed) associated with the option under the 
primary closure analysis and one facility closure under the sensitivity 
analysis. BAT limitations based on Option 2.5, as explained above, 
would result in removal of 2.7 million pounds/year of ammonia as 
nitrogen and 27.7 million pounds/year of total nitrogen. The nutrient 
cost-effectiveness of Option 2.5 relative to BPT Option 2 would be 
$0.27/pound total nitrogen removed. EPA solicits comment on the 
potential selection of Option 2.5 as the basis for BAT for these 
subcategories.
    In its evaluation of effluent limitations guidelines for this 
subcategory, one option EPA is reviewing is the option not to establish 
BAT limitations. Section 301(b)(2)(A) of the CWA authorizes EPA to 
establish BAT limitations for categories of sources that limit 
discharges of toxic and non-conventional pollutants. In establishing 
BAT limitations, EPA considers a number of factors specified in the 
statute (e.g., age of equipment and facilities, engineering aspects of 
various types of controls, non-water quality environmental impacts), 
including other factors deemed appropriate by the Administrator. 
Section 304(b)(2)(B). The bulk of the pollutant discharges from this 
category are conventional and non-conventional pollutant discharges, 
with no significant discharges of toxic pollutants. The non-
conventional pollutant discharges from this category consist largely of 
nutrients. In certain cases, nutrients may represent a significant 
water quality problem for specific water bodies. Where necessary to 
protect local water quality, individual dischargers may currently be 
subject to water quality-based effluent limitations for nutrient 
discharges. EPA is evaluating whether it is appropriate to establish 
national BAT limitations for this subcategory more stringent than BPT 
limitations or whether these nutrient discharges are more appropriately 
addressed on a case-by-case basis in individual permits based on 
applicable water quality standards. EPA will be examining data on water 
quality impacts from MPP facilities as part of its benefits analysis 
and specifically the extent to which such discharges significantly 
contribute to water quality impairments from nutrients. EPA requests 
comment on not establishing BAT limitations for these subcategories.
2. Subcategory K (Poultry Slaughterhouses)
    This section describes the options EPA is considering for BAT for 
non-small facilities in the proposed Subcategory K. As discussed in 
Section IX.A, EPA is not presenting revised costs, pollutant 
reductions, and economic impacts in today's notice for small 
Subcategory K facilities; however, those results are presented in 
Section 21.1, DCNs 125803 and 126003 of the public record.
    EPA proposed to establish the BAT level of regulatory control based 
on Option 3 (complete nitrification) for non-small facilities in this 
subcategory. As discussed in Section IX.A, EPA is now giving less 
consideration to Option 3. After review and evaluation of the revised 
and new data, EPA is considering establishing BAT for these facilities 
based on either Option 2.5, Option 2.5 + P, or Option 4. As with 
Subcategories A-D, discussed above, EPA is also considering not 
establishing BAT limitations for this subcategory.
    EPA is considering establishing BAT for this subcategory based on 
Option 4. EPA estimates the pre-tax annualized compliance costs for 
Option 4 to be $83.4 million (1999$) (which is $37.9 million more than 
Option 2.5 + P and $67 million more than Option 2.5). EPA estimates 
that 7 facilities and 1 company will close as a result of BAT based on 
Option 4 under both the primary and sensitivity closure analysis. Note 
that these estimates only include the 34 estimated total facilities in 
this subcategory for which EPA has sufficient data to conduct the 
closure analysis. There may be additional closures in the remaining 84 
facilities. The company level results are based on the analysis of 26 
companies. While EPA does not have an estimate of the total number of 
companies operating facilities in this subcategory, EPA believes these 
26 companies account for the majority of Subcategory K facilities (see 
Section X.A.2.c for further discussion). As discussed in Section X, 
based on EPA's market analysis, the maximum projected price increase 
occurs under Option 4 but is less than 0.1 percent of baseline price 
for chicken and turkey. In addition, the domestic production of meat 
products, and therefore industry employment, is projected to decrease 
by about 0.04 percent under Option 4.
    EPA estimates that Option 4 removes an additional 10.9 million 
pounds/year of nitrogen compared to Option 2.5 or Option 2.5 + P and an 
additional 534,000 pounds/year of phosphorus compared to Option 2.5 + 
P. In Subcategory K, there are 5 of 118 direct discharge facilities 
that currently operate with Option 4 pollution control technology (or 
more advanced technology).
    As discussed above, EPA is also considering nutrient removal cost-
effectiveness when evaluating potential BAT options for this industry. 
EPA estimates the nutrient cost-effectiveness (based on pounds of 
nitrogen removed) for Option 4 to be $6.14/pound nitrogen removed 
(incremental to BPT Option 2.5). EPA estimates the nutrient cost-
effectiveness (based on pounds of phosphorus removed) for Option 4 to 
be $70.96/pound phosphorus removed (incremental to BPT Option 2.5 + P). 
EPA solicits comment on the potential selection of Option 4 as the 
basis of BAT for this subcategory.
    EPA is also considering establishing BAT for this subcategory based 
on Option 2.5 + P. EPA estimates the pre-tax annualized compliance 
costs for Option 2.5 + P to be approximately $45.5 million (1999$) 
(which is approximately $29 million more than Option 2.5). EPA 
estimates that no facilities (of the 34 facilities analyzed) and one 
company (if the 13 poultry companies analyzed) will close as a result 
of BAT based on Option 2.5 + P under either the primary or sensitivity 
closure analyses. EPA notes that the poultry company that is projected 
to close did not provide facility level financial information; 
therefore, the facilities owned by this company could not be analyzed. 
EPA estimates that Option 2.5 + P removes an additional 3.8 million 
pounds/year of phosphorus as compared to Option 2.5. In Subcategory K, 
there are 17 of 118 direct discharge facilities that currently operate 
Option 2.5 + P technology (or more advanced technology). EPA estimates 
the nutrient cost-effectiveness (based on pounds of phosphorus removed) 
for Option 2.5 + P to be $7.61/pound phosphorus removed (incremental to 
BPT Option 2.5). EPA solicits comment on the potential

[[Page 48504]]

selection of Option 2.5 + P as the basis of BAT for this subcategory.
    EPA is also considering whether it should base BAT limitations on 
Option 2.5. As previously noted, EPA estimates the pre-tax annualized 
compliance costs for Option 2.5 to be approximately $16.3 million 
(1999$). EPA estimates that none of the analyzed facilities will close 
as a result of compliance with Option 2.5 limitations in this 
subcategory under either the primary or sensitivity closure analyses. 
This option would remove an additional 3.5 million pounds of Total N 
per year relative to Option 2 (as Option 2 is not designed to remove 
Total N), for an incremental nutrient cost effectiveness of $2.28/pound 
Total N removed (1999$). EPA solicits comment on the potential 
selection of Option 2.5 as the basis of BAT for this subcategory. EPA 
is also considering not establishing BAT limitations for this 
subcategory for the same reasons discussed above for Subcategories A-D, 
and solicits comment on this option.

D. Options Being Considered for New Source Performance Standards (NSPS)

    When establishing the NSPS level of control, EPA considers the 
barrier that compliance costs due to the effluent guidelines regulation 
pose to entry into the industry for a new facility. The barrier to 
entry analysis compares estimated average incremental facility or 
company capital costs incurred to meet the effluent guidelines to 
average total assets of existing facilities or companies. To the extent 
that potential new entrants have similar total assets to existing 
industry participants, this provides a proxy for the potential barrier 
to entry that new facility compliance costs may represent. EPA does not 
have data on the assets of potential new entrants because in general 
they cannot be identified in advance. The analysis was performed to 
evaluate the effect of the MPP rule on the costs faced by new entrants 
into the meat and poultry products industry. Increased start-up costs 
resulting from the capital costs of the MPP regulation (as revised in 
this notice) may prevent entrepreneurs from entering the industry. The 
calculated ratio of average capital costs to average total assets 
measures the potential for barriers to entry due to the MPP rule. If 
the barrier to entry ratio is large, then the possibility exists that 
the rule will discourage entry into the meat and poultry products 
market. EPA solicits comment on other measures of ``barrier to entry'' 
that would be appropriate for this industry.
    For both the red meat (Subcategories A-D) and Poultry (Subcategory 
K) slaughtering facilities, EPA is considering setting the NSPS 
limitations equivalent to BAT or the next level of stringency. For 
example, if Option 2.5 is the basis for BAT for the final rule, then 
EPA would consider Option 2.5 as well as Option 2.5 + P for new sources 
and if Option 2.5 + P is the basis for BAT, then EPA would consider 
Option 2.5 + P as well as Option 4 for new sources. EPA has estimated 
the ratio of capital costs to assets for each of the options (see 
Section X of today's notice). If EPA did not establish BAT limitations 
for existing facilities then EPA would establish NSPS equivalent to BPT 
or the next level of stringency. EPA solicits comment on NSPS for all 
MPP industry subcategories.

X. Revised Estimates of Costs, Loadings, Economic Impacts and Cost-
Effectiveness

A. Revised National Estimates of Costs, Loadings, and Economic Impacts

    EPA is providing the results of its preliminary economic analysis 
based on revised costs and selected changes in methodologies discussed 
above in Sections III and IV. All other aspects of the economic 
analysis methodology remain as described at proposal. Analyses 
presented in this section incorporate costs and loadings that reflect 
the sample weights discussed in Section III.B.3. of this document.
    Results presented here remain in 1999 dollars, for purpose of 
comparison with the results of the proposed rule analysis. The analysis 
EPA will prepare for the final rule will be presented in 2002 dollars.
1. Results Using the Economic Impact Analysis Methodologies
    Many of the surveyed facilities did not provide enough financial 
data for EPA to perform an adequate economic impact analysis. Thus, the 
total number of facilities in each class or subcategory is not 
equivalent to the number of facilities analyzed. In Subcategories A 
through D, 21 of 39 facilities in the national estimate could not be 
analyzed due to lack of data. In Subcategory K, 84 of 118 facilities in 
the national estimate were not analyzed due to lack of data. Thus, the 
facility closure analysis represents projected closures at only 46 
percent (18/39) of facilities in Subcategories A-D and 29 percent (34/
118) of facilities in Subcategory K nationally. There may be additional 
closures at the remaining 54 percent and 71 percent of Subcategory A-D 
facilities and Subcategory K facilities, respectively, that could not 
be analyzed.
    For cost annualization and the closure analysis, a 6.6 percent 
discount rate was used if facilities did not provide a usable discount 
rate in their survey data. The 6.6 percent discount rate is a weighted 
average of the discount rate data provided in the surveys. If the 
facility provided a nominal discount rate greater than 3 percent but 
less than 19 percent in their survey then that value was used to run 
the impact analysis. Discount rates outside that range were deemed to 
reflect internal hurdle rates rather than the opportunity cost of 
capital.
2. Summary of Results
a. National Costs
    Total pretax annualized costs of the rule range from $13 million 
under Option 2 to $131 million under Option 4. Pretax annualized costs 
per facility are consistently larger in Subcategories A though D 
($127,000 to $1.2 million) than in Subcategory K ($71,000 to $707,000). 
See Table X.A-1 for compliance costs by subcategory and treatment 
option.

                                       Table X.A--1.--Total and Average Compliance Costs by Subcategory and Option
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Total costs ($000)                             Average costs ($000)
                                                         -----------------------------------------------------------------------------------------------
                         Option                                              Post-tax         Pre-tax                        Post-tax         Pre-tax
                                                              Capital       annualized      annualized        Capital       annualized      annualized
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Subcategories A through D (39 facilities)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2................................................          $6,646          $3,037          $4,951          $170.4           $77.9          $127.0
Option 2.5..............................................          67,885           8,986          12,359         1,740.6           230.4           316.9
Option 2 + P............................................          36,385          23,089          35,574           933.0           592.0           912.1
Option 2.5 + P..........................................          86,118          27,875          42,004         2,208.1           714.7         1,077.0

[[Page 48505]]

 
Option 4................................................         104,090          31,418          47,627         2,669.0           805.6         1,221.2
---------------------------------------------------------
                                                             Subcategory K (118 facilities)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2................................................          18,856           6,656           8,333           159.8            56.4            70.6
Option 2.5..............................................          74,219          13,321          16,329           629.0           112.9           138.4
Option 2 + P............................................          65,644          29,683          38,999           556.3           251.6           330.5
Option 2.5 + P..........................................          99,509          34,743          45,492           843.3           294.4           385.5
Option 4................................................         299,178          65,400          83,368         2,535.4           554.2           706.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. National Loadings
    Table X.A-2 shows estimated pollutant reductions for each treatment 
option. The conventional pollutant loadings (i.e. 5-Day Biological 
Oxygen Demand, Total Suspended Solids and Oil and Grease) removed for 
Options 2, 2+P, 2.5 and 2.5+P are identical for Subcategories A through 
D and Subcategory K, respectively. Options 2+P, 2.5 and 2.5+P represent 
additional removals of nutrients, not conventional pollutants, over 
Option 2. Option 4 provides additional removals of both nutrients and 
conventional pollutants relative to other options.

                                       Table X.A-2.--Removal of Specified Pollutants by Subcategory and Option \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Removals (pounds per year)
               Subcategory                           Pollutant           -------------------------------------------------------------------------------
                                                                             Option 2       Option 2.5      Option 2+P     Option 2.5+P      Option 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
A through D.............................  5-Day Biochemical Oxygen               755,213         755,213         755,213         755,213         795,121
                                           Demand.
                                          Total Suspended Solids........       1,058,991       1,058,991       1,058,991       1,058,991       1,236,504
                                          Chemical Oxygen Demand........               0               0               0               0               0
                                          Carbonaceous Biochemical               633,168         633,168         633,168         633,168         633,168
                                           Oxygen Demand.
                                          Ammonia as Nitrogen...........       2,717,147       2,717,147       2,717,147       2,717,147       2,789,738
                                          Total Nitrogen................               0      27,688,678               0      27,688,678      31,331,318
                                          Total Phosphorus..............               0               0       5,128,793       5,128,793       5,659,799
                                          Nitrate/Nitrite...............               0      26,910,414               0      26,910,414      28,762,544
                                          Total Kjeldahl Nitrogen.......       2,669,042       2,669,042       2,669,042       2,669,042       2,690,827
                                          Oil & Grease (HEM)............               0               0               0               0               0
K.......................................  5-Day Biochemical Oxygen               646,527         646,527         646,527         646,527         846,484
                                           Demand.
                                          Total Suspended Solids........       1,420,573       1,420,573       1,420,573       1,420,573       2,728,104
                                          Chemical Oxygen Demand........       6,278,429       6,278,429       6,278,429       6,278,429      10,788,159
                                          Carbonaceous Biochemical               707,270         707,270         707,270         707,270         707,270
                                           Oxygen Demand.
                                          Ammonia as Nitrogen...........         469,249         469,249         469,249         469,249         664,527
                                          Total Nitrogen................               0       3,509,950               0       3,509,950      14,427,113
                                          Total Phosphorus..............               0               0       3,830,011       3,830,011       4,363,815
                                          Nitrate/Nitrite \2\...........               0       6,156,008               0       6,156,008      13,325,056
                                          Total Kjeldahl Nitrogen.......         307,004         307,004         307,004         307,004         975,539
                                          Oil & Grease (HEM)............         320,986         320,986         320,986         320,986        346,840
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Incremental to baseline of current performance. Current performance based on summarized 1999 DMR data provided in response to detailed surveys.
  Pollutant loading for various treatment options based on sampling data, survey information, and DMR data. (See Section IV for discussion of loadings
  methodology).
\2\ EPA recognizes that, in theory, total nitrogen should be less than nitrate/nitrite as nitrogen because total nitrogen is the sum of nitrate/nitrite
  as nitrogen and total kjeldahl nitrogen. However, the target effluent concentrations were taken from different sets of facilities (i.e. those that
  provided total nitrogen data and those that provided nitrate/nitrite as nitrogen data). EPA anticipates regulating total nitrogen, not nitrate/nitrite
  nitrogen for the final rule.

c. Closure Analysis
    A facility (or company) forecast to have a negative net present 
value (NPV) of net income under at least 3 of 5 methods (described in 
Section VI.A) prior to regulatory costs are called ``baseline 
closures.'' In Subcategories A through D there are two baseline 
closures; in Subcategory K there are 10 baseline closures. The economic 
impact of the rule on ``baseline closures'' cannot be assessed using 
the closure model. Under the sensitivity analysis, in which a negative 
NPV under only 1 method is sufficient to project a closure, EPA 
estimates that 7 facilities are baseline closures in Subcategories A-D 
and 15 facilities are baseline closures in Subcategory K.
    In the facility level closure analysis, no facility closures are 
projected under any options for Subcategories A through D under the 
primary analysis for the 18 out of 39 facilities analyzed and 1 
facility closure is projected for all options under the sensitivity 
analysis. For Subcategory K, under either the primary or sensitivity 
analysis seven facilities from the 34 facilities out of the

[[Page 48506]]

118 analyzed are projected to close under Option 4 and no facility 
closures are projected under other treatment options.

    Table X.A-3.--Summary of Projected Facility Closure Impacts by Subcategory and Option (Primary Analysis)
----------------------------------------------------------------------------------------------------------------
                                                         Number of
                       Option                           facilities      Total revenues ($000)       Employees
----------------------------------------------------------------------------------------------------------------
                                            Subcategories A through D
----------------------------------------------------------------------------------------------------------------
Total Facilities Analyzed \1\.......................              18                $9,303,506            48,114
Baseline Closures...................................               2       1,000,000-2,500,000       5,000-7,500
Option 2 Closures...................................               0                         0                 0
Option 2 + P Closures...............................               0                         0                 0
Option 2.5 Closures.................................               0                         0                 0
Option 2.5 + P Closures.............................               0                         0                 0
Option 4 Closures...................................               0                         0                 0
-----------------------------------------------------
                                                  Subcategory K
----------------------------------------------------------------------------------------------------------------
Total Facilities Analyzed \2\.......................              34                $4,023,230           112,491
Baseline Closures...................................              10                 1,584,600            13,260
Option 2 Closures...................................               0                         0                 0
Option 2 + P Closures...............................               0                         0                 0
Option 2.5 Closures.................................               0                         0                 0
Option 2.5 + P Closures.............................               0                         0                 0
Option 4 Closures...................................               7           250,000-500,000     2,500--5,000
----------------------------------------------------------------------------------------------------------------
\1\ Of the 39 facilities estimated to be in Subcategories A through D, EPA was able to analyze data from surveys
  representing 18 facilities; the remaining surveys (representing 21 facilities) did not provide sufficient data
  to be analyzed, and therefore, the number of closures among these facilities is not reflected in the table and
  is unknown.
\2\ Of the 118 facilities estimated to be in Subcategory K, EPA was able to analyze data from surveys
  representing 34 facilities; the remaining surveys (representing 84 facilities) did not provide sufficient data
  to be analyzed, and therefore, the number of closures among these facilities is not reflected in the table and
  is unknown.

    In the primary company level closure analysis, one poultry company 
is projected to close under Option 2 + P, Option 2.5 + P, and Option 4. 
This company employs between 2,500 and 5,000 workers. The poultry 
company that is projected to close did not provide facility level 
financial information, therefore the facilities owned by this company 
could not be analyzed. Under the sensitivity analysis, the same poultry 
company (under the same options) is projected to close as well as one 
red meat company under all treatment options and one mixed meat (i.e., 
company owns both poultry and red meat facilities) company under 
Options 2 + P, 2.5 + P, and Option 4.

     Table X.A-4.--Summary of Projected Company Closure Impacts by Subcategory and Option (Primary Analysis)
----------------------------------------------------------------------------------------------------------------
                                                                   Baseline conditions and projected incremental
                                                                                closure impacts \1\
                             Option                              -----------------------------------------------
                                                                     Number of    Total revenues
                                                                     companies      ($millions)      Employees
----------------------------------------------------------------------------------------------------------------
                      Red Meat (Predominantly Own Facilities in Subcategories A through I)
----------------------------------------------------------------------------------------------------------------
Total Companies Analyzed........................................               9         $29,949          80,755
Baseline Closures...............................................               1         250-500     1,000-4,000
Option 2 Closures...............................................               0               0               0
Option 2 + P Closures...........................................               0               0               0
Option 2.5 Closures.............................................               0               0               0
Option 2.5 + P Closures.........................................               0               0               0
Option 4 Closures...............................................               0               0               0
-----------------------------------------------------------------
                         Poultry (Predominantly Own Facilities in Subcategories K and L)
----------------------------------------------------------------------------------------------------------------
Total Companies Analyzed........................................              13         $15,455         136,000
Baseline Closures...............................................               6           3,400          31,190
Option 2 Closures...............................................               0               0               0
Option 2 + P Closures...........................................               1         100-150     2,500-5,000
Option 2.5 Closures.............................................               0               0               0
Option 2.5 + P Closures.........................................               1         100-150     2,500-5,000
Option 4 Closures...............................................               1         100-150     2,500-5,000
-----------------------------------------------------------------
                        Mixed (Own Facilities in Both Red Meat and Poultry Subcategories)
----------------------------------------------------------------------------------------------------------------
Total Companies Analyzed........................................               4          89,439         184,834

[[Page 48507]]

 
Baseline Closures...............................................               0             N/A             N/A
Option 2 Closures...............................................               0               0               0
Option 2 + P Closures...........................................               0               0               0
Option 2.5 Closures.............................................               0               0               0
Option 2.5 + P Closures.........................................               0               0               0
Option 4 Closures...............................................               0               0              0
----------------------------------------------------------------------------------------------------------------
\1\ Projected revenue and employment impacts are presented as a range to prevent the disclosure of confidential
  business information.

    Company level results are unweighted because the survey sampling 
frame was stratified on the basis of facility level data. Therefore, 
the facility level and company level results are not additive. Because 
of the large number of facilities that were unable to submit financial 
data in their survey, EPA performed a subsidiary company level analysis 
to provide a consistency check on the primary facility level analysis. 
EPA has estimated that the 26 companies in the company level analysis 
own at least 117 of the 157 in-scope facilities that EPA project will 
be subject to regulation in Subcategories A-D and K.
d. Altman Z' Analysis
    EPA used the Altman Z' ratio to assess the baseline financial 
condition of MPP firms and the incremental impacts of the rule on their 
financial health. Note this analysis includes the same 26 companies 
analyzed for company closure analysis. In the baseline, the Altman Z' 
analysis shows that 7 red meat companies and 8 poultry companies are 
considered financially healthy. One red meat company, 5 poultry 
companies, and 3 mixed meat companies have Altman Z' scores in the 
indeterminate range for financial health; 1 red meat company and 1 
mixed meat company are considered financially stressed. Under Option 4, 
the Altman Z' score for one poultry company changed from the 
financially healthy to the indeterminate range (represented by the +1 
and -1 on Table X.A-5).

               Table X.A-5.--Projected Impacts on Company Altman Z' Score by Meat Type and Option
----------------------------------------------------------------------------------------------------------------
                                                                    Number of companies with baseline Altman Z'
                                                                     score in specified range and incremental
                                                                                 changes in score
                             Option                              -----------------------------------------------
                                                                    Financially                     Bankruptcy
                                                                      healthy      Indeterminate      likely
----------------------------------------------------------------------------------------------------------------
                      Red Meat (predominantly own facilities in Subcategories A through I)
----------------------------------------------------------------------------------------------------------------
Baseline........................................................               7               1               1
Option 2........................................................               0               0               0
Option 2 + P....................................................               0               0               0
Option 2.5......................................................               0               0               0
Option 2.5 + P..................................................               0               0               0
Option 4........................................................               0               0               0
-----------------------------------------------------------------
                         Poultry (predominantly own facilities in Subcategories K and L)
----------------------------------------------------------------------------------------------------------------
Baseline........................................................               8               5               0
Option 2........................................................               0               0               0
Option 2 + P....................................................               0               0               0
Option 2.5......................................................               0               0               0
Option 2.5 + P..................................................               0               0               0
Option 4........................................................              -1              +1               0
-----------------------------------------------------------------
                        Mixed (own facilities in both red meat and poultry subcategories)
----------------------------------------------------------------------------------------------------------------
Baseline........................................................               0               3               1
Option 2........................................................               0               0               0
Option 2 + P....................................................               0               0               0
Option 2.5......................................................               0               0               0
Option 2.5 + P..................................................               0               0               0
Option 4........................................................               0               0              0
----------------------------------------------------------------------------------------------------------------
Note: A change from one state (e.g., financially healthy) to another state (e.g., indeterminate) is indicated by
  ``-1'' and ``+1''.

e. Sales Test
    None of the analyzed facilities are projected to incur costs 
exceeding 3 percent of revenues (pre-tax). In addition, none of the 
analyzed facilities in Subcategories A through D are projected to incur 
costs exceeding 1 percent of revenues under any option. In Subcategory 
K, no analyzed facilities

[[Page 48508]]

are projected to incur costs exceeding 1 percent of revenues under 
Option 2, Option 2 + P, or Option 2.5, while 4 analyzed facilities are 
projected to incur costs exceeding 1 percent of revenues under Option 
2.5 + P and 17 analyzed facilities under Option 4.

    Table X.A-6.--Facilities With Annualized Costs Exceeding 3 Percent of Revenues by Subcategory and Option
----------------------------------------------------------------------------------------------------------------
                                                    Facilities with annualized      Facilities with annualized
                                                   costs exceeding 3 percent of    costs exceeding 1 percent of
                     Option                                  revenues                        revenues
                                                 ---------------------------------------------------------------
                                                      Pre-tax        Post-tax         Pre-tax        Post-tax
----------------------------------------------------------------------------------------------------------------
Subcategories A through D (18 facilities
 analyzed) 1
-------------------------------------------------
Option 2........................................               0               0               0               0
Option 2 + P....................................               0               0               0               0
Option 2.5......................................               0               0               0               0
Option 2.5 + P..................................               0               0               0               0
Option 4........................................               0               0               0               0
-------------------------------------------------
                                    Subcategory K (34 facilities analyzed) 2
----------------------------------------------------------------------------------------------------------------
Option 2........................................               0               0               0               0
-------------------------------------------------
Option 2 + P....................................               0               0               0               0
Option 2.5......................................               0               0               0               0
Option 2.5 + P..................................               0               0               4               0
Option 4........................................               0               0              17              7
----------------------------------------------------------------------------------------------------------------
1 Of the 39 facilities estimated to be in Subcategories A through D, EPA was able to analyze data from surveys
  representing 18 facilities; the remaining surveys (representing 21 facilities) did not provide sufficient data
  to be analyzed, and therefore, the number of closures among these facilities is not reflected in the table and
  is unknown.
2 Of the 118 facilities estimated to be in Subcategory K, EPA was able to analyze data from surveys representing
  34 facilities; the remaining surveys (representing 84 facilities) did not provide sufficient data to be
  analyzed, and therefore, the number of closures among these facilities is not reflected in the table and is
  unknown.

f. Market Level Impacts
    EPA analyzed the impact of the rule on market price, domestic 
supply, domestic consumption, and international trade of four meat 
types (beef, pork, chicken, and turkey). Pre-tax annualized compliance 
costs per pound of carcass weight for each of the four meat types 
measures the vertical shift in the supply curve in response to the 
effluent limitations guidelines. The most appropriate measure of the 
shift in supply is the cost per pound of total industry production 
because: (1) The majority of facilities incur no costs, and (2) the 
competition from facilities that do not incur costs will discourage 
affected facilities from increasing price by the full cost per pound of 
the ELG.
    The results of the market analysis show that the decrease in supply 
will be smallest for pork, where the costs per pound of total 
production range from $0.000014 under Option 2 to $0.0005 under Option 
4, and largest for turkey with costs per pound of total production 
ranging from $0.00036 under Option 2 to $0.0019 under Option 4. The 
maximum projected price increase is less than 0.1 percent of baseline 
price for chicken and turkey (under Option 4); price is projected to 
increase less than 0.04 percent of baseline for beef and pork under any 
option.
    The domestic production of meat products, and therefore industry 
employment, is projected to decrease by about 0.04 percent under Option 
4, and by lesser amounts under all other options for all meat types. In 
general, impacts to domestic consumption of meat products are somewhat 
smaller than impacts to domestic supply due to partially offsetting 
increases in meat imports.
    Impacts on meat exports are of particular concern to the poultry 
sector. Exports are the means the poultry industry has used to sustain 
growth. Exports are also used to balance domestic preferences for white 
meat poultry products with the necessary production of dark meat as a 
byproduct of white meat production; dark poultry meat is preferred in 
other parts of the world. Meat exports are projected to decrease by 
less than 0.06 percent for poultry meat under all options except Option 
4 which decreases by 0.11 percent.

                                                 Table X.A-7.--Projected Impacts on Meat Product Markets
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Quantity        Quantity
                                                                             Domestic        Domestic        imported        exported       Compliance
                         Option                           Price  ($/lb.)   supply  (lbs.   demand  (lbs.     (lbs. x 1       (lbs. x 1       costs per
                                                                             x 1 mil.)       x 1 mil.)         mil.)           mil.)           pound
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Beef
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................        $1.11050        26,386.0        26,843.0         2,874.0         2,417.0  ..............
Option 2................................................         1.11058        26,384.1        26,841.8         2,874.4         2,416.7        $0.00016
Option 2 + P............................................         1.11085        26,378.7        26,838.7         2,875.8         2,415.8         0.00065
Option 2.5..............................................         1.11065        26,382.9        26,841.2         2,874.8         2,416.5         0.00028
Option 2.5 + P..........................................         1.11092        26,377.3        26,837.8         2,876.2         2,415.6         0.00078
Option 4................................................         1.11098        26,376.2        26,837.3         2,876.5         2,415.4         0.00088
---------------------------------------------------------

[[Page 48509]]

 
                                                                          Pork
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................         1.00380       19,278.00        18,827.0          827.00        1,278.00  ..............
Option 2................................................         1.00382       19,278.04        18,827.1          827.02        1,277.97         0.00001
Option 2 + P............................................         1.00402        19,275.6        18,825.3          827.24        1,277.56         0.00042
Option 2.5..............................................         1.00390        19,277.0        18,826.3          827.11        1,277.81         0.00018
Option 2.5 + P..........................................         1.00407        19,275.1        18,825.0          827.29        1,277.47         0.00050
Option 4................................................         1.00410        19,274.9        18,824.8          827.33        1,277.39         0.00056
---------------------------------------------------------
                                                                         Chicken
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................          0.5807        29,741.0        24,826.0          5.0000         4,920.0  ..............
Option 2................................................          0.5808        29,739.8        24,825.3          5.0005         4,919.5         0.00016
Option 2 + P............................................          0.5810        29,734.9        24,822.6          5.0026         4,917.3         0.00086
Option 2.5..............................................          0.5808        29,738.6        24,824.7          5.0010         4,919.0         0.00033
Option 2.5 + P..........................................          0.5810        29,733.9        24,822.1          5.0031         4,916.9         0.00100
Option 4................................................          0.5812        29,727.8        24,818.3          5.0054         4,914.5         0.00184
---------------------------------------------------------
                                                                         Turkey
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................          0.6898         5,297.0         4,919.2          1.2500           379.0  ..............
Option 2................................................          0.6899         5,296.6         4,918.9          1.2502           378.9         0.00036
Option 2 + P............................................          0.6900         5,296.1         4,918.5          1.2505           378.8         0.00085
Option 2.5..............................................          0.6900         5,296.3         4,918.7          1.2503           378.9         0.00058
Option 2.5 + P..........................................          0.6901         5,295.8         4,918.3          1.2506           378.8         0.00106
Option 4................................................          0.6903         5,294.8         4,917.4          1.2510           378.7         0.00191
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Revised National Estimates of Cost Reasonableness and Cost-
Effectiveness

    EPA performed a revised cost reasonableness and nutrient cost-
effectiveness analysis based on the revised estimates of costs, 
loadings and removals described previously. As noted in Section X, 
incremental results are presented somewhat differently here than in 
that section, reflecting changes associated with increasingly stringent 
options irrespective of which technology standard (BPT vs. BAT) they 
are being considered under.
1. Cost Reasonableness of Pollutant Removals: BPT Cost and Removal 
Comparison
    Based on BOD, total phosphorus, and total nitrogen, average BPT 
cost and removal comparison of pollutant removals ranges from $0.43 per 
pound (Option 2.5) to $6.56 per pound (Option 2) in Subcategories A 
through D, and from $3.93 per pound (Option 2.5) to $12.89 per pound 
(Option 2) in Subcategory K.

                                   Table X.B-1.--BPT Cost & Removal Comparison
----------------------------------------------------------------------------------------------------------------
                                                                              Average BPT cost   Incremental BPT
                                               Pre-tax        Total pounds        & removal      cost & removal
                 Option                   annualized costs     removed \1\       comparison        comparison
                                               (1999$)                          (1999$/pound)     (1999$/pound)
----------------------------------------------------------------------------------------------------------------
                                            Subcategories A through D
----------------------------------------------------------------------------------------------------------------
Baseline................................                 0                 0                NA                NA
Option 2................................        $4,951,238           755,213             $6.56             $6.56
Option 2.5..............................        12,359,499        28,443,891              0.43              0.27
Option 2 + P............................        35,573,746         5,884,007              6.05               DOM
Option 2.5 + P..........................        42,004,409        33,572,685              1.25              0.23
Option 4................................        47,626,564        37,786,238              1.26              1.33
-----------------------------------------
                                                  Subcategory K
----------------------------------------------------------------------------------------------------------------
Baseline................................                 0                 0                NA                NA
Option 2................................         8,333,047           646,527             12.89             12.89
Option 2.5..............................        16,328,846         4,156,478              3.93              2.28
Option 2 + P............................        38,998,615         4,476,538              8.71             70.83
Option 2.5 + P..........................        45,492,024         7,986,488              5.70              1.85
Option 4................................        83,368,375        19,637,412              4.25             3.25
----------------------------------------------------------------------------------------------------------------
\1\ Total pounds of: BOD, Total Phosphorus, and Total Nitrogen.
DOM: Option is dominated because it has higher cost and lower removals. Note however that the composition of
  removals is different with Option 2 + P having higher Total P and lower Total N removals than Option 2.5 (see
  Section X.B.2).


[[Page 48510]]

2. Cost Effectiveness of Nitrogen and Phosphorus Removals
    The tables in this section provide both the incremental and average 
nutrient cost-effectiveness values. As a basis of comparison, EPA 
estimated that the average cost-effectiveness of nutrient removal by 
POTWs with biological nutrient removal to be $4/lb for nitrogen and 
$10/lb for phosphorus (67 FR 8622). EPA notes that Table X.B-2 displays 
the results for the nitrogen cost-effectiveness and, therefore, 
includes only options specifically designed to remove total nitrogen 
(i.e., Option 2.5 and Option 4). Similarly, Table X.B-3 displays the 
results for the phosphorus cost-effectiveness and, therefore, only 
includes those options with a chemical phosphorus treatment step (i.e., 
Option 2 + P and Option 4). Option 2.5 + P is also omitted from Table 
X.B-2 and Table X.B-3 because it provides no additional Total N 
removals relative to Option 2.5 and no additional Total P removals 
relative to Option 2 + P, respectively. Average cost-effectiveness 
(cost per pound of nitrogen removed) ranges from $0.45 (Option 2.5) to 
$1.52 (Option 4) in Subcategories A through D, and from $4.65 (Option 
2.5) to $5.78 per pound (Option 4) in Subcategory K. The incremental 
cost-effectiveness from Option 2.5 to Option 4 is $9.68/pound of 
nitrogen removed for Subcategories A-D and $6.14/pound nitrogen removed 
for Subcategory K. Average cost-effectiveness (cost per pound of 
phosphorus removed) ranges from $6.94 (Option 2+P) to $8.41 (Option 4) 
in Subcategories A through D, and from $10.18 (Option 2+P) to $19.10 
per pound (Option 4) in Subcategory K. The incremental cost-
effectiveness from Option 2 + P to Option 4 is $22.70/pound of 
phosphorus removed for Subcategories A-D and $83/pound phosphorus 
removed for Subcategory K. EPA notes that the nutrient cost-
effectiveness numbers presented below represent upper bounds because 
they assign all the costs for an option to either Total N or Total P 
removal even though the options also remove other pollutants. EPA used 
this approach to provide a conservative estimate of cost-effectiveness 
and because it does not have a good basis to divide up removal costs 
among pollutants.

                            Table X.B-2.--Nutrient Cost-Effectiveness: Total Nitrogen
----------------------------------------------------------------------------------------------------------------
                                               Pre-tax                          Average cost    Incremental cost
                 Option                   annualized costs   Pounds removed     effectiveness     effectiveness
                                               (1999$)                          (1999$/pound)     (1999$/pound)
----------------------------------------------------------------------------------------------------------------
                                            Subcategories A through D
----------------------------------------------------------------------------------------------------------------
Baseline................................                $0                 0                NA                NA
Option 2.5..............................        12,359,499        27,688,678             $0.45             $0.45
Option 4................................        47,626,564        31,331,318              1.52              9.68
-----------------------------------------
                                                  Subcategory K
----------------------------------------------------------------------------------------------------------------
Baseline................................                 0                 0                NA                NA
Option 2.5..............................        16,328,846         3,509,950              4.65              4.65
Option 4................................        83,368,375        14,427,113              5.78              6.14
----------------------------------------------------------------------------------------------------------------


                           Table X.B-3.--Nutrient Cost-Effectiveness: Total Phosphorus
----------------------------------------------------------------------------------------------------------------
                                               Pre-tax                          Average cost    Incremental cost
                 Option                   annualized costs   Pounds removed     effectiveness     effectiveness
                                               (1999$)                          (1999$/pound)     (1999$/pound)
----------------------------------------------------------------------------------------------------------------
                                            Subcategories A through D
----------------------------------------------------------------------------------------------------------------
Baseline................................                $0                 0                NA                NA
Option 2 + P............................        35,573,746         5,128,793             $6.94             $6.94
Option 4................................        47,626,564         5,659,799              8.41             22.70
-----------------------------------------
                                                  Subcategory K
----------------------------------------------------------------------------------------------------------------
Baseline................................                 0                 0                NA                NA
Option 2 + P............................        38,998,615         3,830,011             10.18                10
Option 4................................        83,368,375         4,363,815             19.10                83
----------------------------------------------------------------------------------------------------------------

C. Results of Barrier to Entry Analysis for New Sources

    As discussed in Section X.D, when establishing the NSPS level of 
control, EPA considers the barrier that compliance costs due to the 
effluent guidelines regulation pose to entry into the industry for a 
new facility. The barrier to entry analysis compares estimated average 
incremental facility or company capital costs incurred to meet the 
effluent guidelines to average total assets of existing facilities. 
Tables X.C-1 and X.C-2, below, provide the results of the facility 
level and company level ratios. The facility level ratio of capital 
costs to total assets ranges from 0.1 percent under Option 2 to 2.1 
percent under Option 4 in Subcategories A through D, and from 0.4 
percent under Option 2 to 7.8 percent under Option 4 in Subcategory K. 
Average capital costs of $3.0 million per facility in Subcategories A 
through D result in a 2.1 percent ratio and average capital costs of 
$3.1 million per facility in Subcategory K result in a 7.8 percent 
ratio. The company level ratio of capital costs to total assets ranges 
from 0.02 percent under Option 2 to 0.3 percent under Option 4 for red 
meat, and from 0.1 percent under Option 2 to 1.7 percent under Option 4 
for poultry companies. EPA notes that companies may own both red meat 
and poultry facilities across more than one subcategory. Poultry 
companies show the larger impacts as compared to red meat and mixed 
meat companies.

[[Page 48511]]



           Table X.C-1.--Summary of Facility Level Ratio of Capital Costs to Assets (Barrier to Entry)
                                                  [In percent]
----------------------------------------------------------------------------------------------------------------
                   Subcategory                       Option 2       Option 2.5    Option 2.5 + P     Option 4
----------------------------------------------------------------------------------------------------------------
A-D.............................................             0.1             1.2             1.6             2.1
K...............................................             0.4             1.5             1.7             7.8
----------------------------------------------------------------------------------------------------------------
Note: Percentages are based on those facilities for which EPA had asset data and compliance costs.


           Table X.C-2.--Summary of Company Level Ratio of Capital Costs to Assets (Barrier to Entry)
                                                  [In percent]
----------------------------------------------------------------------------------------------------------------
                   Subcategory                       Option 2       Option 2.5    Option 2.5 + P     Option 4
----------------------------------------------------------------------------------------------------------------
Red Meat........................................            0.02             0.2             0.3             0.3
Poultry.........................................            0.1              0.4             0.6             1.7
Mixed Meat......................................            0.0              0.2             0.2             0.3
----------------------------------------------------------------------------------------------------------------
Note: Percentages are based on those companies for which EPA had complete asset data and compliance costs.

XI. Solicitation of Comment

    The following discussion summarizes some of those issues raised by 
new information and comments on the proposal for which EPA is 
requesting comment. Other solicitations for information, data, or 
comment are contained within the text of the notice. Note that several 
of the solicitations for comment/data below have not been previously 
discussed elsewhere in this NODA.
    1. Concentration-based limits. EPA proposed to set mass-based 
limitations and standards (e.g., kg/1,000 kg live weight killed). 
Based, however, on comments received on the proposed rule, EPA is 
considering setting concentration-based limitations and standards in 
the final rule. EPA is considering such limitation rather than limiting 
facility flows, and, as a result, potentially hindering their ability 
to reduce pathogens that can cause foodborne illness. Use of 
concentration-based limitations would also obviate the need for 
facilities to report production data when applying for coverage under 
an NPDES permit and the necessity for the permit writer to establish a 
reasonable measure of long-term production that applies to a particular 
facility. EPA solicits comment on this issue. EPA is particularly 
interested in comments on whether adoption of such concentration 
limitations rather than mass-based limitations is appropriate in light 
of the Agency's expressed interest in conservation of water. EPA notes 
that it has already received and is evaluating comments on the proposed 
rule concerning increased water usage as a result of the implementation 
of USDA's Hazard Analysis and Critical Control Point (HACCP) systems 
final rule.
    2. Combining of poultry subcategories. EPA is considering combining 
the proposed Poultry Slaughtering and Poultry Further Processing 
subcategories into one subcategory. EPA currently identified only one 
stand-alone poultry further processing facility. This facility is 
employing more advanced wastewater treatment technology than most 
facilities in the Poultry Slaughtering subcategory. EPA notes that in 
addition to using data from poultry slaughtering facilities, the limits 
for Subcategory K were developed using facilities that were treating 
further processing and rendering wastewater in addition to their 
slaughtering wastewater. Therefore, EPA believes that the data for 
Subcategory K may reasonably characterize the treatability of 
Subcategory L wastewater and is considering combining subcategories K 
and L into one subcategory for the final rule. EPA solicits comment on 
this approach.
    3. Chemical or Biological Phosphorus Removal. EPA has based its 
cost module for phosphorus removal on the chemical removal of 
phosphorus using alum. However, there are facilities using biological 
phosphorus removal including one poultry facility which EPA is using to 
develop limitations. However, EPA has determined that it is unlikely 
that biological phosphorus removal (without the use of a chemical 
removal polishing step) would consistently achieve the target effluent 
concentrations that EPA is currently projecting for chemical phosphorus 
removal. EPA solicits comment and data on treatability of poultry or 
red meat wastewater using biological phosphorus removal as well as data 
on the associated costs. EPA also requests comment on developing 
limitations for the final rule based on performance of biological 
phosphorus removal, in order to provide greater compliance flexibility 
to facilities.
    4. Filters and Storage Ponds. EPA received comment concerning the 
achievability of the proposed limits and the need for either filters or 
``emergency'' storage ponds to consistently achieve the total suspended 
solids limits. EPA is considering whether costs for polishing filters 
or additional storage/diversion capacity may need to be included for 
one or more options or subcategories. EPA has received some information 
regarding the number of red meat facilities that may have ``emergency'' 
storage ponds. EPA is specifically considering whether or not to 
include costs for such a storage pond to receive wastewater prior to 
discharge when the TSS limits have not been achieved through an 
existing ``BAT'' or ``BPT'' treatment system. EPA intends to perform a 
sensitivity analysis to estimate additional costs for those sites that 
currently do not have this capacity. EPA is also considering adding 
costs for a polishing filter. EPA solicits comments and data on the 
performance of storage/diversion ponds and filters for polishing final 
effluent at red meat or poultry facilities and the associated costs.
    5. BOD to TKN Ratio. EPA has worked with stakeholders during the 
development of the revised cost model discussed in Section III of 
today's notice. EPA is using a BOD to TKN ratio of 3 to 1 in designing 
the denitrification treatment. Stakeholders commented that this ratio 
is too low. EPA calculated this ratio from information in comments from 
industry, where EPA converted a COD to TKN ratio to a BOD to TKN ratio 
and then built in an additional safety margin. Specific details 
regarding this conversion can be found in the cost report, DCN 100782. 
To further investigate this issue, EPA is soliciting influent and 
effluent data from the direct discharge detail survey facilities

[[Page 48512]]

who are currently employing denitrification technology. This would 
enable EPA to calculate the actual BOD to TKN ratio for each 
subcategory for use in the final rule. EPA would specifically like 
monitoring data from the influent to the biological treatment system 
for BOD and TKN and information on the level of denitrification that is 
occurring in the system (e.g., data on Total Nitrogen at the influent 
and effluent or nitrate+nitrite at the influent and effluent of the 
system).
    6. Lagoon Bypass. As discussed in Section III, EPA has estimated 
costs for facilities to bypass some of the wastewater around the 
anaerobic lagoons if data indicated that the concentration of BOD 
leaving the anaerobic lagoon is not at least three times the 
concentration of TKN. Stakeholders reviewing EPA's cost model commented 
that EPA underestimated the costs for lagoon bypass. EPA's cost 
estimates were based on the lagoon bypass observed at one of the 
facilities EPA has sampled which may be less complex than the lagoon 
bypass discussed by commenters. EPA solicits comment on the capital and 
operating and maintenance costs associated with less complex and more 
complex systems used to bypass anaerobic lagoons.
    7. Use of Methanol as Carbon Source. EPA includes costs, as 
necessary, for facilities to use methanol on weekends (when the plant 
is not in operation) as a carbon source for the biomass. Commenters are 
concerned that methanol would cause biomass upset if the biomass is not 
acclimated to it. EPA does not believe that the quantity of methanol 
that it estimates to be used over the weekends is sufficient to cause 
toxicity to the biomass. EPA solicits comment on the quantity of 
methanol found to be ``toxic'' to biological systems used to treat red 
meat and poultry processing wastewater.
    8. EPA received a request from permitting authorities to clarify 
the distinction between animal feeding operations (AFOs)/CAFOs and 
animal holding areas in the MPP industry. Animal holding areas at MPP 
facilities where animals are held for short durations (one to several 
days) prior to slaughter are not considered AFOs, but rather are 
considered part of the MPP facility and any process wastewater from 
these areas is subject to MPP effluent guidelines. EPA solicits comment 
on an approach that would articulate these clarifying points in the 
regulatory text of the Meat and Poultry Products ELG. (See Section V.A 
for the relevant discussion.)
    9. EPA is considering revising the existing and proposed 
limitations and standards for fecal coliforms to allow for results to 
be reported in either MPN units or CFU units per 100 ml. EPA solicits 
comment on this possible revision. (See Section V.C for the relevant 
discussion.)
    10. Some facilities use ultraviolet (UV) technology to disinfect 
their wastewater before discharge instead of using chlorine or other 
chemical disinfectants. EPA intends to further review sampling episode 
data and to consider the self-monitoring data from facilities that use 
UV technology. EPA solicits comments and data on UV performance and 
costs for reducing fecal coliforms in MPP wastewaters. EPA also 
solicits comment on the extent to which water quality standards are 
driving the MPP industry to shift from chlorination/dechlorination to 
UV to achieve water quality standards for chlorine and chlorination 
byproducts and whether this shift necessitates a revised fecal 
coliforms limit that is consistently achievable with UV technology. 
(See Section V.C for the relevant discussion.)
    11. EPA is considering using five forecasting methods when 
determining facility closures for the final rule. A facility would be 
projected to close if the present value (PV) of future compliance costs 
exceeds the forecast PV of net income under three of the five 
forecasting methods. Alternately, EPA might use some subset of the five 
forecasting methods. EPA solicits comment on the appropriate use of 
these forecasting methods for future facility income in the MPP 
industry. (See Section VI.A.1 for the relevant discussion.)
    12. Because fewer than 40 percent of direct discharging facilities 
provided facility-level financial data in the detailed survey, EPA is 
considering a closure analysis at the company level in addition to the 
facility level. EPA solicits comment on the aggregation of facility-
level compliance costs to the company level, and the use of a company-
level closure analysis. In addition, EPA solicits comment on the 
methodology used to estimate compliance costs for the closure analysis 
for the 70 non-surveyed facilities which are owned by the same parent 
companies as the 55 detailed survey recipients. (See Section VI.A.3 for 
the relevant discussion.) EPA also solicits comment on appropriate 
methods for ``scaling-up'' the facility-level and company-level closure 
analyses to provide national projections given that there are 
sufficient data to analyze only a subset of facilities/companies.
    13. To address commenters' concerns about the effect of the 
proposed rule on poultry exports, EPA derived its trade elasticities 
based on Armington's framework in which one country's meat products are 
an imperfect substitute for those of other countries. EPA solicits 
comment on its revised trade elasticity methodology. (See Section VI.B 
for the relevant discussion.)
    14. Based on public comments received on the proposed rule, EPA is 
considering possible revisions to its approach for determining 
environmental benefits. For modeling water quality, EPA solicits 
comment on the use of the six-parameter Water Quality Index (instead of 
the four-parameter Index) to assess the environmental improvements from 
the MPP regulation. In particular, EPA solicits comment on the 
inclusion of nitrogen and phosphorous in the kinetics model. EPA also 
solicits comment on the use of NAWQA data to calibrate the baseline, 
and solicits other sources of data to use in the calibration effort. 
(See Section VII.A.1 for the relevant discussion.)
    15. EPA is considering site-specific or watershed-specific models 
to evaluate the effects of nutrients and pollutants on receiving 
waterbodies from individual representative MPP facilities. EPA solicits 
comment on the applicability of the AQUATOX, QUAL2E and BASINS models 
to model the environmental benefits of the MPP regulation. (See Section 
VII.A.2 for the relevant discussion.)
    16. EPA solicits comment on the use of Mitchell and Carson's 
valuation function for estimating the monetized benefit for the MPP 
industry. If more site-specific valuation information becomes 
available, EPA may decide to incorporate those site-specific values for 
estimating the monetized benefit. (See Section VII.B.1 for the relevant 
discussion.)
    17. EPA solicits comment on its approach to estimating monetized 
benefits associated with reduced TSS concentrations at drinking water 
intakes. (See Section VII.D.1 for the relevant discussion.)
    18. EPA solicits comment on the use of a regional vulnerability 
assessment for the MPP environmental assessment. (See Section VII.D.3 
for the relevant discussion.)
    19. EPA did not use data from two pre-proposal sampling episodes 
(6335 and 6446) in its analyses presented in today's notice. EPA 
solicits comment on the potential use of data from Episodes 6446 and 
6335 for use in developing pollutant loading estimates and limitations 
and standards for the final

[[Page 48513]]

rule. (See Section VIII.A.2 for the relevant discussion.)
    20. EPA is considering reducing the assumed monitoring frequency 
from daily to weekly for any new limitations and standards promulgated 
in this rulemaking. EPA incorporated a weekly monitoring frequency into 
the monitoring costs for this notice. EPA solicits comment on changing 
the monitoring frequency to weekly. (See Section VIII.B for the 
relevant discussion.)
    21. EPA solicits comment on a no further regulation option for red 
meat processing facilities and a no regulation option for poultry 
processing facilities (See Section IX.B for the relevant discussion).
    22. For developing the estimates of compliance costs and pollutant 
loadings presented in today's notice, EPA transferred the target 
effluent concentration for Total Nitrogen from well-operated facilities 
at the Option 2.5 level that slaughter poultry (Subcategory K) to red 
meat facilities in Subcategories A-D. EPA solicits comment on this data 
transfer from poultry to meat slaughtering for the final rule. (See 
Section V.D for the relevant discussion.)
    23. When establishing the New Source Performance Standard (NSPS) 
level of control, EPA considers the potential barrier that compliance 
costs due to the effluent guidelines regulation pose to new facilities 
entering the industry. The barrier to entry analysis compares estimated 
average incremental facility or company capital costs incurred to meet 
the effluent guidelines to average total assets of existing facilities 
or companies. The ratio of average capital costs to average total 
assets is a proxy for potential barriers to entry due to the MPP rule. 
EPA solicits comment on other measures of ``barrier to entry'' that 
would be appropriate for this industry. (See Section X.D for relevant 
discussion.)

    Dated: August 5, 2003.
G. Tracy Mehan, III,
Assistant Administrator, Office of Water.
[FR Doc. 03-20524 Filed 8-12-03; 8:45 am]
BILLING CODE 6560-50-P