[Federal Register Volume 68, Number 248 (Monday, December 29, 2003)]
[Proposed Rules]
[Pages 75068-75105]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31867]



[[Page 75067]]

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Part V





Environmental Protection Agency





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40 CFR Part 451



Effluent Limitations Guidelines and New Source Performance Standards 
for the Concentrated Aquatic Animal Production Point Source Category; 
Notice of Data Availability; Proposed Rule

  Federal Register / Vol. 68 , No. 248 / Monday, December 29, 2003 / 
Proposed Rules  

[[Page 75068]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 451

[FRL-7602-5]


Effluent Limitations Guidelines and New Source Performance 
Standards for the Concentrated Aquatic Animal Production Point Source 
Category; Notice of Data Availability

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of data availability.

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SUMMARY: In 2002, EPA proposed technology-based effluent limitations 
and new source performance standards for the concentrated aquatic 
animal production (CAAP) point source category. The proposal applied to 
new and existing CAAP facilities that discharge pollutants directly to 
waters of the United States.
    This notice summarizes the data received since proposal and 
describes how the Agency may use the data to address comments and 
develop the final rule. The notice also discusses refinements EPA may 
make to its methods for estimating costs, load reductions and financial 
impacts. It also presents revised results for these analyses reflecting 
the refinements and incorporating new data.

DATES: Submit comments on or before February 12, 2004.

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-2002-0026 (formerly W-02-01), or submitted electronically at http://www.epa.gov/edocket. For additional information on how to submit 
comments, see section B in the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: For technical information concerning 
today's proposed rule, contact Ms. Marta Jordan at (202) 566-1049. For 
economic information, contact Mr. Christopher Miller at (202) 566-0395.

SUPPLEMENTARY INFORMATION: 

A. Regulated Entities

    Entities potentially regulated by this action include:

------------------------------------------------------------------------
                                 Examples of regulated    Primary NAICS
           Category                    entities               codes
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Industry and Government.......  Facilities engaged in
                                 concentrated aquatic
                                 animal production,
                                 which may include
                                 these sectors:
                                Finfish Farming and               112511
                                 Fish Hatcheries.
                                Other Animal                      112519
                                 Aquaculture.
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your facility would be regulated by this action, you should carefully 
examine the applicability criteria in 40 CFR 451.1, 451.10, 451.20 and 
451.30 of the proposed rule. If you have questions regarding the 
applicability of this proposed action to a particular entity, 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-2002-0026. The official public docket 
consists of the documents specifically referenced in this action, any 
public comments received and other information related to this action. 
Although a part of the official docket, the public docket does not 
include information as Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. 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 Avenue, 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 $25.00.
    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 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, information claimed as CBI, or other 
information whose disclosure is

[[Page 75069]]

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 
information you claim as 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 information you claim as 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-
2002-0026. 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-2002-0026. In contrast to 
EPA's electronic public docket, EPA's e-mail system is not an 
``anonymous access'' system. If you send an e-mail comment directly to 
the Docket without going through EPA's electronic public docket, EPA's 
e-mail system automatically captures your e-mail address. E-mail 
addresses that are automatically captured by EPA's e-mail system are 
included as part of the comment that is placed in the official public 
docket, and made available in EPA's electronic public docket.
    iii. Disk or CD-ROM. You may submit comments on a disk or CD-ROM 
that you mail to the mailing address identified in 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-2002-0026.
    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-2002-0026. 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 and Analysis Division, Mail Code 4303T, U.S. 
Environmental Protection Agency, 1200 Pennsylvania Ave., NW., 
Washington, DC 20460, Attention: Marta Jordan, Docket ID No. OW-2002-
0026. For hand delivery or courier deliver the information to the 
Engineering and Analysis Division, EPA West, Room 6233M, 1301 
Constitution Avenue, NW., Washington, DC, Attention: Marta Jordan, 
Docket ID No. OW-2002-0026.
    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, indicate on the outside of the disk or CD-ROM that it 
contains information claimed 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 disc or CD-ROM, mark the outside 
of the disk or CD-ROM to clearly indicate that it does not contain CBI. 
Information not marked as CBI will be included in the public docket and 
EPA's electronic public docket without prior notice. If you have any 
questions about CBI or the procedures for claiming CBI, please consult 
the person identified in the FOR FURTHER INFORMATION CONTACT section.

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.

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    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.

Table of Contents

I. Purpose of This Document
II. New Data and Information
    A. EPA site visits and sampling episodes
    B. Monitoring and permit data from the permitting authorities
    C. Information submitted with comments
    D. Detailed survey results
    E. Literature searches and other information collection 
activities
    F. Holding time study
III. Summary of Comments and EPA's Preliminary Assessment
    A. Representativeness of EPA's sampling database
    B. Production systems
    C. Drugs and chemicals
    D. Non-native species
    E. Water quality impacts from TSS, BOD, and nutrients
    F. Best management practices
    G. Proposed TSS limitations
    H. Feed conversion ratios
    I. Cost analyses
IV. Regulatory Options Considered for the Proposal and Modifications 
Being Considered for the Final Rule
    A. Proposed regulatory options
    B. Modifications being considered for the final rule
V. Revisions to the Cost, Loadings, Economic, and Benefits Models
    A. Revisions to assumptions and methodology used in EPA's cost 
analyses
    B. Revisions to assumptions and methodology used in loadings 
analyses
    C. Revisions to assumptions and methodology used in economic 
analyses
    D. Revisions to assumptions and methodology used in benefits 
analyses
VI. Revised Estimates of Costs and Economic Impacts
    A. National cost estimates
    B. Economic analysis
    C. Cost-effectiveness and cost-reasonableness analysis
    D. Small business analysis
VII. Solicitation of Comments
    A. Alligator production
    B. BMPs
    C. Disposal of drugs and chemicals
    D. Differentiating between warm and cold water species
    E. Combining the proposed recirculating and flow-through 
subcategories into one subcategory
    F. Revised economic impact methodology
    G. Factoring unpaid labor charges in the impact analysis
    H. Facilities excluded from the economic impact analysis

I. Purpose of This Document

    Today's document has several purposes. First, EPA is summarizing 
new data and information we received during public comment on the 
proposed concentrated aquatic animal production (CAAP) regulations (67 
FR 57872, September 12, 2002). The document also describes data EPA 
collected since it published the proposed rule. For example, EPA 
evaluated the data from detailed industry surveys, EPA's Permit 
Compliance System (PCS) database, Discharge Monitoring Reports (DMRs), 
National Pollutant Discharge Elimination System (NPDES) permits and the 
industry. This notice summarizes major issues raised in comments on the 
proposal and how the additional data and comments affect EPA's thinking 
on these issues. Finally, this document discusses possible changes in 
our methodology for estimating costs, removals, economic impacts, and 
benefits associated with the modified options, and includes revised 
estimates for costs, removals, and economic impacts.
    Today's document includes six main components:
    1. Discussion of new data and information.
    2. Discussion of comments and EPA's preliminary assessments based 
upon these comments.
    3. Possible Modifications to the Proposed Options and Technologies.
    4. Possible Revisions to Costs, Loadings, Economic, and Benefits 
Models.
    5. Revised Estimates of Costs, Loadings, and Economic Impacts.
    6. Solicitation of Comments.
    Through this NODA, EPA seeks further public comment on any and all 
aspects of the specific data and issues it has identified here. EPA 
continues to review the comments we received on the proposed rule and 
will address those comments and the comments submitted in response to 
this notice in the final action.

II. New Data and Information

    This section provides a brief overview of new data from these 
general sources:
    [sbull] EPA post-proposal sampling.
    [sbull] National Pollutant Discharge Elimination System (NPDES) 
permits, permit fact sheets, and Discharge Monitoring Report (DMR) data 
for facilities that responded to the detailed survey.
    [sbull] Information submitted with comments on the proposed rule.
    [sbull] Detailed surveys of aquatic animal production (AAP) 
facilities.
    [sbull] Literature searches.
    [sbull] Data from a study that evaluated the effect of sample 
holding times on subsequent chemical analysis.

A. EPA Site Visits and Sampling Episodes

    During the comment period and at the public meetings on the 
proposal, commenters raised concerns about the representativeness of 
the data EPA used as the basis for the proposed rule. In response to 
these concerns, EPA undertook additional wastewater sampling at a State 
trout hatchery using flow-through system technology (one of the 
technology options evaluated for the proposal) and visited 17 
additional sites, including flow-through systems raising warm water 
species.
1. Sampling Episode
    The facility selected for post-proposal wastewater sampling was a 
State hatchery in Pennsylvania producing cold water species (trout for 
stocking enhancement) using flow-through system technology. EPA 
considered this facility a good candidate for sampling because it used 
wastewater treatment similar to the treatment systems on which EPA 
based the proposed limitations. Those systems rely on primary settling 
of solids generated during cleaning of quiescent zones in an offline 
settling basin, and secondary settling of the primary effluent, and 
full or bulk flow from the raceways. Primary settling generally 
involves physical separation of particles through either quiescent 
zones and offline settling or a full-flow basin. Secondary settling is 
sequential solids removal after primary by using a second settling 
basin (i.e., polishing pond) or a technology unit such as a 
microscreen. EPA considers this facility to be representative of a well 
operated facility with effective wastewater treatment. EPA sampled 
wastewater for five days at this facility during a time of year when 
the facility approached a maximum stocking density. For more 
information, refer to the sampling episode report for this facility 
(Document Control Number (DCN) 62386).
2. Site Visits
    EPA selected 17 additional sites to visit based, in part, on public 
comments regarding specific gaps in the information EPA considered at 
proposal. Commenters raised concerns about the production of warm water 
aquatic animals and the use of green water production systems and the 
ability of these types of production facilities to achieve the proposed 
effluent limits. Commenters also raised concerns about EPA's 
assumptions concerning the application of

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microscreen treatment to achieve proposed limits for Total Suspended 
Solids (TSS).
    To address comments about the lack of representation of warm water 
and green water systems, EPA visited two facilities that use warm water 
culture systems and four facilities that use green water systems. Warm 
water culture systems refer to the culture of aquatic animals such as 
catfish, tilapia, or shrimp, that normally live in warmer water. These 
species can survive water temperatures that exceed 70-75[deg]F for 
extended periods. Cold water species, such as salmonids, live and are 
cultured in much colder water and would become severely stressed or die 
in warmer water. Green water systems contain algae and zooplankton in 
the water with the cultured fish. Although most green water systems are 
warm water, some may be used for cold water species. Some green water 
systems are used to grow species, such as marine fish (e.g., cod or 
flounder), crustaceans (e.g., shrimp), and freshwater fish (e.g., 
larval striped bass, walleye or yellow perch) that consume the algae 
and/or zooplankton as a major part of their diets. Other facilities use 
green water cultures to remove metabolic wastes from the aquatic 
animals in the process water. Green water systems could contain 
measurable amounts of TSS in effluents, primarily because of the 
plankton present in the culture water.
    To address public comments about the effectiveness of microscreen 
treatment, especially in cold temperatures, EPA visited four facilities 
reporting the use of microscreen technology to treat wastewater. We 
chose these four facilities from a population of 13 facilities that 
reported in their responses to the detailed survey that they used 
microscreen technology as a primary or secondary solids removal 
treatment system. During the visits to these four facilities, EPA 
observed microscreens being used to remove solids from effluent 
streams. EPA also evaluated how these facilities incorporated 
microscreens into the daily operation and maintenance activities. See 
Section III.A. for further discussion of this issue.
    Other facilities that EPA visited included several State and 
Federal hatcheries in California, Washington, Idaho, Pennsylvania, and 
Utah. EPA looked at the differences in mission, operation, and 
management of government facilities compared to commercial facilities.

B. Monitoring and Permit Data From the Permitting Authorities

    To further assess facilities with NPDES permits, EPA asked the EPA 
regional offices for updated copies of permits, fact sheets, and DMR 
data for many of the 125 facilities. EPA evaluated NPDES permits and 
DMR data for 43 of the 125 facilities identified as having a NPDES 
permit. EPA used the detailed surveys and NPDES permit information to 
identify discharge points and the nature of discharges (e.g., full flow 
from raceways or solids collection decant water) in the DMR data.
    To better evaluate the quality of current facility discharges 
compared to the proposed limits, EPA used the detailed surveys to 
determine the number of facilities reporting NPDES permits. Of the 203 
facilities that responded to the detailed survey, EPA found 125 
potentially in-scope facilities (i.e., facilities that are subject to 
the proposed regulation) with existing NPDES permits. The facilities 
with NPDES permits use these systems:
    [sbull] 108 flow-through systems.
    [sbull] 6 recirculating systems.
    [sbull] 8 pond systems.
    [sbull] 3 mixed flow-through and recirculating systems.
    EPA found that 78 facilities did not report having NPDES permits,
    [sbull] 9 facilities that are not discharging or indirectly 
discharge.
    [sbull] 9 net pen facilities.
    [sbull] 25 pond facilities.
    [sbull] 4 recirculating system facilities.
    [sbull] 31 flow-through system facilities.
    Many of these facilities are not subject to existing requirements 
for NPDES permits (i.e., ponds that discharge less than 30 days, warm 
water facilities producing less than 100,000 pounds, and cold water 
facilities producing less than 20,000 pounds).
    EPA was primarily interested in getting information on the permit 
requirements and effluent monitoring data to better assess the baseline 
performance of facilities (i.e., current effluent treatment conditions) 
that are in-scope for the proposed regulation. A listing of the NPDES 
permit numbers for the facilities identified for additional data 
gathering is available in the record (see DCN 70264). See Section 
III.G. for discussion of the analysis on the NPDES permits and DMR 
data.
    EPA was also interested in getting information about best 
management practices (BMPs) required in NPDES permits to compare with 
the BMPs required in the proposed regulation. For those facilities that 
have BMP requirements in the NPDES permit, EPA observed that the 
requirements were primarily related to developing overall facility BMP 
plans and to practices that addressed drugs and chemicals.

C. Information Submitted With Comments

    In the proposal, EPA asked for data and information from 
commenters. EPA received about 300 public comments on the proposed 
rule. A wide range of stakeholders representing Federal, State, and 
local government agencies, industry associations, environmental groups, 
individual facilities, and members of the public provided comments. 
Comments addressed many aspects of the proposed regulation and EPA's 
supporting analysis, including scope of the rule, environmental 
impacts, regulatory authority, cost, economic impact, and benefit 
analyses. In some cases, commenters submitted supporting materials (in 
the form of engineering, economic, scientific, or regulatory reports or 
journal articles; data summaries or compilations of engineering, 
economic, scientific, or regulatory data; or references to such 
information). See Section 7.5 of the Public Docket for this rulemaking 
for these materials.
    The comments included information on the costs associated with 
flow-through systems for the structural, labor, and land components 
described in each proposed flow-through option. In preparing this 
notice, EPA used this cost information to help fill gaps in the 
detailed survey data and to better understand industry diversity. EPA 
plans to use this additional cost information in refining its estimates 
of compliance costs for the final rule. The Agency included this 
information in developing the revised cost estimates presented in this 
notice. You can find non-confidential cost information in Section 6.5.3 
of the public record. Several comments provided monitoring data, used 
in conjunction with the DMR data described in Section II.B.
    The Joint Subcommittee on Aquaculture (JSA) has a task force known 
as the Aquaculture Effluents Task Force (AETF) that concentrates on the 
effluent guidelines efforts. The AETF is a group of interested parties 
representing Federal, State and local governments, academia, industry 
and environmental organizations. The AETF submitted detailed comments 
on aspects of the proposed rule such as the use of drugs and chemicals, 
production systems, costs and economic analyses. In response to EPA's 
follow-up requests, the AETF provided additional information, primarily 
papers that were referenced by their comments, or that supported 
statements made in their

[[Page 75072]]

comments. Reviewers can find this additional information at DCN 45232 
and we cited it often in this notice.
    Additional information included:
    [sbull] References documenting the presence of viral hemorrhagic 
septicemia in west coast salmonids.
    [sbull] Documents on the fate and environmental effects of copper 
sulfate as a treatment for catfish ponds.
    [sbull] Feed conversion rates including the effect that feed 
formulation has on the excretion and discharge of various pollutants.
    [sbull] Information on BMPs and permit requirements for net pen 
systems.
    [sbull] Information on the economic impacts of additional costs for 
aquatic animal production to the farm operations and nearby 
communities.
    This notice also addresses questions and concerns raised during 
three public meetings on the proposed rule held in late October to mid-
November of 2002. EPA used the public meetings to update the public on 
the status of the CAAP effluent guidelines and to discuss the proposal. 
Several attendees submitted comments to EPA after the meetings. DCNs 
40520, 40521, 40522 summarize the discussions and comments at those 
meetings.

D. Detailed Survey Results

    In August 2001, EPA mailed about 6,000 screener surveys to aquatic 
animal production facilities. EPA received responses from 4,900 
facilities, of which about 2,300 facilities reported that they produce 
aquatic animals. EPA based its proposed regulations on the data 
collected from the screener questionnaire.
    Consistent with EPA's intentions described in the preamble to the 
proposed rule, EPA based its analyses for this notice on data collected 
from the detailed questionnaire. The preamble described the detailed 
questionnaire (DCN 62452) and EPA's plans to recalculate estimates for 
costs and benefits associated with the proposed regulatory options. The 
preamble also stated that the Agency would describe these data and 
analyses in this notice. (67 FR 57881, September 12, 2002). EPA 
reviewed the responses from the detailed questionnaire, performed 
follow-up activities on the detailed questionnaires resulting from 
inconsistencies or questions from an initial review of responses, and 
completed analyses of the data contained in these responses. This 
section describes the facilities that EPA selected to receive the 
detailed questionnaire and those that responded.
    EPA used the screener responses to select a stratified random 
sample to receive the detailed questionnaire. Sample criteria were 
designed to primarily capture facilities that produce aquatic animals 
and are likely to be covered by the proposed rule. EPA also developed 
sample criteria to capture facilities that are out of scope (based on 
information in the screener survey) to validate its assumptions about 
the applicability of the proposed regulation. For example, the sample 
criteria includes facilities with ponds, which are out of scope in the 
proposed regulation, to confirm that additional regulations for ponds 
are unnecessary. The Technical Development Document (TDD), page A11, 
describes in detail the criteria and includes facilities that are in-
scope and out of scope. The facilities selected met one of these 
criteria:
    [sbull] Aquariums.
    [sbull] Production includes alligators and total biomass exceeds 
100,000 pounds.
    [sbull] Production includes trout or salmon and total biomass 
exceeds 20,000 pounds.
    [sbull] Predominant production method is ponds; predominant species 
is catfish; and total biomass exceeds 2,200,000 pounds.
    [sbull] Predominant production method is ponds; predominant species 
is shrimp, tilapia, other finfish, or hybrid striped bass; and total 
biomass exceeds 360,000 pounds.
    [sbull] Predominant production method is any method except ponds, 
and total biomass exceeds 100,000 pounds.
    Applying these criteria resulted in 539 facilities from the 
screener questionnaire responses with these characteristics. We then 
classified the 539 facilities into 44 groups defined by facility type 
(commercial, government, research, or tribal), the predominant species, 
and predominant production. A sample was drawn from the 539 facilities 
ensuring sufficient representation of facilities in each of the 44 
groups. The sample drawn consisted of 263 facilities. From these 263 
facilities EPA excluded 11 facilities that were duplicates on the 
mailing list or, after revising production estimates, did not meet the 
production thresholds for a CAAP facility. Detailed questionnaires were 
finally sent to 252 facilities.
    EPA received responses on 215 of the 252 questionnaires. A few 
responses contained information on more than one facility. 
Subsequently, EPA separated that information into several 
questionnaires so that a single questionnaire represented an individual 
facility. EPA also excluded data from 12 facilities that returned 
incomplete responses. Because these facilities would not have been 
subject to the proposed limitations, EPA did not ask for more 
information. After separating multiple responses and excluding 
incomplete responses, information is available from 205 facilities. 
Table II.D.1, Questionnaire Summary, provides a breakdown of this 
information.

                  Table II.D.1.--Questionnaire Summary
------------------------------------------------------------------------
                                                           Number of
                Information identifier                   questionnaires
------------------------------------------------------------------------
Sample frame.........................................                263
Mailed...............................................                252
Received.............................................                215
Incomplete and not followed-up.......................                 12
Received and usable..................................                203
Received and usable + separated......................                205
------------------------------------------------------------------------

    Because we selected the 205 facilities using a statistical design 
(see Appendix A of the Technical Development Document for more 
information), the responses allowed us to build a database to be used 
for estimating population characteristics reflecting the above 
criteria. For national (i.e., population) estimates, EPA applied survey 
weights to the facility responses that incorporate the statistical 
probability of a particular facility being selected to receive the 
detailed questionnaire and adjust for non-responses. (The response rate 
was about 80 percent for the detailed questionnaire. Appendix A of the 
proposed TDD addresses the non-response adjustments for the screener 
questionnaire.) In this case, a survey weight of 3 means that the 
facility represents itself and two others in the population. EPA will 
continue its analysis to refine the survey weights for the detailed 
questionnaire.
    From the sample for the detailed survey, EPA estimated the 
distribution of facilities by: production systems, ownership type, 
species produced, and geographic regions. We describe the distribution 
here and in Tables II.D.2, II.D.3, II.D.4, and II.D.5.
    For production systems, EPA estimates that 14 percent of the 
surveyed population use multiple production system types, 70 percent 
use flow-through systems, 11 percent use ponds, 3 percent use 
recirculating systems, and 2 percent use net pens.
    For ownership type, EPA estimates that 34 percent of the surveyed 
population are State-owned facilities, 14 percent are Federal 
facilities, 1 percent are academic facilities, 2 percent are Tribal 
facilities, 1 percent are private non-profit facilities, and 48 percent 
are private commercial facilities.

[[Page 75073]]

    For species produced, EPA estimates that 78 percent of the surveyed 
population grow trout and/or salmon, 11 percent grow catfish, 3 percent 
grow tilapia, 2 percent grow striped/hybrid bass, 1 percent grow 
shrimp, 5 percent grow ``other'' species such as walleye, sturgeon, 
sunfish, ornamentals, baitfish. We estimate that about 16 percent of 
the population produce more than one species.
    For geographic regions, EPA found that the surveyed population is 
widely distributed throughout the United States. We estimate that 10 
percent of the population are located in Region 1, 1 percent in Region 
2, 6 percent in Region 3, 16 percent in Region 4, 13 percent in Region 
5, 8 percent in Region 6, 5 percent in Region 7, 11 percent in Region 
8, 11 percent in Region 9, and 19 percent in Region 10.

                    Table II.D.2.--Production Systems
------------------------------------------------------------------------
                                                         Percentage of
                  Production system                        facilities
------------------------------------------------------------------------
Flow-through.........................................                 70
Recirculating........................................                  3
Ponds................................................                 11
Net Pens.............................................                  2
Multiple production systems..........................                 14
------------------------------------------------------------------------


                      Table II.D.3.--Ownership Type
------------------------------------------------------------------------
                                                         Percentage of
                    Ownership type                         facilities
------------------------------------------------------------------------
State governments....................................                 34
Federal facilities...................................                 14
Academic facilities..................................                  1
Tribal facilities....................................                  2
Private non-profit...................................                  1
Private commercial...................................                 48
------------------------------------------------------------------------


     Table II.D.4.--Species Identified at Facility in Survey Sample
------------------------------------------------------------------------
                                                         Percentage of
                       Species*                            facilities
------------------------------------------------------------------------
Trout/Salmon.........................................                 78
Catfish..............................................                 11
Tilapia..............................................                  3
Hybrid Striped Bass..................................                  2
Shrimp...............................................                  1
Other (walleye, sturgeon, sunfish, etc.).............                 5
------------------------------------------------------------------------
* Based on predominant species, facility may produce more than one
  species.


                Table II.D.5.--Geographical Distribution
------------------------------------------------------------------------
                                                         Percentage of
                      EPA region                           facilities
------------------------------------------------------------------------
1 (CT, ME, MA, NH, RI, VT)...........................                 10
2 (NJ, NY, PR, VI)...................................                  1
3 (DE, DC, MD, PA, VA, WV)...........................                  6
4 (AL, FL, GA, KY, MS, NC, SC, TN)...................                 16
5 (IL, IN, MI, OH, WI)...............................                 13
6 (AR, LA, NM, OK, TX)...............................                  8
7 (IA, KS, MO, NE)...................................                  5
8 (CO, MT, ND, SD, UT, WY)...........................                 11
9 (AZ, CA, HI, NV, AS, GU)...........................                 11
10 (AK, ID, OR, WA)..................................                 19
------------------------------------------------------------------------

    Although EPA received and used responses from 205 surveys for 
various analyses, we use only a subset to estimate national CAAP costs 
for the industry sectors affected by the proposed rule. From the cost 
analyses, we excluded eight responses from facilities that discharge 
indirectly or do not discharge, because these facilities are not 
affected by the rule. For salmon net pens, the detailed questionnaire 
responses confirmed our assumptions at proposal (i.e., no costs would 
be incurred in eight net pen facilities as a result of the proposed 
option). EPA will continue to evaluate cost and impacts for other net 
pen systems. We excluded pond data from the costs analyses because 
ponds were not within the scope of the proposed rule. However, EPA is 
using the pond information from 33 detailed questionnaires to validate 
assumptions on the applicability of the proposed regulation to ponds. 
EPA generated cost and loadings information for 13 facilities, but we 
excluded these from the economic analysis because the facilities 
produced less than 20,000 pounds of aquatic animals per year. As a 
result of these exclusions, EPA used the data from 143 facilities in 
its costs and loading analyses to evaluate economic impacts presented 
in this notice.

E. Literature Searches and Other Information Collection Activities

    EPA continued to collect technical, scientific, and regulatory 
information from many sources on key issues about the CAAP industry, 
including those described in the preceding subsections of Section II of 
today's notice. In some cases, EPA started targeted literature searches 
or other types of investigations to assess issues raised by 
stakeholders and commenters (see Section III for a summary of major 
issues raised in comments). Several of these efforts are:
1. Net Pens
    EPA received several comments about the relative significance of 
environmental impacts from net pen operations, as well as whether or 
not there is a need to establish requirements to mitigate environmental 
impacts (see Section III.B.2. of today's notice). To address these 
comments, EPA is updating its literature evaluation for net pen impacts 
and current practices and requirements. We placed a draft preliminary 
reference list in the public record (DCN 62399). EPA is examining new 
and re-examining previously available literature on the environmental 
impacts of discharges of solids, nutrients, BOD, and drugs and 
chemicals from net pen facilities. This updated literature search will 
examine existing permit requirements and other practices used by net 
pen facilities. This new information will improve EPA's understanding 
of environmental concerns with net pen systems and the actual impacts 
of present-day operations in the U.S., in light of existing State 
requirements and industry practices. However, current EPA analysis 
indicates that practices to minimize solids released at most net pen 
facilities are at least as stringent as the requirements we are 
considering. EPA does not expect further reductions in solids and 
pollutants associated with solids from net pens to result from this 
rule.
2. Chemicals, Including Therapeutants, Used at CAAP Facilities
    EPA also received comments about the application of chemicals, 
including therapeutic substances, at CAAP facilities. These comments 
address:
    [sbull] Antibiotics (residues in fish, antibiotic resistance, 
estimated volumes of antibiotic use in the U.S. CAAP industry).
    [sbull] Regulatory authority and need for action (asserting that 
EPA should or should not include requirements about the use of 
chemicals, including therapeutants, at CAAP facilities; that FDA, 
American Veterinary Medical Association, and other entities' 
requirements or guidelines already ensure environmental safety of 
therapeutant applications).
    [sbull] Chemicals in fish feed (including color additives).
    These comments are further discussed in Section III.C. In some 
cases, supporting materials and referenced literature were also 
provided to EPA.
    To address these comments, EPA is updating its literature search 
about environmental fate and effects studies of chemicals/therapeutic 
substances

[[Page 75074]]

reported in the public comments, detailed surveys, and literature as 
used at CAAP facilities in the U.S. These chemical/therapeutic 
substances include anaesthetics, antibiotics, pesticides, antifungals, 
disinfectants, algicides, antifoulants, feed additives, and hormones 
used under EPA-approved, FDA-approved, and veterinary prescribed extra-
label use, and FDA's investigational new animal drug (INAD) provisions. 
For several of the more commonly used substances, EPA collected 
information on quantities used from the detailed survey and industry-
supplied data. EPA also has environmental assessments from the FDA 
docket for oxytetracycline, formalin, Romet, and canthaxanthin (see 
DCNs 40417, 40477, 40492, 40567). In addition, EPA obtained and is 
evaluating studies of the fate and effects of these chemical/
therapeutic substances, when available. We placed a draft preliminary 
reference list in the public record (DCN 62454). EPA will work with 
appropriate internal and external experts to interpret these studies.
    Second, EPA met with FDA to clarify FDA's environmental assessment 
requirements for the substances over which FDA has jurisdiction (DCN 
31126). EPA met with USDA's Animal and Plant Health Inspection Service 
(APHIS) to discuss how the requirements and objective of the CAAP rule 
relate to authorities under their jurisdiction (DCN 31123). At the 
meeting, USDA discussed the Animal Health Protection Act (``2002 Farm 
Bill''), which gives APHIS the authority to develop and implement 
aquatic animal health programs. This law gives authority to APHIS for 
aquatic farm-raised animal disease management including emergency 
responses actions to invasive pathogen outbreaks. APHIS is also 
authorized to implement control programs using drugs or chemicals and 
biosecurity practices to reduce disease risk and impact on the 
industry.
    EPA is also reviewing, industry and professional association 
guidelines on using antimicrobial agents responsibly (e.g., DCN 70720). 
EPA will continue to work closely with the JSA National Aquatic Animal 
Health Task Force and other Federal, State, and scientific experts to 
better understand the relationships between current technical and 
regulatory aspects of chemical applications at CAAP facilities and 
EPA's proposed requirements.
3. Non-Native Species
    EPA also received comments about non-native species (described in 
more detail in Section III.D). Briefly, comments included:
    [sbull] Arguments supporting or opposing the establishment of 
controls on non-native species.
    [sbull] EPA's regulatory involvement with non-native species 
issues.
    [sbull] Specific scientific information to correct or supplement 
data on potential impacts of CAAP non-native species that EPA 
considered in developing the proposed rule.
    [sbull] Descriptions of specific Federal, State, local, or industry 
requirements and programs to reduce or mitigate non-native concerns at 
CAAP facilities.
    First, EPA is evaluating the comments and the supplementary 
literature submitted with them. Second, we continue our dialogue with 
Federal agencies that set policy for non-native species to facilitate 
coordination among relevant programs. EPA met with the APHIS, which has 
a broad mandate to address import and interstate movement of exotic 
species under the Federal Plant Pest Act and the Plant Quarantine Act 
(DCN 31123). EPA is also communicating with the National Invasive 
Species Council (NISC) regarding the non-native species aspects of the 
CAAP rule. Third, as some commenters urged, EPA is also more closely 
examining State, regional, and other requirements and programs designed 
to reduce or mitigate concerns about non-native species and that may 
already apply to facilities within the scope of the CAAP rule. One 
source of information of which EPA has become aware since proposal is 
the Environmental Law Institute's August 2002--Halting the Invasion--
State Tools for Invasive Species Management. This publication analyzes 
legal tools available at the State level to address non-native species 
(including aquatic invasive species), identifies critical components of 
such tools and discusses examples of effective programs. The document 
also describes specific legal tools in each State (DCN 40637).
    EPA is also considering supplemental information provided by 
members of the National Association of State Aquaculture Coordinators 
(NASAC). NASAC gave EPA a summary of information from their members 
regarding non-native species requirements and State regulating agencies 
(DCN 40607). Several States recognize and actively implement measures 
to address potential risks about non-native aquatic species. For 
example, the California Department of Fish and Game (CDFG) instituted 
several requirements to prevent the introduction of non-native species 
into bodies of water and to prevent the dissemination of fish diseases 
and parasites to wild populations and cultured stocks (DCNS 40593, 
40594). A forthcoming report (Non-native Oysters in the Chesapeake Bay) 
by the National Research Council (NRC) may also provide insight into 
the effectiveness of existing regulations and programs, and 
recommendations for more effective approaches to non-native species 
issues (DCN 62456). While this study targets an industry sector EPA is 
not proposing to regulate (molluscan shellfish), certain discussions 
and findings regarding approaches for addressing non-native species 
concerns may be informative.
    EPA has identified several non-North American species currently 
raised at CAAP facilities that might pose an environmental threat if 
they were to escape and become established (e.g., several species 
commonly referred to as tilapia) (DCN 40649). To identify species of 
interest, EPA reviewed the database of facility responses to EPA's 2001 
screener survey (DCN 10001). The database includes information on 
facility location and species raised for each of over 2,300 respondents 
who produce aquatic animals. Although this is a much larger population 
than the facilities covered by the proposed rule, EPA used this 
information to identify general trends in the production of non-native 
fish that could become invasive. EPA compared species and facility 
location with a State-by-State list of invasive fish derived from the 
United States Geologic Survey (USGS) (Fuller et al., 1999).
    We faced several challenges with using this information for our 
evaluation. Most of the facilities contained in the screener survey 
database did not provide enough taxonomic detail to determine if 
cultured species were non-native and potentially invasive. In several 
cases where we had enough taxonomic detail, the species being cultured 
had already been widely introduced throughout North America. In 
addition, several facilities in the database raise fish hybrids, and 
evaluating the invasive potential of hybrids poses a unique challenge 
because the characteristics may not be a simple blending of parent 
species' characteristics. Genetic effects may influence the ecological 
niche of a hybrid, making it difficult to predict its possible 
geographic distribution. Such genetic effects include dominance, 
polygenic inheritance (where traits are influenced by the cumulative 
effects of multiple genes), epistasis (where one gene influences the 
expression of another), and pleiotropy (where a single gene influences 
the multiple traits).

[[Page 75075]]

    For several of these species, EPA is using an ecological niche 
model (DCN 40650) to predict their possible geographic distributions in 
the United States. EPA is also examining the geographic distribution of 
CAAP facilities raising these non-North American species, potential 
habitat for these species, and existing requirements (e.g., those 
contained in State regulations) for reducing escapes of non-natives 
that already apply to CAAP facilities producing non-natives. There are 
many limitations on data in such an evaluation (e.g., limited 
information on escape rates, the likelihood of escapes, and the 
consequences of escapement), but this analysis provides some insight 
into the scope of non-native species concerns at CAAP facilities. EPA 
will consider this analysis as one factor to assess the need, if any, 
for reporting, BMP implementation, or other requirements regarding non-
native species in the final regulation. You can find a draft memorandum 
describing EPA's preliminary analysis in the record for this notice 
(DCN 40649). EPA will continue to collect and evaluate data to assess 
concerns associated with escaped non-native aquatic animals from CAAP 
facilities and the effectiveness of technologies and management 
practices to prevent animals from escaping in the effluents from CAAP 
facilities.
    Finally, EPA is also performing literature searches to collect 
examples of risk and cost-benefit analyses that have been performed for 
non-native or invasive species. Such analyses include:
    [sbull] Leung, B., D.M. Lodge, D. Finoff, J.F. Shogren, M.A. Lewis, 
and G. Lamberti. 2002. ``An ounce of prevention or a pound of cure: 
bioeconomic risk analysis of invasive species.'' Proceedings of the 
Royal Society of London, Series B 269: 2407-2413. This paper describes 
a quantitative modeling framework to analyze risks from non-indigenous 
species to economic activity and the environment. The model identifies 
the best allocation of resources to prevention vs. control, acceptable 
invasion risks and consequences of invasion to optimal investments. The 
paper reports on an application of this model to a non-CAAP invasive 
species (zebra mussels), but the quantitative and systematic risk 
analysis approach may be useful for its examples (DCN 40568).
    [sbull] Kolar, C.S. and D.M. Lodge. 2002. ``Ecological predictions 
and risk assessment for alien fishes in North America.'' Science 298: 
1233-1236. This paper uses a risk assessment approach and statistical 
models of fish introductions into the Great Lakes to develop a 
quantitative approach for targeting prevention efforts on species most 
likely to cause damage (DCN 40569).
    [sbull] Federal Register. 2003. Ballast Water Management Program 
for U.S. Waters, proposed rule. 68 FR 44691-44696. The U.S. Department 
of Homeland Security/Coast Guard recently proposed mandatory ballast 
water management practices for vessels equipped with ballast tanks to 
address possible threats to marine and freshwater resources, biological 
diversity, and coastal infrastructures from unintentional introduction 
of nonindigenous species. The Coast Guard performed a regulatory 
evaluation including an estimate of the proposed rule's effects on 
invasion rates. The regulatory evaluation also included monetized 
damages from invasions, but did not attempt to monetize the benefits of 
their proposed rule (DCN 40570).
    These examples describe tools that could potentially be used to 
assess risks and benefits of control options for escapes. Even if EPA 
can not conduct assessments of risks and benefits from controls on CAAP 
facility escapes, examples such as those mentioned above may provide 
useful context for a qualitative discussion and highlight data needs.
4. Water Quality Impacts
    At proposal, EPA described data and literature it compiled on water 
quality impacts of CAAP facilities in the United States. EPA drew on 
several sources to characterize these impacts, including open 
literature publications reporting on water quality and biological 
observations downstream of CAAP facilities. Another resource EPA 
evaluated was the National report of State listings of impaired waters 
(TMDL listings or State 303(d) reports). EPA also used a water quality 
model (QUAL2E) to simulate potential downstream water quality impacts 
under baseline and proposed regulatory scenarios. EPA's proposal 
estimated that the regulatory requirements would create pollutant load 
reductions at 23 flow-through and recirculating facilities in the scope 
of the proposed regulation, leading in turn to water quality 
improvements valued at $22,000 to $113,000 annually. Based upon these 
sources and its water quality modeling, EPA concluded that some CAAP 
facilities may have measurable adverse downstream impacts.
    EPA will use materials submitted with public comment on the 
proposed rule (see Section III.E. of today's notice) and other data and 
literature to improve our characterization of the likelihood for CAAP 
facilities to affect water quality and aquatic ecosystems. Key 
highlights of this new information include:
    First, the National Association of State Aquaculture Coordinators 
(NASAC) submitted a report describing NASAC's close examination of the 
States' listings of impaired waters that EPA used in analyses 
supporting the proposal to help characterize the prevalence of water 
quality impairments in the U.S. due to aquaculture (DCN 70583). (See 
Section III.E. for details.) NASAC found that of the seven States 
listing aquaculture as a possible source of impairment to certain 
specific waterbodies within their borders, only two verified that 
aquaculture facilities actually were a source of impairment. NASAC also 
found that for the two States that did confirm aquaculture as the 
source of reported impairments for the listed waterbody, changes at the 
facilities had been undertaken to address the source of impairments. 
(Refer to Section III.E. for a discussion of the NASAC report.)
    Second, EPA received more publications and unpublished technical 
reports of which it was not aware at proposal and which describe 
studies of downstream water quality and biological impacts of CAAP 
facility effluents. Covering a range of facilities and geographic 
regions, some of the studies report adverse water quality and 
ecological impacts; others report limited or no impacts. These reports 
will help characterize the potential range of environmental impacts of 
CAAP facilities and we have put them in the record supporting this 
action. Examples include:
    [sbull] Fries, L.T. and D.E. Bowles. 2002. ``Water quality and 
macroinvertebrate community structure associated with a sportfish 
hatchery outfall.'' North American Journal of Aquaculture 64: 257-266. 
These authors examined aquatic impacts associated with a large CAAP 
facility (four million largemouth bass fingerlings, one million channel 
catfish fingerlings, 12,000 kg live forage for captive broodstock, and 
67,000 rainbow trout (winter only)). Based on the data covering a 
period from October 1996 to July 1998, the authors concluded that ``the 
hatchery effluent did not substantially affect downstream water quality 
and benthic communities, despite the relatively high total suspended 
solids and chlorophyll-a levels in the effluent.'' Their data showed 
``* * *that sportfish hatchery operations can have negligible effects 
on receiving waters, even in environmentally sensitive systems'' (DCN 
40621).

[[Page 75076]]

    [sbull] Loch, D.D., J.L. West, and D.G. Perlmutter. 1996. ``The 
effect of trout farm effluent on the taxa richness of benthic 
macroinvertebrates.'' Aquaculture 147: 37-55. These authors studied 
three large trout flow-through facilities in North Carolina. Their data 
``* * * indicate that trout farm effluent has a definite effect on 
stream insect communities, suggesting that water quality is reduced 
just below their outfalls, and to a lesser extent, 1.5 km further 
downstream. We were able to demonstrate quite clearly that taxa 
richness was significantly lower just below the outfalls compared to 
the control, and that although richness did increase further 
downstream, the recovery was not complete.'' The authors noted that 
impacts were seasonal, and that water quality and taxa richness 
improved during the winter. The authors also noted that sewage fungus 
(which they defined as a community of organisms that consist mainly of 
bacteria and ciliated protozoans and is the product of concentrated 
organic matter) ``was present in great abundance at Site 2 of each 
trout farm'' (DCN 61497).
    [sbull] The Virginia Water Resources Research Center. Benthic TMDL 
Reports for Six Impaired Stream Segments in the Potomac-Shenandoah and 
James River Basins, Submitted by the Virginia Department of 
Environmental Quality, (Richmond, VA: Virginia Department of 
Conservation and Recreation, 2002), 207 pp. This document reports on a 
Total Maximum Daily Load (TMDL) calculation performed for six impaired 
stream segments in Virginia (see Section III.E. of today's notice). The 
report states that aquaculture effluents were confirmed as the primary 
source of the organic solids that impaired these short segments (0.02 
to 0.8 miles), constituting from 86 percent to 99 percent of the 
organic solids loading in these largely first-order, spring-fed streams 
(DCN 40571). You can find this document on the Internet at http://www.deq.state.va.us/tmdl/apptmdls/shenrvr/trout.pdf.
    [sbull] Memoranda, correspondence, and discussion with staff of the 
South Central Region of the Pennsylvania Department of Environmental 
Protection (PA DEP) regarding reports of environmental impacts at 
several CAAP facilities (200,000 to 400,000 lbs annual production) in 
Pennsylvania. PA DEP provided data and reports documenting adverse 
impacts of hatchery effluents in receiving spring-fed streams. The 
materials described observations and/or concerns including those about 
discharges of carbonaceous BOD and TSS and other pollutants, and 
results of aquatic biological surveys showing adverse impacts in 
hatchery receiving waters. While recognizing unique characteristics of 
these hatcheries (all located on limestone spring creeks and all 
capture most, if not all, of the streamflow) and seasonality of these 
impacts, staff biologists were concerned about adverse environmental 
impacts observed at several sites (DCNS 40596, 40597, 40598, 40599, 
40600, 40601, 40602, 40603, 40604, 40605, 40606).

F. Holding Time Study

    EPA took samples at aquatic animal facilities for a holding time 
study. The holding time study consisted of analyzing samples at 
different time intervals prior to analysis (i.e., holding times) to 
determine whether varying holding times for the samples yielded 
comparable results to samples analyzed within the required time 
specified in the analytical method. EPA conducted the holding time 
study (1) to evaluate the data collected during sampling episodes at 
aquatic animal facilities and (2) for possible revisions to current 
holding time requirements. We assessed changes in target bacterial 
(total coliforms, fecal coliforms, Escherichia coli, Aeromonas, fecal 
streptococcus, and Enterococcus) concentrations over time (between 8 
and 48 hours holding time) in wastewater samples.
    When EPA designed the holding time study, we considered a range of 
model technologies for treating CAAP effluents, including some that 
would provide reductions in bacterial concentrations. EPA found the 
costs associated with using disinfection technologies at CAAP 
facilities to treat effluents are economically burdensome to the 
industry. The disinfection cost assessment is described in the preamble 
to the proposal (67 FR 57872, September 12, 2002). Because of the cost, 
EPA did not include technologies that reduce bacterial concentrations 
(such as disinfection) in the technology basis for the proposed rule. 
The TSS removal technologies we considered at proposal are not designed 
to reduce bacterial concentrations in effluents. Therefore, the 
original purposes for the study are no longer relevant for this 
rulemaking. However, study results may be useful for facilities, permit 
writers, and others. For this reason, this NODA summarizes the results 
and DCN 62398 in Section 6.20 of the rule-making record provides the 
complete results.
    In summary, EPA conducted the study to evaluate sample 
concentrations at 8, 24, 30, and 48 hours after sample collection. 
Table II in 40 CFR part 136 specifies a maximum holding time of six 
hours for fecal coliforms, total coliforms, and fecal streptococci 
tests used for compliance with NPDES regulations. As a matter of 
practicality, EPA generally considers eight hours acceptable because 
the analytical laboratories require some sample preparation time before 
a sample can be processed. In addition, Section 9060B (Preservation and 
Storage) of Standard Methods, 20th Edition, recommends that nonpotable 
water samples be held below 10[deg]C for a maximum of 6 hours transport 
plus 2 hours to begin analysis for bacterial analyses performed for 
compliance purposes.
    As holding times increase, we expect that bacteria concentrations 
will change. Many CAAP facilities are remotely located and would have 
difficulty meeting the required 6 hour transport time to a laboratory. 
In conducting the study, EPA hoped to gain insight into the length of 
time that would still give comparable results to samples held for eight 
hours.
    The study results for Aeromonas and fecal coliforms indicate that 
holding times over 8 hours did not provide comparable results to 
results at 8 hour holding times. For total coliforms, E. coli, fecal 
streptococcus, and Enterococcus holding times of 30 hours or less 
provided results comparable to results at 8 hour holding times.

III. Summary of Comments and EPA's Preliminary Assessment

    In these sections, we discuss some of the major comments received 
on the proposed rule and EPA's current thinking on the issues.

A. Representativeness of EPA's Sampling Database

    During the comment period and at the public meetings on the 
proposal, commenters raised concerns over the representativeness of the 
sampling and DMR data (EPA's sampling database) used to evaluate 
options and determine limits.
    Some of the commenters were concerned about the lack of 
representation of green water systems that produce warm water species, 
which they claim have very different water characteristics, especially 
regarding the effluent concentrations of TSS. Commenters were concerned 
about the ability of both green water and warm water types of 
production systems to be able to comply with the proposed limitations 
for TSS. With assistance from industry representatives and detailed 
survey responses, EPA identified and visited six warm water or green 
water production facilities. To assess these concerns, EPA obtained and 
examined DMR data for two of the six

[[Page 75077]]

warm water facilities we visited, data for the remaining four 
facilities was not available. For both facilities, the data indicate 
that the discharges are lower than the proposed limits when evaluating 
TSS on a net basis (i.e., which accounts for the concentrations in the 
source water). These discharges are consistent with the facilities' 
current NPDES permits. The second warm water facility also consistently 
meets its NPDES permit limits for phosphorus. Although these two warm 
water species production facilities differ in many ways from facilities 
engaged in the production of cold water species, the data confirms that 
these facilities can achieve the proposed effluent TSS concentrations. 
Thus, the proposed limits for recirculating systems may be achievable 
for green water/warm water facilities generally. Therefore, based on 
current data, there is no basis for differentiating between warm water 
and cold water production systems for any limitations for TSS in the 
final rule. (See the site visit reports DCNs 62393, 62394, 62395 and 
DMR data DCNs 31093, 30850). EPA seeks comment on this issue and 
requests any additional data for these types of systems to supplement 
EPA's current data set.
    Other commenters questioned whether the database we used is 
sufficiently representative to evaluate the effectiveness of 
microscreen treatment, especially in cold temperatures. (Microscreens 
are one component of the Option 3 technology that was the basis for the 
proposed limitations and standards for certain subcategories.) EPA 
identified 13 facilities from the detailed surveys that reported using 
microscreen technology as a primary or secondary solids removal system. 
To observe the operation of the microscreen, EPA also made site visits 
to five facilities (three with recirculating systems and two with flow-
through systems) that use microscreens. We visited facilities in areas 
that experience freezing temperatures in winter and concluded that 
operating a microscreen filter year round is possible because the 
facilities demonstrated satisfactory performance.
    However, unlike our assumptions for the proposal, these facilities 
operate the microscreen filters in indoor spaces that are protected 
from freezing. Their microscreens are installed in existing heated 
spaces or, in one case, in a recently-constructed building that houses 
other effluent treatment system components. The facilities using 
microscreens were satisfied with their performance and at least one was 
planning renovations that included additional microscreens (see site 
visit reports DCN 62388, 62389, 62390, 62391, 62392). For the NODA and 
in its evaluation of the costs of second stage solids removal 
technology, EPA adjusted costing to include either full-flow settling 
basins where appropriate or microscreens in heated spaces of existing 
buildings. Our analysis shows that, based on available data, either of 
these technologies, the full-flow settling basin or microscreen, can 
achieve the proposed limits so we used the lower cost option for each 
facility in our analysis.

B. Production Systems

1. Flow-Through and Recirculating Systems
    Based on comments, EPA may combine the two separate subcategories 
for flow-through and recirculating systems into a single subcategory. 
We received comments with engineering descriptions for identifying 
recirculating systems, including assertions that EPA had not adequately 
evaluated green water systems; however, the commenters did not give a 
specific regulatory definition that EPA could use. While we found that 
a widely-accepted formal definition for recirculating systems does not 
exist, these systems are generally distinguished by some form of 
engineered biological treatment, that allows for extended water reuse. 
(EPA uses the term ``engineered'' biological treatment to distinguish a 
recirculating system from a pond, having a ``natural'' biological 
treatment process that allows for extended water reuse.) A green water 
system, in turn, takes advantage of the algae's and bacteria's ability 
to improve water quality. The commenters based the distinction between 
the categories on hydraulic residence time or cumulative feed burden, 
which they define as the feed application rate divided by the flushing 
rate. Based on comments, we realize that the distinction between the 
two systems is less obvious than we assumed for the proposal. Further, 
some facilities may commingle components of both systems. Therefore, 
EPA may combine the two subcategories into a single subcategory and we 
seek comment on this approach.
    Regardless of whether the subcategories are combined, EPA is 
considering the same modified BMP plan for both systems (Section III.F 
describes this BMP plan and Section III.G. presents potential TSS 
limitations.
2. Net Pens
    EPA proposed best management practices, rather than numeric limits, 
for facilities raising fish in net pens. At proposal, we stated that 
net pen facilities discharged pollutants into receiving waters. We also 
noted that researchers had documented environmental impacts due to 
discharges in limited areas near and beneath some U.S. net pen 
facilities. EPA found reports documenting rapid recoveries of benthic 
areas impacted by net pen operations. We are also aware that State 
regulatory programs have addressed a number of concerns associated with 
these discharges and require regular benthic monitoring at sites to 
identify problems early so they can be corrected. Public comments on 
the proposal also asserted that State regulatory programs effectively 
address environmental concerns associated with pollutant discharges 
from net pen operations and no further environmental benefits from 
additional effluent guideline requirements are likely (DCN 70236, 
70283, 70104). However, we also received comments that asserted the 
proposed requirements were not adequate or reflective of scientific 
understanding of environmental impacts (including impacts from solids 
deposition and from the use of drugs and chemicals). These comments 
also suggested how such impacts might be managed (e.g., DCNs 70253, 
70269, and 70270).
    In light of these comments, EPA tried to collect more information 
to support evaluation of regulatory options for controlling pollutant 
discharges from net pen systems. EPA updated its literature search on 
the environmental effects of discharges of solids, nutrients, BOD, and 
drugs and chemicals from net pen facilities. The search included 
examining existing permit requirements and other practices currently 
used by net pen facilities. It also involved recognizing modeling tools 
that were developed and described in research literature that may be 
useful in translating pollutant load reductions into environmental 
responses. We do not expect to use these models to estimate 
environmental benefits for the net pen subcategory because our analysis 
suggests that practices relating to minimizing releases of solids at 
most net pen facilities would already meet the requirements we are 
considering (see Section II.E and DCN 62399).
    EPA is also aware of a recently-updated major scientific review of 
non-native Atlantic salmon at net pen farms in the Pacific Northwest. 
This review updates an assessment that was considered at proposal (DCN 
40149) and appears in a group of six articles published in Volume 62 
(2003) of the journal, Fisheries Research. The updated information 
helps EPA better

[[Page 75078]]

understand environmental concerns with net pen systems and the actual 
impacts of current operations in the U.S. in the context of existing 
State and other requirements. At present, EPA concludes that net pens 
should continue to be included in the CAAP rule. Again, it appears that 
most net pen operations potentially in the scope of the regulation are 
already using practices and technologies at least as stringent as those 
EPA is considering for this subcategory.
    One commenter questioned the need for a national regulation when 
the extent and size of the net pen industry is small. Data regarding 
in-scope facilities indicate that net pen facilities are used to raise 
salmon in three States (Alaska, Maine and Washington). A limited number 
of net pen facilities also produce other fish species as well. While 
net pen systems in Maine and Washington raise salmon to harvestable 
weights, net pen systems in Alaska also rear salmon before their 
release in the ocean.
    Offshore aquatic animal production is another new area under 
development. The National Marine Fisheries Service (NMFS) proposed 
codes of conduct for these offshore operations announced in an August 
2002 Federal Register notice (67 FR 54644). NMFS held six regional 
workshops in the fall of 2000 to discuss the codes of conduct for these 
types of operations. In 2002, NMFS published Current and Future 
Regulation of Marine Aquaculture, which describes best management 
practices similar to those we are considering in this rule. These 
include feed management to minimize waste, minimizing escapes, and 
minimizing negative effects of escapees on wild populations. The NMFS 
report also states that disease prevention through vaccinations is 
preferred over using antibiotics. NMFS has five research stations of 
which three have aquatic animals. Demonstration projects include sea 
cages in Puerto Rico, Hawaii, Gulf of Mexico, and eastern Gulf of 
Maine. EPA did not identify quantitative estimates of future U.S. 
mariculture activity. However, as research efforts move forward, 
offshore aquatic animal production may be of greater interest and 
provide opportunities for future industry growth in this area (see DCN 
20428 for information about programs and future prospects). EPA is 
considering whether to identify as new sources subject to these 
requirements new offshore production facilities located in the 
territorial seas (e.g., three to eight miles from shore) that use open 
water net-like structures.
3. Molluscan Shellfish Operations
    EPA did not propose to include certain categories or types of 
facilities within the scope of the proposed rule. Floating or bottom 
culture molluscan shellfish operations were among the production 
systems not within the scope of the proposal. Although these operations 
were excluded, the proposed regulation did not specifically address 
nursery operations for molluscan shellfish, whose shellfish nurseries 
tend to be flow-through systems. We received requests to clarify the 
scope of the proposal and exclude shellfish nurseries from the 
regulation. We reviewed the information provided in the comments on 
this issue (see DCNs 70147, 70218, 70236, 70238, and 70268). Based on 
our review, EPA determined that these operations (e.g., shellfish 
hatcheries, nursery operations, shore based wet storage (live holding) 
facilities and depuration (cleaning shellfish of impurities) 
facilities) discharge or add very little, if any pollutants to the 
receiving water. In some cases, they may remove some of the materials 
in source water. Some of these comments (DCNs 70147 and 70236) also 
indicated that shellfish hatcheries and nurseries produce less than 
100,000 pounds annually and thus would not be subject to the proposed 
regulations.
    Two comments indicated that adverse environmental effects, 
primarily accumulation of silt and solids, of excessively large and 
densely seeded molluscan shellfish operations were reported in the 
scientific literature (e.g., DCN 70270, 70511). However, these sources 
acknowledge that adverse impacts are unusual and have not been reported 
in the United States.
    EPA is, however, aware of concerns about deliberately introducing 
non-native shellfish into coastal waters of the United States. For 
example, there is ongoing debate about the comparison of possible 
benefits compared to the possible risks of introducing non-native 
pacific oysters (Crassostrea ariakensis) in the Chesapeake Bay. The 
National Academy of Sciences (NAS) issued a report (DCN 62456) 
summarizing the potential risks and benefits of introducing C. 
ariakensis in the Chesapeake Bay. The NAS report also recommends that 
States and regional authorities develop protocols to reduce the 
possibility of release of reproductively viable non-native oysters into 
the bay, including hatchery biosecurity. Although the National Academy 
of Sciences concludes that there is not an adequate group of laws and 
regulations in the United States to address the introduction of non-
native shellfish into marine waters, the Academy does recommend that 
the Chesapeake Bay Program be evaluated as a model for 
interjurisdictional decision-making system with binding authority over 
introductions that might affect the coastal areas of several States.

C. Drugs and Chemicals

    EPA's proposal and technical literature in the record identified 
several human and aquatic life health and environmental issues of 
potential concern related to using drugs and chemicals at AAP 
facilities. These issues included evidence of drug and/or chemical 
residues in sediments in the receiving waters of AAP facilities or in 
non-target organisms in the receiving waters (e.g., DCN 20141). The 
Agency proposed limited reporting requirements for certain types of 
drug applications. It also proposed establishment and implementation of 
BMP plans that would help reduce the unintended release of covered 
drugs and chemicals. EPA could not, however, quantify either baseline 
loadings of drugs and chemicals, or expected reductions in these 
loadings due to proposed requirements. Consequently, we did not try to 
quantify environmental benefits for measures addressing drugs and 
chemicals.
    Some comments asserted that those who apply drugs and chemicals at 
CAAP facilities consider environmental safety in their decision-making 
process (DCNs 70236 and 70263). Other commenters added that EPA did not 
provide evidence that drugs and chemicals used at aquatic animal 
production facilities lead to environmental problems. They also argued 
that FDA is the appropriate Federal agency to assess the environmental 
safety of drugs used in aquatic animal culture (DCNs 70165, 70192, 
70216, 70228, 70230, 70236, 70239, 70262, 70263, 70273, 70286). EPA 
also received other comments arguing that the proposed reporting and 
BMP requirements relating to drugs and chemicals should be more 
stringent (DCN 70145).
    In addition to drugs and chemicals used as therapeutants or to 
maintain process water quality, some commenters believe that EPA should 
regulate the discharge of feeds that contain pigments (such as 
astaxanthin or canthaxanthin). They believe that these color additives 
are harmful to humans, especially in the fish flesh of cultured fish 
that consume the feed. Astaxanthin and canthaxanthin, two widely used 
color additives in fish feed, are approved by FDA as color additives in 
fish feed when used in accordance with

[[Page 75079]]

prescribed conditions on the label. FDA found that these additives 
would not have a significant impact on human health and the environment 
(DCN 40417 and 40421).
    EPA also collected more information about CAAP drugs and chemicals 
(see Section II.E of today's notice). EPA has met with other Federal 
authorities such as USDA/APHIS and FDA to clarify and coordinate 
regulatory and program goals. EPA will work closely with Federal, 
State, and other appropriate scientific experts to fully consider the 
available information described here.
    Based on our consideration of public comments and information 
described in Section II.E relating to chemicals applied at CAAP 
facilities, EPA believes that further evaluation is needed to fully 
understand the potential for adverse environmental impacts from 
discharges of chemicals, including therapeutants, applied at CAAP 
facilities. However, the information we have reviewed to date suggests 
that the FDA environmental assessment process and site-specific 
regulatory, professional, or industrial requirements or practices 
address adverse impacts to a significant degree. We will continue to 
evaluate this information and consult with relevant authorities.
    In addition, EPA and FDA are working on a formal agreement that 
would address environmental concerns about the discharge of drugs used 
at aquatic animal production facilities. This agreement, which might 
help protect the aquatic environment from harm, would facilitate 
information sharing about effluent concentrations of active drug 
ingredients. When appropriate, FDA would include in the labeling of 
approved new animal drugs, effluent concentrations of the active drug 
ingredient which should not be exceeded in wastewater discharges. EPA 
would notify permitting authorities who would incorporate these 
effluent concentrations into the NPDES permits as enforceable 
requirements. EPA seeks comments on including these labeling 
concentrations into NPDES permits.
    EPA identified research on the use of activated carbon filtration 
to treat and remove active ingredients in drug and pesticides from CAAP 
facility wastewater. We also estimated the cost of applying this 
treatment at facilities (DCN 62451). Based on the information we 
collected, EPA estimated the cost of applying wastewater treatment to 
remove drugs and chemicals from CAAP effluent before discharge. EPA 
considers these costs to be economically unachievable, (see Section 
V.C. of this notice). However, management practices intended to ensure 
proper storage, use and disposal of drugs and chemicals and to minimize 
the need for their use may be an effective approach for minimizing 
their discharge. To address this issue, EPA is evaluating an additional 
option (Option A) that would be similar to Option 1 but would 
substitute a drugs and chemicals BMP plan for the solids control BMP 
plan proposed in Option 1. The Option A BMP plan would also have to 
address potential escapes of non-native species.
    In developing this option, EPA evaluated practices that involve the 
early identification of health problems, recordkeeping, and proper use 
and storage of drugs and chemicals by employees. In addition, EPA found 
that biosecurity practices that contain and prevent the spread of 
disease throughout the facility are effective at reducing the use of 
drugs at CAAP facilities. Health screening involves observing the 
normal behavior of aquatic animals at a facility (e.g., feeding 
behavior and abnormal activities). EPA recognizes that more intensive 
screening activities, such as diagnostic tests for specific pathogens, 
may not be technologically feasible or economically achievable. 
Recordkeeping and the regular review of the records should help 
facilities evaluate the effectiveness of health management and modify 
their practices to further reduce health problems in the aquatic 
animals that may lead to greater use and disposal of drugs and 
chemicals.

D. Non-Native Species

    EPA received comments presenting discussions about CAAP as a 
pathway for the introduction of non-native species. Some commenters 
feel that existing State and local permitting programs and regulations 
provide adequate protection. Several State agencies commented that 
while they concur that measures to address potential risks associated 
with aquatic nuisance or invasive species are important, such measures 
are most appropriately and effectively developed at a State or Tribal 
level and that in many cases, specific requirements and policies 
already exist. Some of these States briefly described their relevant 
programs and regulations. We also received comments from States 
suggesting that proposed new national requirements might threaten 
existing State efforts addressing invasive species.
    However, a State permitting authority (DCN 70067) and a State 
coastal resources agency (DCN 70225) commented that EPA should require 
CAAPs to report escapes of non-native species to the permitting 
authority. They gave their rationale for this requirement, including 
arguing that timely notification of escapes would allow State natural 
resource and environmental agencies to evaluate and, if necessary, 
control the spread of the non-natives. These agencies also recommended 
that EPA prohibit the intentional release from CAAPs of non-native 
species that might harm wild species. One of these agencies suggested 
that facilities should be equipped with physical barriers to prevent 
the incidental discharge of all life stages of non-native species. One 
agency supported a Federal regulation corresponding to existing State 
rules that would prohibit unauthorized release of harmful or 
potentially harmful exotic and non-native species.
    Other commenters urged more coverage (e.g., ponds, molluscan 
shellfish) and control for escapes. They identified several specific 
concerns: escapes of the cultured organisms themselves (e.g., Atlantic 
salmon in the Pacific Northwest), including genetically modified 
species, and escapes of pathogens and parasites potentially associated 
with the cultured organisms. Commenters also proposed potential control 
requirements (e.g., prohibitions on reproductively viable non-native 
species; containment requirements). Some commenters believe that 
current practices to minimize or prevent the release or escape of non-
native species are effective.
    EPA also received comments questioning our interpretations of 
technical literature about non-native species concerns. The JSA pointed 
out that EPA cited a comprehensive 2001 NOAA technical memorandum on 
the net pen salmon farming industry in the Pacific Northwest in its 
discussions on possible concerns with escapes of non-native species 
(DCN 40149) but that EPA did not also cite the conclusions of the 
report regarding the ``very low or no'' risk of interactions or 
problems from accidental releases of Atlantic salmon in the Pacific 
Northwest. That report states that the escape of Atlantic salmon, a 
non-native species, is ``deemed to carry very little or no risk'' with 
respect to potential for hybridization with other salmonids, 
colonization of salmonid habitat, competition with native species for 
forage, predation on indigenous species, and serving as vectors for the 
introduction of exotic pathogens. The report reviews and discusses 
scientific evidence and reasoning to support this conclusion. The 
report also states that ``[t]he possible negative consequences of such 
[accidental escape] events have

[[Page 75080]]

been limited in part by implementation of pre-prepared recovery plans, 
some of which have included deregulating catch limits for public 
fishing on escaped farm fish, and by programs to monitor the background 
populations of fish in nearby watersheds. These responses will continue 
to be effective management practices to minimize impact, together with 
further advances in the technology. Improvements in the design and 
engineering of net pens and their anchorages, and the use of new net 
materials, are continuing to reduce the incidents of loss following 
structural failure or damage from large predators.''
    In addition, JSA gave references updating information contained in 
earlier sources we cited in developing the proposed rule addressing 
viral hemorrhagic septicemia (VHS) on the West Coast. In contrast to 
that earlier information, the more recent references provided by JSA 
demonstrate that VHS was a pre-existing condition in marine fish 
throughout the Pacific Northwest. These references are:
    [sbull] Amos, K.H., J. Thomas, B. Stewart, and C.J. Rodgers. 2001. 
``Pathogen transmission between wild and cultured salmonids: risk 
avoidance in Washington State, United States of America.'' Risk 
Analysis in Aquatic Health: Proceedings of an International Conference, 
Paris, France, 8-10 February, 2001:83-89 (DCN 40609).
    [sbull] Amos, K.A., J. Thomas, and K. Hopper. 1998. ``A case 
history of adaptive management strategies for viral hemorrhagic 
septicemia virus (VHSV) in Washington State.'' Journal of Aquatic 
Animal Health 10:152-159. (DCN 70732)
    [sbull] Meyers, T.R. and J.W. Winton. 1995. ``Viral hemorrhagic 
septicemia virus in North America.'' Annual Review of Fish Diseases 
5:3-24. (DCN 40592)
    Some commenters urged EPA to more effectively and appropriately 
align any considerations about invasive species with existing Federal 
(e.g., the National Invasive Species Council), State, and other 
authorities and requirements. Other comments asserted that EPA should 
not regulate non-native species because they are already regulated by 
other agencies.
    Commenters further stated that EPA should better define some of the 
terms we used in the proposal (such as ``non-native species'' and 
``biological pollutants''). The proposed non-natives definition applies 
to an individual, group or population of a species that is introduced 
into an area or ecosystem outside its historic or native geographic 
range and that was identified by the appropriate authority as non-
native or invasive. Most States have, by statute or regulation, 
identified certain species of plants and animals as non-native, 
invasive or exotic species that could threaten native aquatic biota. 
The term excludes species raised for stocking by public agencies in a 
given State. EPA excluded these species because the action of stocking 
a species in public waters provides a sanctioned opportunity for the 
species to become established. In any given State, if an aquatic animal 
species that is otherwise defined as non-native is raised to be stocked 
in public waters, then any commercial facilities producing the same 
species, by definition, would not be producing a non-native species. 
EPA defers to the States to determine what species are considered non-
native in their State.
    EPA recognizes that non-native species do not always present a 
problem. The problem lies in a species becoming invasive or established 
in an area to the point where it creates adverse human health, economic 
or ecological/environmental impacts. EPA is evaluating the information 
described in Section II.E.3 of today's notice and comments on the 
proposal and will assess whether the requirements for minimizing and/or 
reporting on escapes of non-native species are appropriate. EPA is 
particularly interested to learn about prevention measures that reduce 
the likelihood that species or pathogens will become invasive or 
established (e.g., regular inspection and maintenance of escape 
prevention devices). For the final rule, EPA will also consider costs, 
economic impacts, effectiveness, and possible benefits, and existing 
relevant Federal, State, Tribal, and other requirements or practices.

E. Water Quality Impacts From TSS, BOD, and Nutrients

    EPA received several comments about water quality impacts from CAAP 
facilities. (This section addresses comments on discharges from flow-
through and recirculating facilities. Section III.B.2 discusses 
comments on water quality impacts at net pen systems. Elsewhere in 
Section III. you will find discussions on impacts from other 
discharges.) As discussed in Section II.E.4, some information indicated 
that CAAP facilities may be a significant part of local water quality 
impacts. Commenters were especially concerned with one source of 
information EPA considered in developing the proposed rule (State CWA 
section 303(d) reports on the causes and status of impaired water 
bodies) and questioned whether water quality impacts from CAAP 
facilities were of sufficient national scope to warrant a national 
effluent guideline.
    Commenters also discussed situations where CAAP effluents might 
contribute to positive water quality impacts. In addition, commenters 
reviewed existing regulatory structures that, they asserted, provided 
adequate water quality protection. Following public comment, EPA 
received materials from a State agency drawing attention to what they 
characterized as serious adverse water quality impacts at several CAAP 
facilities in their jurisdiction (Section II.E.4. describes additional 
information about water quality EPA compiled since proposal).
    Two stakeholder groups (JSA and NASAC) argued that there is no 
evidence that CAAP is a ``significant threat to our Nation's waters.'' 
They asserted that ``[t]o justify promulgating national effluent rules 
for the U.S. aquaculture industry, EPA must provide scientific 
documents irrefutably identifying that most of the U.S. aquaculture 
facilities are compromising the water quality of the receiving waters 
from aquaculture facilities.'' These groups offered the results of a 
NASAC study documenting that a far smaller number of States (two) than 
discussed in EPA's proposal documents (seven) identified aquaculture as 
a major source of impairment in the 1998 and 2000 303(d) lists they 
submitted to EPA (DCN 70583).
    EPA reviewed this information and concurs with several key findings 
of the NASAC 303(d) report. First, NASAC's analysis correctly shows 
that although seven States listed aquaculture as a possible source of 
impairment to water bodies within their borders, only two of these 
States (North Carolina and Virginia), when contacted by NASAC, verified 
that aquaculture facilities were a source of impairment. The remaining 
States indicated to NASAC that aquaculture was not a known source of 
impairment on the impaired stream segments reported to EPA. However, 
one of the States noted that aquaculture had subsequently been 
identified as a possible source of impairment on a different stream 
segment. EPA also concurs that, for the reported aquaculture-related 
water body impairments, local authorities reported that impairments are 
being addressed by site-specific solutions. In the case of North 
Carolina, according to the NASAC report, the State addressed water 
quality impairment in the affected arm of Santeetlah Lake by 
structuring a buy out that will remove the trout farms contributing to 
the impairment. In the case of the six stream segments that Virginia 
reported impaired due to trout

[[Page 75081]]

farm effluents, a 2001 benthic macroinvertebrate survey confirmed that 
all six streams were still impaired. In 2002, the State prepared a TMDL 
for these six stream segments. The State affirmed that aquaculture 
effluents were the primary source of organic solids that impaired these 
short stream segments (ranging from 0.02 to 0.8 miles). They constitute 
from 86 to 99 percent of the organic solids loading in these largely 
first-order, spring-fed streams (DCN 40571).

F. Best Management Practices

    Many commenters stated that EPA did not have enough information to 
develop best management practices that would apply to all CAAP 
facilities alike. Commenters also did not want the BMPs to be 
prescriptive. They wanted language changes to allow for flexibility and 
innovative technologies. Commenters asked EPA to consider alternatives 
to the preferred options selected for the proposal for certain 
subcategories. As a result, EPA is considering several changes to the 
BMP requirements in the proposed rule.
    Among the comments received on BMPs are:
    [sbull] Commenters preferred BMPs over direct monitoring to comply 
with numerical limits. One commenter reported that testing (including 
shipping) took about 600 employee hours and $40,000 per year. The 
commenter also stated that reliance on BMPs would ease the burden and 
allow them to shift the hours and dollars spent on testing to 
implementing BMPs.
    [sbull] Other concerns should be addressed in developing a BMP 
plan, but the appropriate personnel at the facility should identify the 
selected practices or control options, subject to regional or State 
review. Commenters also stated that the BMPs should not be prescriptive 
due to regional and State variations in aquatic animal production 
operations as well as possible misinterpretation by permit writers.
    [sbull] EPA should better define the term ``BMPs'' and the 
requirements of a BMP plan.
    [sbull] EPA underestimated time and costs for development of BMPs.
    [sbull] Some commenters supported BMPs but did not believe that EPA 
should issue a final guidance document (an updated version of the 
proposal document). Instead, EPA should give references to other 
sources such as land grant universities that have researched this area.
    [sbull] The proposed BMPs would control effluent discharges poorly. 
Some commenters indicated that BMPs should not be used as a replacement 
for discharge limitations but as an added tool to achieve discharge 
reductions.
    Based on comments, EPA is considering a simplified guidance 
document to identify recommended components of a BMP plan. In EPA's 
view, a list of these components may help guide producers in developing 
their own BMP plans. Such guidance might also help reduce the burden on 
producers of developing a plan and allow flexibility in meeting the 
facility's specific goals. (Section IV.C. describes these components)

G. Proposed TSS Limitations

    EPA received comments stating that it lacked information to develop 
numerical limitations relevant to all CAAP facilities. Commenters 
stated that regional differences (among facilities) and effluent 
characteristic differences (between cold water and warm water species) 
would make it impractical for all facilities to meet the proposed 
limits.
    The National Association of State Aquaculture Coordinators (see DCN 
62387) asserted that there is no evidence to show that using best 
professional judgment to develop limitations associated with NPDES 
permits is not already protecting water quality effectively and that a 
national effluent guidelines regulation is not necessary. They later 
provided information on recent developments in some State programs on 
the use of BMPs in NPDES permits for CAAP facilities. EPA will consider 
this information with other information the Agency collected to further 
evaluate current wastewater treatment practices in the industry.
    In response to these comments, EPA performed a preliminary 
assessment of the TSS limitations and found that most flow through 
facilities already have relatively low discharges of TSS in full flow 
or recombined flow effluents. The BMP approach will provide an 
additional control of TSS discharges. Thus, EPA is reconsidering 
whether monitoring of TSS concentrations is necessary for this 
industry. EPA seeks comment on this issue.
    EPA proposed that, in the case of flow-through systems, TSS 
limitations would apply on a net basis (67 FR 57927). That is, the 
discharge limitation would apply to the amount of TSS added by the 
production system. This approach is consistent with the NPDES general 
permit conditions for CAAP facilities in at least one State (Idaho). 
For recirculating systems, by contrast, EPA proposed that TSS 
limitations would apply on a gross basis, without accounting for TSS in 
the source water. EPA's supporting documentation for the proposal shows 
that the data used to establish the proposed limitations for both 
subcategories was based on gross TSS concentrations.
    The NPDES permit regulation provides a procedure for adjusting 
limitations to reflect credit for pollutants in intake source water in 
certain circumstances. These include a demonstration that a 
discharger's control system would meet the applicable limitations in 
the absence of pollutants in the intake water (see 40 CFR 122.45(g)). 
EPA is now considering whether to promulgate limitations for both 
subcategories that leave the decision of establishing permit limits on 
a net or gross basis to the permit writer. A requirement to establish 
limitations on a net basis could be interpreted to require all CAAP 
facilities to collect samples from both their effluent and influent, 
thus doubling the number of samples required and the analytical costs, 
which may be unnecessary under many circumstances. For example, 
facilities whose source water is spring fed may have very little TSS in 
the source water. Likewise, some recirculating facilities may use 
public water supplies that also have low TSS concentrations in their 
source water. Another approach would require monitoring of influent 
only where effluent monitoring shows a possible exceedence of the 
limit.
    EPA asked for updated copies of NPDES permits, fact sheets, and DMR 
data for 125 permitted facilities from the EPA regional offices. EPA 
was able to get NPDES permits for 49 facilities in the detailed survey. 
EPA also obtained DMR data directly from facilities and PCS for 47 
facilities. EPA got DMR data and permits for 43 facilities. There were 
six facilities for which EPA had NPDES permits but not DMR data and 
four facilities for which EPA had DMR data but not NPDES permits.
    EPA used the detailed surveys and NPDES permit information to 
identify discharge points and the nature of discharges (e.g., full flow 
from raceways or solids collection decant water) in the DMR data. EPA 
found reported TSS data in the DMR set from 31 of the 47 facilities for 
which it had DMR data. Sixteen facilities in the DMR set did not have 
TSS data. EPA concluded that 28 of the 31 facilities with TSS data use 
at least primary settling treatment. Two of the 31 facilities indicated 
that they have no treatment, and EPA was not able to verify in-place 
treatment for one facility.
    To determine the ability of facilities to meet the primary 
treatment option, EPA then compared the reported TSS concentration data 
with the limits proposed for flow-through facilities that produce 
100,000 to 475,000 pounds of

[[Page 75082]]

aquatic animals a year and for recirculating systems that produce more 
than 100,000 pounds of aquatic animals a year. For the 31 facilities 
with TSS data, the number of effluent measurements per facility ranged 
from 424 to 2, with the average for all 31 facilities being 68 
measurements. EPA compared facility TSS monitoring data with the 
proposed limits for similar types of discharges and found:
    [sbull] Recombined effluent--Two of the three facilities in this 
category exceeded the proposed daily maximum limit of 11 mg/L in 28 of 
178 reported measurements. We did not find monthly average measurements 
for this group
    [sbull] Full flow settling basin discharges--Two of six facilities 
exceeded the proposed daily maximum limit of 11 mg/L in 15 of 110 
reported measurements, and exceeded the proposed monthly average 
limitation of 6 mg/L in 10 of 113 reported measurements
    [sbull] Bulk flow effluent--One of three facilities exceeded the 
proposed daily maximum limit of 11 mg/L in four of 104 reported 
measurements and exceeded the proposed monthly average limitation of 6 
mg/L in six of 104 reported measurements
    [sbull] Offline settling basins--Neither of the two facilities with 
TSS data exceeded the proposed daily maximum limit of 87 mg/L or the 
proposed monthly average limitation of 67 mg/L in 81 reported 
measurements
    [sbull] Recirculating system combined effluent--The one facility 
with reported TSS data exceeded in one of nine reported measurements 
the proposed daily maximum limit of 50 mg/L, and they exceeded in three 
of 87 reported measurements the proposed monthly average limitation of 
30 mg/L.
    EPA found that all of the reported TSS measurements that exceeded 
the proposed limits occurred in the earlier data reported by an 
individual facility. The time periods varied by facility from 1990 
through 2001 for the data used to compare proposed limits with reported 
monitoring data. Facility data in the most recent year were all within 
the proposed TSS limits for the corresponding outfall type. The record 
discusses the analysis in these data (see DCNs 62641 and 31137).
    EPA also compared sampling data from the four sampling episodes 
with the proposed daily maximum limits and found:
    [sbull] Full flow settling basin discharges--Neither of the two 
facilities with full flow discharges exceeded the proposed daily 
maximum limit of 11 mg/L in any of the 10 sample measurements.
    [sbull] Bulk flow effluent--One facility with a bulk discharge did 
not exceed the proposed daily maximum limit of 11 mg/L in any of five 
sample measurements.
    [sbull] Offline settling basins--One of three facilities with 
offline settling basins exceeded the proposed daily maximum limit of 87 
mg/L in four of the total 21 sample measurements taken at the three 
facilities.
    [sbull] Recirculating system combined effluent--The one facility 
sampled exceeded the proposed daily maximum limit of 50 mg/L in one of 
five reported measurements.

H. Feed Conversion Ratios

    Improving the conversion of feed to live weight positively affects 
water quality, generating less wastes by reducing the amount of uneaten 
feed. Some commenters raised a concern about the feed conversion ratios 
(FCRs) EPA assumed in the cost model and the frequency factor 
adjustment (see Section III.I.). The FCR is the weight of feed used to 
produce a unit weight of aquatic animals. Commenters said the FCRs we 
used for proposal were too high, and most facilities are achieving 
better feed conversion ratios than assumed.
    Many facilities responding to the detailed survey estimated their 
FCR or submitted detailed information on feed use and production. EPA 
found reported FCRs to be quite variable, even among facilities with 
similar systems, ownership-types, and species. EPA calculated FCRs 
facility-by-facility from the detailed survey to estimate possible load 
reductions. For the purpose of estimating costs and pollutant load 
reductions, EPA assigned target FCRs as the 25th percentile value for 
facilities in each combination of species, production system, and 
ownership type group. EPA does not currently plan to establish any 
limits on FCRs. We used facility-specific FCRs to estimate baseline 
loads and compare them to the target FCR to estimate possible load 
reductions from implementation of solids control BMPs.
    In comparing FCRs with effluent concentration data on a facility 
basis, EPA found that the raw wastewater pollutant loading at a 
facility is still largely linked with feed inputs. To address comments 
about the impact of the FCR values, EPA will perform sensitivity 
analyses to compare the target FCR and resulting pollutant load 
reduction estimates.

I. Cost Analyses

    Comments stated that the proposed model facility approach used was 
not adequate. Many of the comments suggested that EPA's cost estimates 
were not accurate, but only a few commenters (e.g., JSA AETF, NASAC, 
and the U.S. Trout Growers Association) provided detailed cost data. 
These commenters also suggested that EPA's model facilities were an 
inaccurate representation of the industry because the model facilities 
do not capture the diversity of actual facilities. One commenter stated 
that the labor rates for managers and laborers were too low. To address 
these concerns, EPA used facility-specific information from the 
detailed survey to perform the analyses for the NODA. See Section 
V.A.2.
    Commenters also criticized our use at proposal of the frequency 
factor approach to major national estimates. For this approach, EPA 
applied a ``frequency factor'' to the cost for each model facility to 
estimate the national cost for all facilities represented by the single 
model facility. EPA estimated frequency factors based on these sources: 
EPA site visits, screener surveys, observations by industry experts, 
USDA's 1998 Aquaculture Census, USDA APHIS National Animal Health 
Monitoring System, and State regulatory programs. Commenters argued 
that the frequency factors underestimated compliance costs, so EPA may 
have underestimated impacts.
    For the NODA, EPA changed its approach by using data from the 
detailed survey to estimate facility-level compliance costs and 
associated loads. Instead of applying the frequency factors used at 
proposal, we applied statistically-derived weights from the survey 
design to scale detailed survey facility estimates to national 
estimates based on the probability that a facility was selected for the 
detailed survey sample. Because not all sampled facilities would be 
within the scope of the rule, we used a subset of the detailed survey 
sample to estimate national CAAP costs for industry sectors affected by 
the proposed rule (see Section II.D. for a description of the survey 
weights and the subset).

IV. Regulatory Options Considered for the Proposal and Modifications 
Being Considered for the Final Rule

A. Proposed Regulatory Options

    In subcategorizing the industry for the proposal, EPA considered 
several factors (e.g., age of the equipment and facilities, location, 
processes employed, and the available types of treatment technology.) 
We identified the types of production systems (e.g., flow-through 
systems, recirculating systems, net pens) to create subcategories with 
similar operating practices, quality and quantity

[[Page 75083]]

of effluent type and discharge frequency.
    We then proposed limitations based on these CAAP subcategories: 
flow-through, recirculating, and net pen systems. Flow-through systems 
tend to have high effluent flows that can exceed a complete system 
volume exchange per hour. Some flow-through facilities may treat two 
discharges: a bulk discharge and a discharge from a settling basin 
referred to as off-line settling. The bulk discharge is large volume 
and flows directly from the areas where the animals are confined. The 
off-line settling discharge is water drawn from, without disturbing, 
the solids collected from the production process that are treated in a 
basin through settling. Compared to the bulk flow discharge, the volume 
of discharge from the off-line settling basin is small but more 
concentrated in pollutants such as TSS, BOD, or nutrients. Other flow-
through facilities choose to treat their entire discharge through a 
single treatment system (full-flow settling) that includes the solids 
generated from the production process and the entire production volume 
of water. Facilities that use full-flow settling with a single 
discharge point usually have relatively low concentrations of TSS, BOD, 
and nutrients.
    Some recirculating systems have single discharges with relatively 
small volumes (often a fraction of the system volume per day) of 
treated effluent with concentrations of TSS, BOD, and nutrients 
comparable to the off-line settling basin discharge at some flow-
through facilities. Other recirculating systems (called dual discharge) 
may have two discharges, one from a solids treatment process and one 
often described as ``overtopping'' water. Overtopping water is process 
water that drains from production tanks or process water treatment 
units as a result of continually adding a small amount of water to the 
recirculating system. This practice provides make-up water that offsets 
losses and some dilution for a ``margin of safety'' that ensures 
adequate process water quality. The overtopping water effluent TSS, 
BOD, and nutrients are typically less concentrated than solids 
treatment system effluent, but they are more concentrated than bulk 
discharges from flow-through systems. Solids treatment effluents from a 
dual discharge recirculating system are similar in concentration to 
flow-through offline settling basin and single discharge recirculating 
systems. Net pen systems release TSS, BOD, and nutrients directly to 
receiving waters.
    EPA then divided the subcategories by facility size (i.e., the 
amount of aquatic animals produced) because of differences in economic 
factors related to production size. The proposal did not include 
facilities with annual production below 100,000 pounds due to economic 
achievability concerns. We also proposed less stringent requirements 
for flow-through facilities with production between 100,000 and 475,000 
pounds a year (again based on concerns about economic achievability). 
EPA based its proposed conclusions on economic achievability of 
limitations based on the model technology and model facility analysis. 
The proposed model facilities represented specific size ranges in 
pounds produced. Pounds produced were derived from annual revenue 
ranges and price data from the 1998 Census of Aquaculture. Most of the 
impacts that EPA identified would adversely affect trout producers 
below an annual threshold of 94,000 pounds production. Therefore, EPA 
proposed to establish the applicability threshold for the effluent 
guideline at 100,000 pounds a year to avoid projected impacts in the 
trout sector. Production of other species also faced similar economic 
stress at lower production levels. EPA proposed the same applicability 
threshold for other species because doing otherwise would add needless 
complexity to the regulation, with little corresponding environmental 
benefit.
    EPA identified technology options for each of the system/size 
subcategories based on technologies and practices found at facilities 
in the subcategory. We evaluated the options in order of increasing 
stringency, both in the degree of pollutant reduction achieved as well 
as in cost. Each successive option incorporates the technologies and 
practices of the previous option.
    Option 1 for flow-through systems includes primary settling (e.g., 
quiescent zones and settling basins) and developing and implementing a 
BMP plan for solids control. Option 1 for recirculating systems 
includes similar technologies/practices to those for flow-through 
systems. Option 1 for net pens includes feed management and BMP plan 
development for solids control.
    Option 2 for all subcategories combined the Option 1 requirements 
with identifying and implementing BMPs to control discharges of drugs, 
chemicals, and non-native species. Option 2 also included a reporting 
requirement for the use of Investigational New Animal Drug (INAD) and 
extra-label use drugs. Option 3 combines Option 2 requirements with 
solids polishing (e.g., microscreen filtration) for flow-through and 
recirculating systems and active feed monitoring for net pens.
    EPA selected the proposed regulatory options for each subcategory 
based, in part, on the costs and economic impacts of installing and 
implementing these options. The proposed regulation for flow-through 
systems applied a two-tiered approach reflecting economic achievability 
concerns. For facilities that produce between 100,000 and 475,000 
pounds of aquatic animals a year, EPA proposed to base BPT, BCT, BAT 
and NSPS on Option 1. For facilities that produce more than 475,000 
pounds of aquatic animals per year, we proposed BPT, BCT, BAT and NSPS 
requirements on Option 3. For recirculating systems, EPA proposed 
Option 3 as the basis for the BPT, BCT, BAT and NSPS requirements. For 
net pen systems, EPA also proposed Option 3 as the basis for BPT, BCT, 
BAT and NSPS. The components for each option for flow-through and 
recirculating systems are summarized in Table IV.B.1.
    EPA is still considering a no further regulation option. EPA 
received many comments supporting a no rule option for this industry. 
Comments referred to programs within the Federal and State governments 
such as the NPDES permitting process and TMDLs, indicating that these 
programs are better equipped to address local problems than national 
guidelines. They also argued that the baseline discharge loadings do 
not warrant national guidelines. The Agency will fully consider this 
option and the comments when it issues the final action.

B. Modifications Being Considered for the Final Rule

    The following sections discuss several alternatives EPA is 
considering. We present the revised costs, pollutant reductions, and 
economic impact estimates for both the proposed options (1 to 3) and 
two new options (A&B) (see Section VI of today's notice). These revised 
estimates reflect:
    [sbull] Data from EPA's detailed surveys.
    [sbull] Data received with comments to the proposed rule.
    [sbull] Effluent monitoring (DMR) data received from EPA regional 
and State permitting authorities.
    [sbull] Changes resulting from methodological revisions to EPA's 
analytical approach. Before final action, EPA will consider these and 
any further revisions resulting from comment on today's notice. The 
following sections describe alternatives we are considering for the 
different regulatory levels of control (e.g., BPT, BCT, BAT, NSPS).

[[Page 75084]]

1. Description of Modified Options--Flow-through and Recirculating 
System Subcategories
    As a result of the facility-level analysis from detailed surveys 
and comments, EPA re-evaluated the flow-through and recirculating 
system technology options for BPT, BCT, BAT, and NSPS limitations or 
standards from proposal. In addition to the three proposal options, EPA 
is considering two new options that represent changes to the proposed 
options. We will also continue to consider a no further regulation 
option.
    The first new option (Option A) would, like Option 1, include 
primary settling. It would also include the requirement to develop and 
implement a BMP plan that minimizes both the discharge of drugs and 
chemicals and the possible escape of non-native species. Option A would 
also include the requirement for reporting Investigational New Animal 
Drugs (INADs) and extra-label use drugs as included in the proposed 
Option 2. The only difference between Option A and the proposed Option 
2 is that Option A does not require the development and implementation 
of BMPs to address solids control.
    Like Option 1, Option A would ensure that all covered facilities 
remove solids by primary settling. Based on the detailed survey data, 
primary settling is used at 468 out of 506 (92.5%) of all flow-through 
and recirculating CAAP facilities. However, where Option 1 would 
require using BMPs to control solids, Option A does not. Option A would 
instead require BMPs to (1) address the use, storage, and disposal of 
drugs and chemicals and (2) minimize or prevent the release or escape 
of non-native species. This substitution may be appropriate for two 
reasons. First, many facilities have already established these 
practices. The detailed survey indicates that drug and chemical 
management practices are in use at 44% of flow-through and 
recirculating CAAP facilities. The practices are also used at 46% of 
flow-through facilities with annual production between 100,000 and 
475,000 pounds. Over 90 percent of facilities producing species that 
would be considered non-native use escape prevention practices. Second, 
EPA thinks this change may be appropriate because it addresses the 
environmental effects that most concerned commenters. Therefore, EPA 
will consider Option A as the basis for BPT, BCT, BAT, and NSPS for the 
flow-through and recirculating subcategories with annual production 
greater than 100,000 pounds in the final rule. Option A would identify 
aspects of the facility operation that must be addressed with 
appropriate management practices but not specify the particular 
practices.
    The proposed Option 3 specified additional solids removal 
requirements that could be accomplished through secondary solids 
removal treatment technologies such as microscreen filtration or a 
solids polishing pond. Option 3 included a numeric TSS concentration 
limit of 10 mg/L maximum daily and 6 mg/L monthly average for full-
flow, flow-through facilities; 69 mg/L maximum daily and 55 mg/L 
monthly average for offline settling at flow-through facilities; and 50 
mg/L maximum daily and 30 mg/L monthly average for recirculating 
facilities. EPA estimates that solids polishing technologies (or some 
equivalent) are currently used at 264 of 506 (52.2%) of all flow-
through and recirculating CAAP facilities.
    The second modified option (Option B) being considered is similar 
to the proposed Option 3 in that it would require a greater degree of 
solids removal than achieved under Option A. However, Option B would 
offer facilities the choice to develop and implement a solids control 
BMP as included in Option 1 in lieu of installing secondary solids 
control technology, such as a second stage settling pond or a 
microscreen filter, and meeting numeric TSS limits. Facilities could 
still choose to install solids polishing technology and monitor TSS to 
achieve a numeric limit, but they could alternatively choose to instead 
implement solids control BMPs such as feed management.
    Table IV.B.1 identifies the components or technologies we are 
considering for the proposed and modified options for flow-through and 
recirculating systems.

                                Table IV.B.1.--Technologies or Practices Considered for the Proposed and Modified Options
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Technologies or practices
                                                                    ------------------------------------------------------------------------------------
                              Options                                    Primary       Solids control     Drugs and          Escape         Secondary
                                                                         settling           BMPs        chemicals BMPs     prevention     solids removal
--------------------------------------------------------------------------------------------------------------------------------------------------------
1..................................................................         [radic]          [radic]   ...............  ...............  ...............
2..................................................................         [radic]          [radic]          [radic]          [radic]   ...............
3..................................................................         [radic]          [radic]          [radic]          [radic]          [radic]
A..................................................................         [radic]   ...............         [radic]          [radic]   ...............
B *................................................................         [radic]          [radic]          [radic]          [radic]         [radic]
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Option B would include primary settling, drugs and chemicals BMPs, escape prevention, and a choice between solids control BMPs or secondary solids
  removal technology.

    EPA seeks comment on establishing BPT, BCT, BAT, and NSPS based on 
any one of these options for both flow-through and recirculating 
systems. We also seek comment on whether EPA should establish 
limitations and associated BMPs.
2. Continual Discharge Subcategory
    Public comment (DCNs 70137 and 70236) suggests that EPA's proposal 
did not clearly define recirculating systems. A variety of systems are 
used to produce aquatic animals spanning a continuum from completely 
flow-through (single pass of water through culture tanks) to nearly 
complete recirculating (only small amounts of make-up water are added 
to offset evaporation and other losses). Closed ponds (i.e., systems 
that do not regularly discharge) and net pens (systems located directly 
in the receiving water), are outside of this continuum. Many facilities 
operate flow-through systems with multiple uses of the water before 
discharge. Oxygen may be added and solids collected between uses to 
provide better quality of reused water. Some facilities operate flow-
through systems with process treatments that are similar to some used 
in recirculating systems (e.g., enhanced solids removal, extensive 
oxygenation, and carbon dioxide stripping).
    Recirculating systems may have concentrated solids effluents from 
solids removal processes that require additional treatment prior to 
discharge.

[[Page 75085]]

These concentrated solids effluents from recirculating systems may be 
similar in quality to those discharged from quiescent zones in flow-
through systems. Many recirculating systems also have an overflow or 
overtopping water discharge that is combined with the solids treatment 
effluent. Overtopping water quality is essentially the same as that of 
the process water in the recirculating system. The quality of the 
overtopping water is usually more concentrated in constituents (such as 
TSS, BOD, nitrogen, and phosphorus) than flow-through system bulk 
discharges. However, it is less concentrated in these constituents than 
effluents from solids treatment processes such as offline settling 
basins. Daily volume of discharged overtopping water is also typically 
less than 10% of the system volume compared to the multiple system 
volume exchanges per day in typical flow-through systems. Our proposal 
did not clearly state how the rule would cover overtopping water from 
recirculating systems. EPA intended overtopping water discharges to be 
treated like solids treatment water or combined effluents. That is, all 
discharges from recirculating systems would be subject to the same 
proposed effluent limits.
    EPA may revise its proposed subcategorization scheme by combining 
the flow-through and recirculating subcategories into a single 
subcategory, called the ``continual discharge'' subcategory (see 
Section III.B.1). Both proposed subcategories operate with a continuous 
or frequent discharge of wastewater containing similar wastewater 
pollutants. The recirculating system wastewater discharge typically 
comes from two sources, backwash from solids removal and overflow water 
from production tanks, and has similar pollutant concentrations as 
offline treatment system effluents from flow-through systems. Combined 
recirculating system discharges (backwash from solids removal and 
overflow water from production tanks) are also like the wastewater 
discharged from offline treatment at a flow-through system.
    The detailed survey data indicate that nationally 11 facilities use 
both flow-through and recirculating system technologies. Depending on 
the facility layout, wastewater from both systems may be commingled for 
discharge in a single effluent stream. Under the proposal, facilities 
that commingle recirculating and flow-through system wastewater would 
be subject to the recombined effluent limits that are the same as the 
full flow requirements for primary settling.
    By combining the flow-through and recirculating systems into a 
single subcategory, EPA would basically apply two sets of effluent 
limits. One set would apply to the discharge of full flow effluents, 
and the other would apply to offline treatment or recirculating system 
effluents. The flow-through facilities would be subject to the proposed 
requirements (i.e., remain unaffected by combining the separate 
subcategories into one), whereas the recirculating systems would be 
subject to offline treatment requirements. Offline treatment 
requirements had higher (less stringent) effluent concentration-based 
limits than the proposed recirculating system limits. They operate with 
a frequent continual discharge that contain similar wastewater 
characteristics.
    EPA is also considering the same modified options (A & B) for the 
continual subcategory as for the separate flow-through and 
recirculating subcategories. Because the continual subcategory would 
include limits from the separate flow-through and recirculating 
systems, the results of the analyses for the continual subcategory 
would be similar to those presented for the separate subcategories. EPA 
would apply the same requirement for TSS in a continual discharge 
subcategory to discharges from stand-alone recirculating facilities and 
offline settling basins. EPA seeks comment on combining these two 
subcategories into a single subcategory.
3. Net Pen Subcategory
    EPA is not considering changes to the proposed options for the net 
pen subcategory. For facilities that produce more than 100,000 pounds 
of aquatic animals per year, EPA proposed BPT limits based on:
    [sbull] Option 3 active feed monitoring (i.e., additional solids 
removal).
    [sbull] Developing a BMP plan for solids control.
    [sbull] General reporting requirements for use of certain drugs and 
chemicals for facilities.

EPA also proposed to establish BAT equal to BPT because no more 
stringent options representing BAT were available. EPA proposed to 
establish BCT equal to BPT because EPA did not identify any more 
stringent technologies representing BCT were available. Finally, EPA 
proposed NSPS equal to BAT because the proposed effluent limitations 
guidelines would be affordable and would not pose a barrier to entry 
for new source net pens.

V. Revisions to the Cost, Loadings, Economic, and Benefits Models

A. Revisions to Assumptions and Methodology Used in EPA's Cost Analyses

1. Proposed Costing Approach
    At proposal, EPA used a model facility approach to estimate the 
cost of installing or upgrading wastewater treatment to achieve the 
proposed requirements. As described in the preamble to the proposed 
regulation (67 FR 57872), EPA developed 21 model facilities (based on 
the USDA's Census of Aquaculture and EPA's screener survey) 
characterized by different combinations of production systems, size 
categories, species and ownership types. We developed regulatory 
technology options based on screener survey responses, site visits, 
industry and other stakeholder input, and existing permit requirements.
    EPA estimated the cost for each option component for each model 
facility. We then calculated costs for each regulatory option at each 
model facility based on model facility characteristics and the costs of 
the option's technologies or practices corresponding to the option.
    EPA estimated frequency factors for treatment technologies and 
existing BMPs based on screener survey responses, site visits, and 
sampling visits (see Section III.1). Baseline frequency factors 
represented the portion of the operations that would not incur costs to 
comply with the proposed requirements because they were already using 
the technology or practice. EPA adjusted the component cost for each 
model facility represented by the model to account for those facilities 
then EPA derived national estimates of costs by aggregating the 
component costs applicable to each model facility across all model 
facilities.
2. Revised Costing Approach
    EPA's detailed surveys captured information on the treatment in-
place at the facility and other site-specific information (such as 
labor rates). EPA got additional cost information from data supplied 
from public comments and site visits. With the new data, EPA revised 
the method to estimate compliance costs. Instead of a model facility 
approach, EPA is presenting facility-level costs based on the available 
facility-specific data contained in the detailed survey responses. We 
then apply statistically-derived survey weights instead of the 
frequency factors used at proposal to estimate costs to the CAAP 
industry as a whole.

[[Page 75086]]

    On the detailed survey, facilities operating flow-through and 
recirculating production systems reported a variety of BMPs that are 
used today. These BMPs include:
    [sbull] Feed management.
    [sbull] Cleaning of quiescent zones.
    [sbull] Inventory control.
    [sbull] Health screening.
    [sbull] Cleaning screens in tanks or raceways.
    [sbull] Mortality removal.
    [sbull] Use of dam boards.
    [sbull] Flow diversion during harvest and cleaning activities.

The detailed survey did not ask for detailed descriptions of the steps 
in the BMPs. Therefore, except for the feed management practice (see 
below), when a facility indicated a particular BMP in place, EPA 
assumed no additional cost to the facility for implementing that BMP.
    The costs associated with BMP plan development include a one-time 
labor cost of 40 hours to develop and write the plan. The plan that EPA 
costed included (1) identifying all waste streams, wastewater 
structures, and wastewater and manure treatment structures at the site, 
(2) identifying and documenting standard operating procedures for all 
BMPs used at the facility, and (3) management and staff 
responsibilities for implementing the plan. We included an annual cost 
for four hours of management labor to maintain the plan and eight hours 
of management labor for an annual review of BMP performance. We 
included the cost of developing a solids control and drugs and 
chemicals BMP plan in the estimates for all facilities, except those in 
Idaho and Washington. (Facilities in Idaho and Washington would not 
incur this cost because NPDES permits in these States already require 
solids control and drugs and chemicals BMP plans.) EPA found that the 
components of the BMP plans required in Idaho and Washington are 
similar to those being considered for the final rule.
    In evaluating facilities for solids controls, EPA first checked for 
evidence of a good feed management program. If the facility reported 
they practice feed management, EPA looked for evidence of solids 
management and good operation of the physical plant, including regular 
cleaning and maintenance of feed equipment and solids collection 
devices (e.g., quiescent zones, sedimentation basins, screens, etc.). 
To evaluate the effectiveness of a facility's solids control practices, 
we calculated feed conversion ratios (FCRs) using pounds of feed per 
pound of live product (as reported in the detailed survey) and 
considered existing solids control equipment. We assumed facilities 
lacking evidence of good feed management or solids control programs 
would incur additional costs to improve or establish them.
    EPA estimated FCRs from data in the detailed survey and follow-up 
with some facilities and compared FCRs for groups of facilities (i.e., 
combinations of ownership, species and production system types such as 
commercial trout flow-through facilities or government salmon flow-
through facilities). We found a wide range of FCRs (reported by 
facilities in their detailed surveys, which were validated by call 
backs to the facility) among apparently similar facilities within 
ownership-species-production system groupings.
    For example, we had good data for 24 of 60 government trout 
producers using flow-through systems. They reported a range of FCRs of 
0.79 to 1.80 with a median FCR of 1.30. If an individual facility's 
reported FCR was significantly greater than the median, EPA further 
evaluated the facility to ascertain the reason for the higher FCR. 
Facilities that produce larger fish, such as broodstock, might have 
higher FCRs because the larger fish produce less flesh per unit of 
food. Facilities with fluctuating water temperatures could also be less 
efficient than facilities with constant water temperatures. We did not 
apply costs for solids control BMPs for facilities with reasonable 
explanations for the higher FCRs. We evaluated facilities that did not 
report FCRs or provide enough data for an estimate using the 
methodology described in section III.H.
    Costs for the solids control BMP component include staff time for 
recordkeeping for feed delivery and daily feeding observations. 
Management activities associated with the solids control plan were 
weekly data reviews of feeding records, regular estimates of changes to 
feeding regimes for each group of aquatic animals, and staff 
consultations about feeding. For facilities with no solids control 
equipment, we also estimated the costs for primary and secondary solids 
control. EPA evaluated each facility to identify the configuration of 
the existing treatment units and what upgrades would be required. We 
found that most flow-through systems not having any treatment 
structures can comply with Option 1 by adding a combination of 
quiescent zones and off-line settling basins. We assume quiescent zones 
can be retrofitted into existing raceways without expanding them and 
without impacting production levels in the raceways.
    EPA also used industry cost information provided through public 
comment and the detailed survey to estimate costs for design and 
installation of primary settling equipment for effective settling of 
suspended solids. For example, we used the facility-level data included 
in the detailed survey responses to place and size the off-line 
settling basins on the facility site. For facilities that use earthen 
flow-through technologies, EPA estimated costs to construct and operate 
full flow settling structures rather than quiescent zones and off-line 
settling.
    EPA classified each facility's wastewater treatment system based on 
the description provided in its survey response and available 
monitoring data, including DMR data. We assumed that treatment 
technologies indicated by a facility on the detailed survey are 
properly sized, installed, and maintained. EPA estimated facility-
specific costs for each of the responding direct dischargers and used 
these estimates as the basis for national estimates. Because the survey 
did not collect information about many specific parameters used in 
individual facilities' production processes and treatment systems, EPA 
supplemented the facility-specific information with typical 
specifications or parameters from literature, survey results, and 
industry comments. For example, EPA assumed that facilities have pipes 
of typical sizes for their operations.
    As a consequence of such assumptions, a particular facility might 
need a different engineering configuration from those modeled if it 
installed equipment that varies from the equipment or specifications we 
used to estimate costs. EPA nonetheless considers that costs for these 
facilities are generally accurate and representative, especially 
industry-wide. EPA applied typical specifications and parameters 
representative of the industry to a range of processes and treatment 
systems. We contacted facilities to get site-specific configuration 
information where possible.
    In revising cost estimates, EPA paid particular attention to:
    [sbull] Size of tanks, raceways, and culture units.
    [sbull] Labor rates.
    [sbull] Treatment components in place.
    [sbull] BMPs and plans in place.
    [sbull] Daily operations at the facility.

Site visits and analysis of the detailed surveys indicated that 
raceways and quiescent zones are cleaned as necessary to maintain 
system process water quality.

[[Page 75087]]

    The effective operation of microscreen filters require that they be 
enclosed in heated buildings to prevent freezing when located in cold 
climates. EPA's revised estimates of costs for Option 3 are not based 
on the application of microscreen filters unless the detailed survey 
response indicated that such a structure existed at the site. When the 
detailed survey did not indicate a structure at the site, EPA estimated 
costs for a second stage settling structure rather than a microscreen 
filter. Based on data from two of EPA's sampling episodes at CAAP 
facilities, this technology will achieve the proposed limits for Option 
3.
    EPA agrees with concerns raised in comments that the cost 
associated with enclosing the filter in a heated structure would be 
prohibitive. Option B would allow facilities to choose between solids 
polishing treatment (e.g., second stage settling) and solids control 
BMPs. For estimating compliance costs, EPA assumes that facilities will 
choose the least costly method which, in all cases, proved to be using 
the BMPs. Thus, EPA based Option B costs on the application of solids 
control BMPs.
    To estimate costs for the drugs and chemical component of the BMP 
plan, EPA first looked at the detailed survey to determine if the 
facility reported using drugs, chemicals, or medicated feed. The 
detailed survey also asked if the facility has adopted health 
management BMPs. Although responses indicated that nearly half of the 
regulated population has some form of health management practices, we 
do not have information on the specific activities associated with 
these practices. Therefore, EPA assumed that all facilities reporting 
drugs and chemicals would incur additional costs to implement 
management practices (except in Idaho and Washington). These States 
have already issued NPDES permits that include requirements for drug 
and chemical management BMPs similar to those in our cost estimates. 
(EPA found evidence of other states with similar requirements, but no 
facilities in these states were in the group of in-scope facilities 
that responded to the detailed survey.) Costs include staff time for:
    [sbull] Initial and annual plan review.
    [sbull] Weekly inspections of storage facility.
    [sbull] Completion of an application program worksheet 
(recordkeeping).
    [sbull] Completion of a disposal worksheet (for out-of-date drugs 
or chemicals).
    [sbull] Marking of production units being treated.
    [sbull] Annual training sessions.
    Management activities include:
    [sbull] Initial plan development.
    [sbull] Annual review and update of plan.
    [sbull] Review of application worksheets.
    [sbull] Leading facility training sessions.
    [sbull] Quarterly inspections of entire facility.
    [sbull] Management of veterinary assistance (e.g., implementing vet 
recommendations).
    [sbull] Biweekly review of drug and chemical records.
    [sbull] Staff management consults.
    Because therapeutic treatments vary considerably at a facility from 
year-to-year and also among facilities, EPA estimated the BMP costs 
based on monthly drug applications throughout the year. We estimated 
costs for a few hatcheries that produce only eggs and larvae for 
regular treatments to control fungus during the egg incubation period.
    We also considered the use of activated carbon filtration to treat 
and remove drug or pesticide active ingredients from wastewater. 
Research indicates that this technology is effective at treating these 
compounds, and at least one aquatic animal production facility 
installed this technology. EPA estimated the costs for activated carbon 
treatment as a stand-alone technology. We estimated costs on a site-
specific basis for facilities which reported using drugs and then added 
these costs for options A, B, 2, and 3 (see Section V.C.) to assess the 
economic achievability of this technology.
    EPA estimated the costs to develop and implement escape management 
practices at facilities where (1) the cultured species was not commonly 
produced or regarded as native in the State, (2) the facility was a 
direct discharger, and (3) the species was expected to survive if 
released. (In contrast, producers of a warm water species in a cold 
climate, such as tilapia producers in Minnesota or Idaho, would not 
incur costs for this practice.) Costs for escape prevention include 
staff time for production unit and discharge point inspections and 
maintenance of escape prevention devices. We applied these costs to 
facilities that installed equipment conforming with State requirements 
for facilities producing non-native species (identified by the State). 
Management time includes quarterly production unit and discharge point 
inspections, eight hours a year to review applicable State and Federal 
regulations, and quarterly staff consultations.
    EPA revised estimates for all labor costs using the employee and 
wage information supplied in the detailed surveys. For those facilities 
indicating they use unpaid labor for all or part of the facility 
operation or did not supply useable wage information, we used average 
State or regional wages.

B. Revisions to Assumptions and Methodology Used in Loadings Analyses

1. Proposed Approach
    To estimate the baseline discharge loadings and load reductions for 
the proposal, EPA used the same model approach described in Section 
V.A.1. for the costing analyses. We first estimated pollutant loadings 
for untreated wastewater based on several factors for each model 
facility. Feed offered to the CAAP species contributed to pollutant 
discharges in three ways: feces, urine-contributing dissolved ammonia, 
and uneaten feed (dissolved and particulate forms). These byproducts of 
feed contribute to the pollutant load in the untreated culture water. 
EPA used typical efficiency rates of removing specific pollutants from 
water for the technology options and BMPs we are considering. Using the 
same frequency factors for technologies in place that were used to 
estimate costs, we estimated the baseline pollutant loads discharged. 
We then calculated load reductions for the options.
2. Revised Loadings Approach
    Rather than using the proposed model approach, EPA revised the 
loadings approach to incorporate a facility-level approach using data 
primarily from the detailed surveys, but also taking into account 
suggestions concerning appropriate feed conversion ratios (FCRs) 
provided by commenters. EPA also applied statistically-derived survey 
weights to get national estimates.
    Since pollutant loads are proportional to feed inputs, improving 
feeding efficiency and reducing wasted (uneaten) feed will reduce 
pollutants discharged from CAAP facilities. EPA expects that using feed 
management BMPs will reduce pollutant loads by improving the efficiency 
of converting feed to the final product (i.e., less feces and uneaten 
feed). EPA determined pollutant loadings from revised estimates of 
pollutant loads for a unit of feed input. EPA's re-evaluation of the 
baseline or current practices changed the loading estimates, reflecting 
survey responses on practices or treatment-in-place at facilities. The 
revised results also reflect the estimated FCRs we used in the 
facility-level analyses (see Section III.H).
    In its evaluation of data from the facilities responding to the 
detailed survey, EPA found no apparent relationships that explain why 
some

[[Page 75088]]

facilities use drugs or medicated feeds and others do not. EPA also 
evaluated the amounts of drugs and medicated feed reported in the 
detailed survey as used at facilities and found no basis for predicting 
how much drugs or medicated feed would be used at a given facility. 
Information reported by facilities did not provide enough detail for 
EPA to estimate pollutant reductions associated with drug and chemical 
BMPs.

C. Revisions to Assumptions and Methodology Used in Economic Analyses

    Due to new information and comments, EPA is considering several 
changes in the approaches for economic analysis. EPA seeks comments on 
the changes. Section VI describes new data and results for the revised 
economic analyses.
1. Economic Analysis Approach for the Proposed Rule
    For the proposed rule, EPA evaluated projected economic impacts 
using screener questionnaire data which did not include financial or 
economic information beyond revenues and limited firm-level production 
data. As a consequence, the impact analysis was based on compliance 
costs for model facilities, frequency factors for extrapolating costs 
to a group of facilities represented by a model, and sales or revenue 
tests. Revenue tests involve simple comparisons of compliance costs 
with facility revenues. For non-commercial facilities, in lieu of 
revenues, we imputed a value to their production based on annual 
harvest and commercial prices. Similar revenues tests were applied to 
both commercial and non-commercial facilities. We estimated the number 
of small businesses from a special tabulation of the United States 
Department of Agriculture (USDA) Census of Aquaculture (1998) (for 
details, see ``Economic and Environmental Impact Analysis of the 
Proposed Effluent Limitations Guidelines and Standards for the 
Concentrated Aquatic Animal Production Industry,'' EPA-821-R-02-015, 
September 2002, DCN 20141).
2. Clarifications Regarding Baseline Assumptions for Economic Analysis
    Treatment in Place. In the proposed rule and this notice, EPA 
characterizes baseline conditions using existing compliance levels and 
treatment in place. This approach is consistent with past effluent 
guidelines and EPA's Guidelines for Preparing Economic Analyses (EPA 
240-R-00-003, September 2003, DCN 20435) and Office of Management and 
Budget (OMB) guidelines. OMB guidelines state that `` * * * the 
baseline should be the best assessment of the way the world would look 
absent the regulation * * * You may often find it reasonable to 
forecast the world absent the regulation will resemble the present.'' 
(OMB. 2002. ``Guidelines to Standardize Measures of Costs and Benefits 
and the Format of Accounting Statements,'' memorandum from Jacob J. 
Lew, Director to Heads of Departments and Agencies, M-00-08, March 22, 
DCN 20385). Thus, EPA does not agree with some commenters' suggestions 
that baseline conditions for impact analysis should assume no treatment 
in place.
    Consideration of Market Conditions, Market Forecasts, and 
International Competition. EPA assumed in the proposed rule that CAAP 
producers cannot pass cost increases through to consumers. We do not 
expect to change this assumption for the final rule (foreign 
competition is so strong that the domestic market cannot raise prices 
at all). EPA used the 1999-2001 data from the detailed questionnaire to 
reflect current market conditions. We also used several publicly-
available data sources to develop market forecasts, ranging from 
pessimistic to slightly optimistic, for future prices (see Section 
V.C.3.b.i). This approach addresses comments suggesting the need to 
account for foreign competition and sluggish market outlooks for U.S. 
aquaculture in the economic analysis for this rule.
3. Revisions of the Approaches and Assumptions Used in the Economic 
Analysis
    Data collected from the detailed questionnaire will form the basis 
for the economic analysis supporting the final rule. These financial 
analyses use the standard methodology for developing effluent 
limitations guidelines with some changes to address impacts to non-
commercial (e.g., State, Tribal or Federal government) facilities. 
Comments recommended changes to the proposed methodology. The following 
sections describe the revisions, based on comments and the availability 
of detailed questionnaire responses, to the economic analyses we are 
considering.
    a. Revisions to Estimates of Numbers of Small Business. EPA 
received several comments questioning the number of facilities 
identified as small businesses in the proposed rule. EPA revised its 
estimates of affected small businesses based on the results of the 
detailed survey and designed the detailed questionnaire to collect 
revenue information for both individual facilities and the companies 
that own the facilities. We compared these data to Small Business 
Administration size standards for the industry (up to $750,000 annual 
revenues). If a facility earned more than the size standard, we did not 
consider it a small business. If a facility did not earn more than the 
size standards, EPA examined company revenues to determine whether the 
company was a small business as defined by SBA. EPA collected public 
information on company ownership and revenues as needed to complete 
each determination. At this time, EPA identified 117 facilities out of 
522 facilities within the scope of the rule that are owned by small 
businesses, seven that belong to small organizations, and one that is 
an academic/research facility.
    b. Revisions to Economic Analyses for Commercial Facilities. For 
the final rule, EPA intends to use (1) facility-specific data supplied 
by the detailed questionnaire, (2) results from forecasting methods 
(see Section V.C.3.b.i) to improve cost and price estimates, and (3) 
several economic impact measures that were not used in the proposal. In 
particular, the detailed questionnaire data should help us address 
comments suggesting that we underestimated costs and overestimated 
prices and that our extrapolation of impacts based on model facilities 
misstated the impacts on many facilities.
    i. Measures of Economic Impacts for Commercial Facilities. For the 
final rule, EPA will use several measures to evaluate possible impacts 
on commercial facilities that we did not use for the proposed rule due 
to lack of data. These measures examine the possibility of closure, 
direct impacts on employment and communities, indirect and national 
impacts, and changes in financial health and borrowing capacity.
    Closure Analysis. The closure analysis compares costs from 2005 to 
2015 to earnings during the same period. We used two methods to 
estimate earnings: (1) cash flow and (2) net income. We discounted both 
costs and earnings with a 7 percent real discount rate to account for 
the time value of money and place earnings and costs on a comparable 
basis. To be considered a closure as a result of this rule, a facility 
must show for two out of three forecasting scenarios (1) positive 
discounted cash flow (or net income) without the rule and (2) negative 
discounted cash flow (or net income) with the rule. In the detailed 
questionnaire, EPA asked commercial respondents whether their facility 
did more than raise fish. If they did, the questionnaire asked them to 
report the financial performance of both the

[[Page 75089]]

aquaculture enterprise and the entire farm/company. EPA will perform 
the closure analysis for the enterprise, facility, and company levels. 
These analyses involve several complexities (e.g., what to consider as 
earnings, what costs are included, and the number and type of 
forecasting methods used). Section V.C.3.b.ii contains our detailed 
responses to comments on these and other aspects of the closure 
analysis.
    Closure Analysis--Forecasting methods. EPA examines the possibility 
of closure under three forecasting methods to project future earnings. 
The first method uses U.S. Department of Agriculture (USDA) long-run 
baseline projections for the Consumer Price Index, Food at Home, Fish 
and Seafood Sector for 2004 through 2012 (USDA Agricultural Baseline 
Projections to 2012, Staff Report WAOB-2003-1. February, DCN 20363). 
This projection reflects the current industry downturn which then 
changes to a long-run annual increase of 1.5 percent. This index is 
used to adjust the revenue information in the detailed questionnaire to 
project revenue in future years.
    The second method uses historic time-series data collected and 
published by several government agencies to estimate price trends and 
project them into the future. For trout, EPA uses USDA trout price data 
for 1994-2002 (Trout Production, Sales of fish 12'' or longer, U.S. 
Average price per pound). For all other fish, EPA uses U.S. Department 
of Labor, Bureau of Labor Statistics, Fish PPI, Producer Price Index--
Unprocessed and packaged fish, not seasonally adjusted, (Series ID: 
WPU0223) from January 1980 through February 2003. EPA examined Series 
ID: WPU-223-1-3 (salmon) not seasonally adjusted but could find no 
trend in the data. EPA converts the data to constant dollars where 
needed. For time series with monthly observations, EPA converts the 
series to a 12-month centered moving average to smooth seasonal 
variations. We performed a regression analysis using this price data to 
derive kinked trend lines for prices (e.g., Chow Breakpoint Test, see 
DCN 20366 and DCN 20371 for details). This type of regression allows 
the slope of the price line to differ before and after suggested 
breakpoints in time. Both data sets (trout and all fish) show downward 
trends for prices. We converted price level forecasts into an index 
using 2001 as the base period (this is the most recent year for which 
data were collected in the detailed questionnaire). We also applied 
this index to base year (2001) data from the detailed survey to project 
future revenues. The third forecasting method assumes constant future 
revenues using the average of 1999-2001 earnings collected in the 
detailed questionnaire.
    For this notice, EPA projected impacts only when the same impacts 
occurred using two of the three forecasting methods. EPA seeks comment 
on basing its closure analysis for the final rule on impacts that occur 
using one of the three methods.
    The forecasting methods give a range of trends (i.e., upward 
(USDA), downward (estimated price indices), and no change (survey 
earnings average)). However, EPA expects to adjust the forecasts to 
reflect more recent data for the final rule, so this range of trends 
may change (see DCN 20450).
    Closure Analysis--Baseline Industry Conditions. We can not analyze 
facilities with negative net earnings under 2 or 3 of the forecasting 
methods before they incur pollution control costs with the methodology 
used for the facility closure analysis. EPA seeks comment on omitting 
such facilities from the closure analysis. Such facilities represent 
situations such as:
    [sbull] Start-ups (where the first year of income is negative but 
does not indicate future earnings)
    [sbull] Cost centers (that transfer production to other facilities 
under the same ownership at no cost, or the cost is set to the 
operating costs)
    [sbull] Facilities where the company does not record income 
statement information at the facility level.
    [sbull] Facilities that are likely to fail with or without the 
rule.
    Direct and Community Impacts. When the analysis projects that a 
facility will close as a result of the rule, EPA then tracks the direct 
and indirect impacts from that closure. We consider all associated 
revenues, production wages, and employment (both paid and unpaid labor 
and management) lost. We will also examine the increase in local 
unemployment resulting from the facility closure. These approaches 
respond to comments that suggested the need to determine how the CAAP 
industry impacts communities (e.g., employment) in several areas of the 
country.
    Indirect and National Impacts. Impacts on the CAAP industry are 
known as direct effects. Impacts due to lost CAAP output and employment 
in sectors that directly support the CAAP industry are known as 
indirect effects. Induced effects are overall changes in household and 
business spending due to direct and indirect effects. The U.S. 
Department of Commerce's Bureau of Economic Analysis (BEA) tracks these 
effects both nationally and regionally in large ``input-output'' 
tables, published as the Regional Input-Output Modeling System (RIMS 
II) multipliers (DCN 20386). EPA used the multipliers for the RIMS II 
industry number 1.0302 (miscellaneous livestock) because it includes 
all of SIC code 0273. EPA used national final demand multipliers for 
output (3.7163) and employment (45.2228) because they include direct, 
indirect, and induced effects. For example, for every $1 million in 
output lost due to the projected closure of a CAAP facility, nearly 
$3.8 million in output and 45 jobs are lost nationwide. When a facility 
is projected to fail as a result of the rule, EPA may estimate the loss 
in output associated with facility closure and then use the RIMS II 
multipliers to estimate national level impacts.
    Impact on Financial Health. EPA will calculate impacts on financial 
health at the company level using USDA's four-state categorization of 
financial health based on a combination of net cash income and debt/
asset ratio (i.e., favorable, marginal solvency, marginal income, and 
vulnerable). EPA calculates the financial state of each company before 
and after incremental pollution control costs. EPA considers any change 
in categorization an impact of the rule.
    Impact on Borrowing Capacity (``Credit Test''). Commenters 
suggested that impacts on borrowing capacity should be considered. 
Based on several measures used by USDA, EPA developed a method to 
examine whether a bank would lend a farm/company the amount needed to 
cover the costs of incremental pollution control. According to the 
USDA, ``Lenders generally require that no more than 80 percent of a 
loan applicant's available income be used for repayment of principle 
and interest on loans'' (DCN 20395, p. 19). EPA considered the income 
available for debt coverage as after-tax cash flow for 2001 for the 
farm or company (typically, the worst year represented in the 
questionnaire data). For sole proprietors, EPA collected data for 
aquatic animal production from Schedule F or Schedule C from the IRS 
tax forms submitted with a proprietor's Form 1040. EPA intentionally 
did not request information from the proprietor's Form 1040 (the Agency 
specifically excluded the collection of off-farm income data). We 
multiplied the after-tax cash flow by 80 percent to obtain a proxy for 
USDA's ``maximum feasible loan payment'' (MFLP). We then calculated the 
ratio of the pre-tax annualized cost of an option and the after-tax 
MFLP. We assumed that a bank would compare the pre-tax cost to the

[[Page 75090]]

MFLP to be conservative. To be more conservative, EPA identified any 
company with a ratio exceeding 80 percent of MFLP being impacted under 
this test (i.e., the test threshold is actually 64 percent of the 
after-tax cash flow).
    ii. Economic Topics Raised in Comments to the Proposed Rule. 
Commenters raised several issues about assumptions for closure analysis 
including (1) the definition of what constitutes earnings for the 
discounted cash flow analysis (including questions about how to 
incorporate depreciation, cash flow, net income, sunk costs, capital 
replacement, and unpaid labor), (2) forecasting methods used to project 
earnings, and (3) assumptions EPA makes to address trade impacts.
    Cash Flow. In projecting closures, EPA estimated earnings using (1) 
cash flow and (2) net income. We calculated the difference between 
gross revenues and total expenses reported in the detailed 
questionnaire and reduced the value by the estimated federal and State 
taxes to calculate net income. We then added the non-cash expense of 
depreciation (when it was reported in the questionnaire) to net income 
to calculate cash flow. The difference between cash flow and net income 
is, therefore, depreciation, consistent with the guidance from the Farm 
Financial Standards Council (FFSC; Financial Guidelines for 
Agricultural Producers, DCN 20095) and several business financial 
references (DCNs, 20378, 20382, and 20388).
    Some commenters were concerned about using cash flow analysis 
because of how earnings are calculated, the extent of the fixed costs, 
and, in older facilities, sunk costs. These comments are covered in the 
following discussions of: (1) Depreciation, (2) sunk costs, (3) capital 
replacement, and (4) unpaid family labor and management.
    Depreciation. Depreciation is an annual allowance for the 
exhaustion, wear, and tear of a firm's fixed assets. Depreciation 
reflects a previous expenditure for a fixed asset to which the entity 
makes no payments in the current period. Although depreciation 
theoretically reflects wear and tear spread out evenly over the useful 
life of an asset, depreciation (as calculated for tax purposes) does 
not. First, the recovery period for costs is shorter than the asset 
lifetime and, second, accelerated recovery factors are skewed to the 
initial years of useful life. EPA identified information (e.g., 
Financial Accounting Standards Board, DCN 20382, DCN 20378, DCN 20388) 
suggesting that cash flow may be appropriate for some types of economic 
analyses. EPA seeks comment on the appropriateness of cash flow and net 
income analyses as they apply to this rulemaking. Because depreciation 
reported on an accounting statement may or may not correspond to true 
``economic'' depreciation, EPA estimated closure impacts with 
depreciation as an expense (i.e., net income analysis) and without 
depreciation (i.e., cash flow).
    Sunk costs. Some commenters argued that the analysis should 
consider sunk costs. Comments characterized cash flow analysis as 
inappropriate because it does not account for sunk costs, particularly 
in older facilities. Sunk costs paid out of capital (as opposed to 
financing) already occurred and, therefore, are not incremental cash 
flows. They should not affect future investment or the economic 
viability of the firm. Therefore, EPA excludes this category of sunk 
costs from the closure analysis. Sunk costs that are financed have 
interest, and this interest is included in interest payments reported 
in the income statements. Unpaid principle from previously financed 
sunk costs is reflected in a farm's debt/asset ratio, and EPA will 
include it in our evaluation of farm financial health and the ability 
of facilities (or companies) to carry additional debt (see Section 
V.C.3.b.i).
    Capital replacement. EPA received comments that the facility 
financial analysis should include an allowance for capital replacement. 
EPA evaluated data on capital expenditures and capital replacement. The 
Census Bureau collects data on annual capital expenditures including 
forestry, fishing, and agricultural services (U.S. Census Bureau, 
Annual Capital Expenditures Survey 1999, DCN 20384). However, Census 
Bureau capital expenditure data includes intra-company transfers of 
capital equipment and ownership changes (see DCN 20384, Appendix D-10, 
Instructions, Definitions, and Codes List).
    As a consequence, it is difficult to know whether capital 
expenditures help maintain existing production or whether they support 
expanded production. Capital expenditures for an industry undergoing 
consolidation, such as salmon, include acquisitions reflecting 
transfers of capital rather than purchases of new or replacement 
capital. Further, the Census data includes expansion in productive 
capacity, whether in new plants or in existing plants. Aggregate 
industry data on capital expenditures cannot be used to specify the 
level of capital expenditure that is necessary to maintain productive 
capacity at an individual facility.
    EPA includes costs for capital replacement as they occur within the 
depreciation and interest payments reported on income statement. When 
EPA relies on net income calculations, capital replacement costs (as 
approximated by financial depreciation, in addition to interest 
payments captured in cash flow) are considered in the closure analysis. 
Capital replacement costs that are capitalized and not expensed are 
reflected in the asset, debt, and equity components of the balance 
sheet as appropriate. Past capital replacement costs are represented in 
the farm financial health measures and credit tests that are based on 
balance sheet data. When estimating compliance costs, EPA includes 
replacement costs for pollution control capital. EPA's cost estimates 
include all capital expenditures (whether initial or replacement) that 
are projected to occur within the 10-year analytical time frame.
    Unpaid family labor and management. EPA received suggestions that 
the financial analysis of aquatic animal production should include a 
``proxy'' cost to reflect unpaid family labor and management. Unpaid 
family labor and management is ``unpaid'' only with respect to the 
income statement. Distributions from the business to cover family 
living and other personal expenses are generally referred to as 
``family living withdrawals'' or ``owner withdrawals.'' These 
withdrawals are shown in the statement of owner equity in the balance 
sheet and not the income statement. As a consequence, the financial 
health and credit tests incorporate any withdrawals from equity for 
unpaid labor and management, because these tests are based on balance 
sheet data. Note that EPA includes estimates for labor costs when 
estimating compliance costs in order to include the effects of the 
additional labor and management in closure analysis. EPA also includes 
unpaid labor and management as lost jobs in the total count of lost 
employment from facilities projected to close as a result of the rule.
    EPA reviewed USDA Economic Research Service data on off-farm income 
by farm category (USDA, 2003. Economic Research Service. Agriculture 
Income and Finance Outlook. AIS-80. March, DCN 20396). USDA data 
indicate that farm operation's contribution to total household income 
ranges from a substantial amount for ``Very Large Farms'' to a negative 
contribution that is subsidized by off-farm income for limited resource 
and

[[Page 75091]]

``small low-sales farms.'' These data indicate that it is possible for 
labor to earn a zero or negative return in the short run. EPA 
recognizes that, under standard economic theory, an enterprise in which 
labor is earning no return, either as wages or profit, is unlikely to 
be viable in the long run. The Farm Financial Standards Council also 
discusses the issue of unpaid labor (DNC 20095, pp. II-3 and II-22). 
EPA does not estimate a charge for unpaid labor when calculating farm 
income under discounted cash flow or net income analysis for this NODA. 
However, EPA seeks comment on whether it should impute a cost for 
unpaid labor and management in the closure analysis and, if so, on what 
data and methods the wage should be based.
    c. Revisions to Economic Analyses for Non-commercial Facilities. 
EPA uses a methodology for non-commercial facilities where pre-tax 
annualized costs are compared with the operating budgets for Federal, 
State, Tribal (owned and operated by Tribal governments), and research 
facilities. For Alaskan non-profit facilities, EPA compares pre-tax 
annualized costs to reported salmon revenues. EPA is also considering 
calculations, such as the increased need for taxes or fees to cover the 
additional costs, that can be made as detailed questionnaire data 
permit. EPA seeks comment on methodologies for investigating impacts on 
non-commercial operations, including methods for characterizing the 
implications or consequences of percent reductions in facility budgets.

D. Revisions to Assumptions and Methodology Used in Benefits Analyses

    The proposal established limits for total suspended solids (TSS) 
loads from flow-through and recirculating systems and required 
practices to minimize accumulation of excess feed from net pen systems. 
These requirements, according to EPA loadings calculations, would 
reduce facility discharges of TSS, total nitrogen (TN), total 
phosphorus (TP), and biochemical oxygen demand (BOD). The proposal also 
required facility operators to minimize releases of non-native species, 
pathogens, and therapeutants. At proposal, EPA did not quantify 
baseline or regulated loads for these latter parameters.
    Reductions in these loadings (TSS, TN, TP, BOD, non-native species, 
pathogens, and therapeutants) could affect water quality, the uses 
supported by varying levels of water quality, and other aquatic 
environmental variables (e.g., primary production and populations or 
assemblages of native organisms in the receiving waters of regulated 
facilities). EPA discussed several of these possible responses to 
loading reductions qualitatively at proposal. The proposal also 
estimated the monetized benefits based on changes in the recreational 
use value of freshwater streams affected by the rule.
    EPA anticipates that its overall approach for characterizing 
benefits for the final rule will be similar to that used for the 
proposed rule. The proposal approach involved three efforts. First, EPA 
developed an estimate of national monetized benefits of the rule. We 
derived the monetized benefit estimate by applying (1) the QUAL2E (a 
water quality model) to a range of model facilities and receiving water 
conditions and (2) an economic monetization method that related water 
quality improvements to monetized benefits. Second, EPA discussed the 
possible impacts from rule-related reductions in BOD, TN, TP, and TSS 
loads on stream water quality relative to national water quality 
criteria. This discussion was primarily qualitative. Third, EPA 
included qualitative discussions of possible benefits of the rule that 
could not be quantified. Examples of such possible benefits include 
those that might arise from reductions in releases of non-native 
species or reductions in inadvertent spills of drugs and chemicals used 
at CAAP facilities. Again, these were qualitative discussions only, and 
EPA neither quantified nor monetized these possible benefit areas. 
While we expect to retain this overall approach, the Agency may revise 
inputs, methods, or information in each of these areas. Sections V.D.1-
V.D.3 discuss these improvements further.
    EPA's analysis of possible benefits of the final rule will address 
public comments about the proposal benefits analysis. We received some 
comments addressing the Agency's water quality-based monetized benefit 
estimate. One commenter criticized EPA's monetized benefit estimate as 
insufficiently reflecting the value of water quality. Other commenters 
asserted that EPA overestimated environmental benefits of the 
regulation. One of these commenters argued that EPA's use of frequency 
factors led to overestimation of benefits. Another commenter questioned 
whether EPA should extrapolate estimates of freshwater benefits for 
reductions in pollutant discharges to Alaska facilities that are 
discharging to marine environments. This commenter also asserted that, 
in many nutrient-poor streams where salmonid fish are found, hatchery-
related nutrients lead to improved downstream fishing, and that a rule-
related reduction in these nutrient inputs should be subtracted from 
EPA's benefits estimate.
    In addition to comments on EPA's monetized benefit estimate, EPA 
received some comments on whether and how to characterize benefits from 
rule-related reductions in discharges of non-native species, pathogens, 
antibiotics or other therapeutants, and other chemicals. One commenter 
argued that it is extremely complex and controversial to make 
statements about benefits as a result of controlling non-native 
species, pathogens, antibiotics, or chemical releases is extremely 
complex and controversial.
1. Revisions to Monetized Benefits Estimate
    At proposal, EPA used an approach for estimating national benefits 
from rule-related improvements in water quality that relied on (1) 
simulating improvements in downstream water quality parameters for 
model facilities, and (2) applying a monetization method that related 
changes in water quality to ``willingness to pay'' (WTP) values for 
water quality improvements. For the monetization method, we combined 
four simulated water quality parameters to generate a water quality 
index (WQI-4). The parameters were dissolved oxygen (DO), biochemical 
oxygen demand (BOD), total suspended solids (TSS), and fecal coliform 
(FC). Because we do not expect loadings for FC to be discharged from 
CAAP facilities, we assumed that background levels of this parameter 
remain unchanged. The WQI is a 0-100 scale that weighs each water 
quality parameter to reflect its significance for determining the 
suitability of water for progressively more demanding uses. We 
converted changes in the WQI-4 to monetary values based on a contingent 
valuation survey (Carson and Mitchell, 1993, DCN 20157).
    At proposal, data were not available for site-specific estimates of 
water quality responses to reduced pollutant loadings. Neither were 
they available for facility-specific estimates of pollutant loadings 
and loading reductions nor individual facility locations for all 
potentially regulated facilities. Therefore, to simulate possible 
ranges in downstream water quality improvements for regulated 
facilities, we used estimates of pollutant loadings and loading 
reductions for representative (``model'') facilities and a hypothetical 
receiving water with a wide range of assumed background water quality 
and flow conditions. We used the Enhanced Stream Water Quality (QUAL2E) 
model to perform these simulations. We then applied the

[[Page 75092]]

monetization method described above to calculate WTP values for the 
simulated water quality improvements for each model facility. Finally, 
we estimated and summed WTP values for other potentially regulated 
facilities of that model facility type to produce a national benefit 
estimate. (For more details of the methodology, see DCN 20141).
    We expect to apply a similar water quality modeling and 
monetization approach for estimating water quality-related benefits. 
However, we expect that the final methodology will address certain 
limitations that we did not recognize at proposal. We will take 
advantage of refined estimates of facility loads. That is, we will 
improve the water quality-related benefits analysis using:
    [sbull] Significantly improved facility-specific loadings estimates 
based on new data from the detailed surveys and new information on feed 
conversion ratios (FCRs). These improved loadings estimates help us 
evaluate contributions of specific facilities to improved water quality 
(see Section V.B).
    [sbull] Site-specific water quality simulations using new 
information from the survey on the geographical distribution of 
facilities. EPA intends to use specific facility receiving water 
simulations when data are available, and model receiving water 
conditions when data are unavailable, for an individual site.
    [sbull] A more refined method for selecting a subset of QUAL2E 
application sites from which we can develop a national benefits 
estimate. Sites will be selected based on the availability of data 
(e.g., water quality and discharge data) for model calibration. The 
sites should represent geographic regions and environmental conditions 
where most of the facilities are located. We expect to select between 
five to ten QUAL2E application sites.
    [sbull] An improved method for calculating the WQI that better 
reflects water quality changes associated with CAAP discharges. The WQI 
that EPA used previously included four water quality parameters (WQI-
4). EPA more recently developed a six-parameter WQI (``WQI-6'') based 
on TSS, BOD, DO, FC, plus nitrate (NO3) and phosphate 
(PO4). The new index more completely reflects the type of 
water quality changes that will result from loading reductions for TSS, 
total nitrogen (TN), total phosphorus (TP), and BOD. We may present 
results from both the WQI-4 and WQI-6 indices in the final benefits 
analysis for the CAAP rule.
    [sbull] An improved method for monetizing water quality benefits. 
We based the water quality benefits monetization method we used for the 
proposed rule on results from a stated-preference survey conducted by 
Carson and Mitchell (1993) (DCN 20157). We divided household 
willingness-to-pay (WTP) values for changes in recreational water ``use 
classes'' by the number of WQI-4 points in each use class. We assigned 
a portion of the value for each unit change to achieving the whole 
step. Recently, EPA developed an alternative approach, also based on 
Mitchell and Carson's work. The authors also expressed their results as 
an equation relating a household's WTP for improved water quality to 
the change in the water quality index and household income. An 
important feature of this approach is that it is less sensitive to the 
baseline use of the water body. This approach is also consistent with 
economic theory in that it exhibits a declining marginal WTP for water 
quality. (See more information on this approach in DCNS 40138 and 
40595.) Caution must be used in manipulating valuations derived from 
stated preference surveys, but this valuation function approach helps 
address some concerns about earlier applications of the water quality 
benefits monetization method. (See DCN 40595 for a more detailed 
discussion.)
2. Other Revisions to Benefits Analysis About Reductions in BOD, TN, 
TP, and TSS Loads
    At proposal, EPA examined additional ways of characterizing 
environmental benefits from rule-related reductions in BOD, TN, TP, and 
TSS loads using the same QUAL2E modeling results from the proposal 
monetized benefits estimate. Specifically, we compared water quality in 
receiving streams simulated by QUAL2E modeling with national water 
quality criteria for DO, ammonia, TN, and TP. EPA discussed this 
comparison in light of the possibility for rule-related reductions in 
exceedences of these criteria. We did not monetize the results of that 
evaluation. They were intended to illustrate an alternate indicator of 
possible rule-related changes in water quality (Section 10.5.1., DCN 
20141).
    For the final benefits analysis, EPA may update this evaluation in 
several ways. First, we expect to use the improved site-specific water 
quality modeling results described in Section V.D.1. for the comparison 
with national water quality criteria. We are also evaluating the 
possibility of using an aquatic ecosystem model to further translate 
load reductions and water quality changes at a subset of facilities 
into other ecosystem changes (e.g., effects on benthic fauna, fish 
populations, and other ecosystem variables). The model, AQUATOX (http://www.epa.gov/waterscience/models/aquatox/), represents stream, river, 
lake, reservoir, and pond ecosystems by modeling:
    [sbull] Periphyton.
    [sbull] Moss.
    [sbull] Macrophytes.
    [sbull] Major guilds and taxonomic groups of invertebrates and 
fish, as well as phytoplankton.

The model can also simulate constant or time-varying discharges of BOD, 
nutrients, and TSS like those that might be discharged by a CAAP 
facility. Finally, we expect to update our discussions of research 
literature that describes water quality impacts. We will consider 
literature that we have compiled since the proposal as well as 
information from stakeholder comments (see Sections II.E and III.E). As 
at proposal, the purpose of these analyses is to provide supplemental 
information of possible rule-related benefits to receiving waters.
3. Other Revisions to Benefits Analysis
    EPA concurs with one commenter's assertion that determining 
benefits of non-native species, pathogens, antibiotics, or chemical 
releases from facilities is complex and controversial. Ideally, an 
analysis of benefits from mandated reductions in such discharges would 
draw from an understanding of environmental impacts from each 
discharge; quantitative estimates of both baseline discharges and 
reductions in discharges under any regulatory regime; and the 
relationship between changes in discharges and environmental response. 
In some cases, economic valuation techniques can then be applied to 
monetize the environmental responses. In the case of water quality 
improvements due to reductions in TSS, BOD, and nutrients from flow-
through and recirculating systems, this information is available for 
estimates of quantitative and monetized benefits of the rule.
    In most other cases, EPA will not estimate monetized or even 
quantitative benefits. Rather, we will discuss qualitative benefit 
areas including:
    [sbull] Possible benefits from reducing escapes of non-native 
species, recognizing existing State and other requirements for escapes 
and mitigation (see Section II.E.3), and
    [sbull] Possible benefits from reducing inadvertent releases of 
applied chemicals (including therapeutic substances) from CAAP 
facilities (see Sections II.E.2 and III.C).

[[Page 75093]]

VI. Revised Estimates of Costs and Economic Impacts

    EPA revised estimates of costs and economic impacts based on the 
detailed survey results, comments, information from States, and 
methodological changes (see Section V). In the tables presented in 
Section VI, the options labeled ``Option 1'', ``Option 2'', and 
``Option 3'' correspond to the options presented in the proposal, but 
the revised costs are based on detailed questionnaire data and other 
factors. EPA also considered two additional sets of requirements listed 
as ``Option A'' and ``Option B'' in the economic analysis. These 
analyses incorporate costs and loadings that reflect assumptions for 
feed conversion ratios (FCR) and production for those facilities that 
did not report these in the detailed questionnaire (see Section V.A.2). 
For cost annualization and the closure analysis, we used a 7 percent 
discount rate. Results are in 2001 dollars. Additional details about 
costs and impacts are provided in the record (DCN 20446). EPA will 
consider these revised results for all options in its decisions for the 
final rule.
    Table VI.1 summarizes the types of public and private organizations 
that operate facilities represented in the national population of in 
scope facilities (i.e., after applying the survey weights). Facilities 
that might incur costs include all facilities in the proposed 
subcategories that are large enough to meet the current CAAP 
definition. At proposal, EPA proposed to exclude facilities with less 
than 100,000 pounds of annual production; however, for information 
purposes, we included these facilities in the Tables in this Section. 
At proposal, EPA indicated that it would continue to analyze the costs 
and impacts associated with including such facilities (meeting the CAAP 
definition) within the scope of the rule. Facilities listed in the 
tables as not incurring costs would still be within the scope of the 
rule if they exceed the final production thresholds; however, EPA does 
not expect that these facilities would have to do anything more to meet 
the requirements of the regulation.

         Table VI.1.--Estimated Number and Type of Organizations
------------------------------------------------------------------------
                                       Estimated number of facilities
                                  --------------------------------------
           Organization            Would incur   Would not
                                      costs     incur costs     Total
------------------------------------------------------------------------
Commercial.......................          181           15          196
Academic/Research................            1            0            1
Government.......................          302            1          303
Tribal...........................           14            0           14
Alaska Non-profits...............            7            0            7
                                  --------------
    Total........................          506           16          522
------------------------------------------------------------------------


    Note: We calculated the national estimates with survey weights 
and rounded them to whole numbers in each cell. Numbers may, 
therefore, not sum due to rounding.

    Table VI.2 provides more detailed information on the facilities 
estimated to incur costs under the rule. There are 141 unweighted 
facilities (questionnaire respondents) that correspond to a national 
estimate of 506 facilities (see Section II.D). Table VI.2 further 
differentiates facilities by production system, size (in terms of lbs/
yr production), owner, and the number of facilities that are projected 
to be baseline closures (assuming cash flow analysis), before we 
include compliance costs (see Section V.C.3.b.i). Table VI.2 also shows 
the number of facilities we used to derive cost and facility closure 
results, assuming discounted cash flow analysis. EPA proposed different 
requirements for the size of facilities. You will find the proposed 
option for each category in the right-hand column in Table VI.2.

                                                       Table VI.2.--Number and Type of Facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Estimated number of facilities
                                                                             -------------------------------------------------------
        Production system              Size (lbs/yr)            Owner                               Baseline   In cost   In closure  Options at proposal
                                                                              Potentially   Incur   closures    totals    analysis
                                                                                in scope    costs      \1\       \2\         \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Flow-Through.....................  20,000 to 100,000     Commercial.........           75       75        25         50          45
                                    \4\.
                                                         Non-commercial.....          135      135         0        135          NA
                                                         Alaska Non-profit..            7        7         0          7          NA
                                   100,000 to 475,000..  Commercial.........           62       62         8         54          54  Option 1.
                                                         Non-commercial.....          121      121         0        121          NA  Option 1.
                                   475,000+............  Commercial.........           26       26        15         11          11  Option 3.
                                                         Non-commercial.....           46       46         0         46          NA  Option 3.
Recirculating....................  20,000 to 100,000     Commercial \4\.....            6        6      n.d.       n.d.        n.d.
                                    \4\.
                                                         Non-commercial.....         n.d.     n.d.      n.d.       n.d.        n.d.
                                   100,000 to 475,000..  Commercial.........            7        7         1          6           6  Option 3.
                                   475,000+............  Commercial.........         n.d.     n.d.      n.d.       n.d.        n.d.  Option 3.
                                                         Non-commercial.....         n.d.     n.d.      n.d.       n.d.        n.d.  Option 3.
Mixed Flow-Through Recirculating.  20,000 to 100,000...  Non-commercial.....           11       11         0         11          NA
Net Pen..........................  20,000 to 100,000...  Non-commercial.....            1        0         0       n.d.          NA
                                   100,000 to 475,000..  Commercial.........         n.d.     n.d.      n.d.       n.d.        n.d.  Option 3
                                   475,000+............  Commercial.........           15        0         0          0           0  Option 3
                                  ----------------------------------------------------------------------------------------------------------------------

[[Page 75094]]

 
    Total........................  ....................  ...................          522      506        59        452         447  ...................
--------------------------------------------------------------------------------------------------------------------------------------------------------
 n.d. Not disclosed for reasons of confidentiality.
 NA not applicable.
\1\ Numbers of commercial facilities that are projected baseline closures assuming cash flow analysis. Section VI.B.1.a discusses baseline closures
  using net income.
\2\ Facilities used to derive values in Table VI.A.1. Excludes baseline closures (based on cash flow analysis) which we assume will close before
  promulgation and, thus, incur no costs under the rule.
\3\ Facilities used to derive values in Table VI.B.1. Excludes baseline closures (based on cash flow analysis), start-ups, and other facilities where we
  did not have enough information to conduct closure analysis.
\4\ Facilities with less than 100,000 pounds annual production were not within the scope of the proposed rule.

    Table VI.3 breaks out the estimated 181 commercial facilities with 
costs by financial organization. Slightly over half (55 percent) of the 
commercial facilities are organized as corporations. C and S 
corporations are named after the Subchapters in the IRS code under 
which they are organized and are taxed in different ways. C corporation 
earnings are taxed at the corporate rate. S corporation earnings are 
paid to individuals, who then pay taxes at the personal rate on those 
earnings.

 Table VI.3.--Commercial Facilities With Costs by Financial Organization
------------------------------------------------------------------------
                                                              Estimated
                   Financial organization                     number of
                                                              facilities
------------------------------------------------------------------------
C Corporation..............................................           42
S Corporation..............................................           58
Sole Proprietorship........................................           49
Limited Partnership........................................           24
General Partnership........................................            5
Other......................................................            5
                                                            ------------
    Total..................................................          181
------------------------------------------------------------------------


    Note: Numbers do not sum due to rounding.

A. National Cost Estimates

    Table VI.A.1 summarizes the cost of the rule by subcategory. We 
estimated national costs on the number of facilities we expect to incur 
compliance costs if they exceed the production threshold in the final 
rule. We assume that possible compliance costs will occur in all 
facilities that are not baseline closures. This includes some 
facilities for which EPA could not make baseline closure determinations 
(e.g., start-up operations, facilities with insufficient data) that we 
excluded from the closure analysis. The number of baseline closures 
increases under net income analysis, implying that national costs 
decrease when we use net income analysis (see Table VI.B.2). Table VI.2 
indicates that non-commercial flow-through facilities make up about 
two-thirds of the facilities projected to incur costs. They incur about 
80 to 83 percent of the total cost for each option.

                                           Table VI.A.1.--National Costs--Total by Subcategory and Option \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Pre-tax annualized costs \4\  (thousands, 2001
                                                                                                                            dollars)
         Production system \2\                                       Owner                             -------------------------------------------------
                                                                                                         Option    Option    Option    Option    Option
                                                                                                            A         B         1         2         3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Flow-through...........................  Commercial 20-100K production................................       $45       $50       $22       $50       $89
                                         Commercial 100-475K production...............................       151       371       315       362       779
                                         Commercial 475K production........................        17        17         7        17        53
                                         Non-commercial...............................................     1,351     2,796     2,528     2,794     5,612
                                         Alaska Non-profit............................................       141       172       165       176       188
Recirculating..........................  Commercial \3\...............................................         8         8         3         8         8
                                         Non-commercial...............................................        18        55        44        60        81
                                         Alaska Non-profit............................................         0         0         0         0         0
Net Pen................................  Commercial...................................................         0         0         0         0         0
                                         Non-commercial...............................................         0         0         0         0         0
                                         Alaska Non-profit............................................         0         0         0         0         0
                                        ----------------------------------------------------------------------------------------------------------------
    Total..............................  Pre-Tax......................................................     1,731     3,469     3,084     3,466     6,809
                                         Post-Tax.....................................................     1,693     3,375     3,004     3,372    6,695
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Does not include costs for facilities projected to close before implementation of the rule, where baseline closures are determined using cash flow.
  Number of baseline closures increases if net income is used, implying decreased costs.
\2\ Costs for facilities that use both flow-through and recirculating technologies were divided according to production and placed in the appropriate
  category. For example, for a facility that splits production equally between flow-through and recirculating, we would split costs equally and add to
  flow-through and recirculating costs.
\3\ All costs for the recirculating commercial category in the table are incurred by facilities producing between 20,000 and 475,000 lbs. Due to the
  small number of facilities (i.e., confidentiality) in the recirculating category, costs are not presented by size.
\4\ Cost equaling zero ($0) in the table indicate that facilities already meet the requirements of the option. Zero cost does not imply that facilities
  are exempt.



[[Page 75095]]

    Note: Numbers do not sum due to rounding.

    Due to differences in option requirements for the various 
subcategories, as well as differences in facility counts between the 
proposed rule and this notice, it is difficult to compare costs in 
Table VI.A.1 directly to costs for the proposal (67 FR 57908). As a 
consequence, Table VI.A.2 facilitates comparisons between costs at 
proposal and costs summarized in this notice.

     Table VI.A.2.--Comparison of Costs--Proposal and Notice of Data
                           Availability (NODA)
------------------------------------------------------------------------
                                   Total pre-tax annual costs (2001$)
       Production system       -----------------------------------------
                                      Proposal               NODA
------------------------------------------------------------------------
Flow-through..................           $1,032,942           $2,076,456
Recirculating.................               46,354                5,409
Net Pens......................               35,322                    0
------------------------------------------------------------------------


    Note: Proposal costs, taken from Table IX.G.1 (67 FR 57908) of 
the preamble from the proposed rule, were inflated to 2001 dollars. 
For closest comparison to proposal results, NODA results in this 
table do not include costs for facilities that produce 20,000 to 
100,000 lbs/year. We assume Option 1 for flow-through facilities in 
the size category 100,000 to 475,000 lbs/yr, and we assume Option 3 
for all other flow-through and recirculating facilities.

B. Economic Analysis

    Sections VI.B.1 and VI.B.2 provide details about the impact 
analysis for commercial and non-commercial facilities.
1. Economic Results for Commercial Facilities
    EPA projects economic impacts based on two procedures for 
estimating earnings: (1) cash flow analysis and (2) net income 
analysis. Table VI.B.1 summarizes the economic impacts for commercial 
facilities based on cash flow analysis, and Table VI.B.2 summarizes 
results based on net income analysis. All impacts fall on flow-through 
systems: no impacts fall on recirculating or net pen systems. No 
impacts fall on facilities with flow-through systems that produce more 
than 475,000 lbs per year.

                                   Table VI.B.1.--Impacts for Commercial Flow-Through Facilities (Cash Flow Basis) \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Number of                         Option
      Analysis level \2\                     Impact                 Size  (1,000 lbs/yr)     entities in    --------------------------------------------
                                                                                             analysis \3\       A        B        1        2        3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facility.....................  Closure...........................  100-475                               54        5        5        5        5       11
                               Direct Employment Loss (lost jobs)  100-475                               54        5        5        5        5       24
                               Increase in County Unemployment     100-475                               54     <0.2     <0.2     <0.2     <0.2       <1
                                Rate (%).
                               National Employment Loss..........  100-475                               54       20       20       20       20       90
                               National Loss in Output ($          100-475                               54     $1.6     $1.6     $1.6     $1.6     $7.4
                                millions).
                               Sales test: 1 percent..  20-100                                50       15       15        5       15       25
                                                                   100-475                               54       13       23       21       23       29
                               Sales test: 3 percent..  20-100                                50       10       10        0       10       10
                                                                   100-475                               54        5       11       11       11       16
Company......................  Closure...........................  .....................                 32        1        1        1        1        2
                               Farm Financial Health \4\.........  .....................                 43       1A       1A       1A       1A       1A
                                                                                                                                                      1B
                               Credit Test.......................  .....................                 32        1        1        1        1        2
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All impacts fall on flow-through systems; recirculating or net pen systems display no impacts. In addition, facilities with flow-through systems
  that produce more than 475,000 lbs per year display no impacts.
\2\ Rows are shown only when there are impacts. The 20,000 to 100,000 size category shows impacts only under the 1 percent and 3 percent sales test. No
  impacts at enterprise level or for 475,000 lb/yr or more size category (see DCN 20446 for details); no closure analysis at the enterprise level was
  conducted for facilities that are projected to close.
\3\ Number of entities projected to incur compliance costs and are not baseline closures, assuming cash flow analysis, and for which enough data were
  available. For closure analysis, this is the number of weighted facilities or the unweighted number of companies. The statistical procedure used to
  draw the sample and develop the facility survey weights do not allow us to make inferences about company characteristics at the national level. Of the
  facilities projected to incur costs in this NODA, more than 90 percent are single facility companies.
\4\ 1A: one company shifts from marginal solvency to vulnerable.
1B: one company shifts from favorable to vulnerable.


                                         Table VI.B.2.--Impacts for Commercial Facilities (Net Income Basis) \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Number of                         Option
      Analysis level \2\                     Impact                 Size  (1,000 lbs/yr)     entities in    --------------------------------------------
                                                                                             analysis \3\       A        B        1        2        3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facility.....................  Closure...........................  20-100                                45        5        5        0        5    5 \6\
                                                                   100-475                               50        5        5        5        5       11
                               Direct Employment Loss (lost jobs)  20-100                                45       14       14        0       14       14
                                                                   100-475                               50        5        5        5        5       24

[[Page 75096]]

 
                               Increase in County Unemployment     20-100                                45     <0.1     <0.1        0     <0.1     <0.1
                                Rate (%).
                                                                   100-475                               50     <0.2     <0.2     <0.2     <0.2       <1
                               National Employment Loss..........  20-100                                45       26       26        0       26       26
                                                                   100-475                               50       20       20       20       20       90
                               National Loss in Output ($          20-100                                45     $2.1     $2.1     $0.0     $2.1     $2.1
                                millions).
                                                                   100-475                               50     $1.6     $1.6     $1.6     $1.6     $7.4
                               Sales test: 1 percent..  20-100                                50       15       15        5       15       25
                                                                   100-475                               54       13       23       21       23       29
                               Sales test: 3 percent..  20-100                                50       10       10        0       10       10
                                                                   100-475                               54        5       11       11       11       16
Company \5\..................  Closure...........................  .....................                 26        2        2        1        2        3
                               Farm Financial Health \4\.........  .....................  .................       2A       2A       2A       2A       2A
                                                                   .....................                 43                                           1B
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All impacts fall on flow-through systems; recirculating or net pen systems display no impacts. In addition, facilities with flow-through systems
  that produce more than 475,000 lbs per year display no impacts.
\2\ Rows are shown only when there are impacts. No impacts at enterprise level, recirculating, or net pen systems, or for flow-through facilities in the
  475,000 lb/yr or more size category; we did not conduct closure analysis at the enterprise level for facilities that are projected to close.
\3\ Number of entities projected to incur costs and are not baseline closures, assuming net income analysis, and for which enough data were available.
  For the closure analysis, this is the weighted number of facilities or the unweighted number of companies. The statistical procedures we used to draw
  the sample and develop the facility survey weights do not support inferences on a national level about company characteristics. Of the facilities
  projected to incur costs in this NODA, more than 90 percent are single facility companies.
\4\ 2A: two companies shift from marginal solvency to vulnerable. 1B: one company shifts from favorable to vulnerable.
\5\ Credit test not performed on net income basis because USDA methodology specifies maximum feasible loan payment (MFLP) be calculated from borrower's
  cash flow, without deducting depreciation.
\6\ Due to rounding of survey weights, the total number of facilities (20,000 to 475,000 size categories) projected to close under Option 3 is 15, not
  16.

    a. Closure Analysis Results. For commercial facilities, EPA 
examined the possibility of closure on several levels: enterprise, 
facility, and company. Sixteen respondents to the detailed survey 
supplied enterprise level financial information in Question C9 of the 
detailed survey. EPA based the facility closure analysis on the 
facility financial data supplied in Question C.6 of the detailed 
survey. The company level analysis differs from the facility analysis 
in that it reflects costs for all aquatic animal production facilities 
owned by the company. To identify all sites belonging to each company, 
we compiled a list of companies from the costed facilities (45 
companies) and examined the screener survey data and responses to 
Question 2. Where EPA did not have detailed survey data for a 
particular facility, we assigned the average cost for the other 
facilities owned by that company.
    Section V.C.3.b describes the forecasting methods and closure 
methodology. The analysis predicts that about one-third of the 
facilities (e.g., 64 of 181 commercial facilities) fall into the 
closure category under baseline conditions (i.e., they show negative 
long-term earnings before the rule). This is consistent with comments 
indicating the industry has gone through difficult times in the recent 
past. We could analyze all sixteen enterprises for impacts (i.e., none 
failed in the baseline). We did not conduct closure analysis at the 
enterprise level when the facility was projected to close. No impacts 
are estimated to occur at the enterprise level under any of the 
regulatory options. Thirteen of the 45 companies are projected as 
baseline failures.
    Based on cash flow analysis, five flow-through facilities close as 
a result of the added costs under Options A, B, 1, and 2, (Table 
VI.B.1). We do not expect any other types of facilities to close under 
these options. The closures result in the direct loss of five jobs and 
an increase in the county unemployment rate of less than 0.2%. We 
estimate national impacts to be a loss of 20 jobs (includes the five 
jobs lost from facility closure) and $1.6 million in output (calculated 
with the Commerce Department, Bureau of Economic Analysis, Regional 
Input-Output Modeling System (RIMS II) final demand multipliers for the 
miscellaneous livestock industry (industry code 1.0302).
    The analysis also shows that, under Option 3, eleven flow-through 
facilities close as a result of the added costs. We do not expect any 
other types of facilities to close under this option. These closures 
result in the direct loss of 24 jobs and an increase in the county 
unemployment rate of up to 1 percent, depending on the location. We 
estimate National level impacts to be a loss of 90 jobs and $7.4 
million in output.
    EPA also conducted a facility level closure analysis using net 
income rather than cash flow (Table VI.B.2). The difference between the 
two is depreciation, a non-cash charge theoretically representing the 
capital ``used up'' during operation. Cash flow is calculated as net 
income plus depreciation (see Section V.C.3.b for comparison of cash 
flow and net income). We predict 84 of the 181 facilities to be 
baseline closures before incurring incremental pollution control cost, 
representing 46% of the population. We estimate 35% of facilities to be 
baseline closures under the discounted cash flow analysis. The results 
are the same for Option 1 for net income analysis: five facilities are 
still projected to fail. A single unweighted facility represents the 
five facilities that fail under Option 1. This facility uses cash basis 
accounting and does not record depreciation as a cost. That is, the 
earnings estimate is the same for the cash flow and net income versions 
of the closure analysis. Under Options A, B, and 2, we project ten 
facilities to close (as opposed to five closures projected using 
discounted cash flow) with an associated loss of 19 jobs. The increase 
in the number of projected failures using net income is due to a

[[Page 75097]]

single unweighted facility failing the closure analysis. Under Option 
3, we project that 15 facilities will close with an associated loss of 
38 jobs. Using discounted cash flow analysis, we project that 11 
facilities will close.
    b. Financial Health Results. EPA uses the USDA farm financial 
health test (see Section V.C.3.b.i) that categorizes farms into four 
categories:
    [sbull] Favorable (positive income and debt/asset ratio no more 
than 40 percent)
    [sbull] Marginal income (negative income and debt/asset ratio no 
more than 40 percent)
    [sbull] Marginal solvency (positive income and debt/asset ratio 
more than 40 percent)
    [sbull] Vulnerable (negative income and debt/asset ratio more than 
40 percent)

Two of the 45 companies did not supply complete balance sheet 
information in the detailed survey and were not analyzed using the farm 
financial health test. Under Options A, B, 1, and 2, one company shifts 
from marginal solvency to vulnerable. Baseline closures, based on the 
discounted cash flow and net income analyses, were not excluded from 
the financial health test. Under Option 3, a second company shifts from 
favorable to vulnerable under the cash flow analysis (Table VI.B.1). We 
conducted this analysis at the company level. Both companies that shift 
categories are small and produce between 100,000 and 475,000 lbs/yr. 
Financial health results under net income analysis (Table VI.B.2) are 
similar, except that two companies shift from ``marginal solvency'' to 
``vulnerable'' instead of the one company under cash flow analysis.
    c. Credit Test Results. EPA examined whether commercial companies 
would be unable to get credit for expenses associated with compliance 
(see Section V.C.3.b.i above), assuming cash flow analysis. We did not 
use the credit test under net income analysis as noted in Table VI.B.2. 
All 45 companies provided the data needed for the credit test. One 
company/facility fails the credit test under Options A, B, 1, and 2. 
Under Option 3, a second company fails the credit test. We also 
conducted this analysis at the company level. Both companies that fail 
the credit test are small and produce between 100,000 and 475,000 lbs/
yr.
    d. Sales or Revenue Test Results. The sales or revenue test is 
calculated on a facility basis. This test corresponds to the sales test 
performed at proposal but is calculated on the basis of detailed survey 
information for the facility. Impact results under the sales test, 
using cash flow analysis, are the same as sales test results using net 
income analysis. For the 20,000 to 100,000 lb/year category, five 
facilities ``fail'' the one percent sales test (i.e., compliance costs 
that exceed one percent of sales) under Option 1 (see Table VI.B.2). 
Fifteen facilities fail under Options A, B, and 2, and 25 facilities 
fail under Option 3. For the 3 percent sales test for this size group, 
ten facilities ``fail'' (i.e., compliance costs that exceed 3 percent 
of sales) under Options A, B, 2 and 3. No facilities fail under Option 
1. For the 100,000 to 475,000 lb/year category, 13 facilities fail the 
1 percent test under Option A, 21 facilities fail test under Option1, 
23 facilities fail under Options B and 2, and 29 facilities fail under 
Option 3. For the 3 percent sales test for this size group, 5 
facilities fail under Option A, 11 facilities fail under Options B, 1, 
and 2, and 16 fail under Option 3.
    Due to differences in option requirements for the subcategories and 
differences in facility counts between the proposed rule and this NODA, 
it is difficult to compare sales test results in Table VI.B.1 with 
results in the proposed rule (67 FR 57906, Table IX.E.1). As a 
consequence, we present Table VI.B.3 to facilitate comparisons between 
proposal and NODA. The only test in both the proposal and NODA analyses 
is the 3 percent revenue test. Even this is not strictly comparable for 
non-commercial facilities because the denominator in the ratio changed 
from imputed revenues at proposal to operating budget for the NODA.
    The threshold levels shown in Table VI.B.1 (i.e., 1% and 3%) do not 
necessarily reflect the threshold levels that EPA will use to measure 
regulatory impacts for the final rule using a revenue test. For the 
Agency's final regulatory analysis, EPA anticipates using the same 
revenue test thresholds that were used to evaluate impacts for the 
proposed rule: greater than 3 percent, greater than 5 percent, and 
greater than 10 percent. EPA solicits comment on these thresholds.

                     Table VI.B.3.--Comparison of 3% Revenue Test, NODA and Proposal Results
----------------------------------------------------------------------------------------------------------------
                                                                                            Facilities incurring
                               Size                                  Facilities regulated  costs greater than 3%
                                                                                            of revenue or budget
----------------------------------------------------------------------------------------------------------------
Proposal:
    Commercial....................................................                     78                     25
    Non-Commercial................................................                     57                      0
NODA:
    Commercial....................................................                     71                     11
    Non-Commercial................................................                    169                     30
----------------------------------------------------------------------------------------------------------------


    Notes: To allow for closest comparison to results at proposal, 
NODA results in this table do not include costs or loads for 
facilities that produce 20,000 to 100,000 lbs/year. We assume Option 
1 for flow-through facilities in the size category 100,000 to 
475,000 lbs/yr and Option 3 for all other flow-through and 
recirculating facilities. Alaska non-profit facilities that we 
previously thought produce greater than 100,000 pounds actually 
produce less than 100,000 pounds annually. They are, therefore, not 
included in the Table.

    e. Sensitivity Analysis for Commercial Impacts. EPA estimated 
ranges of impacts (DCN 20430) based on minimum, mean, and maximum 
values for operating and maintenance (O&M) costs for Options B, 1, 2, 
and 3 (see Section V.A.2 for cost estimates and estimation procedures), 
assuming earnings based on cash flow analysis. There are no differences 
in impacts for commercial facilities between the minimum and mean O&M 
costs. Under maximum O&M costs, we project that another five facilities 
(weighted) will close under Options B, 2, and 3. Under the maximum O&M, 
weighted employment losses total 5 under Options A and 1, 22 under 
Options B and 2, and 40 under Option 3. There is no difference in the 
change in local unemployment rate among the minimum, mean, and maximum 
O&M costs.
    EPA also examined other technology options, using activated carbon, 
for removing drugs. As part of sensitivity

[[Page 75098]]

analysis, EPA also examined the economic impacts for Options A, B, 2, 
and 3 with and without activated carbon costs (DCN 20443), assuming 
earnings based on cash flow analysis. These options include BMPs, but 
not treatment for drugs and chemicals. Activated carbon could be used 
to treat CAAP effluent for drugs. We estimated the costs for activated 
carbon treatment to analyze the impacts of requiring treatment as well. 
When we add activated carbon costs (costs for drug and chemical BMPs 
subtracted to avoid double-counting costs), direct employment losses 
are about four times higher, and company closure and financial health 
impacts are roughly double. About one in four companies would have 
difficulty raising the capital to meet the activated carbon costs 
(e.g., six to nine companies fail the credit test with the activated 
carbon costs).
2. Economic Results for Non-commercial Facilities
    The non-commercial category includes four types of facilities: 
Federal and State hatcheries, tribal operations, academic or research 
facilities, and Alaska non-profit organizations. We performed the 
economic analysis on 302 Federal and State facilities, 14 Tribal 
operations, one academic/research, and seven Alaska non-profits. These 
facilities are not operated commercially, and the types of tests used 
to examine impacts on commercial facilities are not applicable. Each 
group is slightly different, and we will discuss the economic tests 
performed on each group within each section.
    a. Federal and State Facilities. For Federal and State facilities, 
EPA compared the pre-tax annualized costs to the 2001 operating budget 
(``budget test''). Table VI.B.4 summarizes the results by production 
system, test threshold, and size. Of the 302 Federal and State 
facilities, 39 have Option A costs that we project will exceed one 
percent of the budget (35 flow-through and four mixed flow-through and 
recirculating facilities). We project that 27 of these 39 facilities 
have costs that will exceed 3 percent of budget. For Option B, 120 have 
costs that we project will exceed one percent of the budget. We project 
that 75 of these 120 facilities have costs that will exceed three 
percent of budget. For Option 1, we project that 112 have costs that 
will exceed one percent of the budget. Fifty-nine of these 112 
facilities have costs that we project will exceed three percent of 
budget. For Option 2, 123 have costs that we project will exceed one 
percent of the budget. We project that 71 of these 123 facilities have 
costs that will exceed three percent of budget. For Option 3, 223 
(nearly three-fourths of the population) have costs that we project 
will exceed one percent of the budget. Of these 223 facilities, 108 
have costs that we project will exceed three percent of budget.
    The threshold levels shown in Table VI.B.4 (i.e., 1% and 3%) do not 
necessarily reflect the threshold levels that EPA will use to measure 
regulatory impacts for the final rule using a budget test. For the 
Agency's final analysis, EPA anticipates using the same thresholds that 
are used to evaluate impacts a revenue test: greater than 3 percent, 
greater than 5 percent, and greater than 10 percent. EPA solicits 
comment on these threshold levels.

                                                  Table VI.B.4.--Budget Test Non-Commercial Facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Number of facilities estimated to exceed
                                                                                           Estimated number         budget threshold by option \1\
    Production technology               Budget threshold            Size  (1,000 lbs/yr)   of facilities in --------------------------------------------
                                                                                               analysis         A        B        1        2        3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Flow Through.................  1%................................  20-100                               135       20       55       51       55       89
                                                                   100-475                              121       15       49       46       49       88
                                                                   475+                                  46        0        8       11       11       39
                               3%................................  20-100                               135       16       40       32       40       48
                                                                   100-475                              121       12       27       19       23       45
                                                                   475+                                  46        0        4        4        4       11
Recirculating................  1%................................  20-100                              n.d.        0        0        0        0        0
                                                                   475+                                n.d.        0        0        0        0        0
                               3%................................  20-100                              n.d.        0        0        0        0        0
                                                                   475+                                n.d.        0        0        0        0        0
Mixed........................  1%................................  20-100                                11        4        8        4        8        8
                               3%................................  20-100                                11        0        4        4        4       4
--------------------------------------------------------------------------------------------------------------------------------------------------------
n.d. not disclosed to protect confidentiality.
\1\ Numbers in Table may not sum to numbers in text due to rounding

    Part C of the detailed survey asked the respondent for the portion 
of the budget due from user fees, such as angler licenses, commercial 
fishing licenses, car vanity plates, and special purpose stamps. EPA 
examined the number of facilities that could pass through increased 
costs to the public by increasing user fees. Where user fees were 
already in place, we estimated the size of the increase they would need 
to cover the incremental costs (``User Fee'' analysis, see Section 
V.C.3.c) (see Table VI.B.5). Costs for thirty-nine facilities exceed 
one percent of the operating budget under Option A (20 flow-through 
facilities that produce between 20,000 and 100,000 lb/yr, 15 flow-
through facilities that produce between 100,000 and 475,000 l/yr, and 4 
mixed facilities producing between 20,000 and 100,000 lb/yr, shown in 
Table VI.B.4). Twenty-three of the 39 facilities do not have user fees. 
Of the remaining 16 facilities, eight can offset the increased costs by 
increasing user fees by less than five percent. The other eight 
facilities would need more than a five percent increase in user fees to 
offset the incremental costs incurred under Option A. Between 60 
percent and 70 percent of the facilities that have costs that exceed 
one percent of budget do not have user fees through which to offset 
increased pollution control costs.

[[Page 75099]]



                                             Table VI.B.5.--User Fee Analysis for Non-commercial Facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Estimated number of facilities that have costs exceeding threshold
                                                         -----------------------------------------------------------------------------------------------
                                                                                                 Percent of budget
                    User Fee Increase                    -----------------------------------------------------------------------------------------------
                                                                             1 Percent                                       3 Percent
                                                         -----------------------------------------------------------------------------------------------
                                                              All      20 to 100  100 to 475     475+         All      20 to 100  100 to 475     475+
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option A:
    All.................................................          39          23          15           0          27          16          12           0
    No Fee \1\..........................................          23          12          12           0          23          12          12           0
    5 Percent \2\............................           8           8           0           0           4           4           0           0
    <5 Percent \2\......................................           8           4           4           0           0           0           0           0
Option B:
    All.................................................         120          63          49           8          75          44          27           4
    No Fee \1\..........................................          76          34          34           8          50          27          19           4
    5 Percent \2\............................          28          20           8           0          24          16           8           0
    <5 Percent \2\......................................          16           9           7           0           1           1           0           0
Option 1:
    All.................................................         112          55          46          11          59          36          19           4
    No Fee \1\..........................................          76          34          31          11          35          19          12           4
    5 Percent \2\............................          24          16           8           0          24          16           8           0
    <5 Percent \2\......................................          12           5           7           0           0           0           0           0
Option 2:
    All.................................................         123          63          49          11          71          44          23           4
    No Fee \1\..........................................          80          34          34          11          46          27          15           4
    5 Percent \2\............................          28          20           8           0          24          16           8           0
    <5 Percent \2\......................................          16           9           7           0           1           1           0           0
Option 3:
    All.................................................         223          96          88          39         108          51          45          11
    No Fee \1\..........................................         143          57          52          35          77          34          32          11
    5 Percent \2\............................          41          24          17           0          30          16          13           0
    <5 Percent \2\......................................          38          16          19           3           1           1           0          0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Facilities that exceed threshold and do not rely on user fees.
\2\ Facilities that must raise fees by more/less than 5% (5%/<5%) to cover compliance costs.

    b. Tribal Facilities. Tribal operations that returned detailed 
surveys are all owned and operated by the tribal government and operate 
on a non-commercial basis. EPA performed a budget test and determined 
that no Tribal facility incurs costs in excess of three percent of 
budget under any Option. Five of 14 facilities have costs that exceed 
one percent of their budgets under Option 3. No Tribal facility fails 
the one percent budget test under Options A, B, 1, and 2. For 
additional information about analyses for Tribal facilities, see DCN 
20447.
    c. Academic/Research Facilities. Of the academic/research 
facilities that returned a detailed survey, only one met the criteria 
of being a CAAP within the scope of the rule, and might incur costs 
under the rule. EPA performed the budget test and determined that the 
facility would not incur costs in excess of one percent of budget.
    d. Alaska Non-profit Facilities. EPA analyzed the impact of 
possible costs on Alaska non-profit facilities by comparing the pre-tax 
annualized cost to reported salmon revenues. Alaska non-profits may 
harvest and market salmon that return to their release areas. We 
excluded grants, enhancement tax revenue, and income from miscellaneous 
sources such as visitor centers from the comparison. Fiscal Year 2000 
had an unusually high salmon return (i.e., large harvest). Therefore, 
we used Fiscal Year 2001 data from Alaska (2002, DCN 20074). For Option 
A, costs range from 0.97 to 1.8 percent of salmon revenues for 1998, 
1999, and 2001 and 0.6 percent of salmon revenues for 2000. For Options 
B, 1, and 2, costs range from 1.2 to 2.3 percent of salmon revenues for 
1998, 1999, and 2001 and 0.6 to 0.7 percent of salmon revenues for 
2000. For Option 3, costs range from 1.3 to 2.4 percent of salmon 
revenues for 1998, 1999, and 2001 and 0.7 percent of salmon revenues 
for 2000.
    e. Sensitivity Analysis for Non-commercial Facilities. EPA 
estimated ranges of impacts (DCN 20430) based on minimum, mean, and 
maximum value for operating and maintenance (O&M) costs (see Section 
V.A.2 for costing methods) for Options B, 1, 2, and 3. Table VI.B.6 
summarizes the results for the sensitivity analysis for non-commercial 
facilities. For the one percent budget test, the impacts based on the 
mean values would not increase markedly if maximum O&M values were 
assumed. On the other hand, if evidence appears that the O&M costs 
resemble the minimum values, the impacts would drop by about half 
compared to impacts under mean O&M costs for Options B, 1, and 2. For 
the three percent budget test, the impacts associated with the maximum 
O&M costs are approximately three times higher than the impacts 
associated with minimum costs for Options B, 1, and 2. There is less 
than a two-fold spread for Option 3.

[[Page 75100]]



         Table VI.B.6.--Number of Non-commercial Facilities That Have Costs Exceeding Budget Thresholds
                                           [O&M sensitivity analysis]
----------------------------------------------------------------------------------------------------------------
                                                                                        Option
             Budget test                    O&M cost assumption     --------------------------------------------
                                                                        A        B        1        2        3
----------------------------------------------------------------------------------------------------------------
1 Percent............................  Minimum.....................       39       61       49       61      199
                                       Mean........................       39      120      112      123      223
                                       Maximum.....................       39      134      126      134      223
3 Percent............................  Minimum.....................       27       42       38       42       83
                                       Mean........................       27       75       59       71      108
                                       Maximum.....................       27      112      112      112      134
----------------------------------------------------------------------------------------------------------------

    EPA also examined alternative technology options for removing 
drugs, using activated carbon. As part of sensitivity analysis, EPA 
also examined the economic impacts for Options A, B, 2, and 3 with and 
without activated carbon costs (DCN 20443), assuming earnings based on 
cash flow analysis. Activated carbon could be used to treat CAAP 
effluent for drugs. These options include BMPs, but not treatment for 
drugs and chemicals. By estimating the costs for activated carbon 
treatment, EPA analyzed the impacts of requiring treatment as well. 
When activated carbon costs are added (costs for drug and chemical BMPs 
were subtracted to avoid double-counting costs), direct employment 
losses are about four times higher, and company closure and financial 
health impacts are roughly double. About one in four companies would 
have difficulty raising the capital needed to meet the activated carbon 
costs (e.g., six to nine companies fail the credit test with the 
activated carbon costs).

C. Cost-effectiveness and Cost-reasonableness Analysis

    EPA performed a revised nutrient cost-effectiveness (CE) and cost 
reasonableness (CR) analysis based on revised estimates of costs, 
loadings and removals (see Development Document for details). We do not 
expect benchmarks or thresholds for assessing CE/CR results to differ 
from those used in the proposed rule (that is, $4/lb for nitrogen, $10/
lb for phosphorus cost-effectiveness and $0.73/lb for cost-
reasonableness (see 68 FR 7249-7250 for discussion of benchmarks)). 
Option costs include costs for BMP components that address invasive 
species, drugs, and chemicals that have no effect on nutrients, BOD, or 
TSS. That is, cost-effectiveness and cost-reasonableness values are 
overstated.
1. Nutrient Cost-effectiveness Results
    The tables in this section provide the nutrient cost-effectiveness 
values for nitrogen and phosphorus. Table VI.C.1 presents the results 
for nitrogen by production system, commercial and non-commercial 
sector, and option. For commercial flow-through facilities, the average 
cost-effectiveness for nitrogen is $24/lb for Option A and ranges from 
$11/lb to $14/lb for the other options. Incrementally, the effects of 
the different BMP requirements result in Options B, 1, and 2 having the 
same removals but different costs. The incremental calculations are 
based on the option with the lowest of the three costs (e.g., Option 1) 
and ranges from $6/lb to $12/lb. Nutrient cost-effectiveness values are 
higher for non-commercial facilities. The average cost-effectiveness 
for nitrogen is $1,096/lb for Option A, and cost-effectiveness ranges 
from $30/lb to $49/lb for the other options. Again, we base the 
incremental calculations on the option with the lowest of the three 
costs with the same removals and ranges from $20/lb to $23/lb.
    For commercial recirculating facilities, the table shows no average 
and incremental cost-effectiveness value for nitrogen because no 
nitrogen is removed. For non-commercial recirculating facilities, no 
nitrogen removals are seen for Option A. For the remaining options, 
average cost effectiveness ranges from $183/lb to $518/lb, and 
incremental cost-effectiveness ranges from $112/lb to $232/lb.

                              Table VI.C.1.--Nutrient Cost-Effectiveness: Nitrogen
----------------------------------------------------------------------------------------------------------------
                                                                                    Cost-effectiveness ($2001/
                                                   Pre-tax          Nitrogen                  pound)
       Subcategory, sector, and option        annualized costs    removals (lb)  -------------------------------
                                                   ($2001)                            Average       Incremental
----------------------------------------------------------------------------------------------------------------
                                             Commercial Flow-Through
----------------------------------------------------------------------------------------------------------------
Option A....................................          $213,030             8,970             $24         \1\ $24
Option 1....................................           344,350            30,998              11               6
Option 2....................................           429,441            30,998              14              NA
Option B....................................           438,443            30,998              14              NA
Option 3....................................           920,663            79,960              12              12
----------------------------------------------------------------------------------------------------------------
                                           Non-Commercial Flow-Through
----------------------------------------------------------------------------------------------------------------
Option A....................................        $1,492,671             1,362          $1,096      \1\ $1,096
Option 1....................................         2,692,963            60,203              45              20
Option B....................................         2,968,001            60,203              49              NA
Option 2....................................         2,969,498            60,203              49              NA
Option 3....................................         5,799,459           194,534              30              23
----------------------------------------------------------------------------------------------------------------

[[Page 75101]]

 
                                            Commercial Recirculating
----------------------------------------------------------------------------------------------------------------
Option 1....................................            $2,784                 0             \2\             \2\
Option A....................................             7,744                 0             \2\             \2\
Option B....................................             7,744                 0             \2\             \2\
Option 2....................................             7,744                 0             \2\             \2\
Option 3....................................             7,744                 0             \2\             \2\
----------------------------------------------------------------------------------------------------------------
                                          Non-Commercial Recirculating
----------------------------------------------------------------------------------------------------------------
Option A....................................           $17,594                 0             \2\             \2\
Option 1....................................            44,268               115             385             232
Option B....................................            55,107               115             480              NA
Option 2....................................            59,558               115             518              NA
Option 3....................................            80,965               443             183             112
----------------------------------------------------------------------------------------------------------------
NA: The option higher costs, not related to nutrient removal, and equal removals compared to previous options.
\1\ Option A is incremental to baseline, so the average and incremental values are the same.
\2\ Undefined: Option costs are costs for BMP components that address invasive species, drugs, and chemicals
  that have no effect on nutrients, or facilities in these groups have adequate treatment to achieve
  requirements for pollutants in this table (i.e., no incremental removals are estimated).

    Table VI.C.2 presents the results for phosphorus by production 
system, commercial and non-commercial sector, and option. For 
commercial flow-through facilities, the average cost-effectiveness for 
phosphorus is $131/lb for Option A; the average cost-effectiveness 
ranges from $41/lb to $81/lb for the other options. Incrementally, the 
effects of the different BMP requirements result in Options B, 1, and 2 
having the same removals but different costs. The incremental 
calculations are based on the option with the lowest of the three costs 
(e.g., Option 1), and the incremental cost-effectiveness is estimated 
to be roughly $34/lb to $35/lb. Nutrient cost-effectiveness values are 
higher for non-commercial facilities. The average cost-effectiveness 
for phosphorus is $925/lb for Option A and ranges from $112/lb to $258/
lb for the other options. Again, the incremental calculations are based 
on the option with the lowest of the three costs (e.g., Option 1) with 
the same removals and ranges from $77/lb to $121/lb.
    For commercial recirculating facilities, the average and 
incremental cost-effectiveness for phosphorus is undefined for 
commercial because no phosphorus is removed. For non-commercial 
recirculating facilities, no phosphorus removals are seen for Option A. 
For the remaining options, average cost effectiveness ranges from $481/
lb to $2,987/lb and incremental cost-effectiveness ranges from $247/lb 
to $1,338/lb.

                             Table VI.C.2.--Nutrient Cost-Effectiveness: Phosphorus
----------------------------------------------------------------------------------------------------------------
                                                                                    Cost-effectiveness ($2001/
                                                   Pre-tax         Phosphorus                 pound)
       Subcategory, sector, and option        annualized costs    removals (lb)  -------------------------------
                                                   ($2001)                            Average       Incremental
----------------------------------------------------------------------------------------------------------------
                                             Commercial Flow-Through
----------------------------------------------------------------------------------------------------------------
Option A....................................          $213,030             1,631            $131         $131\1\
Option 1....................................           344,350             5,396              64              35
Option 2....................................           429,441             5,396              80              NA
Option B....................................           438,443             5,396              81              NA
Option 3....................................           920,663            22,290              41              34
----------------------------------------------------------------------------------------------------------------
                                           Non-Commercial Flow-Through
----------------------------------------------------------------------------------------------------------------
Option A....................................        $1,492,671             1,614            $925         $925\1\
Option 1....................................         2,692,963            11,510             234             121
Option B....................................         2,968,001            11,510             258              NA
Option 2....................................         2,969,498            11,510             258              NA
Option 3....................................         5,799,459            51,976             112              77
----------------------------------------------------------------------------------------------------------------
                                            Commercial Recirculating
----------------------------------------------------------------------------------------------------------------
Option 1....................................            $2,784                 0             \2\             \2\
Option A....................................             7,744                 0             \2\             \2\
Option B....................................             7,744                 0             \2\             \2\
Option 2....................................             7,744                 0             \2\             \2\
Option 3....................................             7,744                 0             \2\             \2\
----------------------------------------------------------------------------------------------------------------

[[Page 75102]]

 
                                          Non-commercial Recirculating
----------------------------------------------------------------------------------------------------------------
Option A....................................           $17,594                 0             \2\             \2\
Option 1....................................            44,268                20           2,220           1,338
Option B....................................            55,107                20           2,764              NA
Option 2....................................            59,558                20           2,987              NA
Option 3....................................            80,965               168             481             247
----------------------------------------------------------------------------------------------------------------
NA: The option higher costs, not related to nutrient removal, and equal removals compared to previous options.
\1\ Option A is incremental to baseline, so the average and incremental values are listed as being the same.
\2\ Undefined: Option costs are costs for BMP components that address invasive species, drugs, and chemicals
  that have no effect on nutrients, or facilities in these groups have adequate treatment in place to achieve
  requirements for pollutants in this table (i.e., no incremental removals are estimated).

    Due to differences in option requirements for the subcategories, as 
well as differences in facility counts between the proposed rule and 
this NODA, it is difficult to compare cost-effectiveness values in 
Tables VI.C.1 and VI.C.2 directly to cost effectiveness values for the 
proposed rule. As a consequence, Table VI.C.3 facilitates comparisons 
between proposal and this NODA.

                        Table VI.C.3.--Comparison of Nutrient Results--Proposal and NODA
----------------------------------------------------------------------------------------------------------------
                                                        Average nutrient    Average nutrient    Average nutrient
                                                       cost effectiveness  cost effectiveness         cost
                                       Total pre-tax         (TN+TP)               (TN)          effectiveness
         Production system             annual costs   ----------------------------------------        (TP)
                                          ($2001)                                             ------------------
                                                        Removals    $/lb    Removals    $/lb   Removals    $/lb
----------------------------------------------------------------------------------------------------------------
                                                    Proposal
----------------------------------------------------------------------------------------------------------------
Flow-Through.......................         1,032,942     66,103    15.63     50,273    20.55    15,830    65.25
Recirculating......................            46,354     32,453     1.43     25,090     1.85     7,363     6.30
Net Pens...........................            35,322     86,890     0.41     74,477     0.47    12,413     2.85
----------------------------------------------------------------------------------------------------------------
                                        NODA
----------------------------------------------------------------------------------------------------------------
Flow-Through.......................         2,076,456    114,933    18.07     92,026    22.56    22,907    90.65
Recirculating......................             5,409          0      \1\          0      \1\         0      \1\
Net Pens...........................                 0          0      \1\          0      \1\         0      \1\
----------------------------------------------------------------------------------------------------------------
Note: Proposal costs, taken from Table IX.G.3 of the preamble from the proposed rule, were inflated to 2001
  dollars. NODA results do not include costs or loads for facilities that produce 20,000 to 100,000 lbs/year.
  Option 1 is assumed for flow-through facilities in the size category 100,000 to 475,000 lbs/yr; Option 3 is
  assumed for all other flow-through and recirculating facilities.
\1\ Undefined.

2. Cost-reasonableness Results
    Table VI.C.4 shows the cost-reasonableness values for conventional 
pollutants. EPA estimated BOD and TSS removals for each facility for 
each option. Because BOD can be correlated with TSS, EPA selected the 
higher of the two values (not the sum) to avoid possible double-
counting of removals. In general, TSS is the more frequently the higher 
of the two. In Option 3 for example, TSS is higher than BOD in nearly 
four out of five facilities. For commercial flow-through facilities, 
cost-reasonableness ranges from $1.53/lb to $1.94/lb for Options A, B, 
1, and 2. Option 3 shows a lower cost-reasonableness value than for the 
other options--$0.64/lb. For non-commercial flow-through facilities, 
cost-reasonableness is $1.01/lb for option A and ranges from $1.18/lb 
to $1.70/lb for the other options. While cost-reasonableness is less 
than $2/lb for all options for flow-through facilities, it is undefined 
for commercial recirculating facilities and ranges from $5/lb to $100/
lb for non-commercial recirculating facilities.

                                 Table VI.C.4.--Cost-reasonableness: BOD and TSS
----------------------------------------------------------------------------------------------------------------
                                                    Pre-tax annualized      BOD and TSS      Cost-reasonableness
         Subcategory, sector, and option               costs ($2001)     Removals (lb) \1\      ($2001/pound)
----------------------------------------------------------------------------------------------------------------
                                             Commercial Flow-Through
----------------------------------------------------------------------------------------------------------------
Option A.........................................               213,030            114,162                  1.87
Option 1.........................................               344,350            225,797                  1.53
Option 2.........................................               429,441            225,797                  1.90

[[Page 75103]]

 
Option B.........................................               438,443            225,797                  1.94
Option 3.........................................               920,663          1,447,954                  0.64
----------------------------------------------------------------------------------------------------------------
                                           Non-commercial Flow-Through
----------------------------------------------------------------------------------------------------------------
Option A.........................................             1,492,671          1,480,192                 $1.01
Option 1.........................................             2,692,963          1,743,075                  1.54
Option B.........................................             2,968,001          1,743,075                  1.70
Option 2.........................................             2,969,498          1,743,075                  1.70
Option 3.........................................             5,799,459          4,925,784                  1.18
----------------------------------------------------------------------------------------------------------------
                                            Commercial Recirculating
----------------------------------------------------------------------------------------------------------------
Option 1.........................................                 2,784                  0                   \2\
Option A.........................................                 7,744                  0                   \2\
Option B.........................................                 7,744                  0                   \2\
Option 2.........................................                 7,744                  0                   \2\
Option 3.........................................                 7,744                  0                   \2\
----------------------------------------------------------------------------------------------------------------
                                          Non-commercial Recirculating
----------------------------------------------------------------------------------------------------------------
Option A.........................................                17,594                  0                   \2\
Option 1.........................................                44,268                598                 73.98
Option B.........................................                55,107                598                 92.09
Option 2.........................................                59,558                598                 99.53
Option 3.........................................                80,965             16,150                  5.01
----------------------------------------------------------------------------------------------------------------
\1\ EPA determines the higher of BOD or TSS mass removal for each facility and then aggregates pounds across
  facilities.
\2\ Undefined: Option costs are costs for BMP components that address invasive species, drugs, and chemicals
  that have no effect on BOD or TSS, or facilities in these groups have adequate treatment to achieve
  requirements for pollutants in this table (i.e., no incremental removals are estimated).

    Due to differences in option requirements for the subcategories and 
differences in facility counts between the proposed rule and this NODA, 
it is difficult to compare results in Table VI.C.4 directly to values 
in the proposed rule. As a consequence, Table VI.C.5 facilitates 
comparisons between proposal and this NODA.

                   Table VI.C.5.--Comparison of Cost-Reasonableness Results--Proposal and NODA
----------------------------------------------------------------------------------------------------------------
                              Proposal                                                   NODA
----------------------------------------------------------------------------------------------------------------
                                Total pre-                 Average    Total pre-
                                tax annual  Conventional   cost per   tax annual   Conventional    Average cost
      Production system           costs       pollutant   pound ($/     costs        pollutant     per pound ($/
                                 ($2001)      removals       lb)       ($2001)       removals           lb)
----------------------------------------------------------------------------------------------------------------
Flow-Through.................    1,032,942     4,450,465       0.23    2,076,456       2,524,102            0.82
Recirculating................       46,354       638,365       0.07        5,409               0             \1\
Net Pens.....................       35,322       868,899       0.04            0               0            \1\
----------------------------------------------------------------------------------------------------------------
Note: Proposal costs, taken from Table IX.G.1 of the preamble from the proposed rule, were inflated to 2001
  dollars. NODA results do not include costs or loads for facilities that produce 20,000 to 100,000 lbs/year.
  Option 1 is assumed for flow-through facilities in the size category 100,000 to 475,000 lbs/yr; option 3 is
  assumed for all other flow-through and recirculating facilities.
\1\ Undefined.

D. Small Business Analysis

    EPA evaluates the economic impacts of proposed and final rules on 
small entities where required by the Regulatory Flexibility Act (RFA) 
as amended by the Small Business Regulatory Enforcement Fairness Act of 
1996 (SBREFA). The RFA/SBREFA defines several types of small entities, 
including small governmental jurisdictions (population less than 
50,000), small organizations (not-profit organization that is 
independently owned and operated and is not dominant in its field), and 
small businesses. The CAAP industry includes sites that fall within the 
North American Industry Classification codes 112511 (finfish farming 
and fish hatcheries). The Small Business Administration size standard 
for this code is $0.75 million. A facility is owned by a small business 
if its corporate parent earns $750,000 or less in annual revenues.
    For the purposes of the RFA, Federal, State, and Tribal governments 
are not considered small governmental jurisdictions (EPA, 1999, DCN 
20121). Thus, facilities owned by these governments are not considered 
small entities, regardless of their production levels. EPA identified 
no public facilities owned by small local governments in the analysis. 
For the purpose of this rulemaking, EPA considers many of the non-
profit organizations that produce salmon for the State of Alaska to be 
``small.'' These non-profit facilities have assumed a public function: 
to raise fish (in this case salmon) in hatcheries to be released into 
the wild to supplement wild populations and sustain the Alaska

[[Page 75104]]

commercial and recreational fishing industries.
    Among the costed facilities, EPA identified 117 facilities 
belonging to small businesses, seven belonging to small organizations, 
and one academic/research facility. For commercial facilities, the 
small business results for the facility closure analysis and associated 
loss in jobs and increase in local unemployment rates, financial 
health, credit test, and the sales test results for 20,000 to 100,000 
lb/yr category are the same as those presented in Table VI.B.1 (see DCN 
20448 for details about small business analysis), assuming cash flow 
analysis. That is, all these impacts fall on small businesses. The only 
difference from Table VI.B.1 is in the one percent sales test for the 
100,000 to 475,000 lb/yr category, where the number of facilities 
exceeding the test threshold drops from 54 to 53 when restricted to 
small businesses.

VII. Solicitation of Comments

A. Alligator Production

    As discussed in the proposal, alligator production is not subject 
to Part 451. As ascertained through contacts with industry experts, 
alligator production facilities do not discharge effluents from their 
production systems. Instead, effluents are treated in one-or two-stage 
lagoons and then applied to crop or forested land. EPA verified the 
information by reviewing the data from the detailed survey. Alligator 
producers do not meet the definition of a CAAP because they do not 
exceed the minimum threshold of discharging 30 days annually. In EPA's 
view, after having reviewed detailed data, these operations are not 
CAAPs and are similarly operated to CAFOs. EPA may recommend to permit 
writers that they consider applying requirements similar to CAFOs when 
permitting alligator production facilities. EPA seeks comment on 
whether this would be an appropriate approach for these operations.

B. BMPs

    EPA also seeks comment on BMP language that might be included in 
the final rule or accompanying guidance. For example, in Idaho's 
general permit, these practices by CAAP facilities are prohibited to 
ensure protection of State Water Quality Standards for hazardous 
materials, deleterious materials, and floating, suspended or submerged 
matter.
    [sbull] Discharging hazardous materials is prohibited.
    [sbull] Discharging sludge, grit, and accumulated solid residues 
associated with CAAP operations and fish processing is prohibited.
    [sbull] Practices (e.g., the removal of dam boards in raceways or 
ponds) which allow accumulated solids to be discharged to waters of the 
United States is prohibited.
    [sbull] Discharging untreated cleaning wastewater (e.g., obtained 
from a vacuum or standpipe bottom drain system or rearing/holding unit 
disinfection) to waters of the United States is prohibited.
    [sbull] Sweeping, raking, or intentionally discharging accumulated 
solids from raceways or ponds to waters of the United States is 
prohibited.
    [sbull] Containing, growing or holding fish within an offline or 
full-flow settling basin is prohibited.
    EPA seeks comments on whether these prohibitions, or any other 
specific requirements for BMP plans, should be included in the final 
rule or accompanying guidance.
    EPA also seeks comment on whether it should modify the structure of 
the proposed BMP provisions so that the regulation would require 
specific best management practices and, separately, require sources to 
develop a BMP plan describing how they intend to meet those 
requirements. For example, EPA proposed that the BMP plan for flow-
through systems must minimize excess feed entering the aquatic animal 
production system. (See proposal at 40 CFR 451.15(a); see also proposal 
at 40 CFR 451.25(a) (recirculating systems).) EPA may restructure the 
regulation so that a source would be required by its NPDES permit to 
minimize excess feed and, separately, to develop a BMP plan to describe 
how the source intends to comply with that requirement. Under this 
approach, the BMP plan, while required by permit, would simply be a 
tool to help the source implement the substantive permit requirement: 
minimizing excess feed. EPA also seeks comment on whether to require 
review of BMP plans by the permitting authority and, if so, how such a 
requirement should be expressed.

C. Disposal of Drugs and Chemicals

    Information on practices for the disposal of drugs and chemicals is 
limited. EPA seeks comment on existing practices for the disposal of 
expired drugs and chemicals.

D. Differentiating Between Warm and Cold Water Species

    Data from two warm water facilities indicated that they appear to 
comply with the proposed limits, but EPA recognizes that such 
facilities can have different wastewater characteristics than cold 
water species production facilities. EPA seeks comments and data 
regarding the ability or inability of warm water facilities to achieve 
the proposed limits for either flow-through or recirculating system 
effluents, as appropriate.

E. Combining the Proposed Recirculating and Flow-Through Subcategories 
Into One Subcategory

    EPA may combine flow-through production systems and recirculating 
systems under a single subcategory with two sets of effluent limits: 
one that would apply to the discharge of full flow effluents and one 
that would apply to off-line treatment or recirculating system 
effluents. We received several comments indicating that there is not a 
clear distinction between recirculating and flow-through systems. EPA 
seeks comments on the establishment of a continuous discharge 
subcategory which would apply to wastewater discharges from both 
recirculating and flow-through systems.

F. Revised Economic Impact Methodology

    For this notice, EPA projected impacts only when they occur using 
two out of the three forecasting methods. EPA seeks comment on basing 
its closure analysis for the final rule on impacts that occur using one 
of the three methods.

G. Factoring Unpaid Labor Charges in the Impact Analysis

    EPA is not estimating a charge for unpaid labor reported by CAAP 
facilities when conducting its economic impact analysis. EPA seeks 
comment on methods and data that support the estimation of charges for 
unpaid labor and management in cash flow and net income analyses.

H. Facilities Excluded From the Economic Impact Analysis

    Facilities that are excluded from closure analysis include:
    [sbull] Start-ups (where the first year of income is negative yet 
this is not indicative of future earnings).
    [sbull] Cost centers (that transfer production to other facilities 
under the same ownership at no cost or the cost is set to the operating 
costs).
    [sbull] Facilities where the company does not record income 
statement information at the facility level.
    [sbull] Facilities that are likely to close under baseline 
conditions without regard to the rule.
    EPA seeks comment on omitting such facilities from the closure 
analysis.


[[Page 75105]]


    Dated: December 19, 2003.
G. Tracy Mehan, III,
Assistant Administrator, Office of Water.
[FR Doc. 03-31867 Filed 12-24-03; 8:45 am]
BILLING CODE 6560-50-P