[Federal Register Volume 69, Number 226 (Wednesday, November 24, 2004)]
[Proposed Rules]
[Pages 68444-68565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24913]



[[Page 68443]]

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Part II





Environmental Protection Agency





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40 CFR Parts 9, 122 et al.



National Pollutant Discharge Elimination System--Proposed Regulations 
To Establish Requirements for Cooling Water Intake Structures at Phase 
III Facilities; Proposed Rule

  Federal Register / Vol. 69, No. 226 / Wednesday, November 24, 2004 / 
Proposed Rules  

[[Page 68444]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9, 122, 123, 124, and 125

[OW-2004-0002, FRL-7834-7]
RIN 2040-AD70


National Pollutant Discharge Elimination System--Proposed 
Regulations To Establish Requirements for Cooling Water Intake 
Structures at Phase III Facilities

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: Today's proposed rule would establish national categorical 
requirements under section 316(b) of the Clean Water Act for certain 
existing facilities that employ a cooling water intake structure and 
are designed to withdraw water above a certain design intake flow from 
certain waters of the United States for cooling purposes. Today's 
notice proposes three possible options for defining which existing 
facilities would be subject to uniform national requirements, based on 
design intake flow threshold and source waterbody type: The facility 
has a total design intake flow of 50 million gallons per day (MGD) or 
more, and withdraws from any waterbody; the facility has a total design 
intake flow of 200 MGD or more, and withdraws from any waterbody; or 
the facility has a total design intake flow of 100 MGD or more and 
withdraws water specifically from an ocean, estuary, tidal river, or 
one of the Great Lakes. Because the lowest co-proposed flow threshold 
option is 50 MGD, the proposed requirements would only apply to 
manufacturing facilities--as power producers with a flow greater than 
50 MGD are regulated under the Phase II rule. This proposed rule would 
constitute Phase III of EPA's section 316(b) regulation development and 
would establish national requirements, and procedures for implementing 
those requirements, applicable to the location, design, construction, 
and capacity of cooling water intake structures at Phase III 
facilities. Today's proposed rule would also establish categorical 
section 316(b) requirements for new offshore oil and gas extraction 
facilities, which were specifically excluded from the scope of the 
Phase I new facility rule so that EPA could gather additional data on 
these facilities. The proposed rule would apply to both existing 
manufacturers and new offshore oil and gas extraction facilities that 
withdraw at least 25 percent of the water exclusively for cooling 
purposes.
    The proposed national requirements, which would be implemented 
through National Pollutant Discharge Elimination System (NPDES) 
permits, are based on the best technology available to minimize the 
adverse environmental impact associated with the use of cooling water 
intake structures. For covered existing facilities, today's proposed 
rule would establish performance standards for reducing impingement 
mortality by 80 to 95 percent, or impingement mortality by 80 to 95 
percent and entrainment by 60 to 90 percent. Today's proposal would 
allow existing facilities to select from five compliance alternatives 
consistent with those provided in the final Phase II rule for existing 
large flow electric power generators. Once finalized and implemented, 
the rule would minimize the adverse environmental impact of cooling 
water intake structures by reducing the number of aquatic organisms 
lost as a result of water withdrawals associated with these structures.
    Today's proposed rule does not propose to alter the regulatory 
requirements for facilities subject to the Phase I or Phase II 
regulations, and EPA is not soliciting comment on those regulations. 
EPA is only seeking comment on the proposed regulations for Phase III 
existing facilities and new offshore oil and gas facilities, as 
reflected in the proposed regulatory text for subparts K and N. 
Depending on the options selected in the final section 316(b) 
regulation for Phase III facilities, EPA may decide to integrate the 
regulatory text for subparts K and N proposed today into the existing 
subparts I and J, for purposes of streamlining the number of pages for 
publication.

DATES: Comments must be received on or before March 24, 2005.

ADDRESSES: Submit your comments, identified by Docket ID No. OW-2004-
0002, by one of the following methods:
    I. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the on-line instructions for submitting comments.
    II. Agency Web site: http://www.epa.gov/edocket. EDOCKET, EPA's 
electronic public docket and comment system, is EPA's preferred method 
for receiving comments. Follow the on-line instructions for submitting 
comments.
    III. E-mail: [email protected].
    IV. Mail: Water Docket, Environmental Protection Agency, Mailcode: 
4101T, 1200 Pennsylvania Ave., NW., Washington, DC 20460, Attention 
Docket ID No. OW-2004-0002. Please include a total of 3 copies. In 
addition, please mail a copy of your comments on the information 
collection provisions to the Office of Information and Regulatory 
Affairs, Office of Management and Budget (OMB), Attn: Desk Officer for 
EPA, 725 17th St. NW., Washington, DC 20503.
    V. Hand Delivery: Water Docket, EPA Docket Center, EPA West, Room 
B102, 1301 Constitution Ave., NW., Washington, DC, Attention Docket ID 
No. OW-2004-0002. Such deliveries are only accepted during the Docket's 
normal hours of operation, and special arrangements should be made for 
deliveries of boxed information.
    Instructions: Direct your comments to Docket ID No. OW-2004-0002. 
EPA's policy is that all comments received will be included in the 
public docket without change and may be made available online at http://www.epa.gov/edocket, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute. Do not submit information that you consider to 
be CBI or otherwise protected through EDOCKET, regulations.gov, or e-
mail. The EPA EDOCKET and the regulations.gov websites are ``anonymous 
access'' systems, which means EPA will not know your identity or 
contact information unless you provide it in the body of your comment. 
If you send an e-mail comment directly to EPA without going through 
EDOCKET or regulations.gov, your e-mail address will be automatically 
captured and included as part of the comment that is placed in the 
public docket and made available on the Internet. If you submit an 
electronic comment, EPA recommends that you include your name and other 
contact information in the body of your comment and with any disk or 
CD-ROM you submit. 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. Electronic files should avoid the use of 
special characters, any form of encryption, and be free of any defects 
or viruses. For additional information about EPA's public docket visit 
EDOCKET on-line or see the Federal Register of May 31, 2002 (67 FR 
38102). For additional instructions on submitting comments, go to 
section B of the SUPPLEMENTARY INFORMATION section of this document.
    Docket: All documents in the docket are listed in the EDOCKET index 
at http://www.epa.gov/edocket. Although listed in the index, some 
information is not publicly available, i.e., CBI or other

[[Page 68445]]

information whose disclosure is restricted by statute. Certain other 
material, such as copyrighted material, is not placed on the Internet 
and will be publicly available only in hard copy form. Publicly 
available docket materials are available either electronically in 
EDOCKET or in hard copy at the Water Docket, EPA/DC, EPA West, Room 
B102, 1301 Constitution Ave., NW., Washington, DC. The 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 FURTHER INFORMATION CONTACT: For additional technical information 
contact Martha Segall at (202) 566-1041 or Paul Shriner at (202) 566-
1076. For economic information, contact Erik Helm at (202) 566-1066. 
For biological information contact Ashley Allen at (202) 566-1012. The 
address for the above contacts is: Office of Science and Technology, 
Engineering Analysis Division (Mailcode 4303T), Environmental 
Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460; 
fax number: (202) 566-1053; e-mail address: [email protected].

SUPPLEMENTARY INFORMATION:

General Information

A. What Entities Are Regulated by This Action?

    This proposed rule would apply to ``Phase III existing 
facilities''--i.e., certain existing manufacturing and industrial 
facilities that are: (1) Point sources; (2) use or propose to use one 
or more cooling water intake structures; (3) are designed to withdraw 
water above a certain threshold from certain waters of the U.S. (the 
flow threshold would differ depending on the regulatory option selected 
in the final rule); and (4) use at least 25 percent of water withdrawn 
exclusively for cooling purposes. Depending on the regulatory option 
selected, the facility would be subject to these national requirements 
if it had a design intake flow of: (1) 50 MGD or more from any 
waterbody; (2) 200 MGD or more from any waterbody; or (3) 100 MGD or 
more from an ocean, estuary, tidal river, or one of the Great Lakes. 
This proposed rule would define ``existing facility'' as any 
manufacturing or industrial facility that commenced construction on or 
before January 17, 2002 (or [60 days from publication of the final 
rule] for an offshore oil and gas extraction facility), and any 
modification of, or any addition of a unit at such a facility that does 
not meet the definition of a new facility at Sec.  125.83.
    This proposed rule would also apply to new offshore and coastal oil 
and gas extraction facilities, which were specifically excluded from 
the Phase I new facility rule. An offshore and coastal oil and gas 
extraction facility is new if construction commenced after 60 days from 
publication of the final rule. Exhibit 1 provides examples of 
industrial facility types potentially regulated by this proposed rule.

          Exhibit 1.--Examples of Industrial Facility Types Potentially Regulated by This Proposed Rule
----------------------------------------------------------------------------------------------------------------
                               Examples of potentially regulated    Standard industrial       North American
           Category                         entities               classification codes    industry codes (NAIC)
----------------------------------------------------------------------------------------------------------------
Federal, State and local       Operators of steam electric        4911 and 493..........  221111, 221112,
 government.                    generating point source                                    221113, 221119,
                                dischargers that employ cooling                            221121, 221122
                                water intake structures.
Industry.....................  Operators of industrial point      See below.............  See below
                                source dischargers that employ
                                cooling water intake structures..
                               Agricultural production..........  0133..................  111991, 11193
                               Metal mining.....................  1011..................  21221
                               Oil and gas extraction...........  1311, 1321............  211111, 211112
                               Mining and quarrying of            1474..................  212391
                                nonmetallic minerals.
                               Food and kindred products........  2046, 2061, 2062,       311221, 311311,
                                                                   2063, 2075, 2085.       311312, 311313,
                                                                                           311222, 311225, 31214
                               Tobacco products.................  2141..................  312229, 31221
                               Textile mill products............  2211..................  31321
                               Lumber and wood products, except   2415, 2421, 2436, 2493  321912,321113, 321918,
                                furniture.                                                 321999, 321212,
                                                                                           321219
                               Paper and allied products........  2611, 2621, 2631, 2676  3221, 322121, 32213,
                                                                                           322121, 322122,
                                                                                           32213, 322291
                               Chemical and allied products.....  28 (except 2895, 2893,  325 (except 325182,
                                                                   2851, and 2879).        32591, 32551, 32532)
                               Petroleum refining and related     2911, 2999............  32411, 324199
                                industries.
                               Rubber and miscellaneous plastics  3011, 3069............  326211, 31332, 326192,
                                products.                                                  326299
                               Stone, clay, glass, and concrete   3241..................  32731
                                products.
                               Primary metal industries.........  3312, 3313, 3315,       324199, 331111,
                                                                   3316, 3317, 3334,       331112, 331492,
                                                                   3339, 3353, 3363,       331222, 332618,
                                                                   3365, 3366.             331221, 22121,
                                                                                           331312, 331419,
                                                                                           331315, 331521,
                                                                                           331524, 331525
                               Fabricated metal products, except  3421, 3499............  332211, 337215,
                                machinery and transportation                               332117, 332439,
                                equipment.                                                 33251, 332919,
                                                                                           339914, 332999
                               Industrial and commercial          3523, 3531............  333111, 332323,
                                machinery and computer equipment.                          332212, 333922,
                                                                                           22651, 333923, 33312
                               Transportation equipment.........  3724, 3743, 3764......  336412, 333911, 33651,
                                                                                           336416

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                               Measuring, analyzing, and          3861..................  333315, 325992
                                controlling instruments;
                                photographic, medical, and
                                optical goods; watches and
                                clocks.
                               Electric, gas, and sanitary        4911, 4931, 4939, 4961  221111, 221112,
                                services.                                                  221113, 221119,
                                                                                           221121, 221122,
                                                                                           22121, 22133
                               Educational services.............  8221..................  61131
                               Engineering, accounting,           8731..................  54171
                                research, management and related
                                services.
----------------------------------------------------------------------------------------------------------------

    This exhibit is not intended to be exhaustive, but rather provides 
a guide for readers regarding entities that may be regulated by this 
action if they satisfy the final flow threshold and waterbody type 
criteria. This exhibit 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 exhibit could also be regulated. To 
determine whether your facility is regulated by this action, you should 
carefully examine the applicability criteria in Sec.  125.101 and Sec.  
125.131 of this proposal. If you have questions regarding the 
applicability of this action to a particular entity, consult the 
persons listed for technical information in the FOR FURTHER INFORMATION 
CONTACT section.

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

    1. Submitting Confidential Business Information (CBI). Do not 
submit information that you consider to be CBI electronically through 
EPA's electronic public docket or by e-mail. Send information claimed 
as CBI by mail only to the following address, Office of Science and 
Technology, Mailcode 4303T, U.S. Environmental Protection Agency, 1200 
Pennsylvania Ave., NW., Washington, DC 20460, Attention: Ahmar Siddiqui 
/Docket ID No. OW-2004-0002. You may claim information that you submit 
to EPA as CBI by marking any part or all of that information as CBI (if 
you submit CBI on disk or CD ROM, mark the outside of the disk or CD 
ROM as CBI and then identify electronically within the disk or CD ROM 
the specific information that is CBI). Information so marked will not 
be disclosed except in accordance with procedures set forth in 40 CFR 
Part 2. In addition to one complete version of the comment that 
includes any information claimed as CBI, a copy of the comment that 
does not contain the information claimed as CBI must be submitted for 
inclusion in the public docket and EPA's electronic public docket. If 
you submit the copy that does not contain CBI on disk or CD ROM, mark 
the outside of the disk or CD ROM clearly that it does not contain CBI. 
Information not marked as CBI will be included in the public docket and 
EPA's electronic public docket without prior notice. If you have any 
questions about CBI or the procedures for claiming CBI, please consult 
the person identified in the FOR FURTHER INFORMATION CONTACT section.
    2. Tips for Preparing Your Comments. When submitting comments, 
remember to:
    I. Identify the rulemaking by docket number and other identifying 
information (subject heading, Federal Register date and page number).
    II. Follow directions--The agency may ask you to respond to 
specific questions or organize comments by referencing a Code of 
Federal Regulations (CFR) part or section number.
    III. Explain why you agree or disagree; suggest alternatives and 
substitute language for your requested changes.
    IV. Describe any assumptions and provide any technical information 
and/or data that you used.
    IV. If you estimate potential costs or burdens, explain how you 
arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
    V. Provide specific examples to illustrate your concerns, and 
suggest alternatives.
    VI. Explain your views as clearly as possible, avoiding the use of 
profanity or personal threats.
    VII. Make sure to submit your comments by the comment period 
deadline identified.

C. Supporting Documentation

    The proposed regulation is supported by three major documents:
    1. Economic Analysis for the Proposed Section 316(b) Rule for Phase 
III Facilities (EPA-821-R-04-016), hereafter referred to as the 
Economic Analysis (EA). This document presents the analysis of 
compliance costs, closures, energy supply effects, and benefits 
associated with the final rule.
    2. Regional Benefits Assessment for the Proposed Section 316(b) 
Rule for Phase III Facilities (EPA-821-R-04-017), hereafter referred to 
as the Regional Analysis Document or the Regional Study(ies) Document. 
This document examines cooling water intake structure impacts and 
regulatory benefits at the regional level.
    3. Technical Development Document for the Proposed Section 316(b) 
Rule for Phase III Facilities (EPA-821-R-04-015), hereafter referred to 
as the Technical Development Document. This document presents detailed 
information on the methods used to develop unit costs and describes the 
set of technologies that may be used to meet the final rule's 
requirements.

D. Table of Contents

General Information
    A. What Entities Are Regulated By This Action?
    B. What Should I Consider as I Prepare My Comments for EPA?
    C. Supporting Documentation
    D. Table of Contents
I. Legal Authority, Purpose, and Background of Today's Regulation
    A. Legal Authority
    B. Purpose of Today's Proposed Regulation
    C. Background
II. Scope and Applicability of the Proposed Rule
    A. What is a ``New'' Offshore Oil and Gas Extraction Facility 
for Purposes of the Section 316(b) Proposed Phase III Rule?
    B. What is an ``Existing Facility'' for Purposes of the Section 
316(b) Proposed Phase III Rule?
    C. What is ``Cooling Water'' and What is a ``Cooling Water 
Intake Structure?''
    D. Would My Facility Be Covered if It Withdraws from Waters of 
the United States?
    E. Would My Facility Be Covered if It is a Point Source 
Discharger?
    F. What are the Cooling Water Use and Design Intake Flow 
Thresholds in this Proposed Rule?
    G. When Would a Phase III Existing Facility and New Offshore Oil 
and Gas Extraction Facility Be Required to Comply With Any New 
316(b) Requirements?
    H. What Special Definitions Apply to This Proposal?

[[Page 68447]]

III. Summary of Data Collection Activities
    A. Survey Questionnaires
    B. Existing Data Sources
    C. Data Provided to EPA by Industrial, Trade, Consulting, 
Scientific or Environmental Organizations or by the General Public
IV. Overview of Facility Characteristics (Cooling Water Systems & 
Intake Structures) for Industries Potentially Subject to Proposed 
Rule
    A. Overview of Potentially Regulated Phase III Universe
    B. Existing Manufacturers and Industrial Facilities Potentially 
Subject to Proposed National Requirements
    C. New Offshore Oil and Gas Facilities Subject to Proposed 
National Requirements
V. Environmental Impacts Associated With Cooling Water Intake 
Structures
VI. Basis for the Proposed Requirements
    A. What is the Best Technology Available for Minimizing Adverse 
Environmental Impact at Phase III Existing Facilities?
    B. Economic Practicability
    C. What is the Proposed Role of Restoration and Trading?
VII. Implementation
    A. When Would the Proposed Rule Become Effective?
    B. What General Information Would I Be Required to Submit to the 
Director When I Apply for My Reissued NPDES Permit?
    C. Phase III Existing Facility Implementation
    D. New Offshore Oil and Gas Extraction Facilities
    E. What Are the Respective Federal, State, and Tribal Roles?
    F. Are Permits for Phase III Facilities Subject to Requirements 
Under Other Federal Statutes?
VIII. Economic Impact Analysis
    A. Existing Phase III Facilities: Manufacturers and Electric 
Power Producers
    B. New Offshore Oil and Gas Extraction Facilities
    C. Summary of Total Social Costs and Impacts
IX. Benefits Analysis
    A. Introduction
    B. Study Design and Methods
    C. Impingement and Entrainment
    D. National Benefits
X. Comparison of Benefits and Costs
    A. Benefit-Cost Analysis
    B. Break-even Analysis
XI. Statutory and Executive Order Reviews
    A. E.O. 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. E.O. 13175: Consultation and Coordination With Indian Tribal 
Governments
    G. E.O. 13045: Protection of Children From Environmental Health 
Risks and Safety Risks
    H. Executive Order 13211: Actions that Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. E.O. 12898: Federal Actions to Address Environmental Justice 
in Minority Populations and Low-Income Populations
    K. E.O. 13158: Marine Protected Areas
    L. Plain Language Directive

I. Legal Authority, Purpose, and Background of Today's Regulation

A. Legal Authority

    Today's proposed rule is issued under the authority of sections 
101, 301, 304, 306, 308, 316, 401, 402, 501, and 510 of the Clean Water 
Act, 33 U.S.C. 1251, 1311, 1314, 1316, 1318, 1326, 1341, 1342, 1361, 
and 1370. Publication of this proposed rule fulfills an obligation of 
the U.S. Environmental Protection Agency (EPA) under a consent decree 
in Riverkeeper, Inc. v. Leavitt, No. 93 Civ. 0314, (S.D.N.Y).

B. Purpose of Today's Proposed Regulation

    Section 316(b) of the Clean Water Act provides that any standard 
established pursuant to section 301 or 306 of the Clean Water Act and 
applicable to a point source must require that the location, design, 
construction, and capacity of cooling water intake structures reflect 
the best technology available for minimizing adverse environmental 
impact. Today's proposed rule would establish requirements reflecting 
the best technology available for minimizing adverse environmental 
impact, applicable to the location, design, construction, and capacity 
of cooling water intake structures at Phase III facilities (Phase I and 
Phase II are described in section I. C of today's preamble). Today's 
notice proposes the following three possible options for defining which 
existing facilities would be subject to categorical national 
requirements based on the design intake flow of cooling water intake 
structures at a facility and waterbody type: (1) The facility has a 
total design intake flow of 50 million gallons per day (MGD) or more 
and withdraws from any waterbody; (2) the facility has a total design 
intake flow of 200 MGD or more and withdraws from any waterbody; or (3) 
the facility has a total design intake flow of 100 MGD or more and 
withdraws water specifically from an ocean, estuary, tidal river, or 
one of the Great Lakes. Today's notice also proposes a design intake 
flow threshold of greater than 2 MGD for new offshore oil and gas 
extraction facilities consistent with the design intake flow threshold 
for new facilities in the Phase I rule. Under each of these co-proposed 
regulatory options, a Phase III facility must use at least 25 percent 
of the water withdrawn exclusively for cooling purposes and meet other 
specified criteria in order to be within the scope of the rule (see 
Section II--Scope and Applicability of Proposed Rule).

C. Background

1. The Clean Water Act
    The Federal Water Pollution Control Act, also known as the Clean 
Water Act (CWA), 33 U.S.C. 1251 et seq., seeks to ``restore and 
maintain the chemical, physical, and biological integrity of the 
nation's waters.'' 33 U.S.C. 1251(a). The Clean Water Act establishes a 
comprehensive regulatory program, key elements of which are: (1) A 
prohibition on the discharge of pollutants from point sources to waters 
of the United States, except as authorized by the statute; (2) 
authority for EPA or authorized States or Tribes to issue National 
Pollutant Discharge Elimination System (NPDES) permits that regulate 
the discharge of pollutants; and, (3) requirements for limitations in 
NPDES permits based on effluent limitations guidelines and standards 
and water quality standards.
    Section 316(b) addresses the adverse environmental impact caused by 
the intake of cooling water, not discharges into water. Despite this 
special focus, the requirements of section 316(b) are closely linked to 
several of the core elements of the NPDES permit program established 
under section 402 of the Clean Water Act to control discharges of 
pollutants into navigable waters. For example, while effluent 
limitations apply to the discharge of pollutants by NPDES-permitted 
point sources to waters of the United States, section 316(b) applies to 
facilities subject to NPDES requirements that withdraw water from 
waters of the United States for cooling and that use a cooling water 
intake structure to do so.
    Section 402 of the Clean Water Act provides authority for EPA or an 
authorized State or Tribe to issue an NPDES permit to any person 
discharging any pollutant or combination of pollutants from a point 
source into waters of the United States. Forty-five States and one U.S. 
territory are currently authorized under section 402(b) to administer 
the NPDES permitting program. NPDES permits restrict the types and 
amounts of pollutants, including heat, that may be discharged from 
various industrial, commercial, and other sources of wastewater. These 
permits control the discharge of pollutants primarily by requiring 
dischargers to meet effluent limitations established pursuant to 
section 301 or section 306. Effluent

[[Page 68448]]

limitations may be based on Federal effluent limitations guidelines, 
new source performance standards, or the best professional judgment of 
the permit writer. Limitations based on these guidelines, standards, or 
best professional judgment are known as technology-based effluent 
limits. Where technology-based effluent limits are inadequate to ensure 
attainment of water quality standards applicable to the receiving 
water, section 301(b)(1)(C) of the Clean Water Act requires permits to 
include more stringent limits based on applicable water quality 
standards. NPDES permits also routinely include monitoring and 
reporting requirements, standard conditions, and special conditions. In 
addition, NPDES permits contain conditions to implement the 
requirements of section 316(b). Section 301 of the Clean Water Act 
prohibits the discharge of any pollutant by any person, except in 
compliance with specified statutory requirements, including section 
402.
    Section 510 of the Clean Water Act provides that, except as 
provided in the Clean Water Act, nothing in the Act shall preclude or 
deny the right of any State or political subdivision thereof to adopt 
or enforce any requirement respecting control or abatement of 
pollution; except that if a limitation, prohibition or standard of 
performance is in effect under the Clean Water Act, such State or 
political subdivision may not adopt or enforce any other limitation, 
prohibition or standard of performance which is less stringent than the 
limitation, prohibition or standard of performance under the Act. EPA 
interprets this to reserve for the States authority to implement 
requirements that are more stringent than the Federal requirements 
under State law. PUD No. 1 of Jefferson County. Washington Dep't of 
Ecology, 511 U.S. 700, 705 (1994).
    Sections 301, 304, and 306 of the Clean Water Act require that EPA 
develop technology-based effluent limitations guidelines and new source 
performance standards that are used as the basis for technology-based 
minimum discharge requirements in wastewater discharge permits. EPA 
issues these effluent limitations guidelines and standards for 
categories of industrial dischargers based on the pollutants of concern 
discharged by the industry, the degree of control that can be attained 
using various levels of pollution control technology, consideration of 
economics, as appropriate to each level of control, and other factors 
identified in sections 304 and 306 of the Clean Water Act (such as non-
water quality environmental impacts including energy impacts). EPA has 
promulgated regulations setting effluent limitations guidelines and 
standards under sections 301, 304, and 306 of the Clean Water Act for 
more than 50 industries. See 40 CFR 405 through 471. EPA has 
established effluent limitations guidelines and standards that apply to 
most of the industry categories that use cooling water intake 
structures (e.g., steam electric power generation, iron and steel 
manufacturing, pulp and paper manufacturing, petroleum refining, and 
chemical manufacturing).
    Section 316(b) states, in full:

    Any standard established pursuant to section 301 or section 306 
of [the Clean Water] Act and applicable to a point source shall 
require that the location, design, construction, and capacity of 
cooling water intake structures reflect the best technology 
available for minimizing adverse environmental impact.

    The phrase ``best technology available'' in Clean Water Act section 
316(b) is not defined in the statute, but its meaning can be understood 
in light of similar phrases used elsewhere in the Clean Water Act. See 
Riverkeeper v. EPA, slip op. at 11 (2nd Cir. Feb. 3, 2004) (noting that 
the cross-reference in Clean Water Act section 316(b) to Clean Water 
Act section 306 ``is an invitation to look at section 306 for guidance 
in determining what factors Congress intended the EPA to consider in 
determining `best technology available' for new sources.'').
    In sections 301 and 306, Congress directed EPA to set effluent 
discharge standards for new sources based on the ``best available 
demonstrated control technology'' and for existing sources based on the 
``best available technology economically achievable.'' For new sources, 
section 306(b)(1)(B) directs EPA to establish ``standards of 
performance.'' The phrase ``standards of performance'' under section 
306(a)(1) is defined as being the effluent reduction that is 
``achievable through application of the best available demonstrated 
control technology, processes, operating methods or other alternatives. 
* * *'' This is commonly referred to as ``best available demonstrated 
technology'' or ``BADT.'' For existing dischargers, section 
301(b)(1)(A) requires the establishment of effluent limitations based 
on ``the application of best practicable control technology currently 
available.'' This is commonly referred to as ``best practicable 
technology'' or ``BPT.'' Further, section 301(b)(2)(A) directs EPA to 
establish effluent limitations for certain classes of pollutants 
``which shall require the application of the best available technology 
economically achievable.'' This is commonly referred to as ``best 
available technology'' or ``BAT.'' Section 301 specifies that both BPT 
and BAT limitations must reflect determinations made by EPA under Clean 
Water Act section 304. Under these provisions, the limitations on the 
discharge of pollutants from point sources are based upon the 
capabilities of the equipment or ``control technologies'' available to 
control those discharges.
    The phrases ``best available demonstrated technology'' and ``best 
available technology''--like ``best technology available'' in Clean 
Water Act section 316(b)--are not defined in the statute. However, 
section 304 of the Clean Water Act specifies factors to be considered 
in establishing the best practicable control technology currently 
available and best available technology.
    For best practicable control technology currently available, the 
Clean Water Act directs EPA to consider:

the total cost of application of technology in relation to the 
effluent reduction benefits to be achieved from such application, 
and shall also take into account the age of the equipment and 
facilities involved, the process employed, the engineering aspects 
of the application of various types of control techniques, process 
changes, non-water quality environmental impact (including energy 
requirements), and such other factors as [EPA] deems appropriate.

33 U.S.C. 1314(b)(1)(b).
    For ``best available technology,'' the Clean Water Act directs EPA 
to consider:

the age of equipment and facilities involved, the process employed, 
the engineering aspects * * * of various types of control 
techniques, process changes, the cost of achieving such effluent 
reduction, non-water quality environmental impacts (including energy 
requirements), and such other factors as [EPA] deems appropriate.

33 U.S.C. 1314(b)(2)(B).
    Section 316(b) expressly refers to section 301, and the phrase 
``best technology available'' is very similar to ``best available 
technology'' in that section. These facts, coupled with the brevity of 
section 316(b) itself, prompted EPA to look to section 301 and, 
ultimately, section 304 for guidance in determining the ``best 
technology available to minimize adverse environmental impact'' of 
cooling water intake structures for existing Phase II facilities.
    By the same token, however, there are significant differences 
between section 316(b) and sections 301 and 304. See Riverkeeper, Inc. 
v. United States Environmental Protection Agency, slip op. at 13 (2nd 
Cir. Feb. 3, 2004) (``not every statutory directive contained [in

[[Page 68449]]

sections 301 and 306] is applicable'' to a section 316(b) rulemaking). 
Section 316(b) requires that cooling water intake structures reflect 
the best technology available for minimizing adverse environmental 
impact. In contrast to the effluent limitations provisions, the object 
of the ``best technology available'' is explicitly articulated by 
reference to the receiving water: To minimize adverse environmental 
impact in the waters from which cooling water is withdrawn. This 
difference is reflected in EPA's past practices in implementing 
sections 301, 304, and 316(b). While EPA has established effluent 
limitations guidelines based on the efficacy of one or more 
technologies to reduce pollutants in wastewater, considering costs, but 
without necessarily considering the impact on the receiving waters, EPA 
has previously considered the costs of technologies in relation to the 
benefits of minimizing adverse environmental impact in establishing 
section 316(b) limits. In Re Public Service Co. of New Hampshire, 10 
ERC 1257 (June 17, 1977); In Re Public Service Co. of New Hampshire, 1 
EAD 455 (Aug. 4, 1978); Seacoast Anti-Pollution League v. Costle, 597 
F. 2d 306 (1st Cir. 1979).
    For this Phase III rulemaking, EPA therefore interprets Clean Water 
Act section 316(b) as authorizing EPA to consider not only technologies 
but also their effects on and benefits to the water from which the 
cooling water is withdrawn. Based on these two considerations, today's 
proposed rule establishes national requirements for facilities to 
install technology, as appropriate, that is technically available, 
economically practicable, cost-effective, and justified by the benefits 
to the source waterbody.
    At this time, EPA is co-proposing all three options discussed above 
because it sees advantages to each. EPA is also considering an 
alternative under which EPA would not promulgate, at this time, 
categorical requirements under section 316(b) for cooling water intake 
structures unregulated by Phase I and Phase II. Rather, EPA would 
continue to rely on the best professional judgment of the permitting 
authority to determine the best technology available to minimize 
adverse environmental impact, in order to allow these requirements to 
be better tailored to local conditions.
2. Consent Decree
    Publication of this proposal fulfills one of EPA's obligations to 
comply with a consent decree, as amended. The Second Amended Consent 
Decree, which is relevant to today's proposed rule, was filed on 
November 25, 2002, in the United States District Court, Southern 
District of New York, in Riverkeeper, Inc. v. Leavitt, No. 93 Civ 0314 
(AGS). That case was brought against EPA by a coalition of individuals 
and environmental groups. The original Consent Decree, filed on October 
10, 1995, provided that EPA was to propose regulations implementing 
section 316(b) by July 2, 1999, and take final action with respect to 
those regulations by August 13, 2001. Under subsequent interim orders, 
the Amended Consent Decree filed on November 22, 2000, and the Second 
Amended Consent Decree, EPA divided the rulemaking into three phases. 
EPA took final action on a rule governing cooling water intake 
structures used by new facilities (Phase I) on November 9, 2001 (66 FR 
65255, December 18, 2001). EPA took final action on a rule governing 
cooling water intake structures used by large existing power producers 
(Phase II) on February 16, 2004 (69 FR 41576, July 9, 2004). The 
consent decree further requires that EPA propose regulations applicable 
to, at a minimum, existing facilities using cooling water intake 
structures with intake flows above a minimum threshold to be determined 
by EPA, in the following categories: power producers not covered by the 
Phase II regulations, pulp and paper manufacturing, petroleum and coal 
products manufacturing, chemical and allied products manufacturing, and 
primary metal manufacturing (Phase III). EPA is required to propose 
regulations for Phase III facilities by November 1, 2004, and take 
final action by June 1, 2006.
3. What Other EPA Rulemakings and Guidance Address Cooling Water Intake 
Structures?
    In April 1976, EPA published a final rule under section 316(b) that 
addressed cooling water intake structures. 41 FR 17387 (April 26, 
1976), see also the proposed rule at 38 FR 34410 (December 13, 1973). 
The rule added a new Sec.  401.14 to 40 CFR Chapter I that reiterated 
the requirements of Clean Water Act section 316(b). It also added a new 
part 402, which included three sections: (1) Section 402.10 
(Applicability), (2) Sec.  402.11 (Specialized definitions), and (3) 
Sec.  402.12 (Best technology available for cooling water intake 
structures). Section 402.10 stated that the provisions of part 402 
applied to ``cooling water intake structures for point sources for 
which effluent limitations are established pursuant to section 301 or 
standards of performance are established pursuant to section 306 of the 
Act.'' Section 402.11 defined the terms ``cooling water intake 
structure,'' ``location,'' ``design,'' ``construction,'' ``capacity,'' 
and ``Development Document.'' Section 402.12 included the following 
language:

    The information contained in the Development Document shall be 
considered in determining whether the location, design, 
construction, and capacity of a cooling water intake structure of a 
point source subject to standards established under section 301 or 
306 reflect the best technology available for minimizing adverse 
environmental impact.

    In 1977, fifty-eight electric utility companies challenged those 
regulations, arguing that EPA had failed to comply with the 
requirements of the Administrative Procedure Act (APA) in promulgating 
the rule. Specifically, the utilities argued that EPA had neither 
published the Development Document in the Federal Register nor properly 
incorporated the document into the rule by reference. The United States 
Court of Appeals for the Fourth Circuit agreed and, without reaching 
the merits of the regulations themselves, remanded the rule. 
Appalachian Power Co. v. Train, 566 F.2d 451 (4th Cir. 1977). EPA later 
withdrew part 402. 44 FR 32956 (June 7, 1979). The regulation at 40 CFR 
401.14, which reiterates the statutory requirement, remains in effect.
    Since the Fourth Circuit remanded EPA's section 316(b) regulations 
in 1977, NPDES permit authorities have made decisions implementing 
section 316(b) on a case-by-case, site-specific basis. EPA published 
draft guidance addressing section 316(b) implementation in 1977. See 
Draft Guidance for Evaluating the Adverse Impact of Cooling Water 
Intake Structures on the Aquatic Environment: Section 316(b) Pub. L. 
92-500 (U.S. EPA, 1977). This draft guidance described the studies 
recommended for evaluating the impact of cooling water intake 
structures on the aquatic environment and recommended a basis for 
determining the best technology available for minimizing adverse 
environmental impact. The 1977 section 316(b) draft guidance states, 
``The environmental-intake interactions in question are highly site-
specific and the decision as to best technology available for intake 
design, location, construction, and capacity must be made on a case-by-
case basis.'' (Section 316(b) Draft Guidance, U.S. EPA, 1977, p. 4). 
This case-by-case approach was also consistent with the approach 
described in the 1976 Development Document referenced in the remanded 
regulation.
    The 1977 section 316(b) draft guidance suggested a general process 
for developing information needed to

[[Page 68450]]

support section 316(b) decisions and presenting that information to the 
permitting authority. The process involved the development of a site-
specific study of the environmental effects associated with each 
facility that uses one or more cooling water intake structures, as well 
as consideration of that study by the permitting authority in 
determining whether the facility must make any changes for minimizing 
adverse environmental impact. Where adverse environmental impact is 
present, the 1977 draft guidance suggested a stepwise approach that 
considers screening systems, size, location, capacity, and other 
factors.
    Although the draft guidance described the information that should 
be developed, key factors that should be considered, and a process for 
supporting section 316(b) determinations, it did not establish uniform 
technology-based national standards for best technology available for 
minimizing adverse environmental impact. Rather, the guidance left the 
decisions on the appropriate location, design, capacity, and 
construction of cooling water intake structures to the permitting 
authority. Under this framework, the Director determined whether 
appropriate studies have been performed, whether a given facility has 
minimized adverse environmental impact, and what, if any, technologies 
may be required.
4. Phase I New Facility Rule
    On November 9, 2001, EPA took final action on regulations governing 
cooling water intake structures at new facilities. 66 FR 65255 
(December 18, 2001). On December 26, 2002, EPA made minor changes to 
the Phase I regulations. 67 FR 78947. The final Phase I new facility 
rule (40 CFR 125, Subpart I) establishes requirements applicable to the 
location, design, construction, and capacity of cooling water intake 
structures at new facilities that withdraw greater than two (2) million 
gallons per day (MGD) and use at least twenty-five (25) percent of the 
water they withdraw solely for cooling purposes. In the new facility 
rule, EPA adopted a two-track approach. Under Track I, for facilities 
with a design intake flow more than 10 MGD, the intake flow of the 
cooling water intake structure is restricted, at a minimum, to a level 
commensurate with that which could be attained by use of a closed-
cycle, recirculating cooling system. For facilities with a design 
intake flow greater than 2 MGD, the design through-screen intake 
velocity is restricted to 0.5 feet per second and the total quantity of 
intake is restricted to a proportion of the mean annual flow of a 
freshwater river or stream, or to maintain the natural thermal 
stratification or turnover patterns (where present) of a lake or 
reservoir except in cases where the disruption is beneficial, or to a 
percentage of the tidal excursions of a tidal river or estuary. If 
certain environmental conditions exist, an applicant with intake 
capacity greater than 10 MGD must select and implement appropriate 
design and construction technologies for minimizing impingement 
mortality and entrainment. (Applicants with 2 to 10 MGD flows are not 
required to reduce intake flow to a level commensurate with a closed-
cycle, recirculating cooling system, but must install technologies for 
reducing entrainment at all locations.) Under Track II, the applicant 
has the opportunity to demonstrate to the Director that the 
technologies he employs will reduce the level of adverse environmental 
impact to a comparable level to what would be achieved by meeting the 
Track I requirements for restricting intake flow and velocity. As part 
of this demonstration, EPA initially had allowed the applicant to 
employ control measures other than reducing impingement mortality and 
entrainment, including restoration measures that would result in 
increases in fish and shellfish, comparable to the reduction in 
impingement mortality and entrainment it would achieve were it to 
implement the Track I intake flow and velocity requirements. However, 
in February 2004, the 2nd Circuit Court of Appeals issued a decision in 
response to several petitions challenging the final Phase I rule. The 
Court found that EPA exceeded its authority by allowing new facilities 
to comply with section 316(b) through restoration methods, and remanded 
that aspect of the rule to EPA. Riverkeeper, Inc. v. EPA, 358 F.3d 174, 
191 (2nd Cir., 2004).
    Directors may establish less stringent alternative requirements for 
a facility if compliance with the Phase I standards would result in 
compliance costs wholly out of proportion to those EPA considered in 
establishing the requirements at issue or would result in significant 
adverse impacts on local air quality, water resources, or local energy 
markets.
    With the new facility rule, EPA promulgated national minimum 
requirements for the location, design, capacity, and construction of 
cooling water intake structures at new facilities. The final new 
facility rule establishes a reasonable framework that creates certainty 
for permitting of new facilities, while providing significant 
flexibility to take site-specific factors into account.
    EPA specifically excluded new offshore oil and gas extraction 
facilities from the Phase I new facility rule, but committed to 
consider establishing requirements for such facilities in the Phase III 
rulemaking. 66 FR 65338 (December 18, 2001).
5. Phase II Existing Facility Rule
    On February 16, 2004, EPA took final action on regulations 
governing cooling water intake structures at certain existing power 
producing facilities. 69 FR 41576 (July 9, 2004). The final Phase II 
rule applies to existing facilities that are point sources; that, as 
their primary activity, both generate and transmit electric power or 
generate electric power for sale or transmission; that use or propose 
to use a cooling water intake structure with a total design intake flow 
of 50 MGD or more to withdraw water from waters of the United States; 
and that use at least 25 percent of the withdrawn water exclusively for 
cooling purposes.
    Under the Phase II rule, EPA established performance standards for 
the reduction of impingement mortality and, when appropriate, 
entrainment (see 40 CFR 125.94). The performance standards consist of 
ranges of reductions in impingement mortality and/or entrainment (e.g., 
reduce impingement mortality by 80 to 95 percent and/or entrainment by 
60 to 90 percent). These performance standards reflect the best 
technology available for minimizing adverse environmental impacts. The 
type of performance standard applicable to a particular facility (i.e., 
reductions in impingement mortality only or impingement mortality and 
entrainment) is based on several factors, including the facility's 
location (i.e., source waterbody), rate of use (capacity utilization 
rate), and the proportion of the waterbody withdrawn. In most cases, 
EPA believes that these performance standards can be met using design 
and construction technologies or operational measures. The performance 
standards also can be met, in whole or in part, by using restoration 
measures, following consideration of design and construction 
technologies or operational measures, and provided such measures meet 
certain specified requirements. (See 40 CFR 125.94(c)).
    The Phase II rule identifies five alternatives to achieve 
compliance with the requirements for best technology available for 
minimizing adverse environmental impacts associated with cooling water 
intake structures. A facility must demonstrate to the Director one of 
the following: (1) That it has already reduced its flow commensurate 
with a closed-cycle recirculating system

[[Page 68451]]

(to meet performance standards for impingement and entrainment), or 
that it has already reduced its design intake velocity to 0.5 feet per 
second or less (to meet the impingement performance standard only); (2) 
that its current cooling water intake structure configuration meets the 
applicable performance standards; (3) that it has selected design and 
construction technologies, operational measures, and/or restoration 
measures that, in combination with any existing design and construction 
technologies, operational measures, and/or restoration measures, meet 
the applicable performance standards; (4) that it meets the 
applicability criteria and has installed and is properly operating and 
maintaining a rule-specified and/or State-specified approved design and 
construction technology (i.e., submerged cylindrical wedgewire screen) 
in accordance with 40 CFR 125.99(a) or an alternative technology that 
meets the appropriate performance standards and is approved by the 
Director in accordance with 40 CFR 125.99(b); or (5) that its costs of 
compliance would be significantly greater than the costs considered by 
the Administrator for a like facility to meet the applicable 
performance standards, or than the benefits of meeting the applicable 
performance standards at the facility. A discussion of the legal 
authority and basis for the use of the cost test is found in section VI 
of this preamble.
    During the first permit term and subsequent permit terms, a 
facility that chooses compliance alternatives two (2) through five (5), 
as described above, may request that compliance with the requirements 
of the rule be determined based on the implementation of a Technology 
Installation and Operation Plan (TIOP), indicating how the facility 
will install and ensure the efficacy, to the extent practicable, of 
design and construction technologies and/or operational measures, and/
or a Restoration Plan. Adaptive management practices must be employed 
to ensure compliance during subsequent permit terms. The TIOP must be 
developed and submitted to the Director in accordance with 40 CFR 
125.95(b)(4)(ii). The Restoration Plan must be developed in accordance 
with 40 CFR 125.95(b)(5).
6. Public Participation
    EPA worked extensively with stakeholders from the industry, public 
interest groups, State agencies, and other Federal agencies in the 
development of this proposed rule. EPA included industry groups, 
environmental groups, and other government entities in the development, 
testing, refinement, and completion of the section 316(b) survey, which 
was used as a primary source of data for the Phase III proposed rule. 
As discussed in section III of today's preamble, the survey, 
``Information Collection Request, Detailed Industry Questionnaires: 
Phase II Cooling Water Intake Structures & Watershed Case Study Short 
Questionnaire,'' was initiated in 1997, and was used to collect data 
during 1998. EPA conducted two public meetings on section 316(b) 
issues. In June of 1998, EPA conducted a public meeting focused on a 
draft regulatory framework for assessing potential adverse 
environmental impact from impingement mortality and entrainment. 63 FR 
27958 (May 21, 1998). A second public meeting was held in September of 
1998, and focused on technology, cost, and mitigation issues. 63 FR 
40683 (July 30, 1998). In addition, in September of 1998, and April of 
1999, EPA participated in technical workshops sponsored by the Electric 
Power Research Institute on issues relating to the definition and 
assessment of adverse environmental impact. EPA also participated in 
other industry conferences, and has met with representatives of 
industry and environmental groups.
    In the months leading up to publication of the proposed Phase I 
rule, EPA conducted a series of stakeholder meetings to review the 
draft regulatory framework for the proposed rule and invited 
stakeholders to provide their recommendations. Participants included 
representatives of the electric power industry, as well as the 
petroleum refining, pulp and paper, and iron and steel industries. EPA 
also met with environmental groups, States, and interstate groups. 
After publication of the proposed Phase I rule, EPA continued to meet 
with stakeholders. Summaries of these meetings are in the docket. EPA 
also received many comments on the Phase I proposed rule (65 FR 49059, 
August 10, 2000) and Notice of Data Availability (NODA). (66 FR 28853, 
May 25, 2001). These comments informed the development of the Phase II 
rule and this Phase III proposed rule.
    In January 2001, EPA attended technical workshops organized by the 
Electric Power Research Institute and the Utilities Water Act Group. 
These workshops focused on key issues associated with different 
regulatory approaches considered under the Phase I proposed rule and 
alternatives for addressing section 316(b) requirements.
    On May 23, 2001, EPA held a day-long forum to discuss specific 
issues associated with the development of regulations under section 
316(b) of the Clean Water Act. 66 FR 20658 (April 24, 2001). At the 
meeting, 17 experts from industry, public interest groups, States, and 
academia reviewed and discussed the Agency's preliminary data on 
cooling water intake structure technologies that are in place at 
existing facilities and the costs associated with the use of available 
technologies for reducing impingement mortality and entrainment. Over 
120 people attended the meeting.
    On August 21, 2001, EPA participated in a technical symposium 
sponsored by the Electric Power Research Institute in association with 
the American Fisheries Society on issues relating to the definition and 
assessment of adverse environmental impact under section 316(b) of the 
Clean Water Act.
    During development of the Phase I and Phase II rules, EPA 
coordinated with the Nuclear Regulatory Commission (NRC) to ensure that 
there would not be a conflict with NRC safety requirements. NRC 
reviewed the proposed Phase II rule and did not identify any apparent 
conflict with nuclear plant safety. NRC licensees would continue to be 
obligated to meet NRC requirements for design and reliable operation of 
cooling systems. NRC recommended that EPA consider adding language 
which states that in cases of conflict between an EPA requirement and 
an NRC safety requirement, the NRC safety requirement takes precedence. 
EPA added language to address this concern in the Phase II final rule 
and this proposed rule.
    EPA sponsored a Symposium on Cooling Water Intake Technologies to 
Protect Aquatic Organisms, on May 6-7, 2003. This symposium brought 
together professionals from Federal, State, and Tribal regulatory 
agencies; industry; environmental organizations; engineering consulting 
firms; science and research organizations; academia; and others 
concerned with mitigating harm to the aquatic environment by cooling 
water intake structures. Efficacy and costs of various technologies to 
mitigate impacts to aquatic organisms from cooling water intake 
structures, as well as research and other future needs, were discussed.
    During the development of this proposed regulation, EPA met several 
times with trade associations whose members would be subject to the 
Phase III requirements. EPA also conducted Phase III-specific data 
collection activities, including a study of entrainment at 
manufacturing facilities, contacting Phase III facilities to request

[[Page 68452]]

biological studies and conducted an industry survey of offshore oil and 
gas extraction facilities and seafood processing vessels.
    Finally, EPA convened a Small Business Advocacy Review (SBAR) panel 
(in accordance with the Regulatory Flexibility Act section 609(b) as 
amended by the Small Business Regulatory and Enforcement Fairness Act) 
to provide information to small entities and receive feedback during 
the Phase III rulemaking process. EPA hosted a pre-panel outreach 
meeting for small entities potentially subject to Phase III on January 
22, 2004. The SBAR panel held an outreach meeting with small entity 
representatives (SERs) on March 16, 2004. Based on the information 
gathered from the participating small entities during these outreach 
meetings and subsequent correspondence, the SBAR panel produced a final 
report to the EPA Administrator on April 27, 2004. Results of the final 
report were considered in the development of this proposed Phase III 
rule.
    These coordination efforts and all of the meetings described in 
this section, as well as the comments submitted on the Phase I and II 
section 316(b) rules and EPA's response to these comments, are 
documented or summarized in the dockets for these three rules. The 
Administrative Record for today's proposal includes all materials from 
the Phase I, Phase II, and Phase III section 316(b) rule dockets.

II. Scope and Applicability of the Proposed Rule

    Based on the co-proposed flow thresholds based options in today's 
proposed rule, the proposed national categorical requirements would 
apply to two groups of facilities: (1) Existing manufacturing 
facilities (including but not limited to chemical, metal, pulp and 
paper, and petroleum refining facilities), and (2) new offshore oil and 
gas extraction facilities. In today's proposed rule, the term ``new 
offshore oil and gas extraction facility'' is defined to include 
facilities in both the offshore and the coastal subcategories of EPA's 
Oil and Gas Extraction Point Source Category for which effluent 
limitations are established at 40 CFR part 435. Although the term 
``offshore'' denotes only one of these two subcategories for purposes 
of the effluent guidelines, EPA decided that it was more efficient to 
use the term ``offshore'' to denote facilities in either subcategory 
for purposes of today's rule because the proposed requirements are the 
same for both offshore and coastal facilities and the term ``offshore'' 
is commonly understood to include any facilities not located on land. 
EPA requests comment on whether this definition is likely to cause 
confusion over the scope of covered facilities. In order to be covered 
by today's proposed rule, these facilities would need to use cooling 
water intake structures to withdraw water from waters of the U.S. and 
meet all other applicability criteria, described below.
    Existing facilities that meet all of the following criteria would 
be subject to today's proposed rule, if promulgated as proposed (see 
Sec.  125.101).
     The facility is a point source that has or is required to 
have an NPDES permit under section 402 of the Clean Water Act;
     The facility is an existing facility not subject to the 
Phase II regulation;
     The facility uses at least 25 percent of water withdrawn 
exclusively for cooling purposes, measured on an average annual basis; 
and
     The facility uses, or proposes to use, cooling water 
intake structures, including a cooling water intake structure operated 
by an independent supplier (other than a public water system), with a 
total design intake flow equal to or greater than a certain threshold 
to withdraw cooling water from waters of the United States.
    Today's proposed rule co-proposes three options based on design 
intake flow and source waterbody type for defining which existing 
facilities are Phase III existing facilities subject to categorical 
national requirements:
     The facility has a total design intake flow of 50 MGD or 
more, and withdraws from any waterbody type (``50 MGD All 
Waterbodies'');
     The facility has a total design intake flow of 200 MGD or 
more, and withdraws from any waterbody type (``200 MGD All 
Waterbodies'');
     The facility has a total design intake flow of 100 MGD or 
more and withdraws water from an ocean, estuary, tidal river, or one of 
the Great Lakes (``100 MGD Certain Waterbodies'').
    A facility meeting the above criteria, including any flow threshold 
EPA adopts after considering comments on the three co-proposed options, 
would be referred to as a ``Phase III existing facility.'' If an 
existing facility does not meet the relevant Phase II or Phase III 
cooling water use and intake flow thresholds by itself, and is co-
located with an existing facility that is not subject to the Phase II 
regulation (e.g., a power producing facility below the Phase II flow 
threshold, or a manufacturing facility), both facilities would still be 
subject to Phase III requirements if the cooling water used 
collectively by the co-located facilities meets the applicable 
thresholds (and the facilities meet the other requisite Phase III 
criteria). Co-located facilities adjoin each other and are under common 
ownership, operation, or management. If a facility is a point source 
that uses a cooling water intake structure and has, or is required to 
have, an NPDES permit, but does not meet the proposed applicable design 
intake flow/source waterbody threshold or the 25 percent cooling water 
use threshold, it would continue to be subject to permit conditions 
implementing CWA section 316(b) set by the permit director on a case-
by-case, best professional judgment basis.
    Today's notice also proposes requirements for new offshore oil and 
gas extraction facilities, which were specifically excluded from the 
Phase I new facility rule. (40 CFR 125 Subpart I). Section II.B of the 
preamble discusses what constitutes a ``new'' offshore oil and gas 
extraction facility for purposes of the section 316(b) proposed Phase 
III rule. Requirements for new offshore oil and gas extraction 
facilities are proposed in 40 CFR Subpart N. EPA is seeking comment on 
the requirements contained in this subpart. EPA is not seeking comment 
on the Phase I rule that EPA promulgated in 2001.
    Finally, under today's proposed rule a seafood processing vessel or 
an offshore liquefied natural gas import terminal would not be subject 
to national categorical requirements. Such a facility could be subject 
to permit conditions implementing CWA section 316(b) set by the permit 
director on a case-by-case, best professional judgment basis where the 
facility is a point source that uses a cooling water intake structure 
and has, or is required to have, an NPDES permit.

A. What Is a ``New'' Offshore Oil and Gas Extraction Facility for 
Purposes of the Section 316(b) Proposed Phase III Rule?

    For purposes of this proposed rule, new offshore oil and gas 
extraction facilities are those facilities that are subject to the Oil 
and Gas Extraction Point Source Category Effluent Guidelines (i.e., 40 
CFR 435.10 Offshore Subcategory or 40 CFR 435.40 Coastal Subcategory); 
that commence construction more than 60 days after publication of the 
final rule; and that meet all other aspects of the ``new facility'' 
definition in Sec.  125.83 (other than the date for commencing 
construction). In other words, in order to be covered by today's 
proposed rule, a new offshore oil and gas extraction facility would 
have to be a new source or new discharger per 40 CFR 122.2 and 122.29, 
a greenfield or stand-alone

[[Page 68453]]

facility, and use either a newly constructed cooling water intake 
structure, or an existing cooling water intake structure whose design 
capacity is increased to accommodate the intake of additional cooling 
water.

B. What Is an ``Existing Facility'' for Purposes of the Section 316(b) 
Proposed Phase III Rule?

    In today's proposed rule, the definition of ``existing facility'' 
is the same as in the Phase II rule except for additional language 
addressing new offshore oil and gas extraction facilities: any facility 
that commenced construction on or before January 17, 2002 (or 60 days 
after publication of the final rule for an offshore oil and gas 
extraction facility), as described in 40 CFR 122.29(b)(4).\1\ January 
17, 2002 is the effective date of the Phase I new facility rule and, 
therefore, the date for distinguishing new facilities from existing 
ones. However, offshore oil and gas extraction facilities were not 
subject to the Phase I new facility rule, but rather, would be subject 
to requirements under this proposed Phase III rule. Therefore, the 
effective date of the final Phase III rule would be the date for 
distinguishing new offshore oil and gas extraction facilities from 
existing ones. An ``existing facility'' under this proposed rule would 
include modifications and additions to existing facilities, that do not 
meet the definition of a new facility under the Phase I rule (40 CFR 
125.83). That definition states:
---------------------------------------------------------------------------

    \1\ Construction is commenced if the owner or operator has 
undertaken certain installation and site preparation activities that 
are part of a continuous on-site construction program, and it 
includes entering into certain specified binding contractual 
obligations as one criterion (40 CFR 122.29(b)(4)).

    New facility means any building, structure, facility, or 
installation that meets the definition of a ``new source'' or ``new 
discharger'' in [other NPDES regulations] and is a greenfield or 
stand-alone facility; commences construction after January 17, 2002; 
and uses either a newly constructed cooling water intake structure, 
or an existing cooling water intake structure whose design capacity 
is increased to accommodate the intake of additional cooling water. 
New facilities include only ``greenfield'' and ``stand-alone'' 
facilities. A greenfield facility is a facility that is constructed 
at a site at which no other source is located or that totally 
replaces the process or production equipment at an existing facility 
(see 40 CFR 122.29(b)(1)(i) and (ii)). A stand-alone facility is a 
new, separate facility that is constructed on property where an 
existing facility is located and whose processes are substantially 
independent of the existing facility at the same site (see 40 CFR 
122.29(b)(1)(iii). New facility does not include new units that are 
added to a facility for purposes of the same general industrial 
operation (for example, a new peaking unit at an electrical 
generating station).\2\
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    \2\ The Phase I rule also listed examples of facilities that 
would be ``new'' facilities and facilities that would ``not be 
considered a `new facility' '' in two numbered paragraphs. These 
read as follows:
    ``(1) Examples of `new facilities' include, but are not limited 
to: the following scenarios:
    ``(i) A new facility is constructed on a site that has never 
been used for industrial or commercial activity. It has a new 
cooling water intake structure for its own use.
    ``(ii) A facility is demolished and another facility is 
constructed in its place. The newly-constructed facility uses the 
original facility's cooling water intake structure, but modifies it 
to increase the design capacity to accommodate the intake of 
additional cooling water.
    ``(iii) A facility is constructed on the same property as an 
existing facility, but is a separate and independent industrial 
operation. The cooling water intake structure used by the original 
facility is modified by constructing a new intake bay for the use of 
the newly constructed facility or is otherwise modified to increase 
the intake capacity for the new facility.
    ``(2) Examples of facilities that would not be considered a `new 
facility' include, but are not limited to, the following scenarios:
    ``(i) A facility in commercial or industrial operation is 
modified and either continues to use its original cooling water 
intake structure or uses a new or modified cooling water intake 
structure.
    ``(ii) A facility has an existing intake structure. Another 
facility (a separate and independent industrial operation), is 
constructed on the same property and connects to the facility's 
cooling water intake structure behind the intake pumps, and the 
design capacity of the cooling water intake structure has not been 
increased. This facility would not be considered a `new facility' 
even if routine maintenance or repairs that do not increase the 
design capacity were performed on the intake structure.''

    The definition in today's proposed regulation is intended to be 
consistent with EPA's definition of new facility in the Phase I rule 
(Sec.  125.83) and to ensure that sources excluded from the definition 
of new facility in the Phase I rule are captured by the definition of 
existing facility.
    The determination of whether a facility is ``new'' or ``existing'' 
is focused on the point source discharger--not on the cooling water 
intake structure. In other words, modifications or additions to the 
cooling water intake structure (or even the total replacement of an 
existing cooling water intake structure with a new one) does not 
convert an otherwise unchanged existing facility into a new facility, 
regardless of the purpose of such changes. Rather, the determination as 
to whether a facility is new or existing focuses on the point source 
itself, i.e., whether it is a greenfield facility or a stand-alone 
facility.
    Under this proposed rule, an existing manufacturing facility that 
replaces or modifies an existing generating or manufacturing unit would 
remain subject to regulation as a Phase III existing facility, unless 
(1) the existing facility were completely demolished and another 
facility constructed in its place (a ``greenfield'' facility), or a 
separate facility with substantially independent processes were 
constructed on the property (a ``stand-alone'' facility) and (2) the 
new facility used either a new intake structure or the existing 
structure with an increased design capacity. To illustrate, an existing 
facility that undertook the following facility modifications or 
additions would continue to be characterized as an existing facility--
not a new facility--under today's proposed rule:
     An existing manufacturing facility undergoes a 
modification of its process short of total replacement of the process 
and concurrently increases the design capacity of its existing cooling 
water intake structures;
     An existing manufacturing facility builds a new process at 
its site for purposes of the same industrial operation and concurrently 
increases the design capacity of its existing cooling water intake 
structures;
     An existing manufacturing facility completely rebuilds its 
process but uses the existing cooling water intake structure with no 
increase in design capacity.
    Phase III existing facilities subject to today's proposed rule 
would also include point sources that are new users of cooling water 
intake structures, but do not meet the definition of new facility under 
Sec.  125.83. For example, an existing facility may have historically 
withdrawn its cooling water from a municipal or other source, but then 
begins to withdraw cooling water from a water of the United States. 
This facility would be considered an existing facility because it is 
not a ``greenfield'' or ``stand alone'' facility within the meaning of 
the new facility rule. Similarly, a facility that previously relied on 
unit processes that do not require cooling water, and then adds or 
modifies a unit process for purposes of the same industrial operation 
such that cooling water is subsequently required, would also be 
regulated as an existing facility, not a new facility, under 316(b).

C. What Is ``Cooling Water'' and What Is a ``Cooling Water Intake 
Structure?'

    Today's proposed rule would adopt for Phase III facilities the same 
definition of a ``cooling water intake structure'' that applies to new 
facilities under the final Phase I rule and existing facilities under 
the final Phase II rule. A cooling water intake structure would be 
defined as the total physical structure and any associated constructed 
waterways used to withdraw cooling

[[Page 68454]]

water from waters of the Unites States. Under this definition, the 
cooling water intake structure extends from the point at which water is 
withdrawn from the surface water source up to and including the intake 
pumps. Today's proposed rule also would adopt the definition of 
``cooling water'' used in the Phase I and Phase II rules: water used 
for contact or noncontact cooling, including water used for equipment 
cooling, evaporative cooling tower makeup, and dilution of effluent 
heat content. The definition specifies that the intended use of cooling 
water is to absorb waste heat rejected from the processes used or 
auxiliary operations on the facility's premises. The definition also 
indicates that water used in a manufacturing process either before or 
after it is used for cooling is process water and would not be 
considered cooling water for purposes of determining whether the 
facility was using 25 percent or more of the water withdrawn for 
cooling purposes. This clarification is necessary because cooling water 
intake structures typically bring water into a facility for numerous 
purposes, including use in industrial processes; use as circulating 
water, service water, or evaporative cooling tower makeup water; 
dilution of effluent heat content; equipment cooling; and air 
conditioning. This is particularly true for manufacturers addressed 
under this proposed rule, who often seek to reduce water use and 
increase efficiency through water reuse. EPA does not wish to create a 
disincentive to such improved efficiency and recognizes that to do so 
could result in other forms of environmental impacts. Consequently, and 
consistent with the Phase I and Phase II rules, only the water used 
exclusively for cooling purposes would be counted when determining 
whether the 25 percent threshold in Sec.  125.101(a)(4) or Sec.  
125.131(a)(2) is met.
    This proposed definition of ``cooling water intake structure'' 
differs from the definition provided in the 1977 Draft Guidance for 
Evaluating the Adverse Impact of Cooling Water Intake Structures on the 
Aquatic Environment: Section 316(b) Pub. L. 92-500 (U.S. EPA, 1977). 
The proposed rule definition would clarify that the cooling water 
intake structure includes the physical structure that extends from the 
point at which water is withdrawn from the surface water up to and 
including the intake pumps. Inclusion of the term ``associated 
constructed waterways'' in today's proposed rule is intended to clarify 
that the definition includes those canals, channels, connecting 
waterways, and similar structures that may be built or modified to 
facilitate the withdrawal of cooling water. The explicit inclusion of 
the intake pumps in the definition reflects the key role pumps play in 
determining the capacity (i.e., dynamic capacity) of the intake. These 
pumps, which bring in water, are an essential component of the cooling 
water intake structure since without them the intake structure could 
not work as designed.

D. Would My Facility Be Covered if It Withdraws From Waters of the 
United States?

    The requirements proposed today would apply to cooling water intake 
structures that have the design capacity to withdraw amounts of water 
equal to or greater than the specified proposed intake flow thresholds 
from ``waters of the United States.'' Waters of the United States 
include the broad range of surface waters that meet the regulatory 
definition at 40 CFR 122.2, which includes lakes, ponds, reservoirs, 
nontidal rivers or streams, tidal rivers, estuaries, fjords, oceans, 
bays, and coves. These potential sources of cooling water may be 
adversely affected by impingement mortality and entrainment.
    Some facilities discharge heated water to cooling ponds, then 
withdraw water from the ponds for cooling purposes. EPA recognizes that 
cooling ponds may, in certain circumstances, constitute part of a 
closed-cycled cooling system. See, e.g., Sec.  125.102. However, EPA 
does not intend that this proposed rule would change the regulatory 
status of cooling ponds. Cooling ponds are neither categorically 
included nor categorically excluded from the definition of ``waters of 
the United States'' at 40 CFR 122.2. EPA interprets 40 CFR 122.2 to 
give permit writers discretion to regulate cooling ponds as ``waters of 
the United States'' where cooling ponds meet the definition of ``waters 
of the United States.'' The determination of whether a particular 
cooling pond is a water of the United States is to be made by the 
permit writer on a case-by-case basis, informed by the discussions in 
Solid Waste Agency of Northern Cook County (SWANCC) v. U.S. Army Corps 
of Engineers, 531 U.S. 159 (2001), and subsequent case law. Therefore, 
facilities that withdraw cooling water from cooling ponds that are 
waters of the United States and that would meet today's other proposed 
criteria for coverage (including the requirement that the facility has 
or will be required to obtain an NPDES permit) would be subject to 
today's proposed rule. The EPA and the U.S. Army Corps of Engineers 
have jointly issued jurisdictional guidance concerning the term 
``waters of the United States'' in light of the Supreme Court's 
decision in Solid Waste Agency of Northern Cook County v. U.S. Army 
Corps of Engineers, 531 U.S. 159 (2001) (SWANCC). A copy of that 
guidance was published as an Appendix to an Advanced Notice of Proposed 
Rulemaking on the definition of the phrase ``waters of the U.S.,'' see 
68 FR 1991 (January 15, 2003), and may be obtained at http://www.epa.gov/owow/wetlands/ANPRM-FR.pdf. Proposed Sec.  125.101(d) also 
provides, similar to the Phase I and Phase II rules, that facilities 
that obtain cooling water from a public water system or use treated 
effluent are not deemed to be using a cooling water intake structure 
for purposes of this proposed rule.

E. Would My Facility Be Covered if It Is a Point Source Discharger?

    Today's proposed rule would apply only to facilities that are point 
sources (i.e., have an NPDES permit or are required to obtain one) 
because they discharge or might discharge pollutants, including storm 
water, from a point source to waters of the United States. This is the 
same requirement EPA included in the Phase I and Phase II final rules 
(see, 40 CFR 125.81(a)(1), and 40 CFR 125.91(a)(1), respectively). 
Requirements for complying with section 316(b) will continue to be 
applied through NPDES permits.
    Based on the Agency's review of potential Phase III facilities that 
employ cooling water intake structures, the Agency anticipates that 
most Phase III facilities that would be subject to this proposed rule 
control the intake structure that supplies them with cooling water, and 
discharge some combination of their cooling water, wastewater, and 
storm water to a water of the United States through a point source 
regulated by an NPDES permit. In this scenario, the requirements for 
the cooling water intake structure would be specified in the facility's 
NPDES permit. In the event that a Phase III facility's only NPDES 
permit is a general permit (e.g., for oil and gas production) or a 
general permit for storm water discharges, the Agency anticipates that 
the Director may want to write an individual NPDES permit containing 
requirements for the facility's cooling water intake structure. 
Alternatively, requirements applicable to cooling water intake 
structures could be incorporated into general permits. If requirements 
are placed into a general permit, they must meet the criteria set out 
at 40 CFR 122.28.
    The Agency also recognizes that some facilities that have or are 
required to have an NPDES permit might not own

[[Page 68455]]

and operate the intake structure that supplies their facility with 
cooling water. For example, manufacturing facilities operated by 
separate entities might be located on the same, adjacent, or nearby 
property(ies); one of these facilities might take in cooling water and 
then transfer it to other facilities prior to discharge of the cooling 
water to a water of the United States. Proposed Sec.  125.101(c) of 
today's proposed rule would address such a situation. It provides that 
use of a cooling water intake structure includes obtaining cooling 
water by any sort of contract or arrangement with one or more 
independent suppliers of cooling water if the supplier withdraws water 
from waters of the United States but is not itself subject to 
regulations under 316(b). This provision is intended to prevent 
facilities from circumventing the requirements of today's proposed rule 
by creating arrangements to receive cooling water from an entity that 
is not itself subject to national categorical requirements (e.g., a 
facility that is not a point source).
    For facilities that have or are required to have NPDES permits that 
do not directly control the intake structures that supply their 
facilities with cooling water, proposed Sec.  125.101(d) also provides, 
similar to the Phase I and II rules, that facilities that obtain 
cooling water from a public water system or use treated effluent are 
not deemed to be using a cooling water intake structure for purposes of 
this proposed rule.
    As stated in the preamble to the final Phase I rule (66 FR 65256, 
December 18, 2001), the Agency would encourage the Director to closely 
examine scenarios in which a facility withdraws significant amounts of 
cooling water from waters of the United States but is not required to 
obtain an NPDES permit. As appropriate, under this proposed rule, the 
Director would apply other legal requirements, such as section 404 or 
401 of the Clean Water Act, the Coastal Zone Management Act, the 
National Environmental Policy Act, the Endangered Species Act, or 
similar State or Tribal authorities to address adverse environmental 
impact caused by cooling water intake structures at those facilities.

F. What Are the Cooling Water Use and Design Intake Flow Thresholds in 
This Proposed Rule?

    This proposed rule would apply to existing facilities that meet the 
following thresholds: (1) Use at least twenty-five (25) percent of the 
water withdrawn exclusively for cooling purposes (measured on an 
average annual basis), and (2) have a total design intake flow equal to 
or greater than one of the three proposed thresholds , but are not 
subject to the Phase II rule. As previously discussed, EPA is proposing 
three possible flow threshold-based options in today's proposed rule 
(i.e., 50 MGD, 200 MGD, and 100 MGD \3\). The facility would also have 
to meet the other applicability criteria defined in Sec.  125.101.
---------------------------------------------------------------------------

    \3\ Note: the 100 MGD flow threshold also specifies withdrawal 
from certain source waterbody types. The other proposed flow 
thresholds are not linked to source waterbody types.
---------------------------------------------------------------------------

    The 25 percent exclusive cooling use threshold is the same as 
employed in the Phase I and II regulations. As in the Phase I and Phase 
II rules, water used for both cooling and non-cooling purposes would 
not count towards the 25 percent threshold. Thus, the proposed rule 
would not discourage the reuse of cooling water as process water or 
vice versa. Water that serves as cooling water but is either previously 
or subsequently used as process water would not be considered cooling 
water for purposes of determining whether the 25 percent threshold is 
met. Water withdrawn for non-cooling purposes would include water 
withdrawn for warming by liquified natural gas facilities, water used 
to power hydro-electric plants, and water withdrawn for public water 
systems by desalinization facilities.
    Today's notice proposes three different options for defining which 
existing facilities are Phase III existing facilities subject to 
categorical national requirements. These options include existing 
facilities having a total design intake flow of: 50 MGD or more; 200 
MGD or more; or 100 MGD or more if the facility withdraws water from an 
ocean, tidal river, estuary, or Great Lake. EPA is co-proposing these 
options because EPA believes that all three reflect potentially viable 
alternatives for balancing the many factors EPA considers in 
establishing best technology available for minimizing adverse 
environmental impact. These factors include the percentage of cooling 
water flow subject to national requirements, costs, benefits, cost-
effectiveness, permitting burden and the need for flexibility in 
implementation, projected closures, and potential impacts on small 
businesses. Each of these factors are permissible for consideration 
under the CWA and each of these co-proposed options will fulfill CWA 
requirements. For example, considerations of costs, benefits, 
economically practicability and cost-effectiveness are appropriate 
factors under CWA sections 301 and 304 (e.g., see discussion of Agency 
authority in section I). In addition, EPA is required to consider small 
business impacts under the Regulatory Flexibility Act as amended by the 
Small Business Regulatory Enforcement Fairness Act. Accordingly, the 
discussion below focuses on the relative advantages and disadvantages 
of these co-proposed options and the proposed regulatory language 
reflects all three options.
i. Total Design Intake Flow of 50 MGD or More
    Under this co-proposed option, facilities with a design intake flow 
of 50 MGD or greater, and that meet the other criteria in Sec.  
125.101, would be subject to the performance standards and compliance 
alternatives proposed in today's rule discussed below. Under this 
option, section 316(b) permit conditions for existing facilities with a 
design intake flow of less than 50 MGD would continue to be established 
on a case-by-case, best professional judgment basis.
    EPA is co-proposing the 50 MGD threshold based on several factors. 
With a 50 MGD flow threshold, the proposed rule would regulate 75 
percent of the design intake capacity, and 23 percent of the facilities 
(155 facilities) potentially covered by the Phase III rule,\4\ thus 
subjecting the majority of design intake flows potentially included 
within the scope of the Phase III existing facility rule to national 
performance requirements. Use of a 50 MGD threshold would focus 
national section 316(b) requirements on those Phase III existing 
facilities with moderate to large design intake flows. These facilities 
pose a greater potential for causing significant adverse environmental 
impacts than those withdrawing less than 50 MGD. Assuming full 
implementation of the Phase II rule and today's proposed rule, at the 
co-proposed 50 MGD threshold, section 316(b) program requirements would 
regulate more than 97 percent of the total cooling water withdrawals 
associated with existing facilities. In addition, EPA estimates that 
use of a 50 MGD threshold would avoid facility closures under this 
proposed rule, and would reduce the cost of the proposed rule to 
permittees compared with the costs of a lower threshold.
---------------------------------------------------------------------------

    \4\ Facilities ``potentially covered by the Phase III rule'' 
include all existing manufacturing and power producing facilities 
greater than 2 MGD that were not covered by the Phase II rule. There 
are an estimated 683 manufacturing and electric generating 
facilities (survey weighted) potentially covered by the Phase III 
rule, with a total design intake flow of 40,441 MGD.

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[[Page 68456]]

    EPA estimates this option would cost $47.3 to $50.1 million \5\ or 
$348,000 to $368,000 on average annually per facility. Quantified 
benefits are $1.5 million to $1.9 million (annualized use value). 
Because this option covers the most facilities, it may also have the 
greatest ecological protection benefits, which EPA was not able to 
quantify. EPA estimates that this option would provide the highest 
quantified and monetized benefits of the co-proposed options but would 
also have the highest annualized costs, resulting in the lowest 
quantified benefits-to-cost ratio and the lowest (greatest negative) 
quantified net benefits among these options. See section X of this 
preamble for further discussion of benefits and costs.
---------------------------------------------------------------------------

    \5\ Unless otherwise noted, cost and benefit ranges reflect the 
use of alternative discount rates (3% and 7%) in annualized 2003 
dollars.
---------------------------------------------------------------------------

    Finally, the co-proposed 50 MGD threshold would exclude small 
businesses from national rule requirements. This is consistent with the 
recommendations of the Small Business Advocacy Review Panel final 
report that EPA analyze a range of potential thresholds, particularly 
those between 20 MGD and 50 MGD, as a means of reducing potential 
economic impacts on small businesses while still achieving desired 
environmental benefits under the rule. See section XI.C for additional 
information. EPA estimates that setting an applicability threshold at 
50 MGD would exclude all existing small entities potentially subject to 
the Phase III rule.
ii. Total Design Intake Flow of 200 MGD or More
    Under this co-proposed option, facilities with a design intake flow 
of 200 MGD or greater and that meet the other criteria in Sec.  
125.101, would be subject to the performance standards and compliance 
alternatives proposed in today's notice and discussed above. Under this 
option, section 316(b) permit conditions for existing facilities not 
covered under the Phase II rule, with a design intake flow of less than 
200 MGD, would continue to be established on a case-by-case, best 
professional judgment basis.
    EPA is co-proposing the 200 MGD threshold based on several factors. 
With a 200 MGD flow threshold, the proposed rule would regulate 45 
percent of the design intake capacity and approximately 5% of the 
facilities potentially covered by the Phase III rule. Assuming full 
implementation of the Phase II rule and today's proposed rule, at the 
co-proposed 200 MGD threshold, section 316(b) program requirements 
would regulate more than 94 percent of the total cooling water 
withdrawals associated with existing facilities withdrawing greater 
than 2 MGD.
    EPA estimates this option would cost $22.8 to $24.1 million or 
$912,000 to $964,000 on average annually per facility. Quantified 
benefits are $0.98 to $1.26 million (annualized use value). The option 
would have a higher benefit-to-cost ratio yielding 66 percent of the 
quantified benefits at 48% of the costs and greater (lower negative) 
quantified net benefits compared to the 50 MGD option.
    EPA estimates that use of a 200 MGD threshold would avoid facility 
closures under this proposed rule and would exclude all existing small 
entities.
iii. Facility Has a Total Design Intake Flow of 100 MGD or More and 
Withdraws Water From an Ocean, Tidal River, Estuary, or Great Lake
    Under this co-proposed option, facilities located on estuaries, 
oceans, tidal rivers or streams, or one of the Great Lakes, with a 
design intake flow of 100 MGD or greater, and that meet the other 
criteria in Sec.  125.101, would be subject to the performance 
standards and compliance alternatives proposed in today's rule and 
discussed below. Under this regulatory option, section 316(b) permit 
conditions for all existing facilities not covered under the Phase II 
rule, and located on freshwater rivers and streams or lakes and 
reservoirs, or with a design intake flow of less than 100 MGD would 
continue to be established on a case-by-case, best professional 
judgment basis.
    Under this co-proposed option, 4 percent of the facilities 
potentially subject to regulation under Phase III would be subject to 
national requirements, and 18 percent of total design intake capacity 
associated with potential Phase III facilities would be addressed by 
such national requirements. Assuming full implementation of the Phase 
II rule and today's proposed rule, at the co-proposed 100 MGD 
threshold, section 316(b) program requirements would regulate more than 
91 percent of the total cooling water withdrawals associated with 
existing facilities.
    EPA estimates this option would cost $17.6 to $18.2 million or 
$926,000 to $958,000 on average annually per facility. Quantified 
benefits are $1.1 to 1.4 million (annualized use value). EPA estimates 
that this option would provide the second highest quantified benefits 
of the co-proposed options, and would have the lowest annualized costs 
when compared with the other two options, resulting in the highest 
quantified benefits-to-costs ratio and highest (least negative) 
quantified net benefits among the three options. This option would 
provide about 75 percent of the quantified benefits of the 50 MGD flow 
threshold option at about 36 percent of the cost by focusing the rule 
requirements on the most sensitive waterbodies.
    EPA estimates that use of a 100 MGD threshold would avoid facility 
closures under this proposed rule and would exclude all existing small 
entities.
    EPA requests comment on all aspects of each of these co-proposed 
options, including whether lower (e.g., 20 MGD) or higher (e.g., 250 
MGD) thresholds should be considered, as well as whether different 
conditions (e.g., related to waterbody type) should be combined with 
these or other thresholds. EPA also solicits comment on the resource 
implications for State permitting agencies associated with each of 
these options.

G. When Would a Phase III Existing Facility and New Offshore Oil and 
Gas Extraction Facility Be Required To Comply With Any New 316(b) 
Requirements?

    If EPA were to promulgate today's proposed rule, the final rule 
would become effective sixty (60) days after the date of publication in 
the Federal Register. After the effective date of any such final 
regulation, existing manufacturers and new offshore oil and gas 
extraction Phase III facilities, including existing facilities not 
currently subject to cooling water intake requirements under 40 CFR 
125, would need to comply when an NPDES permit containing requirements 
consistent with the final rule is issued to the facility (see Sec.  
125.100 and Sec.  125.132). Under current NPDES program regulations, 
this will occur when a new NPDES permit is issued or when an existing 
NPDES permit is issued, reissued, or modified or revoked and reissued. 
As in Phase II, the proposed rule for Phase III existing facilities 
includes special provisions to allow sufficient time to complete a 
Comprehensive Demonstration Study during the first permit renewal 
following promulgation of the Phase III rule (see Sec.  
125.104(a)(2)(ii)).
    A discussion of the timing of implementation of this proposed rule, 
if promulgated, is provided in section VII.

H. What Special Definitions Apply to This Proposal?

    EPA is proposing specialized definitions to clarify which 
facilities are subject to national categorical requirements. For the 
new oil and gas extraction facility requirements in

[[Page 68457]]

Subpart N, EPA is proposing five new definitions to clarify those 
facilities subject to the requirements. These definitions are set forth 
in the proposed regulations at Sec.  125.133 and include ``new offshore 
oil and gas extraction facilities,'' ``offshore liquified natural gas 
import terminals,'' ``seafood processing vessels,'' ``sea chest'' and 
``fixed facility''). The remainder of the proposed definitions are the 
same as those found in the final Phase I regulations; however, not all 
of the definitions from Phase I regulations have been used as they are 
not all applicable to these proposed Subpart N regulations.
    EPA is also proposing definitions for Phase III existing facilities 
in Subpart K at Sec.  125.102. All of these definitions are borrowed 
from both Phase I and Phase II and remain unchanged, except for the 
cutoff date in the definition of ``existing facility'' for new versus 
existing offshore oil and gas extraction facilities. Similar to the 
definitions for subpart N described above, not all of the definitions 
from Phase II regulations have been used as they are not all applicable 
to these proposed Subpart K regulations.
    EPA solicits comment on these regulatory definitions.

III. Summary of Data Collection Activities

    For the Phase III proposed rule, EPA focused its data collection 
activities on section 316(b) survey data supplemented by available 
existing data sources including the data developed for the Phase I and 
Phase II rules.

A. Survey Questionnaires

    As discussed in the preamble to the Phase II final rule (69 FR 
41576), EPA's industry survey effort consisted of a two-phase process. 
EPA administered a screener questionnaire focused on nonutility and 
manufacturing facilities as the first phase of this data collection 
process. The screener questionnaire provides information on cooling 
water intake capacity, sources of the water, intake structure types, 
and technologies used to minimize adverse environmental impacts. It 
also provides data on facility and parent firm employee numbers and 
revenues. This information was used to design a sampling plan for the 
subsequent detailed questionnaire. Following the screener survey, the 
Agency administered either a short technical or a detailed 
questionnaire to utility, nonutility, and manufacturing facilities, as 
described below. The two-phase survey was designed to collect 
representative data from a sample group of those categories of 
facilities potentially subject to section 316(b) regulation for use in 
rule development.
    In 1997, EPA estimated that over 400,000 facilities could 
potentially be subject to a cooling water intake regulation. Given the 
large number of facilities potentially subject to regulation, EPA 
decided to focus its data collection efforts on six industrial 
categories that, as a whole, were estimated to account for over 99 
percent of all cooling water withdrawals. These six sectors were: 
Utility Steam Electric, Nonutility Steam Electric, Chemicals & Allied 
Products, Primary Metals Industries, Petroleum & Coal Products, and 
Paper & Allied Products. At the time of the survey, there were about 
48,500 facilities in these six categories. EPA believes that this 
approach provided a sound basis for assessing best technologies 
available for minimizing adverse environmental impacts.
    The screener survey focused on nonutility and manufacturing 
facilities. EPA developed the sample frame (list of facilities) for the 
screener questionnaire using public data sources as described in the 
Information Collection Request (DCN 3-3084-R2 in Docket W-00-03). 
Facilities chosen for the screener questionnaire represented a 
statistical sample of the entire universe of nonutility and 
manufacturing facilities potentially subject to cooling water intake 
regulations. EPA did not conduct a census of all facilities (i.e. send 
a survey to all facilities) for the screener questionnaire because of 
the burden associated with surveying a large number of facilities. 
Rather, EPA refined the industry data using industry-specific sources 
to develop sample frames and mailing lists. EPA believes the sample 
frame was sufficient to characterize the operations of each industrial 
category. EPA sent the screener questionnaire to 2600 facilities 
identified in the sample frame as follows: (1) All identified steam 
electric nonutility power producers, both industrial self-generators 
and nonindustrial generators (1050 facilities, of which 853 responded); 
and (2) a sample of manufacturers from the four non-steam electric 
industrial categories: paper and allied products, chemical and allied 
products, petroleum and coal products, and primary metals (1550 
facilities, of which 1217 responded). EPA adjusted the sample frame for 
the screener questionnaire to account for several categories of non-
respondents, including facilities with incorrect address information, 
facilities no longer in operation, and duplicate mailings. Through 
follow-up phone calls and mailings, EPA increased the response rate for 
the screener questionnaire to 95 percent. The screener questionnaire 
was not sent to utilities, all of which were believed to be identified 
accurately using the publicly-available data described above.
    A sample of manufacturing and nonutility facilities identified as 
in-scope (subject to regulation) by the screener questionnaire and all 
utilities then were sent either a short technical or a detailed 
questionnaire. A total of 878 utility facilities, 343 nonutility 
facilities and 191 manufacturing facilities received one of the two 
questionnaires (short technical or detailed) during the second phase of 
the survey. For utilities, nonutilities, and other manufacturing 
facilities, EPA selected a random sample of these eligible facilities 
to receive a detailed questionnaire. The sample included 282 utility 
facilities and 181 nonutility facilities. All 191 manufacturing 
facilities received a detailed questionnaire. For nonutilities and 
utilities, those facilities not selected to receive a detailed 
questionnaire were sent a Short Technical Questionnaire. EPA's approach 
in selecting a sample involved the identification of population strata, 
the calculation of sample sizes based on desired levels of precision, 
and the random selection of sites given the sample size calculations 
within each stratum. More detail is provided in the report entitled 
``Statistical Summary for Cooling Water Intakes Structures Surveys'' 
(See DCN 3-3077 in Docket W-00-03).
    Five questionnaires were distributed to different industrial 
groups. They were: (1) Detailed Industry Questionnaire: Phase II 
Cooling Water Intake Structures--Traditional Steam Electric Utilities; 
(2) Short Technical Industry Questionnaire: Phase II Cooling Water 
Intake Structures--Traditional Steam Electric Utilities (sent to both 
utilities and nonutilities); (3) Detailed Industry Questionnaire: Phase 
II Cooling Water Intake Structures--Steam Electric Nonutility Power 
Producers; (4) Detailed Industry Questionnaire: Phase III Cooling Water 
Intake Structures--Manufacturers; and, (5) Watershed Case Study Short 
Questionnaire. The questionnaires provided EPA with technical and 
financial data necessary for developing this proposed regulation. 
Specific details about the questions may be found in EPA's Information 
Collection Request (DCN 3-3084-R2 in Docket W-00-03) and in the 
questionnaires (see DCN 3-0030 and 3-0031 in Docket W-00-03 and Docket 
for today's proposal); these documents are also available on EPA's Web 
site

[[Page 68458]]

(http://www.epa.gov/waterscience/316b/question/).
    EPA also conducted outreach to industry groups, environmental 
groups, and other government entities in the development, testing, and 
refinement of a second round of surveys, the section 316(b) Phase III 
Industry Technical and Economic Questionnaires, which have been used as 
an additional source of data for the Phase III rule. The Phase III 
surveys, published in September 2003, were sent to offshore oil and gas 
extraction facilities and seafood processing vessels. Specific details 
about the questions may be found in EPA's Information Collection 
Request (DCN 7-0007) and in the questionnaires (see DCN 7-0008) in the 
Docket for today's proposal); these documents are also available on 
EPA's Web site (http://www.epa.gov/waterscience/316b/question/). In 
addition, EPA utilized a survey conducted by the International 
Association of Drilling Contractors (IADC) in 2003 to access technical 
data on cooling water use by offshore oil and gas extraction 
facilities, including fixed platforms and mobile units.

B. Existing Data Sources

    EPA collected data from multiple sources, both public and 
proprietary, in order to compile an accurate profile of the potentially 
regulated community. EPA reviewed information collected by other 
Federal agencies, as well as data compiled by private companies. In 
those instances where databases are considered confidential, or where 
raw data was unavailable for review, EPA did not consider the 
information. Summaries of the reviewed data sources are listed below.
1. Electric Generators
    EPA collected a substantial amount of data on the electric power 
generating industry in the course of the Phase I, II, and III 
rulemakings. For example, EPA used data from the Federal Energy 
Regulatory Commission (FERC) (Forms 1 and 1-F), the Energy Information 
Administration (EIA) (Forms EIA-412, -767, -860, -861, -867), the Rural 
Utility Service (RUS) (Form 12), as well as information from the U.S. 
Nuclear Regulatory Commission (NRC), the Utility Data Institute (UDI), 
and the Edison Electric Institute (EEI). For detailed information about 
these data sources, refer to the proposed rule for Phase II (67 FR 
17131).
    While electric power generators do not meet the proposed flow 
thresholds and are therefore not subject to Phase III national 
requirements (refer to section VI for further details), EPA did use the 
aforementioned data on electric power generators in reaching this 
decision. Data was used to assess, for example, the cooling water 
intake flows and the amount of electricity generated, and as part of 
the determination of economic impacts of the various compliance 
alternatives that EPA considered in developing the proposed rule.
2. Manufacturers
    In order to identify potential entrainment impacts at facilities 
with a design intake flow below 50 MGD, EPA conducted a field study of 
six manufacturers in the Spring of 2002. This study was conducted in 
the mid-Atlantic region, with particular focus on the Delaware River 
and its tributaries. Sampling sites were selected for three freshwater 
and three tidal river facilities. EPA conducted two 4-day sampling 
events at each facility and conducted measurements of the following 
variables: site location and sampling point, facility intake flow rate, 
sampling pump volume, sampling time and duration and sample chain of 
custody. Additional physicochemical variables were measured, including 
the following: temperature, dissolved oxygen (DO), pH, and 
conductivity. Taxonomic identification was conducted for all organisms 
collected and results are provided in the Data Report for Small 
Facility Ichthyoplankton Entrainment Sampling for the Development of 
the 316(b) Phase III Rule for Cooling Water Intake Structures (EPA, 
2003) (DCN 7-0009).
    In mid-June 2003, in order to supplement the biological data used 
for estimating baseline impingement mortality and entrainment rates, 
EPA compiled a list of facilities who had responded in their industry 
questionnaire that they had conducted a biological study. Some of these 
facilities were then requested to provide EPA with copies of these 
studies. The first data collection effort focused on facilities that 
are located on an inland waterbody and have a high average daily intake 
flow. Preference was given to facilities located on Lake Michigan and 
the Columbia River, as these waterbodies (and more broadly, these 
regions of the country) were identified as having inadequate data for 
future analysis of Phase III impingement mortality and entrainment 
rates. The second data collection effort focused on facilities located 
in particular U.S. Fish and Wildlife Service fish regions to be used by 
EPA in calculation of benefits for the rule. The last data collection 
effort focused specifically on Phase III facilities. In total, 90 
facilities were contacted and these contacts resulted in collection of 
63 biological studies (33 of which were from Phase III facilities) for 
use in estimation of baseline impingement mortality and entrainment 
rates.
3. Offshore Oil and Gas Extraction Facilities and Seafood Processing 
Vessels
    EPA conducted extensive research on the use of cooling water by 
offshore oil and gas extraction facilities and seafood processing 
vessels to determine whether these industry sectors would be subject to 
regulation under the Phase III rule. Information sources included 
industry surveys (one administered by EPA in conjunction with the 
International Association of Drilling Contractors (IADC) and another 
solely by EPA); industry databases and other publicly available 
information, and meetings with government and industry representatives. 
The survey efforts are described in section III.A above.
    In April and May of 2003, EPA conducted site visits and field 
interviews at offshore oil and gas extraction facilities and seafood 
processing vessels to evaluate technologies in use for reducing 
impingement mortality and/or entrainment at these facilities. EPA 
employed the services of a specialized naval engineer to conduct these 
site visits and field interviews. Site visits were conducted at 
platforms and vessels. In addition, field interviews were conducted 
with industry personnel. The data collected from these visits and 
interviews included geographic data, intake design and impingement and 
entrainment technologies in place, impingement and entrainment problems 
encountered as well as any methods utilized in resolving such problems 
(See DCN 7-0010).
    Sources used by EPA to characterize the offshore seafood processing 
industry included the following:
     U.S. Food and Drug Administration (FDA), Center for Food 
Safety and Applied Nutrition, January 2003, which included a list of 
U.S. FDA-European Union (EU) Exporters, Processing Vessels.
     Alaska Department of Fish and Game 2002 Intent to Operate 
Listing.
     Water Discharge Permits (PCS) database searches by SIC 
codes 2091, 2092 and 2077.
     Department of Transportation Maritime Administration 
(MARAD) Web site: http://www.marad.dot.gov/publications/index.html and 
http://www.marad.dot.gov/Marad_Statistics/index.html.
     U.S. Coast Guard Merchant Vessels of the United States 
database.

[[Page 68459]]

     U.S. Coast Guard PSIX/MSIS databases.
     National Transportation Safety Board database.
     U.S. Army Corps of Engineers, Navigation Data Center, 
Waterborne Commerce Statistics Center.
     The Alaska Department of Fish and Game Division of 
Commercial Fisheries Web site: http://www.cf.adfg.state.ak.us.
     The At-Sea Processors Association Web site: http://www.atsea.org/.
     EPA Region 10 Database of seafood processors permitted in 
Alaska.
     Technical Development Document (TDD) for the Uniform 
National Discharge Standards (UNDS) program (found at http://unds.bah.com/TDD.pdf) (Appendix A: Seawater Cooling Overboard Discharge 
Report).
     National Marine Fisheries Service Web site, Restricted 
Access Management Program, http://www.fakr.noaa.gov/ram/default.htm.
     National Marine Fisheries Services Web site, link to 
American Fisheries Act (AFA) permits: http://www.fakr.noaa.gov/ram/afa.htm#list.
     Several vessel operators, naval architects, engineers and 
regulators.

C. Data Provided to EPA by Industrial, Trade, Consulting, Scientific or 
Environmental Organizations or by the General Public

    Since 1993, EPA has been developing cooling water regulations as 
part of a collaborative effort with industry and environmental 
stakeholders, other Federal agencies, the academic and scientific 
communities, and the general public. As a result, EPA has reviewed and 
considered the many documents, demonstration studies, scientific 
analyses, and historical perspectives offered in support of each phase 
of the regulatory process. For example, during the early stages of data 
gathering, EPA created an internal library of reference documents 
addressing cooling water intake structure issues. This library 
currently holds over 2,800 documents, many of which were referenced in 
the rulemaking process and are contained in the record (see the 
following paragraph for further information on the record). The library 
contains a thorough collection of a wide variety of documents, 
including over 80 section 316(b) demonstration documents, over 300 
impingement and entrainment studies, over 100 population modeling 
studies, over 500 fish biology and stock assessment documents, over 350 
biological studies commissioned by power generators, over 80 NPDES 
decisions and NPDES or SPDES-related documents, over 120 intake 
technology reports, over 10 databases on the electric power industry, 
and documents from interagency committees such as the Ohio River Valley 
Water Sanitation Commission (ORSANCO).
    In addition, the record for the Phase I new facility rule contains 
nearly 1,000 documents (research articles, databases, legal references, 
memorandums, meeting notes, and other documents), consisting of 
approximately 47,000 pages of supporting material available for public 
review. And the record for the Phase II existing facility rule contains 
over 2600 additional documents, comprising approximately 125,000 pages 
of supporting material.
    Finally, EPA has worked extensively with stakeholders from 
industry, public interest groups, State agencies, and other Federal 
agencies in the development of this proposed rule. These public 
participation activities have focused on various section 316(b) issues, 
including general issues, as well as issues relevant to development of 
the Phase II rule and issues relevant to this proposed Phase III rule. 
See section I.C.6 of this preamble for a discussion of key public 
participation activities.

IV. Overview of Facility Characteristics (Cooling Water Systems & 
Intake Structures) for Industries Potentially Subject to Proposed Rule

    Today's proposed rule would apply national categorical requirements 
to two groups of facilities that use cooling water intake structures to 
withdraw water from waters of the U.S.: existing manufacturing and 
industrial facilities and new offshore oil and gas extraction 
facilities.

A. Overview of Potentially Regulated Phase III Universe

    EPA's data collection efforts largely focused on five industrial 
sectors: small flow electric power generators (both utilities and 
nonutilities withdrawing less than 50 MGD); chemicals and allied 
products (SIC Major Group 28); primary metals industries (SIC Major 
Group 33); paper and allied products (SIC Major Group 26); and 
petroleum and coal products (SIC Major Group 29). The latter four 
sectors use a significant portion of the cooling water withdrawn among 
all manufacturing industries. EPA also identified other industry 
sectors that use cooling water including: transportation equipment (SIC 
Major Group 37); lumber and wood products (SIC Major Group 24); rubber 
and plastics products (SIC Major Group 30); food and kindred products 
(SIC Major Group 20); tobacco products (SIC Major Group 21); and 
machinery (SIC Major Group 35) (see DCN 7-0011). A more comprehensive 
list of industries that use cooling water and their NAICS and SIC Codes 
can be found in section A of the Supplementary Information. Although 
EPA's survey data collection efforts were not designed to collect data 
from industries other than the five listed above, data were collected 
from the following industries: food processing; aircraft engines and 
engine parts; cutlery; sawmills and planing mills; finishers of broad 
woven fabrics of cotton; potash, soda and borate minerals; iron ores; 
and sugarcane and sugar beets. These data from other industries, while 
not a statistically derived sample, confirm that the five primary 
industry sectors discussed above account for the vast majority of Phase 
III cooling water use. The data also suggest that the intake structure 
design and construction at these industries were substantially similar 
to the industries for which EPA did collect data.
    Of the estimated 683 manufacturing and electric generator 
facilities (survey weighted estimate, as described in the Technical 
Development Document EPA-821-R-04-015, DCN 7-0004) within the Phase III 
universe,\6\ approximately 225 (33 percent) belong to the pulp and 
paper sector, 185 (27 percent) belong to the chemical sector, 88 (13 
percent) belong to the metals sector, and 39 (6 percent) belong to the 
petroleum sector. EPA also surveyed 29 facilities in other industry 
sectors (discussed above, all of which are potentially subject to the 
Phase III rule) in the detailed questionnaire, and those data are also 
being considered in today's proposed rule. In addition, an estimated 
117 (17 percent) electric generating facilities are included within the 
Phase III universe.
---------------------------------------------------------------------------

    \6\ The entire Phase III universe includes facilities with a 
design intake flow greater than 2 MGD which use at least 25 percent 
of the water withdrawn exclusively for cooling, and are not covered 
by Phase II. Offshore oil and gas extraction facilities are not 
included in this estimate.
---------------------------------------------------------------------------

    The information below is generally based on data collected from the 
Short Technical Industry Questionnaire, the Detailed Industry 
Questionnaire, and the Phase III Industry Technical and Economic 
Questionnaires. Additional detail discussing the entire Phase III 
universe as well as facilities subject to the uniform national 
standards and facilities subject to permitting based on best 
professional judgment can be found in the Technical Development 
Document.
    As explained in section V of this preamble, there are five main 
categories of surface water used as sources of cooling water. The 
source of surface water withdrawn for cooling is an

[[Page 68460]]

important factor in determining potential environmental impacts. An 
estimated 11 (2 percent) facilities withdraw cooling water from an 
ocean; an estimated 39 (6 percent) facilities withdraw cooling water 
from an estuary or tidal river; an estimated 496 (73 percent) 
facilities withdraw cooling water from a freshwater stream or river; an 
estimated 60 (9 percent) facilities withdraw cooling water from a lake 
or reservoir; and an estimated 77 (11 percent) facilities withdraw 
cooling water from one of the Great Lakes. EPA estimates a total design 
intake flow of 40,441 MGD and total actual intake flow of 21,624 MGD 
for the Phase III universe.
    Of the facilities within the Phase III universe, 303 (44 percent) 
employ once-through cooling systems, 198 (29 percent) use closed-cycle 
recirculating cooling systems, 121 (18 percent) use ``combination'' 
systems, and 61 (9 percent) use an ``other'' type of system. An 
estimated 286 (42 percent) facilities have installed a cooling tower. 
Note that not all facilities that have installed a cooling tower are 
classified as using closed-cycle recirculating cooling systems, as some 
facilities with multiple cooling water systems may be ``combination'' 
systems that employ both closed-cycle and once-through cooling. 
Facilities may also list ``helper'' cooling towers, which are generally 
used to mitigate discharge temperatures and do not affect intake flows. 
Since facilities may have more than one cooling water system, these 
estimates are based on the predominant cooling water system at each 
facility.
    Facilities within this universe also may have more than one cooling 
water intake structure configuration. Therefore, in providing the 
information on intake structures, a facility may be counted multiple 
times (as many times as it has distinct cooling water intake structure 
configurations). Thus, of the facilities within the Phase III universe, 
683 facilities represent an estimated 747 total cooling water intake 
structure configurations. Of these, an estimated 359 (48 percent) have 
a shoreline intake, 216 (29 percent) have a submerged offshore intake, 
123 (16 percent) withdraw cooling water through a canal or channel, 49 
(7 percent) have an intake situated in a bay or cove, and 47 (6 
percent) are estimated to have some other type of intake or provided no 
information.

B. Existing Manufacturers and Industrial Facilities Potentially Subject 
to Proposed National Requirements

    This section presents the number of facilities that would be 
potentially subject to uniform national performance standards under 
each of the three co-proposed options. See section VI of this preamble 
and Chapter 4 of the Technical Development Document for details on the 
other options considered but not presented as part of today's proposal. 
Exhibit IV-1 provides the number of existing facilities by design 
intake flow and waterbody type. Throughout the rest of this section, 
tabulations of less than five facilities are combined to prevent 
disclosure of an individual facility's information.

   Exhibit IV-1.--Total Number of Phase III Manufacturing Facilities Potentially Subject to the Regulations by
                                      Design Intake Flow and Waterbody Type
----------------------------------------------------------------------------------------------------------------
                                                                                Waterbody
                                                        --------------------------------------------------------
                                                                                 Oceans,
              Facility design intake flow                Freshwater rivers   estuaries, tidal
                                                            and streams,        rivers and      All waterbodies
                                                             lakes, and        streams, and
                                                             reservoirs        Great Lakes
----------------------------------------------------------------------------------------------------------------
2 MGD or greater \1\...................................                556                127                683
20 MGD or greater \1\..................................                302                 92                394
50 MGD or greater \2\..................................                103                 52                155
100 MGD or greater \2\.................................                 47                 26                 73
200 MGD or greater \2\.................................                 16                 15                31
----------------------------------------------------------------------------------------------------------------
\1\ Includes those electric generating facilities defined as part of the Phase III universe.
\2\ Only includes manufacturing facilities.

1. National Requirements for Facilities With a Design Intake Flow of 50 
MGD and Above
    EPA's 50 MGD option would require an estimated 155 facilities to 
meet the uniform national standards that implement section 316(b) 
(facilities with a design intake flow of 50 MGD and above and meeting 
applicability criteria at Sec.  125.101). These facilities are 
comprised of an estimated 56 (36 percent) within the chemical sector, 
42 (27 percent) within the pulp and paper sector, 30 (19 percent) 
within the metals sector, 17 (11 percent) within the petroleum sector, 
and an estimated total of 10 facilities (7 percent) within the 
``other'' category; no seafood processing vessels would meet the 
applicability criteria at Sec.  125.101.
    An estimated 6 (4 percent) facilities withdraw cooling water from 
an ocean; an estimated 15 (10 percent) facilities withdraw cooling 
water from an estuary or tidal river; an estimated 93 (60 percent) 
facilities withdraw cooling water from a freshwater stream or river; an 
estimated 10 (6 percent) facilities withdraw cooling water from a lake 
or reservoir; and an estimated 31 (20 percent) facilities withdraw from 
one of the Great Lakes.
    EPA has estimated that these 155 facilities possess a total design 
intake flow of 30,136 MGD and an actual intake flow of 16,582 MGD.
    Further, of the cooling water system types in use at these 155 
facilities, 68 (44 percent) of these systems are once-through cooling 
systems, 6 (4 percent) are closed-cycle recirculating cooling systems, 
56 (36 percent) are ``combination'' systems, and 25 (16 percent) use an 
``other'' type of system. An estimated 52 (33 percent) facilities have 
installed a cooling tower. As noted above, not all facilities that have 
installed a cooling tower are classified as closed-cycle recirculating 
cooling system.
    These 155 facilities possess an estimated 211 total cooling water 
intake structure configurations. Of these, an estimated 46 (23 percent) 
facilities withdraw cooling water through a canal or channel, 17 (11 
percent) have an intake situated in a bay or cove, 89 (59 percent) have 
a shoreline intake, 31 (20 percent) have a submerged offshore intake, 
and 28 (5 percent) are estimated to have some other type of intake or 
provide no information.

[[Page 68461]]

2. National Requirements for Facilities With a Design Intake Flow of 
200 MGD and Above
    EPA's 200 MGD option would require an estimated 31 facilities to 
meet the uniform national standards that implement section 316(b) 
(facilities with a design intake flow of 200 MGD and above and meeting 
applicability criteria at Sec.  125.101). These facilities are 
comprised of an estimated 15 (48 percent) within the metals sector, 7 
(23 percent) within the chemical sector, and 9 (29 percent) within the 
petroleum sector, the pulp and paper sector, or the ``other'' 
industries category.
    An estimated 5 (16 percent) facilities withdraw cooling water from 
an estuary or tidal river; an estimated 16 (50 percent) facilities 
withdraw cooling water from a freshwater stream or river, lake, or 
reservoir; and an estimated 10 (32 percent) facilities withdraw from 
one of the Great Lakes. EPA estimates that there are no manufacturing 
facilities with a design intake flow of 200 MGD or greater that 
withdraw from an ocean.
    EPA has estimated that these 31 facilities possess a total design 
intake flow of 18,340 MGD and an actual intake flow of 11,472 MGD.
    Further, of the cooling water system types in use at these 31 
facilities, 17 (55 percent) of these systems are once-through cooling 
systems, and 14 (45 percent) are ``combination'' or ``other'' systems. 
An estimated 10 (32 percent) facilities have installed a cooling tower 
or closed-cycle recirculating system.
    These 31 facilities possess an estimated 70 total cooling water 
intake structure configurations. Of these, an estimated 16 (23 percent) 
facilities withdraw cooling water through a canal or channel, 24 (34 
percent) have a shoreline intake, and 30 (43 percent) have a submerged 
offshore intake.
3. National Requirements for Coastal and Great Lakes Facilities With a 
Design Intake Flow of 100 MGD and Above
    EPA's third proposed option would establish national requirements 
for facilities with 100 MGD or more design intake flows when the intake 
is on coastal waters (including oceans, tidal rivers and streams, and 
estuaries) or one of the Great Lakes. This option would require an 
estimated 26 facilities to meet the uniform national standards. These 
facilities are comprised of an estimated 12 (46 percent) within the 
metals sector, 7 (27 percent) within the chemical sector, and the 
remaining 7 (27 percent) within the pulp and paper sector, the 
petroleum sector, or the ``other'' industries. EPA estimated that these 
26 facilities possess a total design intake flow of 7,661 MGD and 
actual intake flow of 4,753 MGD.
    Further, of the predominant system types in use at these 26 
facilities, 13 (50 percent) of these systems are once-through cooling 
systems. The other estimated 13 facilities use a combination cooling 
system and have installed a cooling tower. These 26 facilities possess 
an estimated 47 total cooling water intake structure configurations. Of 
these, an estimated 11 (23.4 percent) facilities withdraw cooling water 
through a canal or channel, 21 (44.7 percent) have a shoreline intake, 
and 15 (31.9 percent) have a submerged offshore intake.

C. New Offshore Oil and Gas Extraction Facilities Subject to Proposed 
National Requirements

    Today's proposed rule would also apply national requirements to new 
offshore (offshore includes coastal) oil and gas extraction facilities. 
EPA is presently considering new facilities within the offshore oil and 
gas extraction industry as classified under SIC Major Group 13. EPA 
projects that there will be an estimated 124 new offshore oil and gas 
extraction facilities over the next 20 years. Most of these facilities 
will withdraw less than 50 MGD estimated design intake flow and will 
include both mobile offshore drilling units (MODUs) and deepwater 
platforms in the Gulf of Mexico and Alaska. Only three new MODUs are 
projected to have a design intake flow of greater than 50 MGD within 
the period of analysis. EPA's projection of new oil and gas extraction 
facilities is based on historical refurbishment of old rigs including 
MMS data on new platform installations over the last 10 years. See Part 
C of the EA for more information. Note most new offshore and coastal 
oil and gas extraction facilities to which today's proposed rule would 
apply would not be operating in estuaries, except for those operating 
in Cook Inlet.

V. Environmental Impacts Associated With Cooling Water Intake 
Structures

    Through the Phase III rulemaking, EPA intends to minimize the 
adverse environmental impacts of cooling water intake structures by 
reducing the number of aquatic organisms lost as a result of water 
withdrawals associated with these structures or through restoration 
measures that compensate for these losses. In the Phase I rule for new 
facilities and in the Phase II rule for certain existing facilities, 
EPA provided an overview of the magnitude and type of environmental 
impacts associated with cooling water intake structures, including 
several illustrative examples of documented environmental impacts at 
existing facilities (see 65 FR 49071-4; 66 FR 65262-5; 67 FR 17136-40; 
and 69 FR 41587-88).
    For the same reasons set forth in the preamble to the rules for 
Phase I and Phase II facilities (66 FR 65256, 65291-65297 and 69 FR 
41586-90), EPA has determined that there are multiple types of 
undesirable and unacceptable environmental impacts that may be 
associated with Phase III facilities, depending on conditions at the 
individual site. These types of impacts include entrainment and 
impingement which can contribute to reductions of threatened and 
endangered species; and ecologically critical aquatic organisms, 
including important elements of the food chain; diminishment of a 
population's compensatory reserve; losses to populations, including 
reductions of indigenous species populations, commercial and 
recreational fisheries; and stresses to overall communities and 
ecosystems as evidenced by reductions in diversity or other changes in 
system structure and function. Based on the analyses in and for the 
same reasons set forth in the preambles to the Phase I rule (66 FR 
65256, 65291-65297) and Phase II rule (69 FR 41598-41601), EPA has 
selected reductions in impingement mortality and entrainment as a 
quick, certain, and consistent metric for comparing facility 
performance to applicable requirements for Phase III facilities. 
Further, EPA considered the non-water quality environmental impacts for 
this rule (e.g., impacts on energy use and associated increases in 
emissions) and found them to be acceptable at a national level. This 
section describes the environmental impacts associated with cooling 
water withdrawals and why they are of concern to the Agency.
    Impingement takes place when organisms are trapped against cooling 
water intake screens by the force of the water being drawn through the 
cooling water intake structure. The velocity of the water withdrawal by 
the cooling water intake structure may prevent proper gill movement, 
remove fish scales, and cause other physical harm or death of affected 
organisms through exhaustion, starvation, asphyxiation, and descaling. 
Death from impingement (``impingement mortality'') can occur 
immediately or subsequently as an individual succumbs to physical 
damage upon its return to the waterbody.
    Entrainment occurs when organisms are drawn through the cooling 
water intake structure into the cooling system.

[[Page 68462]]

Organisms that become entrained are typically relatively small, aquatic 
organisms, including early life stages of fish and shellfish. Many of 
these small fragile organisms serve as prey for larger organisms higher 
on the food chain which are commercially and recreationally desirable 
species. As entrained organisms pass through a facility's cooling 
system they may be subject to mechanical, thermal, and at times, 
chemical stress. Sources of such stress include physical impacts in the 
pumps and condenser tubing, pressure changes caused by diversion of the 
cooling water into the plant or by the hydraulic effects of the 
condensers, sheer stress, thermal shock in the condenser and discharge 
tunnel, and chemical toxic effects from antifouling agents such as 
chlorine. Similar to impingement mortality, death from entrainment can 
occur immediately or subsequently as the individual succumbs to the 
damage from the stresses encountered as it passed through the cooling 
water system once it is discharged back into the waterbody.
    EPA estimates that existing Phase III facilities withdraw, on 
average, approximately 23,000 million gallons a day from waters of the 
United States.7 8 The withdrawal of such large quantities of 
water has the potential to affect large quantities of aquatic organisms 
including phytoplankton (tiny, freefloating photosynthetic organisms 
suspended in the water column), zooplankton (small aquatic animals, 
including fish eggs and larvae, that may consume phytoplankton and 
other zooplankton), fish, and shellfish. Aquatic organisms drawn into 
cooling water intake structures are either impinged on components of 
the cooling water intake structure or entrained in the cooling water 
system itself. Other organisms, including reptiles, birds, and mammals 
are also sometimes drawn into cooling water intake structures.
---------------------------------------------------------------------------

    \7\ EPA 1999. Detailed Industry Questionnaires: Phase II Cooling 
Water Intake Structures & Watershed Case Study Short Questionnaire. 
U.S. Environmental Protection Agency, Office of Wastewater 
Management, Washington, DC. OMB Control No. 2040-0213.
    \8\ EPA 2003. Industry Technical Questionnaire: Phase III 
Cooling Water Intake Structures. Offshore and Coastal Oil and Gas 
Extraction Facilities. U.S. Environmental Protection Agency, Office 
of Science and Technology, Washington DC. OMB Control No. 2030-0213.
---------------------------------------------------------------------------

    The environmental impacts attributable to impingement mortality and 
entrainment at individual facilities include losses of early life 
stages of fish and shellfish, reductions in forage species, and 
decreased recreational and commercial fishery landings. EPA estimates 
that cooling water intake structures potentially within the scope of 
today's rule and with a cooling water intake designed to take in 
greater than 2 MGD of water kill more than 120 million age 1 equivalent 
fish annually through impingement and entrainment. Expressing 
impingement mortality and entrainment losses as age 1 equivalents is an 
accepted method for converting losses of all life stages into 
individuals of an equivalent age and provides a standard metric for 
comparing losses among species, years, and facilities. Although the 
number of age 1 equivalent fish killed by impingement and entrainment 
is large, precise quantification of the nature and extent of impacts to 
populations and ecosystems is difficult due in part to the complexity 
of population dynamics and the physical, chemical, and biological 
processes of ecosystems. While it is generally accepted as a simple and 
transparent method for modeling losses, the proportional methodology 
that EPA uses to estimate impingement mortality and entrainment 
nationwide involves uncertainties that may result in under or over 
estimating actual impingement mortality and entrainment rates.\9\
---------------------------------------------------------------------------

    \9\ For more information, please see Chapter A2 of Part A of the 
Regional Analysis Document.
---------------------------------------------------------------------------

    Decreased numbers of aquatic organisms can disrupt aquatic food 
webs and alter species composition and overall levels of biodiversity. 
For example, a model that examined the effect of large entrainment 
losses of forage fish, such as bay anchovy, predicted subsequent 
reductions in predator populations (including commercially and 
recreationally important species such as striped bass, weakfish, and 
blue fish) as high as 25 percent.\10\ This is because forage species, 
which comprise a majority of entrainment losses at many facilities, are 
often a primary food source for predator species.
---------------------------------------------------------------------------

    \10\ Summers, J.K. 1989. Simulating the indirect effects of 
power plant entrainment losses on an estuarine ecosystem. Ecological 
Modeling, 49: 31-47.
---------------------------------------------------------------------------

    EPA is also concerned about the potential impacts of cooling water 
intake structures located in or near habitat areas that support 
threatened, endangered, or other species of concern (those species that 
might be in need of conservation actions, but are not currently listed 
as threatened or endangered under State or Federal law).\11\ In the San 
Francisco Bay-Delta Estuary, California, in the vicinity of the 
Pittsburg and Contra Costa Power Plants several fish species (e.g., 
Delta smelt, Sacramento splittail, chinook salmon, and steelhead) are 
now considered threatened or endangered by State and/or Federal 
authorities. EPA evaluated facility data on impingement mortality and 
entrainment rates for these species and estimated that potential losses 
of special status fish species at the two facilities may average 8,386 
age 1 equivalents per year resulting from impingement and 169 age 1 
equivalents per year due to entrainment.\12\ In another example, EPA is 
aware that from 1976 to 1994, approximately 3,200 threatened or 
endangered sea turtles entered enclosed cooling water intake canals at 
the St. Lucie Nuclear Generating Plant in Florida.\13\ The facility 
developed a capture-and-release program in response to these events. 
Most of the entrapped turtles were captured and released alive; 
however, approximately 160 turtles did not survive. An incidental take 
limit established by NOAA Fisheries in a 2001 biological opinion for 
this facility has been set at no more than 1,000 sea turtles captured 
in the intake, with less than one percent killed or injured as a result 
of plant operations.\14\ Although the extent to which threatened, 
endangered, and other special status species are taken by cooling water 
intake structures more generally is yet to be determined, EPA is 
concerned about potential impacts to such species.
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    \11\ For more information, please see Chapter A9 of Part A of 
the Regional Analysis Document.
    \12\ Impingement and entrainment data were obtained from the 
2000 Draft Habitat Conservation Plan for the Pittsburg and Contra 
Costa facilities. Please see EPA's Regional Studies for the Final 
Section 316(b) Phase II Existing Facilities Rule for detailed 
information on EPA's evaluation of impingement and entrainment at 
these facilities.
    \13\ Florida Power and Light Company. 1995. Assessment of the 
impacts at the St. Lucie Nuclear Generating Plant on sea turtle 
species found in the inshore waters of Florida.
    \14\ Florida Power and Light Company. 2002. Florida Power & 
Light Company St. Lucie Plant Annual Environmental Operating Report 
2002.
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    EPA is addressing the universe of existing facilities through two 
separate rulemakings. The Phase II final rule addressed power 
generation facilities with cooling water intake structures designed to 
take in water flows greater than or equal to 50 million gallons a day 
(MGD). For today's proposed rulemaking, EPA evaluated impacts from the 
remaining power generation facilities (those with cooling water intake 
structures designed to withdraw greater than 2 MGD and less than 50 
MGD) and from manufacturing facilities withdrawing greater than 2 MGD. 
EPA divided the universe of existing facilities in this way in part 
because EPA initially had limited data on Phase III facilities with 
design capacities less than 50 MGD. Dividing the universe of existing 
facilities provided EPA with an

[[Page 68463]]

opportunity to gather more information on Phase III facilities.
    Though the magnitude of impacts EPA has quantified from the 
universe of Phase III facilities is substantially smaller than the 
magnitude of impacts EPA has quantified from the universe of Phase II 
facilities, the information EPA has gathered on individual Phase III 
facilities indicates that the types of impacts that large individual 
facilities have on aquatic organisms can be similar to individual Phase 
II facilities' impacts.\15\ Like Phase II facilities, Phase III 
facilities withdraw water from all waterbody types: lake, reservoir, 
Great Lake, freshwater river and stream, tidal river, estuary, and 
ocean environments. A smaller percentage of the overall cooling water 
flow withdrawn by Phase III facilities comes from tidal river, estuary 
and ocean environments, however, which are some of the most sensitive 
waterbodies. Phase III facilities also reside in many of the same 
geographic areas of the country and on many of the same waterbodies as 
Phase II facilities.
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    \15\ EPA 1999. Detailed Industry Questionnaires: Phase II 
Cooling Water Intake Structures & Watershed Case Study Short 
Questionnaire. U.S. Environmental Protection Agency, Office of 
Wastewater Management, Washington, DC. OMB Control No. 2040-0213.
---------------------------------------------------------------------------

    Information available to the Agency also indicates that the range 
of configurations of Phase III cooling water intake structures is 
similar to that of Phase II intakes (see section VI), and that their 
size ranges broadly overlap (in terms of both design capacity and 
actual intake flow). The majority of facilities evaluated as part of 
the Phase III rulemaking, have cooling water intake structures designed 
to take in less than 50 MGD. However, the majority of total cooling 
water intake volume at Phase III facilities is associated with 
facilities designed to withdraw 50 MGD or more. The ten largest Phase 
III facilities have intakes designed to take in more than 500 MGD. Two 
of these facilities have cooling water intakes designed to take in more 
than 1,000 MGD. In Phase II, there were 257 facilities with cooling 
water intakes designed to take in more than 500 MGD and 112 cooling 
water intakes designed to take in more than 1,000 MGD.
    The universe of Phase III facilities also differs from that of 
Phase II facilities in that it includes oil and gas extraction 
facilities operating in offshore marine environments. EPA knows of no 
studies that examine actual impingement mortality and entrainment by 
offshore oil and gas extraction facilities. However, offshore marine 
environments provide habitat for a number of species of fish, 
shellfish, and other aquatic organisms. Many species have life stages 
that are small and planktonic or of minimal swimming ability and are 
therefore vulnerable to entrainment by cooling water intake structures. 
Larger life stages are potentially vulnerable to impingement. Both 
types of organisms are found in the offshore marine environment and 
thus may be susceptible to impingement mortality and entrainment by 
offshore oil and gas extraction facilities. The densities of organisms 
in the vicinity of these facilities relative to densities in estuaries 
and other nearshore areas is not well characterized.
    Offshore oil and gas extraction facilities have also been shown to 
attract and concentrate aquatic organisms in the immediate vicinity of 
the underwater portions of their structure. A variety of species of 
pelagic fish have been found to gather within relatively short time 
frames around the underwater portion of offshore oil and gas extraction 
facilities. If a facility remains in one place for a sufficient length 
of time, other species of aquatic organisms take up residence directly 
upon the underwater structure and form reef-like communities that 
support additional species of fish and shellfish. The increased number 
of organisms near the underwater portion of facilities where cooling 
water intake structures are located increases the potential for 
impingement mortality and entrainment of those organisms. The extent to 
which the increased numbers of aquatic organisms represents an overall 
increase in organism populations, rather than a simple concentration of 
organisms from surrounding areas, is not known. (For additional 
information, see DCN 7-0013.)
    The Minerals Management Service (MMS) did attempt to estimate 
potential population level impacts from impingement mortality and 
entrainment associated with the future operation of the Liberty Island 
project located in the Beaufort Sea in Alaska. The final Environmental 
Impact Statement for the project states that the proposed seawater 
intake structure will likely harm or kill some young-of-the-year arctic 
cisco during the summer migration period and some eggs and fry of other 
species living in the immediate vicinity of the intake. MMS estimated 
that less than 1% of all arctic cisco in the Liberty Island area were 
likely to be harmed or killed by the intake structure and that there 
would not be a measurable effect on the young-of-the-year cisco in the 
migration corridor. However, MMS also did not expect measurable effects 
on populations of other fish species, including salmon, because of the 
widespread and low density distribution of those species' eggs and fry. 
Essential fish habitat for salmon will be adversely affected according 
to MMS because it is expected that prey species of zooplankton and fish 
in their early life stages (juveniles, eggs, and larvae) could be 
killed in the intake (see Section A of the Regional Study report).
    EPA's analyses indicate that, on a national basis, Phase II 
existing facilities have a total actual cooling water intake flow 
(214,000 million gallons a day) greater than that of Phase III existing 
facilities (23,000 million gallons a day). As discussed in the preamble 
to the Phase II final rule (69 FR 41612), information in the record 
contains evidence to support the proposition that, in a given aquatic 
environment, entrainment is related to flow (see DCN 2-013L-R15 and 2-
013) while impingement is related to a combination of flow, intake 
velocity, and fish swim speed (see DCN 2-029). Larger withdrawals of 
water may result in commensurately greater levels of entrainment 
because the eggs and larvae of some aquatic species are free-floating 
and may be drawn with the flow of cooling water into an intake 
structure. Impingement rates are also influenced by swim speeds of 
affected species and intake velocity. As described in section IX, the 
Agency estimates that 120 million age 1 equivalent fish are impinged 
and entrained annually by the universe of Phase III facilities. This 
number is lower than the 3.4 billion age 1 equivalent fish the Agency 
estimated to be impinged and entrained annually by Phase II facilities 
(69 FR 41656). The lower total flow partially explains why the impacts 
EPA quantified for Phase III facilities are lower than those EPA 
quantified for Phase II facilities. In addition, based on the studies 
EPA was able to collect from Phase II and Phase III facilities, even on 
a flow-weighted basis the number of organisms impinged and entrained by 
Phase III facilities is approximately one third of the number of 
organisms impinged and entrained by Phase II facilities.
    The following discussion refers to studies from Phase II facilities 
which have been extensively studied in order to illustrate 
environmental impacts associated with cooling water intake structures. 
Because of the basic similarities in nature among Phase II and Phase 
III facilities, the Agency believes these case studies are useful for 
understanding the types of environmental impacts that may result from 
cooling water intake structures at Phase III facilities. EPA notes that 
Phase II facilities as a group withdraw more

[[Page 68464]]

cooling water than the Phase III facilities as a group and requests 
comment on the relevance of these Phase II facility studies for the 
Phase III rulemaking. EPA also requests any case studies or other 
available data on environmental impacts from Phase III facilities.
Examples of Environmental Impacts Caused by Phase II Cooling Water 
Intake Structures
1. Hudson River
    The power generation facilities on the Hudson River in New York are 
some of the most extensively studied in the nation. The fish 
populations in the Hudson River have also been studied extensively to 
measure the impacts of these power plants. Studies of entrainment at 
five Hudson River power plants during the 1980s predicted year-class 
reductions ranging from six percent to 79 percent, depending on the 
fish species.\16\ The combined design intake flow capacity of these 
five facilities is greater than 6,500 million gallons per day. The New 
York State Department of Environmental Conservation (NYSDEC) concluded 
that any ``compensatory responses to this level of power plant 
mortality could seriously deplete any resilience or compensatory 
capacity of the species needed to survive unfavorable environmental 
conditions.''\17\
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    \16\ Boreman J. and P. Goodyear. 1988. Estimates of entrainment 
mortality for striped bass and other fish species inhabiting the 
Hudson River Estuary. American Fisheries Society Monograph 4:152-
160.
    \17\ New York State Department of Environmental Conservation 
(NYSDEC). 2000. Internal memorandum provided to the U.S. EPA on 
NYDECs position on SPDES permit renewals for Roseton, Bowline Point 
1 & 2, and Indian Point 2 & 3 generating stations.
---------------------------------------------------------------------------

    The Final Environmental Impact Statement (FEIS) prepared for these 
three of these five facilities concludes that impacts are associated 
with the power plants and notes that these impacts are more like 
habitat degradation than the ``selective cropping'' of fish that occurs 
during regulated fishing because the entire community is impacted 
rather than specific species higher on the food chain.\18\ The FEIS 
estimates, from samples collected between 1981 and 1987, that the 
average annual entrainment losses from these three facilities includes 
16.9 million American shad, 303.4 million striped bass, 409.6 million 
bay anchovy, 468 million white perch, and 826.2 million river 
herring.\19\ In addition, related studies have found a small long-term 
decline in both species richness and diversity within the resident fish 
community.\20\
---------------------------------------------------------------------------

    \18\ New York State Department of Environmental Conservation 
(NYSDEC). 2003. Final Environmental Impact Statement: Concerning the 
Applications to Renew NYSPDES Permits for the Roseton 1 & 2, Bowling 
1 & 2 and Indian Point 2 & 3 Steam Electric Generating Stations, 
Orange, Rockland and Westchester Counties.
    \19\ Ibid.
    \20\ Henderson, P.A. and R.M. Seaby. 2000. Technical comments on 
the Draft Environmental Impact Statement for the State Pollution 
Discharge Elimination System Permit Renewal for Bowline Point 1 & 2, 
Indian Point 2 & 3, and Roseton 1 & 2 Steam Generating Stations. 
Pisces Conservation Ltd.
---------------------------------------------------------------------------

    The Hudson River, like many waterbodies in the nation, has 
undergone many changes in the past few decades. These changes, which 
have affected fish populations either positively or negatively, include 
improvements to water quality as a result of upgrades to sewage 
treatment plants, invasions by exotic species such as zebra mussels, 
chemical contamination by toxins such as PCBs and heavy metals, global 
climate shifts such as increases in annual mean temperatures and higher 
frequencies of extreme weather events (e.g., the El Ni[ntilde]o-
Southern Oscillation), and strict management of individual species 
stocks such as striped bass.\21\ In addition, there are dramatic 
natural changes in fish populations on an annual basis and in the long 
term due to natural phenomena because the Hudson River, like many 
waterbodies, is a dynamic system with many fundamental, fluctuating 
environmental parameters-such as flow, temperature, salinity, dissolved 
oxygen, nutrients, and disease-that cause natural variation in fish 
populations each year.\22\ The existence of these interacting variables 
makes it difficult to determine the impact of impingement and 
entrainment losses on a population's relative health. Nonetheless, as 
described later in this section, EPA is concerned about the potential 
for cumulative impacts resulting from multiple facility intakes that 
collectively impinge and/or entrain aquatic organisms within a specific 
waterbody.
---------------------------------------------------------------------------

    \21\ Ibid.
    \22\ New York State Department of Environmental Conservation 
(NYSDEC). 2003. Final Environmental Impact Statement: Concerning the 
Applications to Renew NYSPDES Permits for the Roseton 1 & 2, Bowling 
1 & 2 and Indian Point 2 & 3 Steam Electric Generating Stations, 
Orange, Rockland and Westchester Counties.
---------------------------------------------------------------------------

2. Mount Hope Bay
    Environmental impacts were also studied in another recent permit 
reissuance for the Brayton Point Station in Somerset, Massachusetts, 
where EPA is the permitting authority. EPA determined that, among other 
things, the facility's cooling water system had contributed to the 
collapse of the fishery and inhibited its recovery despite stricter 
commercial and recreational fishing limits and improved water quality 
due to sewage treatment upgrades. The facility currently withdraws 
nearly one billion gallons of water each day (1,000 MGD) and the 
average annual losses of aquatic organisms due to impingement and 
entrainment are estimated in the billions, including, among other 
species, 251 million winter flounder, 375 million windowpane flounder, 
3.5 billion tautog and 11.8 billion bay anchovy.\23\ A dramatic change 
in the fish populations in Mount Hope Bay is apparent after 1984 with 
finfish abundance decline by more than 87 percent, which coincides with 
a 45 percent increase in cooling water withdrawal from the bay due to 
the modification of Unit 4 from a closed-cycle recirculating system to 
a once-through cooling water system and a similar increase in the 
facility's thermal discharge.24 25 The relative 
contributions of cooling water withdrawal and increased thermal 
discharge to the observed population decline is not known, and some of 
decline may be due to factors other than cooling water. However, the 
downward trend of several species of finfish abundance in Mount Hope 
Bay is significantly greater than declines for the same species in 
adjacent Narragansett Bay that is not influenced by the operation of 
Brayton Point Station.\26\ Despite fishing restrictions, fish stocks 
have not recovered.
---------------------------------------------------------------------------

    \23\ Brayton Point Station, Somerset, MA. Final National 
Pollutant Discharge Elimination System (NPDES) Permit: Fact Sheet. 
October 2003.
    \24\ Ibid.
    \25\ Gibson, M. 1995 (revised 1996). Comparison of trends in the 
finfish assemblages of Mt. Hope Bay and Narragansett Bay in relation 
to operations fo the New England Power Brayton Point station. Rhode 
Island Division of Fish and Wildlife, Marine Fisheries Office.
    \26\ EPA-New England. 2002. Clean Water Act NPDES Permitting 
Determinations for Thermal Discharge and Cooling Water Intake from 
Brayton Point Station in Somerset, MA (NPDES Permit No. MA 0003654), 
July 22, 2002.
---------------------------------------------------------------------------

3. Southern California Bight
    At the San Onofre Nuclear Generating Station (SONGS) (3,300 MGD 
design intake capacity), in a normal (non-El Ni[ntilde]o) year, an 
estimated 57 tons of fish were killed per year when all units were in 
operation.\27\ The amount lost per year included approximately 350,000 
juveniles of white croaker, a popular

[[Page 68465]]

sport fish; this number represents 33,000 adult equivalents or 3.5 tons 
of adult fish. In shallow water, densities of queenfish and white 
croaker decreased 60 percent within one kilometer of SONGS and 35 
percent within three kilometers from SONGS as compared to densities 
prior to facility operations. Densities of local midwater fish 
decreased 50 to 70 percent within three kilometers of the facility. In 
contrast, relative abundances of some bottom-dwelling species in the 
same areas were higher because of the enriched nature of the SONGS 
discharge, which in turn supported elevated numbers of prey items for 
bottom-dwelling fish.
---------------------------------------------------------------------------

    \27\ Murdoch, W.W., R.C. Fay, and B.J. Mechalas. 1989. Final 
Report of the Marine Review Committee to the California Coastal 
Commission. August 1989, MRC Document No. 89-02.
---------------------------------------------------------------------------

4. Missouri River
    Facilities sited on waterbodies previously impaired by 
anthropogenic activities such as channelization can demonstrate the 
potential for reduced entrainment and impingement losses associated 
with cooling water intake structures. The Neal Generating Complex 
facility, located near Sioux City, Iowa, on the Missouri River is coal-
fired and utilizes once-through cooling systems. According to a ten 
year study conducted from 1972-82, the Missouri River aquatic 
environment near the Neal complex was previously heavily impacted by 
channelization and very high flow rates meant to enhance barge traffic 
and navigation.\28\ These anthropogenic changes to the natural river 
system resulted in significant losses of fish habitat. At this 
facility, there was found to be little impingement mortality and 
entrainment by cooling water intake structures.
---------------------------------------------------------------------------

    \28\ Tondreau, R., J. Hey and E. Shane, Morningside College. 
1982. Missouri River Aquatic Ecology Studies: Ten Year Summary 
(1972--1982). Prepared for Iowa Public Service Company, Sioux City, 
Iowa.
---------------------------------------------------------------------------

    Studies like those described in this section provide only a partial 
picture of the range of environmental impacts associated with cooling 
water intake structures. Although numerous studies were conducted to 
determine the environmental impacts caused by impingement mortality and 
entrainment at existing facilities, many of them are based on limited 
data that were collected more than 25 years ago. EPA's review of 
available facility impingement and entrainment studies identified a 
substantial number of serious study design limitations, including data 
collections for only one to two years or limited to one season or for a 
subset of the affected species; limited taxonomic detail (i.e., egg and 
larval losses not identified to the species level); a general lack of 
statistical information such as inclusion of variance measures for 
impingement and entrainment estimates; and the lack of standard methods 
and metrics for quantifying impingement mortality and entrainment, 
which limits the potential for comparing impacts among species, years, 
sites, and technologies and for evaluating cumulative impacts across 
multiple facilities. Further, in many cases it is likely that facility 
operating conditions and/or the state of the waterbody itself has 
changed since these studies were conducted. Finally, the methods for 
monitoring impingement and entrainment used in the 1970s and 1980s, 
when most section 316(b) evaluations were performed, were often 
inconsistent or incomplete, making quantification of impacts difficult. 
Recent advances in environmental assessment techniques provide new and, 
in some cases, better tools for monitoring impingement and entrainment 
and quantifying the current magnitude of the impacts.29 30 
It is difficult to predict the effects of these study limitations on 
the impacts estimates, specifically whether they have led to an 
overestimate or underestimate of impacts. The studies do show, however, 
that the nature and magnitude of impacts are highly case specific.
---------------------------------------------------------------------------

    \29\ Schmitt, R.J. and C.W. Osenberg. 1996. Detecting Ecological 
Impacts. Academic Press, San Diego, CA.
    \30\ EPRI 1999. Catalog of Assessment Methods for Evaluating the 
Effects of Power Plant Operations on Aquatic Communities. TR-112013, 
EPRI, Palo Alto, CA.
---------------------------------------------------------------------------

    EPA is also concerned about the potential for cumulative impacts 
related to cooling water withdrawal. Cumulative impacts may result 
from: (1) Multiple facility intakes impinging and/or entraining aquatic 
organisms within a specific waterbody, watershed, or along the 
migratory pathway of specific species; (2) the existence of multiple 
stressors within a waterbody/watershed, including cooling water intake 
structures withdrawals; and (3) repeated, long-term occurrences of 
impingement and/or entrainment losses that may result in the 
diminishment of the compensatory reserve of a particular fishery stock.
    Historically, environmental impacts related to cooling water intake 
structures have been evaluated on a facility-by-facility basis. These 
historical evaluations do not consider the potential for a fish or 
shellfish species to be concomitantly impacted by cooling water intake 
structures belonging to other facilities that are located within the 
same waterbody or watershed in which the species resides or along the 
coastal migratory route of a particular species. Based on EPA's 
estimation of national impacts from Phase II and Phase III facilities, 
Phase II facilities would contribute a greater level of stress to a 
national measurement of cumulative stress than would the universe of 
Phase III facilities. However, the potential cumulative effects on a 
species or ecosystem of multiple intakes located within a specific 
waterbody or along a coastal segment are difficult to quantify and are 
not typically assessed. Thus, EPA is concerned that this type of 
cumulative impact is largely unknown and has not adequately been 
accounted for in evaluating impacts.
    A total of 408,000 million gallons of water per day were withdrawn 
from waters of the United States in 2000 for cooling, irrigation, 
manufacturing processes, drinking, livestock watering and other 
purposes,\31\ of which cooling water intake from Phase III facilities 
constitutes 23,000 million gallons of water per day, or approximately 
6% of total water withdrawal. Additional stresses on aquatic systems 
include, but are not limited to, nutrient, toxics, and sediment 
loadings; low dissolved oxygen; habitat loss; and stormwater runoff. 
Although EPA recognizes that a nexus between a particular stressor and 
adverse environmental impact may be difficult to establish with 
certainty, EPA believes stressors that cause or contribute to the loss 
of aquatic organisms and habitat, such as those described above, may 
incrementally impact the health and long-term viability of aquatic 
resources. EPA analyses suggest that over 99 percent of all existing 
facilities with cooling water withdrawals that EPA surveyed in its 
section 316(b) survey of existing facilities are located within two 
miles of waters that are identified as impaired by a State or Tribe 
(see 66 FR 65256, 65297). Thus, the Agency is concerned that to the 
extent that many of the aquatic organisms subject to the effects of 
cooling water withdrawals reside in impaired waterbodies, they are 
potentially more vulnerable to cumulative impacts from an array of 
physical and chemical anthropogenic stressors.
---------------------------------------------------------------------------

    \31\ Hutson, S.S., N.L. Barber, J.F. Kenny, K.S. Linsey, D.S. 
Lumia, and M.A. Maupin. 2004. Estimated Use of Water in the United 
States in 2000. U.S. Geological Survey Circular 1268.
---------------------------------------------------------------------------

    Finally, EPA believes that an aquatic population's potential 
compensatory ability--the capacity for a species to increase its 
survival, growth, or reproduction in response to reductions sustained 
to its overall population size--may be compromised by impingement and 
entrainment losses in

[[Page 68466]]

conjunction with all the other stressors encountered within a 
population's natural range, as well as impingement and entrainment 
losses occurring consistently over extended periods of time. As 
discussed in the Phase I new facility rule (see 66 FR 65294), EPA is 
concerned that even if there is uncertainty about the extent to which 
cooling water intake structures alone reduce a population's 
compensatory reserve, this stressor, in combination with the multitude 
of other stressors acting upon a species, can potentially adversely 
affect population sustainability.\32\ Moreover, EPA notes that the 
opposite effect or ``depensation'' (decreases in recruitment as stock 
size declines) \33\ may occur if a population's size is reduced beyond 
a critical threshold. Depensation can lead to further decreases in 
population abundances that are already seriously depleted and, in some 
cases, recovery of the population may not be possible even if the 
stressors are removed.34 35 36
---------------------------------------------------------------------------

    \32\ Hutchings, J.A. and R.A. Myers. 1994. What can be learned 
from the collapse of a renewable resource? Atlantic cod, Gadus 
morhus, of New Foundland and Labrador. Canadian Journal of Fisheries 
and Aquatic Sciences 51:2126-2146.
    \33\ Goodyear, C.P. 1977. Assessing the impact of power plant 
mortality on the compensatory reserve of fish populations. Pages 
186-195 in W. Van Winkle, ed., Proceedings of the Conference on 
Assessing the Effects of Power Plant Induced Mortality on Fish 
Populations. Pergamon Press, New York, NY.
    \34\ Myers, R.A., N.J. Barrowman, J.A. Hutchings, and A.A. 
Rosenburg. 1995. Population dynamics of exploited fish stocks at low 
population levels. Science 26:1106-1108.
    \35\ Hutchings, J.A. and R.A. Myers. 1994. What can be learned 
from the collapse of a renewable resource? Atlantic cod, Gadus 
morhus, of New Foundland and Labrador. Canadian Journal of Fisheries 
and Aquatic Sciences 51:2126-2146.
    \36\ Liermann, M. and R. Hilborn. 1997. Depensation in fish 
stocks: A hierarchic Bayesian metaanalysis. Can. J. Fish. Aquatic. 
Sci. 54:1976-1985.
---------------------------------------------------------------------------

    In conclusion, EPA believes that there are multiple types of 
undesirable and unacceptable environmental impacts that may be 
associated with Phase III facilities, depending on conditions at the 
individual site. EPA solicits comment and additional data 
characterizing the type and extent of these impacts.

VI. Basis for the Proposed Requirements

A. What Is the Best Technology Available for Minimizing Adverse 
Environmental Impact at Phase III Existing Facilities?

    Under today's proposed rule, existing Phase III facilities would be 
subject to the same national performance standards as Phase II existing 
facilities, and would be authorized to meet these requirements through 
the same five compliance alternatives provided in the Phase II rule. 
EPA is proposing to codify Phase III requirements in 40 CFR 125, 
subpart K. See section II for a discussion of the three co-proposed 
thresholds that in part determine which facilities would constitute a 
Phase III existing facility. Requirements for facilities that have, or 
are required to have, an NPDES permit and withdraw cooling water from 
waters of the United States, but do not meet the applicable flow 
threshold of today's proposed rule, or use less than 25 percent of the 
water withdrawn exclusively for cooling purposes, would continue to be 
established by permit writers on a case-by-case, best professional 
judgment basis. Today's proposed rule also would establish requirements 
for new offshore oil and gas extraction facilities. See section VI.A.5 
for a discussion of proposed requirements for new offshore oil and gas 
extraction facilities. As with EPA's Phase I and II rules, States and 
authorized Tribes retain the authority to impose additional 
requirements as authorized by their laws and regulations.
    EPA is proposing national performance standards for the reduction 
of impingement mortality and, when appropriate, entrainment. EPA 
developed these proposed performance standards in part based on a 
variety of technologies, but the proposed rule would not mandate the 
use of any specific technology. Rather, the proposed performance 
standards consist of ranges of reductions in impingement mortality and/
or entrainment (e.g., reduce impingement mortality by 80 to 95 percent 
and/or entrainment by 60 to 90 percent) based on the effectiveness of 
commercially available, economically practicable technologies operating 
in a range of aquatic environments. These proposed performance 
standards reflect the best technology available for minimizing adverse 
environmental impact determined on a national categorical basis. The 
type of performance standard applicable to a particular facility (i.e., 
reductions in impingement mortality only or reductions in both 
impingement mortality and entrainment) would vary by the source 
waterbody type (i.e., freshwater river/stream, estuary/tidal river, 
ocean, Great Lake, or lake/reservoir) and the proportion of the 
waterbody withdrawn.
    Under this proposal, a Phase III existing facility could select 
among the same compliance alternatives available under the Phase II 
rule: (1) Demonstrate that it has reduced or will reduce its cooling 
water intake flow commensurate with a closed-cycle recirculating 
system, or that it has reduced, or will reduce, the maximum through-
screen design intake velocity to 0.5 feet per second or less (the 
through-screen design intake velocity criteria meets the performance 
standards to reduce impingement mortality only; the facility may still 
be subject to performance standards for entrainment); (2) demonstrate 
that its existing design and construction technologies, operational 
measures, and/or restoration measures meet the applicable performance 
standards and restoration requirements; (3) demonstrate that it has 
selected design and construction technologies, operational measures, 
and/or restoration measures that will, in combination with any existing 
design and construction technologies, operational measures, and/or 
restoration measures, meet the applicable performance standards and 
restoration requirements; (4) demonstrate that it will install or has 
installed and properly operates and maintains an approved design and 
construction technology; or (5) demonstrate that it has selected, 
installed, and is properly operating and maintaining, or will install 
and properly operate and maintain, design and construction 
technologies, operational measures, and/or restoration measures that 
the Director has determined to be the best technology available for the 
facility based on application of a specified cost-to-cost test or a 
cost-to-benefit test.
    EPA is proposing this regulatory scheme based on its assessment 
that Phase III existing facilities (existing facilities not covered 
under the Phase II rule with a design intake flow that meets or exceeds 
one of the co-proposed thresholds) and Phase II facilities (existing 
power producers with a design intake flow of 50 MGD or greater) can 
employ similar technologies to minimize adverse environmental impacts, 
specifically impingement mortality and entrainment. EPA found no 
significant differences in either the types of cooling water intake 
structures or types of fish protection technologies used by proposed 
Phase III existing facilities and Phase II facilities. Moreover, EPA 
found that these technologies are economically practicable at the Phase 
III existing facilities proposed for coverage under the three proposed 
options.
    Existing facilities that do not meet one of the co-proposed design 
intake flow thresholds (but meet the other applicability criteria) 
would continue to be subject to requirements established by permit 
writers on a case-by-case, best

[[Page 68467]]

professional judgment basis, rather than to national categorical 
standards.
    EPA notes that under its current regulations at 125.90(b), any 
existing facility that is a point source, that uses or proposes to use 
cooling water intake structures to withdraw cooling water from waters 
of the United States, and that is not subject to Subpart J or any other 
section 316(b)-related subpart in Part 125 must meet the requirements 
of CWA section 316(b) as determined by the Director on a case-by-case, 
best professional judgment (BPJ) basis. In today's Notice, EPA is 
proposing national categorical requirements for some of the facilities 
that, under Sec.  125.90(b), would otherwise be subject to section 
316(b) requirements established on a BPJ basis. Those facilities 
outside the scope of today's proposed rule would continue to be 
regulated on a case by case, BPJ basis, under Part 125 pursuant to 
Sec.  125.90(b). After considering public comment on today's proposed 
regulation and any additional information developed as part of this 
rulemaking, EPA may decide to continue to rely on Sec.  125.90(b) for 
all existing facilities not subject to Subpart J or any other section 
316(b)-related subpart in Part 125 in lieu of today's proposed national 
categorical requirements.
1. Basis for Proposed Performance Standards
    Under today's proposal, Phase III existing facilities would be 
subject to the same performance standards promulgated in the final 
Phase II cooling water intake structure rule (Sec.  125.103(b)). The 
basis for these performance standards is discussed in detail in the 
preamble to the final Phase II rule (69 FR 41576, July 9, 2004).
    Under two of the three options proposed today, Phase III existing 
facilities are subject either to performance standards to reduce 
impingement mortality only, or performance standards to reduce both 
impingement mortality and entrainment. EPA believes that impingement 
mortality and entrainment are appropriate metrics for performance 
because these are primary and distinct types of harmful impacts 
associated with the use of cooling water intake structures.
    All Phase III existing facilities demonstrating compliance under 
alternatives two, three, and four described above (proposed Sec.  
125.103(a)(2), (3), and (4)) would be subject to performance standards 
for impingement mortality. The impingement mortality performance 
standard would require a Phase III existing facility that complies 
under Sec.  125.103(a)(2), (3), and (4)) to reduce impingement 
mortality for all life stages of fish and shellfish by 80 to 95 percent 
from the calculation baseline. The impingement mortality and 
entrainment performance standards under Sec.  125.103(b) would also be 
used for determining eligibility and site-specific requirements for 
facilities choosing to comply under compliance alternative five (see 
proposed Sec.  125.103(b)).
    Both impingement mortality and entrainment performance standards 
would apply to Phase III existing facilities that withdraw cooling 
water from a tidal river, estuary, ocean, or one of the Great Lakes. 
Under the proposed options that would establish a design intake flow 
threshold at 50 MGD or higher or 200 MGD or higher, both standards 
would also apply to facilities that use cooling water from a freshwater 
river or stream and have a design intake flow greater than five percent 
of the mean annual flow. EPA is proposing to apply both standards 
because these facilities have the potential to cause more significant 
entrainment impacts. The entrainment standard, where applicable, would 
require a Phase III existing facility to reduce entrainment of all life 
stages of fish and shellfish by 60 to 90 percent from the calculation 
baseline. Performance standards for entrainment would not apply to 
Phase III existing facilities with design intake flows of five percent 
or less of the mean annual flow of a freshwater river or stream, and 
those that withdraw cooling water from a reservoir or lake (other than 
one of the Great Lakes). EPA believes such facilities have a lower 
propensity for causing significant entrainment impacts due to lower 
proportional intake flow or general waterbody characteristics.
    Although facilities that withdraw from lakes (other than the Great 
Lakes) and reservoirs would not be subject to entrainment performance 
standards, they would be subject to other specific performance 
standards under the 50 MGD or higher proposed option, or 200 MGD or 
higher proposed option. If such a facility proposes to increase the 
design intake flow of the cooling water intake structure, the increase 
in total design intake flow must not disrupt the natural thermal 
stratification or turnover pattern of the source water except in cases 
where the disruption does not adversely affect the management of 
fisheries (see proposed Sec.  125.103(b)(3)).
    The performance standards applicable to Phase III existing 
facilities are not based on a single technology but, rather, are based 
on consideration of a range of technologies that EPA has determined to 
be commercially available for the Phase III industries affected as a 
whole and to have acceptable non-water quality environmental impacts. 
Because the proposed requirements implementing section 316(b) would be 
applied in a variety of settings and to Phase III existing facilities 
of different types and sizes, no single technology is most effective at 
all such facilities. A range of available technologies has therefore 
been used as the basis for the performance standards.
    EPA developed the performance standards for impingement mortality 
reduction based on an analysis of the efficacy of the following 
technologies: (1) Fine and wide-mesh wedgewire screens, as well as 
aquatic filter barrier systems, that can reduce mortality from 
impingement by up to 99 percent or greater compared with conventional 
once-through systems; (2) barrier nets that may achieve reductions of 
80 to 90 percent; and (3) modified screens and fish return systems, 
fish diversion systems, and fine mesh traveling screens and fish return 
systems that have achieved reductions in impingement mortality ranging 
from 60 to 90 percent as compared to conventional once-through systems 
with no impingement mortality controls. Data available to EPA indicate 
that these technologies can be used to achieve the reductions in 
impingement mortality and/or entrainment specified in the performance 
standards. EPA estimates that 35 percent of potential Phase III 
existing facilities (i.e. with an intake greater than 2 MGD) currently 
use passive intake technology (e.g., wedgewire screens, etc.), 12 
percent use fine mesh screens, 6 percent use fish diversion 
technologies, and 5 percent use fish handling technologies. Available 
performance data for entrainment reduction are not as comprehensive as 
impingement data. However, aquatic filter barrier systems, fine mesh 
wedgewire screens, and fine mesh traveling screens with fish return 
systems have been shown to achieve 80 to 90 percent or greater 
reduction in entrainment compared with conventional once-through 
systems without entrainment controls. EPA notes that screening to 
prevent organism entrainment may cause impingement of those organisms 
instead.
    The performance standards proposed at Sec.  125.103(b) are based on 
the type of waterbody in which the intake structure is located, the 
volume of water withdrawn by a facility, and the facility capacity 
utilization rate. Under the final Phase II rule, EPA grouped 
waterbodies into five categories: (1) Freshwater rivers or streams, (2) 
lakes or reservoirs,

[[Page 68468]]

(3) Great Lakes, (4) tidal rivers and estuaries, and (5) oceans. This 
proposal would apply these same categories to Phase III existing 
facilities. The Agency considers location, one aspect of which is 
waterbody type, to be an important factor in addressing adverse 
environmental impact caused by cooling water intake structures. Because 
different waterbody types have the potential for different adverse 
environmental impacts, the requirements to minimize adverse 
environmental impact would vary by waterbody type.
    The performance standards for Phase III existing facilities with 
cooling water intake structures located in a tidal river or estuary are 
a reduction of impingement mortality by 80 to 95 percent and 
entrainment by 60 to 90 percent for fish and shellfish. Data available 
to EPA indicate that estuaries and tidal rivers are among the more 
susceptible waterbodies to adverse impacts from impingement mortality 
and entrainment. The reproductive strategies of tidal river and 
estuarine species, together with other physical and biological 
characteristics of those waters, make them more susceptible to impacts 
from cooling water intake structures (66 FR 28857-28859; 68 FR 17140). 
In contrast, many aquatic organisms found in non-tidal freshwater 
rivers and streams are less susceptible to entrainment due to their 
demersal (bottom-dwelling) nature and the fact that they do not 
typically have planktonic (free-floating) egg and larval stages (66 FR 
28857; 68 FR 17140).
    Absent entrainment control technologies, entrainment at a 
particular site is generally proportional to intake flow at that site. 
EPA believes it is reasonable to vary performance standards by the 
potential for adverse environmental impact associated with flow levels 
and a waterbody type. Under two of the three proposed options, EPA 
would limit the requirement for entrainment controls in fresh waters to 
those facilities that withdraw the largest proportion of water from 
freshwater rivers or streams because they have a greater potential to 
impinge and entrain larger numbers of fish and shellfish. EPA is not 
requiring entrainment reductions in freshwater rivers or streams where 
facilities withdraw 5 percent or less of the source water annual mean 
flow because such facilities generally have a lower propensity for 
causing significant entrainment impacts due to the lower proportion of 
intake flow in combination with the characteristics of the waterbody.
    This proposed rule would also establish a specific performance 
standard for lakes (other than a Great Lake) or reservoirs, in order to 
protect the thermal stratification of the waterbody. The natural 
thermal stratification or turnover pattern of a lake is a key 
characteristic that is potentially affected by the intake flow (which 
can alter temperature and/or mixing of cold and warm water layers) and 
location of cooling water intake structures within such waterbodies. 
The Great Lakes are subject to more stringent standards than other 
lakes or reservoirs, and must meet performance standards for reduction 
in both impingement mortality and entrainment. As described in the 
Phase I proposed rule (65 FR 49086) and Notice of Data Availability 
(NODA) (66 FR 28858), and the Phase II final rule (69 FR 41576), EPA 
believes that the Great Lakes have areas of high productivity and 
sensitive critical habitats that would require a greater level of 
protection.
    The performance standards for Phase III existing facilities with 
cooling water intake structures located in an ocean are a reduction of 
impingement mortality by 80 to 95 percent and entrainment by 60 to 90 
percent for fish and shellfish. EPA is establishing requirements for 
facilities withdrawing from oceans that are similar to those for tidal 
rivers and estuaries because the coastal zone of oceans (where coastal 
cooling water intake structures withdraw water from) are highly 
productive areas for fish and shellfish. (See the Phase I proposed rule 
(65 FR 45060) and documents in the record for the Phase I new facility 
rule (Docket W-00-03) such as 2-013A through O, 2-019A-R11, 2-019A-R12, 
2-019A-R33, 2-019A-R44, 2-020A, 3-0059. EPA is also concerned about the 
extent to which fishery stocks that rely upon tidal rivers, estuaries 
and oceans for habitat are over utilized and seeks to minimize the 
impact that cooling water intake structures may have on these species 
or forage species on which these fishery stocks may depend. See 69 FR 
41600.
    As in the Phase I and Phase II rules, EPA would apply performance 
standards for minimizing adverse environmental impact based on a 
relatively easy to measure and certain metric-reduction of impingement 
mortality and entrainment. Although adverse environmental impact 
associated with cooling water intake structures can extend beyond 
impingement mortality and entrainment, EPA is proposing this approach 
because impingement mortality and entrainment are primary, harmful 
environmental effects that can be reduced through the use of specific 
technologies. In addition, those impacts that exist at the population, 
community, and ecosystem levels will also be reduced by reducing 
impingement mortality and entrainment. Using impingement mortality and 
entrainment as metrics provide certainty about performance standards 
and streamlines and thus speeds the issuance of permits.
    The performance standards are expressed in the form of ranges 
rather than a single performance benchmark because of the uncertainty 
inherent in predicting the efficacy of any one of these technologies, 
or a combination of these technologies, across the spectrum of 
facilities operating in a range of aquatic environments subject to 
today's proposed rule. See 69 FR 41600. In specifying a range, EPA 
anticipates that facilities will select the most cost-effective 
technologies or operational measures to achieve the performance level 
(within the stated range) based on conditions found at their site, and 
that Directors will review the facilities' applications to ensure that 
appropriate alternatives were considered. Proper selection, operation, 
and maintenance of these technologies would serve to increase potential 
efficiencies of the technologies. EPA also expects that some facilities 
may be able to meet these performance requirements by selecting and 
implementing a suite (i.e., more than one) of technologies and 
operational measures and/or, as discussed in this section, by 
undertaking restoration measures.
    Several additional factors support EPA's expectation that the 
impingement mortality and entrainment reduction reflected in the 
performance standards can eventually be achieved by all facilities 
using the design and construction technologies on which the standards 
were based. First, a significant amount of the data available to EPA 
(e.g., section 316(b) permitting studies) were developed during early 
section 316(b) permitting and do not reflect recent developments or 
experience using these technologies. Second, many conventional barrier 
and return system technologies have not been optimized as would be 
encouraged by this rule. Finally, some facilities could achieve further 
reductions (estimated at 15-30 percent) in impingement mortality and 
entrainment by providing for seasonal flow restrictions, variable speed 
pumps, and other operational measures and innovative flow reduction 
alternatives that can achieve greater reductions.
    The calculation baseline used to determine compliance with 
performance standards is defined in proposed Sec.  125.102 as an 
estimate of

[[Page 68469]]

impingement mortality and entrainment that would occur at a site 
assuming: (1) The cooling water system had been designed as a once-
through system; (2) the opening of the cooling water intake structure 
is located at, and the face of the standard \3/8\ inch mesh traveling 
screen is oriented parallel to, the shoreline near the surface of the 
source waterbody; and (3) the baseline practices and procedures are 
those that the facility would maintain in the absence of any 
operational controls, including flow or velocity reductions, 
implemented in whole or in part for the purposes of reducing 
impingement mortality and entrainment. Alternatively, the facility 
could choose to use the current level of impingement mortality and 
entrainment as the calculation baseline. The calculation baseline could 
be estimated using: historical impingement mortality and entrainment 
data from the facility or from another facility with comparable design, 
operational, and environmental conditions; current biological data 
collected in the waterbody in the vicinity of the facility's cooling 
water intake structure; or current impingement mortality and 
entrainment data collected at the facility. Further, a facility could 
request that the calculation baseline be modified to be based on a 
location of the opening of the cooling water intake structure at a 
depth other than at or near the surface if it can demonstrate to the 
Director that the other depth would correspond to a higher baseline 
level of impingement mortality and/or entrainment. EPA is proposing to 
use this definition because it represents the most common default 
conditions the Agency could identify to give facilities credit for 
design and construction technologies, operational measures, and/or 
restoration measures that they have already implemented to minimize 
adverse environmental impact, while providing a clear and relatively 
simple definition. In many cases, existing technologies at the site 
show some reductions in impingement mortality and entrainment when 
compared to this baseline. In such cases, impingement mortality and 
entrainment reductions (relative to the calculated baseline) achieved 
by these existing technologies should be counted toward compliance with 
the performance standards. In addition, operational measures such as 
operation of traveling screens that exceed the baseline (e.g., screens 
finer than \3/8\ inch mesh, or with fish handling capacity), employment 
of more efficient return systems, and even location choices should be 
credited for any corresponding reduction in impingement mortality and 
entrainment. See section VII of this preamble for a discussion of how 
the calculation baseline is used to compare facility performance with 
the proposed rule's performance standards.
    In the Phase II final regulations (see 69 FR 41578), EPA considered 
the rate of use of the electric power generation facility in setting 
performance requirements. Under the Phase II rule, power producing 
facilities with a capacity utilization rate of less than 15 percent are 
only required to meet the impingement mortality reduction requirements, 
based on EPA's determination that entrainment impacts below this 
threshold would be minimal. Today's proposed rule does not contain an 
analogous provision for manufacturing facilities, as EPA has been 
unable to identify a similar threshold of operations below which 
impacts would be considered minimal. EPA requests comment on the 
availability of such a threshold that would result in lesser 
requirements for facilities that do not operate full time, thus 
minimizing burdens to these facilities while still protecting the 
source waterbody.
2. Basis for Five Proposed Compliance Alternatives
    Today's proposed rule would authorize a Phase III existing facility 
with a total design intake flow that exceeds the specified threshold to 
choose one of five alternatives for establishing the best technology 
available for minimizing adverse environmental impact at the facility. 
These compliance alternatives (proposed Sec.  125.103(a)) would be 
consistent with those promulgated in the final Phase II rule (40 CFR 
125.94(a)). Each proposed alternative is described below.
    This proposed approach provides a high degree of flexibility for 
Phase III existing facilities to select the most effective and 
efficient approach and technologies for minimizing adverse 
environmental impact associated with their cooling water intake 
structures. This proposed approach also reflects EPA's judgment that, 
given the wide range of various factors that affect the environmental 
impact posed by Phase III existing facilities, different technologies 
or different combinations of technologies can be used and optimized to 
achieve the performance standards. EPA requests comment on all aspects 
of this proposed approach.
a. Meeting Performance Standards Through Reducing Intake Flow 
Commensurate With a Closed Cycle Recirculating System or Reduced Design 
Intake Velocity
    EPA is proposing that a Phase III existing facility could meet 
applicable performance standards through complying with Sec.  
125.103(a)(1)(i) or (ii). Under proposed Sec.  125.103(a)(1)(i), any 
Phase III existing facility that reduces its flow to a level 
commensurate with a closed-cycle, recirculating cooling system would be 
deemed to satisfy the applicable impingement mortality and entrainment 
performance standards for all waterbodies under Sec.  125.103(b). Such 
facilities may still be subject to requirements under Sec.  125.103(e). 
Facilities that select this compliance alternative either through the 
use of existing closed-cycle recirculating system technology at the 
plant, or by retrofitting their facility, would not be required to 
further demonstrate that they meet the applicable performance 
standards.
    Available data described in Chapter 3 of the Phase II Existing 
Facility Technical Development Document (DCN 7-0004) suggest that 
closed-cycle, recirculating cooling systems (e.g., cooling towers or 
ponds) can reduce mortality from impingement by up to 98 percent and 
entrainment by up to 98 percent when compared with conventional once-
through systems.\37\ Although closed-cycle, recirculating cooling is 
not one of the technologies on which the performance standards are 
based, use of a closed-cycle, recirculating cooling system would 
achieve the performance standards, and therefore, facilities that 
reduce their flow commensurate with closed-cycle, recirculating cooling 
systems would be deemed to have met the performance standards for both 
impingement mortality and entrainment. Under this proposal, Sec.  
125.103(a)(1)(i) would thus constitute a compliance alternative for

[[Page 68470]]

Phase III existing facilities based on the use of a closed-cycle, 
recirculating cooling system. While EPA based the requirements of the 
Phase I new facility rule on the efficacy of closed-cycle recirculating 
systems (66 FR 65273--65274), EPA has determined that this technology 
is not economically practicable for some Phase III existing facilities. 
EPA is nonetheless aware that approximately 6 percent of Phase III 
manufacturers with a design intake flow of 50 MGD or greater, and 3 
percent of Phase III manufacturers with a design intake flow of 200 MGD 
or greater, have installed this highly effective technology and should 
meet this streamlined alternative.
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    \37\ Reducing the cooling water intake structure's capacity is 
one of the most effective means of reducing entrainment (and 
impingement mortality). For the traditional steam electric utility 
industry, facilities located in freshwater areas that have closed-
cycle, recirculating cooling water systems can, depending on the 
quality of the make-up water, reduce water use by 96 to 98 percent 
from the amount they would use if they had once-through cooling 
water systems. Steam electric generating facilities that have 
closed-cycle, recirculating cooling systems using salt water can 
reduce water usage by 70 to 96 percent when make-up and blowdown 
flows are minimized. The lower range of water usage would be 
expected where State water quality standards limit chloride to a 
maximum increase of 10 percent over background and therefore require 
a 1.1 cycle of concentration. The higher range should be attainable 
where cycles of concentration up to 2.0 are used for the design.
---------------------------------------------------------------------------

    Similarly, under proposed Sec.  125.103(a)(1)(ii), any Phase III 
existing facility that reduces its design intake velocity to 0.5 feet 
per second or less would be deemed to have met the performance 
standards for impingement mortality and would not be required to 
demonstrate further that it meets the performance standards for 
impingement mortality. However, if the facility is subject to 
performance standards for entrainment, it would need to otherwise 
demonstrate compliance with entrainment performance standards.
    As EPA discussed in the Phase II proposed rule at 67 FR 17151 and 
Phase I final rule at 66 FR 65274, intake velocity is one of the key 
factors that can affect the impingement of fish and other aquatic 
biota, since in the immediate area of the intake it exerts a direct 
physical force against which fish and other organisms must act to avoid 
impingement and entrainment. As discussed in those notices, EPA 
compiled data from three swim speed studies (University of Washington 
study, Turnpenny, and EPRI) (DCN 2-28A-C) and these data indicated that 
a 0.5 feet per second velocity would protect at least 96 percent of the 
tested fish. As further discussed, EPA also identified Federal 
documents (Boreman, DCN 1-5003-PR; Bell (1990); National Marine 
Fisheries Service (NMFS), (1997); an early swim speed and endurance 
study performed by Sonnichsen et al. (1973); and fish screen velocity 
criteria that support this approach (DCN 2-29).
b. Meeting Performance Standards Through the Use of Design and 
Construction Technologies, Operational Measures, and/or Restoration 
Measures
    Under the second and third proposed Phase III compliance 
alternatives, a facility could either demonstrate to the Director that 
the facility's existing design and construction technologies, 
operational measures, and/or restoration measures already meet the 
minimum performance standards specified under Sec.  125.103(b) and (c), 
or that it has selected design and construction technologies, 
operational measures, and/or restoration measures or some combination 
thereof that will meet these performance standards (see proposed Sec.  
125.103(a)(2) and (3)).
    Available data indicate that barrier and/or fish handling 
technologies are available on a national basis for use by Phase III 
existing facilities.\38\ These technologies exist and are in use at 
various Phase III existing facilities and, thus, EPA considers them 
collectively technologically available. Many Phase III existing 
facilities that do not already have closed-cycle cooling systems have 
these or other technologies in place that reduce impingement mortality 
or entrainment to levels that would meet the proposed rule requirements 
(e.g., EPA estimates this is the case for 23 percent of manufacturers 
with a design intake flow of 50 MGD or greater, see the TDD for more 
details). The fact that these technologies are collectively utilized 
means that, in general, one or more technologies within the suite would 
be available to each Phase III existing facility to meet the applicable 
performance standards. (If this is not the case for a specific 
facility, it can utilize compliance alternative five below.)
---------------------------------------------------------------------------

    \38\ As previously noted, as an example of technologies in use 
EPA estimates that 35 percent of Phase III existing facilities 
currently use passive intake technology (e.g., wedgewire screens, 
etc.), 12 percent use fine mesh screens, 6 percent use fish 
diversion technologies, and 5 percent use fish handling 
technologies.
---------------------------------------------------------------------------

    EPA believes that the design and construction technologies 
necessary to meet the requirements are commercially available and 
economically practicable for existing facilities, because facilities 
can and have installed many of these technologies years after a 
facility began operation. Typically, additional design and construction 
technologies such as fine mesh screens, wedgewire screens, fish 
handling and return systems, and aquatic filter fabric barrier systems 
can be installed during a scheduled outage (operational shutdown).
    In addition, EPA's survey data shows that the types of intakes, 
technologies currently employed, or technologies that may be 
retrofitted at proposed Phase III existing facilities are no different 
than those at Phase II facilities. For example, EPA identified one 
Phase III facility that retrofitted ten 36-inch wedgewire T-screens. 
Another retrofit example is an electric generator that is below the 
Phase II threshold that replaced its perforated plate with wedgewire T-
screens. Examples of Phase II facilities that installed these 
technologies after they initially started operating may be found at 69 
FR 641602.
c. Meeting Performance Standards Through Use of a Pre-Approved Design 
and Construction Technology
    Under the fourth compliance alternative in today's proposed 
regulation, a Phase III existing facility would be able to demonstrate 
that it meets specified conditions and has installed and properly 
operates and maintains a pre-approved technology (see proposed Sec.  
125.103(a)(4)). EPA has identified one pre-approved technology: 
Submerged cylindrical wedgewire screen technology to treat the total 
cooling water intake flow. This pre-approved technology was identified 
in the Phase II rule, and is proposed as a compliance option for Phase 
III existing facilities (see proposed Sec.  125.108). There are five 
conditions that would need to be met in order to use this technology to 
comply with the proposed rule: (1) The cooling water intake structure 
is located in a freshwater river or stream; (2) the cooling water 
intake structure is situated such that sufficient ambient counter 
currents exist to promote cleaning of the screen face; (3) the through 
screen design intake velocity is 0.5 feet per second or less; (4) the 
slot size is appropriate for the size of eggs, larvae, and juveniles of 
any fish and shellfish to be protected at the site; and (5) the entire 
main cooling water flow is directed through the technology (small flows 
totaling less than two MGD for auxiliary plant cooling uses are 
excluded). Under this proposal, Directors would be explicitly 
authorized under Sec.  125.108 to pre-approve other technologies for 
use at facilities with other specified characteristics within their 
respective jurisdiction after providing the public with notice and an 
opportunity to comment on the request for approval of the technology. 
The Director's authority to pre-approve other technologies would not be 
limited to technologies for use by facilities located on freshwater 
rivers and streams.
    EPA has proposed this compliance alternative in response to Phase 
II proposed rule comments and Phase III small entity comments (provided 
pursuant to consultations mandated by the Small Business Regulatory 
Enforcement Fairness Act) that suggested that EPA provide an 
additional, more streamlined compliance option that would allow a 
facility to implement certain specified technologies that are deemed 
highly protective in exchange for reducing the implementation burden, 
including reducing the scope of the

[[Page 68471]]

Comprehensive Demonstration Study. (See, 68 FR 13522, 13539; March 19, 
2003 and DCN 7-0006). EPA evaluated the effectiveness of specific 
technologies using the impingement mortality and entrainment reduction 
performance standards as assessment criteria. The approved cylindrical 
wedgewire screen technology has a demonstrated ability to reduce 
impingement mortality by 80 to 95 percent for fish and shellfish and, 
if required, reduce entrainment by 60 to 90 percent for any stages of 
fish and shellfish at facilities that meet the conditions specified in 
proposed Sec.  125.108(a)(1). Thus, the technology has a demonstrated 
ability to meet the most stringent performance standards that would 
apply to any facility situated on a freshwater river or stream. (See 
DCN 1-3075, 1-5069, 1-5070, 3-0002, and 4-4002B. Also, see DCN 6-5000 
and Chapter 3 of the Phase II Technical Development Document (DCN 6-
0004)). Because cylindrical wedgewire screens are believed to be 
effective when deployed under the specified conditions and properly 
maintained, facilities that select this compliance option are provided 
substantially streamlined requirements for completing the Comprehensive 
Demonstration Study. However, facilities that select this option would 
still be required to prepare a Technology Installation and Operation 
Plan and a Verification Monitoring Plan to monitor the effectiveness of 
the technology at their sites in meeting the performance standards.
    Referenced below are examples of Phase III facilities that 
installed this technology after they initially started operating.
    Sherburne County Generating Plant. A Phase III electric generator, 
Sherburne County is located on the upper Mississippi River in 
Minnesota. The facility began operations in 1976 and operates one 
cooling water intake structure. The facility also uses a closed-cycle, 
recirculating cooling system. In 1986, Sherburne County replaced its 
existing intake technology (a perforated plate) with cylindrical 
wedgewire screens.
    Tosco Refinery. Oil refineries are one of the industry sectors 
examined in the Phase III rule. Located in Rodeo, California, the Tosco 
Refinery replaced its traveling screens with cylindrical wedgewire 
screens in 2000.
    To date, EPA has not identified new data or information that could 
be used to establish other technologies as pre-approved on a nationwide 
basis. Several stakeholders suggested EPA continue to evaluate whether 
other technologies could qualify as pre-approved technologies. EPA 
solicits comment and new data, including appropriate site conditions, 
on other candidate technologies for pre-approval.
d. Site-Specific Determination of Best Technology Available To Minimize 
Adverse Environmental Impact
    Under this proposed compliance alternative, a Phase III existing 
facility also could comply with the proposed rule by seeking a site-
specific determination of the best technology available to minimize 
adverse environmental impact by demonstrating to the Director that its 
cost of complying with the applicable performance standards would be 
significantly greater than the costs considered by EPA for a like 
facility when establishing such performance standards, or that its 
costs would be significantly greater than the benefits of complying 
with such performance standards at the facility. (See proposed Sec.  
125.103(a)(5)(i) and (ii)). If a facility satisfies one of the two 
proposed cost tests in Sec.  125.103(a)(5), then the Director would 
have to establish site-specific alternative requirements based on 
design and construction technologies, operational measures, and/or 
restoration measures that achieve an efficacy that is, in the judgment 
of the Director, as close as practicable to the applicable performance 
standards without resulting in costs that are significantly greater 
than either the costs considered by the Administrator in establishing 
the applicable performance standards, or the benefits at the facility.
    As discussed in the Phase II rule, in developing the proposed 
standards in Sec.  125.103(b) and the proposed compliance alternatives 
in Sec.  125.103(a)(2)-(4), EPA considered several factors, including 
efficacy, availability, ease of implementation, indirect effects, the 
costs that EPA expects all existing facilities to incur (national 
costs) and the benefits if all existing facilities meet the performance 
standards (national benefits). These proposed site-specific compliance 
options would give Phase III existing facilities flexibility to 
demonstrate that the best technology available to minimize adverse 
environmental impact at their particular sites may be less stringent 
than would otherwise be required if the facility selected one of the 
compliance alternatives in Sec.  125.103(a)(2), (3) or (4).
i. Basis of the Cost-Cost Test
    For a number of related reasons discussed below, EPA chose to use a 
comparison of a facility's actual costs to the costs EPA estimated that 
a like facility would incur to meet the national performance standards 
(a ``cost-cost test'') as a basis for obtaining a site-specific 
determination of best technology available to minimize adverse 
environmental impact. EPA's record for this proposed rule shows that 
for Phase III existing facilities withdrawing greater than the three 
co-proposed thresholds, the requirements in today's proposed rule would 
be technically available and generally economically practicable. 
However, EPA recognizes that it may not have anticipated all site-
specific costs that a facility would incur, or that the costs for 
retrofitting may significantly exceed those EPA considered. For 
example, detailed information on some factors important to the 
effectiveness and costs of the technologies, such as debris loading and 
the presence of navigational channels within the waterbody at which 
cooling water intakes are sited, were not available. Moreover, the 
information EPA used to develop its costs was in some cases limited by 
the fact that, while EPA sent surveys to all known electric generators 
and a sample of manufacturing facilities covered under today's proposed 
rule, only 42 percent of the total potential Phase II and Phase III 
universes were sent detailed questionnaires. The remaining 58 percent 
only received a short technical questionnaire which requested minimal 
characterization information. Also, EPA may not have elicited 
information regarding characteristics of a particular facility that, if 
known, would have either significantly changed EPA's cost estimates or 
demonstrated that none of the technologies on which the categorical 
requirements are based are economically achievable by the facility. 
Similarly, existing facilities have less flexibility than new 
facilities in selecting the location of their intakes and technologies 
for minimizing adverse environmental impact, and therefore it may be 
difficult for some facilities to avoid costs much higher than those EPA 
considered when establishing the performance standards. The cost-cost 
site-specific alternative ensures that the overall rule remains 
economically practicable for all facilities that would be subject to 
today's proposed rule. Despite EPA's best effort, site-specific costs 
are difficult to estimate in a national rule. For all of these reasons, 
EPA believes that the cost-cost site-specific compliance alternative is 
necessary to ensure that the proposed rule would be economically 
practicable for all Phase III existing facilities. In order to ensure 
that this alternative provides only the

[[Page 68472]]

minimum relaxation of performance standards that is needed to make the 
proposed rule economically practicable, proposed Sec.  125.103(a)(5)(i) 
requires that the site-specific requirements achieve an efficacy that 
is as close as practicable to the applicable performance standards 
without resulting in costs that are significantly greater than those 
considered by the Administrator for a like facility when establishing 
the performance standards.
    EPA is proposing at Sec.  125.103(a)(5) to limit the comparison of 
like facilities to Phase III existing facilities within the scope of 
the rule. EPA believes this provision is necessary and appropriate 
because different cost assumptions were used in estimating costs for 
the Phase II and Phase III existing facilities. (These differences are 
discussed in detail in the relevant Technical Development Documents 
(DCN 6-0004 and DCN 7-0002.)

Legal Authority for the Cost-Cost Test

    CWA section 316(b) authorizes a site-specific determination of best 
technology available. Although, CWA section 316(b) authorizes EPA to 
promulgate national categorical requirements, the variety of factors to 
be considered in determining these requirements--such as location and 
design--indicate that site-specific conditions can be highly relevant 
to the determination of best technology available to minimize adverse 
environmental impact. In addition to specifying best technology 
available in relation to a national categorical performance standard, 
today's proposed rule also authorizes a site-specific determination of 
best technology available when conditions at the site lead to a more 
costly array of controls than EPA had expected would be necessary to 
achieve the applicable performance standards.
    This site-specific compliance option is similar to the 
``fundamentally different factors'' provision in CWA section 301(n), 
which authorizes alternative requirements for sources subject to 
national technology-based standards for effluent discharges, if the 
facility can establish that it is fundamentally different with respect 
to factors considered by EPA in promulgating the national standard. The 
fundamentally different factors provision was added to the CWA in 1987, 
but prior to the amendment, both the Second Circuit and the Supreme 
Court upheld EPA's rules containing provisions for alternative 
requirements as reasonable interpretations of the statute. NRDC v. EPA, 
537 F.2d 642, 647 (2d Cir. 1976) (``the establishment of the variance 
clause is a valid exercise of the EPA's rulemaking authority pursuant 
to section 501(a) which authorizes the Administrator to promulgate 
regulations which are necessary and proper to implement the Act''); EPA 
v. National Crushed Stone Ass'n, 449 U.S. 64 (1980) (approving EPA's 
alternative requirements provision in a standard adopted pursuant to 
CWA section 301(b)(1), even though the statute did not expressly permit 
a variance.) EPA's alternative site-specific compliance option in this 
proposed rule is similarly a reasonable interpretation of section 
316(b) and a valid exercise of its rulemaking authority under CWA 
section 501.
    Based on this interpretation, EPA and State permitting authorities 
have been implementing CWA section 316(b) on a case-by-case basis for 
over 25 years. Such a case-by-case determination of best technology 
available has been recognized by courts as being consistent with the 
statute. See Hudson Riverkeeper Fund v. Orange and Rockland Util, 835 
F. Supp. 160, 165 (S.D.N.Y. 1993) (``This leaves to the permit writer 
an opportunity to impose conditions on a case by case basis, consistent 
with the statute'').
    EPA reasonably interprets CWA section 316(b) to authorize it to 
consider costs of compliance in determining best technology 
``available.'' (See section I.) Therefore, where EPA fails to consider 
a facility's unusual or disproportionate costs in setting the national 
requirements for best technology available, it reasonably authorizes 
permit authorities to set site-specific alternative limits to account 
for these costs. See Riverkeeper v. EPA, slip op. at 25 (2nd Cir. Feb. 
3, 2004) (upholding site-specific alternative limits under the Phase I 
rule for new facilities where a particular facility faces 
disproportionate compliance costs).
ii. Basis of the Cost-Benefit Test
    Under today's proposal, EPA would allow a facility to use a 
comparison of its costs to the benefits of meeting the performance 
standards at its site (a ``cost-benefit test'') as another basis for 
obtaining a site-specific determination of best technology available to 
minimize adverse environmental impact. Section 316(b) authorizes 
consideration of the environmental benefit to be gained by requiring 
that the location, design, construction, and capacity of cooling water 
intake structures reflect the best technology available for the purpose 
of minimizing adverse environmental impact. Accordingly, in proposing 
the technologies on which EPA based the compliance alternatives and 
performance standards as the best technologies available for existing 
facilities to minimize adverse environmental impact, EPA considered the 
national cost of those technologies in comparison to the national 
benefits--i.e., the reduction in impingement mortality and entrainment 
that EPA estimated would occur nationally if all Phase III existing 
facilities withdrawing greater than any of the co-proposed thresholds 
selected one of the compliance options in Sec.  125.103(a)(2) through 
(4). While EPA believes that there is considerable value in 
promulgating national performance standards under section 316(b) based 
on what EPA determines, on a national basis, to be the best technology 
available to minimize adverse environmental impact, EPA also recognizes 
that, at times, determining what is necessary to minimize adverse 
environmental impact can necessitate a site-specific inquiry. EPA's 
balance of the national costs and national benefits may not be similar 
to the comparison of costs and benefits at a specific site due to 
variations in: (1) The performance of intake technologies, and (2) 
characteristics of the waterbody in which the intake(s) are sited, 
including the resident aquatic biota. For example, there may be some 
facilities where the absolute numbers of fish and shellfish impinged 
and entrained is so minimal that the cost to achieve the required 
percentage reductions would be significantly greater than the benefits 
of achieving the required reductions at that particular site. More 
specifically, because of the characteristics of a particular waterbody, 
or the behavioral patterns of the fish or shellfish in that particular 
waterbody, there may be little or no impingement mortality or 
entrainment occurring at the site. For such a facility, the cost of 
reducing an already small amount of impingement mortality and 
entrainment by 80 to 95 percent and 60 to 90 percent, respectively, may 
be significantly greater than the benefits. In short, it may not be 
cost-effective and, therefore may be economically impracticable for a 
facility to achieve percentage reductions when attempting to save a 
small number of fish or shellfish. For example, in a waterbody that is 
already degraded, very few aquatic organisms may be subject to 
impingement or entrainment, and the costs of retrofitting an existing 
cooling water intake structure may be significantly greater than the 
benefits of doing so. By requiring best technology available to 
minimize adverse environmental impact, section 316(b) invites a 
consideration of both technology and environmental

[[Page 68473]]

conditions, including the potential for adverse impacts, in the 
receiving waterbody. EPA believes it is a reasonable interpretation of 
the statute to allow the Director to consider the results of meeting 
the performance standards in terms of reducing environmental impact 
(i.e., the benefits) in cases where the costs of installing the 
technology are significantly greater than the reduction in 
environmental impacts would seem to warrant. As with the cost-cost 
site-specific provision, EPA also wants to ensure that any relaxation 
of the performance standards be the minimum necessary to ensure that 
the costs are not significantly greater than the benefits. Proposed 
Sec.  125.103(a)(5)(ii) thus provides that alternative site-specific 
requirements must achieve an efficacy that is as close as practicable 
to the applicable performance standards without resulting in costs that 
are significantly greater than the benefits of meeting the performance 
standards at the facility.

Legal Authority for the Cost-Benefit Test

    EPA believes that the Clean Water Act authorizes a site-specific 
determination of the best technology available to minimize adverse 
environmental impact where the costs of compliance with the rule's 
performance standards are significantly greater than its benefits. This 
authority stems from the statutory language of CWA section 316(b). 
Section 316(b) requires that cooling water intake structures reflect 
the best technology available for minimizing adverse environmental 
impact. The object of the best technology available is explicitly 
articulated by reference to the receiving water: To minimize adverse 
environmental impact in the waters from which cooling water is 
withdrawn. In contrast, under section 301, the goal of BAT is 
explicitly articulated by reference to a different purpose, to make 
reasonable further progress toward the national goal of eliminating the 
discharge of all pollutants (section 301(b)(2)(A)). Similarly, under 
section 304, the goal of BPT and BCT is explicitly articulated by 
reference to the degree of effluent reduction attainable. (Section 
304(b)(1)(A) and section 304(b)(4)(A))
    EPA has previously considered the costs of technologies in relation 
to the benefits of minimizing adverse environmental impact in 
establishing section 316(b) limits, which historically have been done 
on a case-by-case basis. See, e.g., In Re Public Service Co. of New 
Hampshire, 10 ERC 1257 (June 17, 1977); In Re Public Service Co. of New 
Hampshire, 1 EAD 455 (Aug. 4, 1978); Seacoast Anti-Pollution League v. 
Costle, 597 F. 2d 306 (1st Cir. 1979). Under CWA section 316(b), EPA 
may consider the benefits that the technology-based standard would 
produce in a particular waterbody, to ensure that it will ``minimize 
adverse environmental impact.'' EPA believes that the technology-based 
standards established in this proposed rule will, as a national matter, 
``minimize adverse environmental impact.'' However, the degree of 
minimization contemplated by the national performance standards may not 
be justified by site-specific conditions. In other words, depending on 
the circumstances of the receiving water, it may be that application of 
less stringent controls than those that would otherwise be required by 
the performance standards will achieve the statutory requirement to 
``minimize'' adverse environmental impact, when considered in light of 
economic practicability. An extreme example is a highly degraded ship 
channel with few fish and shellfish, but such situations can only be 
identified and addressed through a site-specific assessment.
    For these reasons, EPA reasonably interprets the phrase ``minimize 
adverse environmental impact'' in section 316(b) to authorize a site-
specific consideration of the benefits of the technology-based standard 
on the receiving water. EPA continues to believe that any impingement 
or entrainment would be an adverse environmental impact, but has 
determined that section 316(b) does not require minimization of adverse 
environmental impact beyond that which can be achieved at a cost that 
is economically practicable. EPA believes that the relationship between 
costs and benefits is one component of economic practicability for 
purposes of section 316(b) and the legislative history indicates that 
economic practicability may be considered in determining what is best 
technology available for purposes of section 316(b). The legislative 
history of section 316(b) indicates that the term ``best technology 
available'' should be interpreted as ``best technology available 
commercially at an economically practicable cost.'' \39\ EPA believes 
that allowing a relaxation of the performance standards when costs 
significantly exceed benefits, but only to the extent justified by the 
significantly greater costs, is a reasonable way of ensuring that 
adverse environmental impact be minimized at an economically 
practicable cost. This does not mean that there is a need to make a 
finding of ``adverse environmental impact'' before performance 
standards based CWA section 316(b) requirements would apply. Rather, 
EPA is authorizing an exception to national performance standards based 
requirements on a site-specific basis in limited circumstances: when 
the costs of complying with the national performance standards are 
significantly greater than the benefits of compliance at a particular 
site.
---------------------------------------------------------------------------

    \39\ See 118 Cong. Rec 33,762 (1972), reprinted in 1 Legislative 
History of the Water Pollution Control Act Amendments of 1972, at 
264 (1973)(Statement of Representative Don H. Clausen).
---------------------------------------------------------------------------

3. Why Is EPA Proposing National Requirements for New Offshore and 
Coastal Oil and Gas Extraction Facilities?
    After EPA proposed the Phase I rule for new facilities (65 FR 
49060, August 10, 2000), the Agency received adverse comment from 
operators of mobile offshore and coastal drilling units concerning the 
limited information about their cooling water intakes, associated 
impingement mortality and entrainment, costs of technologies, or 
achievability of the controls proposed by EPA. On May 25, 2001, EPA 
published a Notice of Data Availability (NODA) for Phase I that, in 
part, sought additional data and information about mobile offshore and 
coastal drilling units (see 66 FR 28857). In the Phase I final rule, 
EPA committed to ``propose and take final action on regulations for new 
offshore oil and gas extraction facilities, as defined at 40 CFR 435.10 
and 40 CFR 435.40, in the Phase III section 316(b) rule.'' See 66 FR 
65256. Today's proposed regulation would establish national 
requirements for new offshore oil and gas extraction facilities that 
use a cooling water intake structure to withdraw water from waters of 
the U.S.
    Requirements for new offshore oil and gas extraction facilities are 
proposed in a new subpart N. New onshore oil and gas extraction 
facilities are already potentially covered under section 316(b) Phase I 
requirements; new offshore oil and gas extraction facilities that would 
be subject to subpart N include new coastal and offshore oil and gas 
extraction facilities. The proposed requirements for these facilities 
are similar to some, but not all, of the requirements contained in the 
Phase I rule applicable to other new facilities. For example, the Phase 
I requirement to reduce intake flow commensurate with a closed-cycle, 
recirculating cooling system would not apply to these facilities. EPA 
is seeking comment only on the new facility requirements contained in 
proposed Subpart N, which would be applicable to new offshore oil and 
gas extraction facilities.
    Under today's proposed rule, new offshore oil and gas extraction 
facilities

[[Page 68474]]

that withdraw greater than 2 MGD and that employ sea chests as cooling 
water intake structures, and are fixed facilities would have to comply 
with the requirements in Sec.  125.134(b)(1)(ii). These requirements 
address intake flow velocity, specific impact concerns (e.g., 
threatened or endangered species, critical habitat, migratory or sport 
or commercial species), required information submission, monitoring, 
and recordkeeping. Under this proposal, new offshore oil and gas 
extraction facilities that withdraw greater than 2 MGD that do not 
employ sea chests as cooling water intake structures, and are fixed 
facilities would have to comply with the requirements in Sec.  
125.134(b)(1)(i). The one additional requirement for these facilities 
is Sec.  125.134(b)(5), which requires the selection and implementation 
of design and construction technologies or operational measures to 
minimize entrainment of entrainable life stages of fish or shellfish. 
Fixed facilities can also choose to comply through Track II, which 
allows a site-specific demonstration that alternative requirements 
would produce comparable levels of impingement mortality and 
entrainment reduction. New offshore oil and gas facilities that are not 
fixed facilities would have to comply with the regulations at Sec.  
125.134(b)(1)(iii). Track II is not available to non-fixed (mobile) 
facilities because non-fixed facilities, which are expected to operate 
at multiple locations, would not be able to perform a site-specific 
demonstration. For this same reason, EPA has dropped some of the other 
site-dependent requirements for non-fixed facilities (e.g., baseline 
biological assessment). EPA requests comment on the practicability of 
Track II demonstrations and other site-dependent requirements for non-
fixed facilities.
    EPA has limited information on environmental impacts associated 
with the use of cooling water intake structures at new offshore oil and 
gas extraction facilities but believes the potential for such impacts 
is sufficient to warrant including requirements for new offshore oil 
and gas extraction facilities in this proposed rule (see section V for 
more detailed discussion). In addition, although such technologies are 
not generally in use at existing offshore oil and gas extraction 
facilities, EPA believes that technologies are available for use by new 
facilities in this subcategory to meet the proposed requirements as 
described below. EPA requests comment, including data, on environmental 
impacts from, and availability of technologies for, cooling water 
intake structures at new offshore oil and gas extraction facilities.
    Some offshore oil and gas extraction facilities employ an 
underwater compartment within the facility or vessel hull or pontoon 
through which sea water is drawn in or discharged, often called a ``sea 
chest.'' A passive screen (strainer) is often set along the flush line 
of the sea chest. Pumps draw seawater from open pipes in the sea chest 
cavity for a variety of purposes (e.g., cooling water, fire water, and 
ballast water). These intakes are normally the only source of cooling 
water for the facility; therefore, it is crucial to the operation of 
these facilities that the intake structures be kept clean and clear of 
fish, jellyfish, plastic bags, and other debris. To accomplish this 
these intake structures can, and have been, designed for low intake 
velocity (i.e., less than 0.5 feet per second) and/or include fish 
protection equipment; see the Technical Development Document for 
details.
    As outlined in Alaska's oil and gas leasing requirements, oil and 
gas extraction facilities in Alaskan State waters are currently subject 
to an impingement control velocity limit of 0.1 feet per second (i.e., 
more stringent than EPA's design requirement of 0.5 feet per second in 
the Phase I new facility rule to minimize impingement mortality of 
aquatic organism). These State regulations suggest that impingement 
controls that would meet the velocity requirements of this proposed 
rule are available for new offshore oil and gas extraction facilities 
in Alaskan or similar waters.
    However, facilities using sea chests may have limited opportunities 
to meet the entrainment control requirements applicable to facilities 
subject to the Phase I rule. A 2003 literature survey by Mineral 
Management Services (DCN 7-0012) identified no evidence of entrainment 
controls successfully fitted to offshore oil and gas extraction vessels 
with sea chests such as drill ships, jack-ups, MODUs, and barges. EPA's 
data suggests that the only physical technology controls for 
entrainment at facilities with sea chests would entail installation of 
equipment projecting beyond the hull of the vessel. Such controls may 
not be feasible due to facility design requirements, even for new 
facilities that could avoid the challenges of retrofitting control 
technologies.
    EPA does have limited information showing the entrainment reduction 
benefits of planar wedgewire screens. EPA is considering, and requests 
comment on, whether entrainment technologies, such as planar wedgewire 
screens, are available for use by facilities using sea chests and 
whether based on such technologies it would be appropriate to apply 
Sec.  125.134(b)(5) (requiring design and construction technologies or 
operational measures to minimize entrainment of entrainable life stages 
of fish or shellfish) to such facilities.
    EPA also considered whether all new offshore vessels could be 
constructed without employing sea chests. A technology must prove to be 
practicable to be a viable alternative to current technology. In this 
case, EPA treats a viable alternative to sea chests as any practical 
alternative configuration/technology successfully implemented at 
existing facilities, including those in other manufacturing industries, 
with similar seawater intake structures. EPA data suggests the only 
demonstrated design for drill ships and semi-submersible MODUs is to 
use sea chests because they allow the vessel to maintain appropriate 
fluid dynamics, overall optimal vessel shape, and a safe seaworthy 
profile. Therefore, EPA does not believe entrainment controls are 
feasible at such facilities.
    For new offshore oil and gas extraction facilities with intake 
structures other than sea chests, EPA believes the proposed entrainment 
controls are feasible. For example, a caisson intake (as referred to 
here) is simply a steel pipe attached to a fixed structure that extends 
from an operating area down some distance into the water. It is used to 
provide a protective shroud around another process pipe or pump that is 
lowered into the caisson from the operating area. The most likely 
technologies to reduce impingement mortality and entrainment of marine 
life in this type of structure would be passive intake screens or 
velocity caps. Air sparges and copper nickel alloys can be used to 
control biofouling. Other technologies such as acoustic barriers, 
electro barriers or intake relocation may also be used.
    In summary, EPA is proposing to apply requirements that are 
consistent with some--but not all--of the Phase I provisions to new 
offshore oil and gas extraction facilities, because of differences in 
technological availability between such facilities and those covered in 
the Phase I rule. Because available information indicates that it is 
not feasible for all new offshore oil and gas extraction facilities to 
employ closed-cycle recirculating cooling systems, new offshore oil and 
gas extraction facilities would not be subject to Phase I requirements 
based on closed-cycle recirculating cooling systems.

[[Page 68475]]

Specifically, new offshore oil and gas extraction facilities would not 
have to meet requirements equivalent to Sec.  125.84(b)(1) (requiring 
that a facility reduce intake flow to a level commensurate with a 
closed-cycle recirculating cooling system) and Sec.  125.84(d)(1) 
(Track II requirements using closed-cycle recirculating cooling systems 
as a baseline).
    EPA is proposing to exclude new seafood processing vessels from the 
proposed national requirements. Data available to the Agency indicate 
that given the relatively low cooling water flows used by these 
vessels, the propensity for reduced intake of fish or debris due to the 
vessel's speed in relation to the intake's orientation and intake 
velocity, and their highly mobile character, these vessels are not 
likely to cause significant adverse environmental impacts. Further, 
data available to the Agency has not clearly identified available 
technologies that would reduce entrainment for such vessels. In 
addition, EPA is proposing to exclude new offshore liquified natural 
gas import terminals from the proposed national requirements. Such 
facilities withdraw water primarily for warming (not cooling) purposes, 
to heat liquified natural gas to temperatures at which it becomes a gas 
and can enter the natural gas distribution pipelines. Thus, it appears 
that these facilities would not meet the 25 percent exclusive cooling 
water use threshold, and would therefore be beyond the scope of section 
316(b). Seafood processing vessels and new offshore liquified natural 
gas import terminals would continue to be subject to any requirements 
for their cooling water intake structures established by permit 
Directors on a case-by-case basis using best professional judgment.
    EPA requests comment on all aspects of this proposed approach.

B. Economic Practicability

    The legislative history of section 316(b) indicates that the term 
``best technology available'' should be interpreted as ``best 
technology available commercially at an economically practicable 
cost.'' \40\ This interpretation reflects congressional concern that 
the application of best technology available should not impose an 
impracticable and unbearable economic burden. Thus, EPA has conducted 
extensive analyses of the economic impacts of this proposed rule and 
the co-proposed options discussed above, using an integrated energy 
market model (the IPM) and an analysis of market costs and residential 
rates for the energy sector, and a discounted cash flow analysis model 
for the facility, firm, and market levels for manufacturers. For a 
complete discussion of these analyses, please refer to section VIII of 
this preamble or the Economic Analysis in support of this proposed rule 
(DCN 7-0002).
---------------------------------------------------------------------------

    \40\ See 118 Cong. Rec 33,762 (1972), reprinted in 1 Legislative 
History of the Water Pollution Control Act Amendments of 1972, at 
264 (1973)(Statement of Representative Don H. Clausen).
---------------------------------------------------------------------------

    EPA believes that the requirements of this proposed rule reflect 
the best technology available at an economically practicable cost. EPA 
examined the effects of the proposed rule's compliance costs on 
capacity, generation, variable production costs, prices, net income, 
and other measures, both at the market and facility levels. In 
addition, the other economic analyses conducted by EPA showed that the 
costs for this proposed rule would be economically practicable.
    EPA believes that a consideration of the relationship of costs to 
environmental benefits is an important component of economic 
practicability. As discussed in section VIII.C of the proposed Phase I 
rule (65 FR 49094), EPA has long recognized that there should be some 
reasonable relationship between the cost of cooling water intake 
structure control technology and the environmental benefits associated 
with its use. EPA requests comment on the relationship of costs to 
environmental benefits of this proposed rule.

C. What Is the Proposed Role of Restoration and Trading?

1. What Is the Proposed Role of Restoration?
    Under today's proposed rule, consistent with the Phase II 
regulation, EPA would provide Phase III existing facilities with the 
option to use restoration under compliance alternatives Sec.  
125.103(a)(2), (3), and (5) where the performance of the restoration 
measures (the production and increase of fish and shellfish in the 
facility's waterbody or watershed, including maintenance of community 
structure and function), would be substantially similar to that which 
would have been achieved if the facility reduced its impingement 
mortality and entrainment through the use of design and construction 
technologies and/or operational measures, to meet the applicable 
performance standards. The role of restoration under this proposed rule 
is to provide additional flexibility to facilities in complying with 
the rule by eliminating or significantly offsetting the adverse 
environmental impact caused by the operation of a cooling water intake 
structure. Restoration measures that increase fish and shellfish in an 
impacted waterbody or watershed and would result in performance 
substantially similar to that which would otherwise be achieved through 
reductions in impingement mortality and entrainment further the goal of 
minimizing adverse environmental impact while offering additional 
flexibility to both permitting authorities and facilities. Restoration 
measures may include such activities as removal of barriers to fish 
migration, reclamation of degraded aquatic organism habitat, or 
stocking of aquatic organisms.
    Restoration measures have been used at existing facilities as one 
of many tools to implement section 316(b) on a case-by-case, best 
professional judgment basis to compensate for the death and injury of 
fish and other aquatic organisms caused by the cooling water intake 
structure. Under today's proposed rule, a Phase III existing facility 
could utilize restoration measures either in lieu of or as a supplement 
to design and construction technologies and/or operational measures. 
For example, a facility could demonstrate to the Director that velocity 
controls are the most feasible technology choice for the facility but 
that, when used on their own, the velocity controls are insufficient to 
meet the applicable performance standards at Sec.  125.103(b). The 
facility could then, in conjunction with the use of velocity controls, 
implement restoration measures to increase the fish and shellfish 
productivity of the waterbody in order to meet the performance 
standards at Sec.  125.103(b). Another facility could demonstrate to 
the Director that restoration measures alone achieve the greatest 
compliance with the performance standards. A facility could 
alternatively request a site-specific determination of best technology 
available under Sec.  125.103(a)(5) and use restoration measures to 
meet the alternate requirements. Facilities that are currently 
utilizing restoration measures to comply with their existing section 
316(b) requirements may use these measures to comply with the 
performance standards at Sec.  125.103(b) or site-specific requirements 
at Sec.  125.103(a)(5). However, restoration measures that are required 
under other statutory provisions or regulations (e.g., CWA section 404) 
could not be used to comply with today's proposed rule.
    Facilities that propose to use restoration measures would need to 
demonstrate to the Director that they evaluated the use of design and

[[Page 68476]]

construction technologies and operational measures and determined that 
the use of restoration measures is appropriate because meeting the 
applicable performance standards or requirements through the use of 
other technologies is less feasible, less cost-effective, or less 
environmentally desirable than meeting the standards in whole or in 
part through the use of restoration measures. Facilities also would 
need to demonstrate that the restoration measures they plan to 
implement, alone, or in combination with design and construction 
technologies and/or operational measures, would produce ecological 
benefits (production of fish and shellfish) at a level that is 
substantially similar to the level that would be achieved through 
compliance with the applicable impingement mortality and/or entrainment 
performance standards under Sec.  125.103(b), or alternative site-
specific requirements under Sec.  125.103(a)(5). In other words, 
restoration measures would have to replace the fish and shellfish lost 
to impingement mortality and entrainment to the extent the loss would 
have been reduced by otherwise applicable requirements, either as a 
substitute or as a supplement to reducing impingement mortality and 
entrainment through design and control technologies and/or operational 
measures. While the species makeup of the replacement fish and 
shellfish would not have to be exactly the same as that of the 
impingement mortality and entrainment losses, the Director would have 
to make a determination that the net effect is to produce a level of 
fish and shellfish in the waterbody that is ``substantially similar'' 
to that which would result from meeting the performance standards 
through design and construction technologies and/or operational 
measures alone. The proposed rule would require that a facility use an 
adaptive management method for implementing restoration measures 
because the performance of restoration projects must be regularly 
monitored and potentially adjusted to ensure the projects achieve their 
objectives (see 67 FR 17146-17148 and 68 FR 13542).
    The proposed rule also would require that restoration projects 
which replace the lost fish and shellfish with a different species mix 
(``out of kind'' restoration) be based on a watershed approach to 
restoration planning. The boundaries of a ``watershed'' should be 
guided by the cataloging unit of the ``Hydrologic Unit Map of the 
United States'' (USGS, 1980), although it may be appropriate to use 
another watershed or waterbody classification system developed at the 
State or local level if such a system compares favorably in level of 
detail. For example, in coastal systems that support migratory fish, a 
coastal waterbody that transects a number of watersheds may be the most 
appropriate unit for planning restoration.

Legal Authority for Restoration

    While the Phase I rule also authorized use of restoration measures, 
today's proposed rule includes additional regulatory controls on the 
use of restoration measures to ensure that they are used appropriately 
by existing facilities to comply with the applicable performance 
requirements or site specific alternative requirements. For example, as 
described above, restoration measures are authorized only after a 
facility demonstrates to the permitting authority that it has evaluated 
other design and construction technologies and operational measures and 
determined that they are less feasible, less cost effective, or less 
environmentally desirable than meeting the performance standards or 
alternative site-specific requirements in whole or in part through the 
use of restoration measures. The facility must also demonstrate that 
the proposed restoration measures will produce ecological benefits 
(i.e., the production of fish and shellfish for the facility's 
waterbody or watershed, including maintenance of community structure 
and function) at a level that is substantially similar to the level a 
facility would achieve through compliance with the applicable 
performance standards or alternative site-specific requirements. 
Further, the permitting authority must review and approve the 
restoration plan to determine whether the proposed restoration measures 
will meet the applicable performance standards or site specific 
alternative requirements. Consequently, the restoration provisions of 
today's proposed rule are designed to minimize adverse environmental 
impact to a degree that is comparable to the other technologies on 
which the rule is based.
    The use of restoration to meet the requirements of section 316(b) 
is consistent with the goals of the Clean Water Act; measures that 
restore fish and shellfish to compensate for those that are impinged 
and entrained further the objective of the Clean Water Act ``'to 
restore, maintain, and protect the biological integrity of the nation's 
waters.'' 33 U.S.C. 1251(a) (emphasis added). It is also consistent 
with EPA's and States' past practices in implementing section 316(b) in 
individual permit decisions. For at least twenty years, EPA and States 
have authorized existing facilities to comply with section 316(b) 
requirements, at least in part, through the use of restoration 
measures. For example, the Chalk Point Generating Station, located on 
the Patuxent River in Prince George's County, Maryland constructed a 
fish rearing facility in partial compliance of its section 316(b) 
obligations (DCN 1-5023-PR).
    Although the United States Court of Appeals for the Second Circuit 
recently remanded the portion of EPA's Phase I new facility rule that 
authorized restoration measures to meet that rule's requirements, EPA 
believes that portion of the decision should not apply to this Phase 
III proposed rulemaking. Indeed, the Second Circuit explicitly stated 
that ``[i]n no way [does it] mean to predetermine the factors and 
standard applicable to Phase II and III of the rulemaking.'' 
Riverkeeper v. EPA, slip op. at 12, note 13 (2nd Cir. Feb. 3, 2004). 
This is probably because there are important differences between new 
and existing facilities that warrant interpreting section 316(b) more 
broadly to give existing facilities additional flexibility to comply 
with section 316(b). As noted above, restoration measures have been 
used to comply with section 316(b) limits at existing facilities for 
several years because of the more limited availability of other 
technologies for existing facilities. Costs to retrofit an existing 
facility to install a ``hard'' technology can be much higher than costs 
to install one at the time a facility is constructed, and those costs 
can vary considerably from site to site. Thus, the range of 
technologies that are ``available'' to existing facilities to meet the 
performance standards is narrower than the range of technologies 
available to new facilities.
    In recognition of the vast differences between existing and new 
facilities, Congress established separate sections in the Clean Water 
Act for establishing discharge limitations on existing and new 
facilities. Effluent limitations guidelines for existing facilities are 
established under sections 301 and 304, whereas new source performance 
standards are established under section 306. Those sections set out two 
distinct sets of factors for developing effluent limitations guidelines 
for existing facilities and new source performance standards for new 
facilities. Notably, there are only two factors explicitly stated in 
section 306 for the Administrator to consider in establishing new 
source performance standards--cost and non-water quality

[[Page 68477]]

impacts, whereas for existing facilities Congress calls upon EPA to 
consider a much broader range of factors in section 304(b)(2)(b): the 
age of equipment and facilities involved, the process employed, the 
engineering aspects * * * of various types of control techniques, 
process changes, the cost of achieving such effluent reduction, non-
water quality environmental impacts (including energy requirements), 
and such other factors as [EPA] deems appropriate. This list reflects 
the wide range of facility characteristics and circumstances that can 
influence the feasibility and availability of a particular technology 
across a particular industry. Existing facilities generally face more 
and different problems than new facilities because of the technological 
challenges and high costs associated with retrofitting as compared to 
building a new facility. Indeed, by including the phrase ``and such 
other factors as [EPA] deems appropriate,'' Congress made certain that 
EPA would have sufficient flexibility in establishing limitations for 
existing facilities to consider all relevant factors. For several other 
reasons, EPA believes the Second Circuit decision is not binding on 
this Phase III proposed rule. First, section 316(b) requires the design 
of a cooling water intake structure to reflect the best technology 
available to ``minimize adverse environmental impact.'' The phrase 
``minimize adverse environmental impact'' is not defined in section 
316(b). For the Phase III proposed rule, EPA interprets this phrase to 
allow facilities to minimize adverse environmental impact by reducing 
impingement mortality and entrainment, or to minimize adverse 
environmental impact by compensating for those impacts after the fact. 
Section 316(b) does not explicitly state when the adverse environmental 
impact of cooling water structures must be minimized--that is whether 
they must be prevented from occurring in the first place or compensated 
for after the fact or where the minimization most occurs--at the point 
of intake or at some other location in the same watershed. Therefore, 
under Chevron, EPA is authorized to define ``minimize'' to authorize 
restoration at existing facilities to minimize the effects of adverse 
environmental impact.
    In another context under the Clean Water Act, EPA has interpreted 
authority to ``minimize adverse effects'' as including authority to 
require environmental restoration. Section 404 of the CWA authorizes 
the Army Corps of Engineers to issue permits for discharges of dredged 
or fill material into waters of the United States. EPA was granted 
authority to establish regulations containing environmental guidelines 
to be met by the Corps in issuing section 404 permits. See CWA section 
404(b)(1). Current regulations, in place since 1980, prohibit a 
discharge unless, among other requirements, all practicable steps are 
taken to avoid, minimize and mitigate for the environmental effects of 
a discharge. See 40 CFR 230.10. Of particular relevance here, the 
regulations require that steps be taken to ``minimize potential adverse 
effects of the discharge on the aquatic ecosystem'' (40 CFR 230.10(d)). 
EPA has specifically defined minimization steps to include 
environmental restoration. See 40 CFR 230.75(d) (``Habitat development 
and restoration techniques can be used to minimize adverse impacts and 
to compensate for destroyed habitat'').
    Moreover, at the time of the Phase I litigation, EPA had not 
interpreted the term ``reflect'' in section 316(b), and therefore, the 
Second Circuit did not consider its meaning in determining whether 
restoration could be used as a design technology to meet the Phase I 
rule requirements. Section 316(b) requires that ``the location, design, 
construction, and capacity of cooling water intake structures reflect 
the best technology available for minimizing adverse environmental 
impact.'' The term ``reflect'' is significant in two respects. First, 
it indicates that the design, location, construction and capacity of 
the cooling water intake structure itself must be based on the best 
technology available for such structures. This authorizes EPA to 
identify technologies that can be incorporated into the physical 
structure of the intake equipment. It also indicates that the choice of 
what actually is the best physical configuration of a particular 
cooling water intake structure can take into account, i.e., reflect, 
other technologies--and their effects--that are not incorporated into 
the structure itself. For example, barrier nets are not incorporated 
into the physical design of the cooling water intake structure, but 
their use--and effectiveness--influences the physical design of the 
cooling water intake structure. Another relevant example is the 
technology known as ``closed-cycle'' cooling. Although this technology 
is physically independent of the cooling water intake structure, it 
directly influences decisions regarding the design capacity of the 
cooling water intake structure: as more cooling water is recycled, less 
needs to be withdrawn.
    Both barrier nets and closed-cycle cooling are considered 
``design'' technologies.'' Similarly, properly designed restoration 
measures can be best technologies available that can influence the 
design of the physical cooling water intake structure. To put it 
another way, for purposes of minimizing adverse environmental impact, 
requirements for cooling water intake structures reflect a variety of 
best technologies available, which EPA construes to include restoration 
measures. A dry cooling system is another example of a technology that 
although physically independent of the cooling water intake structure 
is nonetheless considered an acceptable method to minimize adverse 
environmental impacts. In fact, since a dry cooling system uses air as 
a cooling medium, it uses little or no water, dispensing altogether 
with the need for a cooling water intake structure.
    EPA has discretion to characterize restoration measures as 
technologies for purposes of section 316(b). Section 316(b) does not 
define either the phrase ``cooling water intake structure'' or the term 
``technology'' and, therefore, leaves their interpretation to EPA. EPA 
has defined the phrase cooling water intake structure in today's rule 
to mean the total physical structure and any associated waterways used 
to withdraw cooling water from waters of the United States. This 
definition embraces elements both internal and external to the intake 
equipment. EPA did not define the term technology in today's proposed 
rule, but looked for guidance to section 304(b), which the Second 
Circuit has recognized can help illuminate section 316(b). Section 
301(b)(2) best available technology limitations are based on factors 
set forth in section 304(b). Section 304(b), while not using the term 
technology, discusses the ``application of the best control measures 
and practices achievable including treatment techniques, process and 
procedure innovations, operating methods, and other alternatives.'' 
This is a broad, nonexclusive list. Indeed, BAT effluent limitations 
guidelines under this authority have been based on a vast array of 
treatment techniques, operation practices (including chemical 
substitution), and management practices. See 40 CFR part 420 (effluent 
guidelines for concentrated animal feeding operations); 40 CFR part 
430, subparts B & E (effluent guideline for pulp and paper industry). 
See also 62 FR 18504 (April 15, 1998).
    Employing this broad concept of technology, in today's proposed 
rule EPA has determined that the design of cooling water intake 
structures may reflect technologies relating to the restoration of fish 
and shellfish in the

[[Page 68478]]

waters from which cooling water is withdrawn. Restoration is not 
included in the definition of ``design and construction technology'' in 
today's proposed rule so as to distinguish restoration from ``hard'' 
technologies for purposes of the proposed rule. Under the regulatory 
scheme of the proposed rule, restoration is treated differently than 
other technologies in several respects, all of which are to help ensure 
that restoration projects achieve substantially similar performance as 
design and construction technologies and/or operational measures. When 
these restoration technologies are used they must produce ecological 
benefits (the production of fish and shellfish for a facility's 
waterbody or watershed, including maintenance of community structure 
and function) at a level that is substantially similar to the level the 
facility would achieve by using other design and construction 
technologies and/or operational measures to achieve the applicable 
performance standards or alternative site-specific performance 
requirements in Sec.  125.103. In other words, the operation of the 
cooling water intake structure together with these restoration 
technologies will achieve the overall performance objective of the 
statute: To minimize the adverse environmental impact of withdrawing 
cooling water. For facilities using this authority, their hardware 
decisions for the cooling water intake structure thus take into 
account--or reflect--the effects of restoration technology, as well as 
other technologies external to the intake structure itself.
    EPA acknowledges that in 1982, when Congress was considering 
substantial amendments to the Clean Water Act, EPA testified in support 
of a proposed amendment to CWA section 316(b) that would have expressly 
authorized the use of restoration measures as a compliance option. 
According to the Second Circuit, this suggested that EPA may have 
interpreted section 316(b) at that time as not authorizing restoration 
measures to minimize the adverse environmental impact of cooling water 
intake structures. In EPA's view, the Second Circuit gave undue weight 
to that testimony, particularly because it was provided before the 
Supreme Court's decision in Chevron U.S.A. v. Natural Resources Defense 
Council, 467 U.S. 837 (1984), which gave administrative agencies 
latitude to fill in the gaps created by ambiguities in statutes the 
agencies have been charged by Congress to implement. For at least 
twenty years, EPA and States have authorized existing facilities to 
comply with section 316(b) requirements, at least in part, through the 
use of restoration measures. Additionally, since 1982 EPA has gathered 
substantially more data to inform its judgment regarding cooling water 
intake structures, the environmental impact resulting from them, and 
various technologies available to reduce impingement mortality and 
entrainment. Finally, EPA notes that, in contrast to water quality 
based effluent limitations that are included in NPDES permits to meet 
water quality standards, the required performance of restoration 
measures under this proposed rule is not tied to conditions in the 
waterbody. Rather it is tied directly to the performance standards, 
just as is the performance of the other technologies that facilities 
may use to meet the standards. While the design and operation of 
restoration measures will necessarily be linked to conditions in the 
waterbody (as is also the case for ``hard'' technologies) the 
performance standards that restoration measures must meet are not.
2. What Is the Role of Trading in Today's Proposed Rule?
    Under today's proposed rule, if a State demonstrates to the 
Administrator that it has adopted alternative regulatory requirements 
in its NPDES program that will result in environmental performance 
within a watershed that is comparable to the reductions of impingement 
mortality and entrainment that would otherwise be achieved under Sec.  
125.103, the Administrator must approve such alternative requirements 
(see Sec.  125.100(c)). A trading program could be a part of these 
alternative regulatory requirements.
    Trading under other EPA programs has been shown to provide 
opportunities for regulatory compliance at reduced costs. EPA's Office 
of Water's Water Quality Trading Policy, published in January 2003 (see 
DCN 6-5002), fully supports trading nutrients and sediment and adopts a 
case-by-case approach to evaluating proposals to trade other 
pollutants. Trading in the context of section 316(b) raises many 
complex issues, for example, how to establish appropriate units of 
trade and how to measure these units effectively given the dynamic 
nature of the populations of aquatic organisms subject to impingement 
mortality and entrainment. Should a State choose to propose a trading 
program under Sec.  125.100(c), EPA would evaluate the State's proposal 
on a case-by-case basis to ensure the program complies with the 
regulatory requirement--that it will result in environmental 
performance within a watershed that is comparable to the reductions of 
impingement mortality and entrainment that would otherwise be achieved 
under the requirements established at Sec.  125.103. For more 
information on approaches to trading under section 316(b) and 
considerations, see the Phase II proposed rule at 67 FR 17170-17173; 
April 9, 2002.
    As in Phase II, questions have been raised by stakeholders in the 
context of EPA's section 316(b) rulemakings as to whether these 
proposed requirements would allow for trading of aquatic organisms for 
pollutant discharges. EPA is concerned that such a program may 
introduce comparability and implementation challenges that would be 
difficult to overcome, and therefore, EPA does not expect that such a 
program would work within the framework of today's proposed rule. In 
addition, EPA does not believe that it is possible at this time to 
quantify with adequate certainty the potential effects on ecosystem 
function, community structure, biodiversity, and genetic diversity of 
such trades, especially when threatened and/or endangered species are 
present. Based on the current state of the science in aquatic community 
ecology and ecological risk assessment, States wishing to develop 
trading programs in the context of section 316(b) would be better off 
focusing on programs based on metrics of comparability between fish and 
shellfish gains and losses among trading facilities, rather than the 
much more complex metrics that would be necessary for comparability 
among fish and shellfish losses on the one hand, and pollutant 
reductions on the other hand (69 FR 41609). EPA requests comment on the 
potential role of trading in the context of today's proposed rulemaking 
and possible approaches for developing a trading program.

VII. Implementation

    As in Phase I and II, proposed section 316(b) requirements for 
Phase III existing facilities and new offshore oil and gas extraction 
facilities would be implemented through the NPDES permit program. 
Today's proposal would establish implementation requirements consistent 
with the Phase II final rule for Phase III existing facilities. This 
proposed rule would also establish implementation requirements for new 
offshore oil and gas extraction facilities that are generally 
consistent with Phase I requirements. Today's proposal would establish 
application requirements for Phase III existing facilities under 40 CFR 
122.21 and proposed Sec.  125.104, monitoring requirements under

[[Page 68479]]

proposed Sec.  125.105, and record keeping and reporting requirements 
under proposed Sec.  125.106. For new offshore oil and gas extraction 
facilities, today's proposal would establish application requirements 
consistent with 40 CFR 122.21 and proposed Sec.  125.136, monitoring 
requirements under proposed Sec.  125.137, and record keeping and 
reporting requirements consistent with proposed Sec.  125.138. The 
proposed regulations also require the Director to review application 
materials submitted by each regulated facility and include monitoring 
and record keeping requirements in the permit (Sec.  125.107, Sec.  
125.139).

A. When Would the Proposed Rule Become Effective?

    If promulgated as proposed, this proposed rule would become 
effective 60 days after the final rule is published in the Federal 
Register. Phase III existing facilities subject to today's proposed 
rule would need to comply with the Subpart K requirements when an NPDES 
permit containing requirements consistent with Subpart K is issued to 
the facility. Under existing NPDES program regulations, this would 
occur when an existing NPDES permit is reissued or, when an existing 
permit is modified or revoked and reissued. For facilities whose 
permits are expiring, EPA recognizes that facilities will need a 
reasonable time period to conduct baseline studies and develop and 
implement an appropriate suite of control technologies and this is 
provided for in Sec.  125.104(a)(2)(ii). Under today's proposed rule, 
new offshore oil and gas extraction facilities would need to comply 
with the Subpart N requirements when an NPDES permit containing 
requirements consistent with Subpart N is issued to the facility (Sec.  
125.132).

B. What General Information Would I Be Required To Submit to the 
Director When I Apply for My Reissued NPDES Permit?

    The NPDES regulations that establish the application process at 
Sec.  122.21 generally require that facilities currently holding a 
permit submit information and data 180 days prior to the end of the 
permit term, which is five years. Under today's proposed rule, Phase 
III existing facilities and new offshore oil and gas extraction 
facilities would be required to submit the information that is required 
under Sec.  122.21 of today's proposed rule with their application for 
permit issuance or reissuance.
    Today's proposed rule would modify regulations at Sec.  122.21 to 
require existing Phase III facilities and new offshore oil and gas 
extraction facilities to prepare and submit some of the same 
information required for new Phase I and existing Phase II facilities. 
The proposed application requirements would require owners or operators 
of all Phase III existing facilities to submit two general categories 
of information when they apply for a reissued NPDES permit. The general 
categories of information would include (1) physical data to 
characterize the source waterbody in the vicinity where the cooling 
water intake structure(s) is/are located, and (2) data to characterize 
the design and operation of the cooling water intake structures. As in 
Phase II, Phase III existing facilities would not be required to submit 
the Source Water Baseline Biological Characterization Data required 
under Sec.  122.21(r)(4). However, new offshore oil and gas extraction 
facilities may be required to submit the Source Water Baseline 
Biological Characterization Data depending on whether they are fixed or 
non-fixed facilities. Non-fixed facilities would be exempt from the 
requirement. Specific data requirements for the Source Water Baseline 
Biological Characterization Data are described later in this section. 
Studies to be submitted by both Phase III existing facilities and new 
offshore oil and gas extraction facilities are described below.
1. Source Water Physical Data (Sec.  122.21(r)(2))
    Under the requirements at Sec.  122.21, Phase III existing 
facilities and new offshore oil and gas extraction facilities subject 
to this proposed rule are required to provide the source water physical 
data specified at Sec.  122.21(r)(2) in their application for a 
reissued permit. These data are needed to characterize the facility and 
evaluate the type of waterbody and species potentially affected by the 
cooling water intake structure. The Director would use this information 
to evaluate the appropriateness of the design and construction 
technologies proposed by the applicant.
    The applicant for an existing facility or a new fixed offshore oil 
and gas extraction facility would be required to submit the following 
specific data: (1) A narrative description and scale drawings showing 
the physical configuration of all source waterbodies used by the 
facility, including areal dimensions, depths, salinity and temperature 
regimes, and other documentation; (2) an identification and 
characterization of the source waterbody's hydrological and 
geomorphological features, as well as the methods used to conduct any 
physical studies to determine the intake's zone of influence and the 
results of such studies; and (3) locational maps. For new non-fixed 
(mobile) offshore oil and gas extraction facilities this provision 
requires only some of the location information and not the source water 
physical data required for Phase III existing facilities and new fixed 
offshore oil and gas extraction facilities.
    EPA recognizes that mobile facilities may not always know where 
they will be operating during the permit term, and the requirement in 
(r)(2)(iv) is not meant to restrict them only to locations identified 
in the permit application. However, EPA expects that permit applicants 
will provide, based on available information, their best estimate as to 
where they will be operating during the permit term, at whatever level 
of detail they can. EPA requests comment on this requirement.
2. Cooling Water Intake Structure Data (Sec.  122.21(r)(3))
    Phase III existing facilities and new offshore oil and gas 
extraction facilities would be required to submit the cooling water 
intake structure data specified at Sec.  122.21(r)(3) to characterize 
the cooling water intake structure and evaluate the potential for 
impingement and entrainment of aquatic organisms. Note that Sec.  
122.21(r)(3)(ii)--latitude and longitude of each intake structure--
would not be applicable to non-fixed (mobile) offshore oil and gas 
extraction facilities. Information on the design of the intake 
structure and its location in the water column would allow the permit 
writer to evaluate which species or life stages would potentially be 
subject to impingement mortality and entrainment. A diagram of the 
facility's water balance would be used to identify the proportion of 
intake water used for cooling, make-up, and process water. The water 
balance diagram also provides a picture of the total flow in and out of 
the facility, allowing the permit writer to evaluate compliance with 
the performance standards or requirements.
    The applicant would be required to submit the following specific 
data: (1) A narrative description of the configuration of each of its 
cooling water intake structures and where they are located in the 
waterbody and in the water column; (2) latitude and longitude in 
degrees, minutes, and seconds for each of its cooling water intake 
structures (not applicable to new non-fixed (mobile) offshore oil and 
gas extraction facilities); (3) a narrative description of the 
operation of each of the cooling water intake structures, including 
design intake flows, daily

[[Page 68480]]

hours of operation, number of days of the year in operation, and 
seasonal operation schedules, if applicable; (4) a flow distribution 
and water balance diagram that includes all sources of water to the 
facility, recirculating flows, and discharges; and (5) engineering 
drawings of the cooling water intake structure.
3. Cooling Water System Description (Sec.  122.21(r)(5)) (Phase III 
Existing Facilities Only)
    Phase III existing facilities would be required to submit the 
cooling water system data specified at Sec.  122.21(r)(5) to 
characterize the operation of cooling water systems and their 
relationship to the cooling water intake structure(s) at the facility. 
They would also be required to submit a narrative description of the 
proportion of design intake flow that is used in the system, the number 
of days of the year that the cooling water system is in operation, and 
any seasonal changes in the operation of the system, if applicable. The 
facility would also submit design and engineering calculations prepared 
by a qualified expert, such as a professional engineer, and supporting 
data to support the narrative description. This information would be 
expected to be used by the applicant and the Director in determining 
the appropriate standards that can be applied to the Phase III 
facility.

C. Phase III Existing Facility Implementation

    In this proposed rule, a Phase III existing facility as defined by 
any of the three co-proposed options would choose one of the following 
five compliance alternatives for establishing best technology available 
for minimizing adverse environmental impact at the site (see Sec.  
125.103(a)(1-5)):
    (1) Demonstrate that it has reduced its flow commensurate with a 
closed-cycle recirculating system and therefore already meets the 
performance standards to reduce impingement mortality and entrainment. 
Or, a facility may demonstrate that it has already reduced its design 
intake velocity to 0.5 feet per second and therefore meets the 
performance standards to reduce impingement mortality only;
    (2) Demonstrate that existing design and construction technologies, 
operational measures, and/or restoration measures already meet the 
performance requirements specified under Sec.  125.103(b) and the 
restoration requirements in (c), as applicable;
    (3) Demonstrate that it has selected and installed design and 
construction technologies, operational measures, and/or restoration 
measures that will, in combination with any existing design and 
construction technologies, operational measures, and/or restoration 
measures, meet the performance standards specified under Sec.  
125.103(b) and the restoration requirements specified in Sec.  
125.103(c), as applicable;
    (4) Demonstrate that it has installed and properly operates and 
maintains an approved design and construction technology in accordance 
with Sec.  125.108(a); or propose a technology for approval in 
accordance with Sec.  125.108(b); or,
    (5) Demonstrate that a site-specific determination of best 
technology available for minimizing adverse environmental impact is 
appropriate for its site in accordance with Sec.  125.103(a)(5).
    The application, monitoring, record keeping, and reporting 
requirements for each of these compliance alternatives are detailed in 
the following sections.
1. As an Existing Phase III Facility, What Additional Information Would 
I Submit to the Director When I Apply for My Reissued NPDES Permit?
    In addition to Sec.  122.21 described above, the facility would be 
required to submit the information required under Sec.  125.104, as 
appropriate. This information includes the Comprehensive Demonstration 
Study and its seven components as discussed in this section. The seven 
components include the following: Proposal for Information Collection; 
Source Waterbody Flow Information; Impingement Mortality and/or 
Entrainment Characterization Study; Technology Compliance and 
Assessment Information; Restoration Plan; Information to Support Site-
specific Determination of Best Technology Available for Minimizing 
Adverse Environmental Impact; and Verification Monitoring Plan.
    Under today's proposed rule, if a Phase III existing facility's 
permit expires before 4 years after the publication date of the final 
rule, the facility may request that the Director establish a schedule 
for the facility to submit the information required as expeditiously as 
practicable, but not later than 3 years and 180 days after publication 
of the final rule. Between the time the facility's existing permit 
expires and the time an NPDES permit containing requirements consistent 
with Subpart K is issued to the facility, the best technology available 
to minimize adverse environmental impact would continue to be based on 
the Director's best professional judgment.
    The Proposal for Information Collection component of Sec.  125.104 
should be submitted to the Director for review and comment prior to the 
start of information collection activities. For a typical facility that 
plans to install a new technology, it is estimated that a facility 
would need to submit this Proposal for Information Collection about 
fifteen (15) months prior to the submission of the remainder of the 
required information, which in turn would need to be submitted about 
twenty-one (21) months prior to the expiration of its current permit. 
This approximate timing is based on the sequential Comprehensive 
Demonstration Study requirements and the estimated level of effort 
required to complete the studies and allow time for the Director's 
review and approval. The timing provided in this section is for 
illustrative purposes only and represents a schedule that the average 
facility may need to follow to meet the deadlines established in 
today's proposed rule. Some facilities may require more, or less time 
to perform the studies and prepare the application requirements. All 
facilities, except those that choose to comply with the proposed rule 
by reducing intake capacity to a level commensurate with a closed-cycle 
recirculating system in accordance with Sec.  125.103(a)(1)(i), or by 
adopting an approved technology in accordance with Sec.  125.103(a)(4) 
would submit a Proposal for Information Collection for review and 
comment by the Director (Sec.  125.104(a)(1)). Facilities that comply 
with impingement mortality requirements by reducing intake velocity to 
0.5 feet per second or less in accordance with Sec.  125.103(a)(1)(ii) 
will only need to submit a Comprehensive Demonstration Study, including 
a Proposal for Information Collection, for entrainment reduction 
requirements, if applicable. The Proposal for Information Collection 
requirements are detailed later in this section. Figure 1 presents an 
example of a possible time frame a facility may follow in preparing and 
submitting application components.
    Following submission of the Proposal for Information Collection, 
the Director will review and provide comments on the proposal. During 
this time, the facility may proceed with planning, assessment, and data 
collection activities in fulfillment of Comprehensive Demonstration 
Study requirements. The Director is encouraged to provide comments 
expeditiously (i.e., within 60 days) so the permit applicant can make

[[Page 68481]]

responsive modifications to its information gathering activities.
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    It is assumed that most facilities would need approximately one 
year to complete the studies outlined in the Proposal for Information 
Collection. These would be completed at least 180 days prior to the end 
of the current permit term, by which time the remainder of required 
application information would be submitted. If the facility believed it 
would require more than one year to complete studies described in the 
Proposal for Information Collection, the facility would be encouraged 
to consult with the Director.
    After the first permit containing requirements consistent with 
Subpart K is issued, facilities may submit a request to their Director 
soliciting a reduced information collection effort for subsequent 
permit applications in accordance with Sec.  125.104(a)(3), which 
allows facilities to demonstrate that the conditions at their facility 
and within the waterbody in which their intake is located remain 
substantially unchanged since their previous permit application. The 
request for reduced cooling water intake structure and waterbody 
application information would contain a list of and justification for 
each information item in Sec.  122.21(r) and Sec.  125.104(b) that has 
not changed since the previous permit application. The applicant would 
submit this request at least one year prior to the expiration of the 
current permit term and the Director is required to act on the request 
within 60 days.
    The Director would review the information provided in the 
application including the information submitted in compliance with 
Sec.  122.21 and Sec.  125.104 and would confirm whether the facility 
should be regulated as an existing facility under these proposed 
regulations or as a new facility under regulations that were published 
on December 19, 2001 (66 FR 65256), and establish the appropriate 
requirements to be applied to the cooling water intake structure(s). 
Following review and approval of the permit application, the Director 
would develop a draft permit for public notice and comment. The comment 
period would allow the facility and other interested parties to review 
the draft permit conditions and provide comments to the Director. The 
Director would consider all public comments received on the draft 
permit and would develop a final permit based upon the application 
studies submitted and other information submitted during the comment 
period, as appropriate. The Director would incorporate the relevant 
requirements for the facility's cooling water intake structure(s) into 
the final permit.
    The information required under Sec.  125.104 would be identical 
under each of the three co-proposed regulatory options, with one 
exception. Under the regulatory option which defines facilities with 
design intakes flows 100 MGD or more located on tidal rivers, 
estuaries, or oceans or one of the Great Lakes as existing Phase III 
facilities, there would not be a requirement to collect the Source 
Waterbody Flow information described below, because this information is 
only relevant for facilities withdrawing water from freshwater rivers 
and streams or lakes and reservoirs. In addition, under this regulatory 
option there would not be any facilities required to meet only 
impingement mortality performance standards. Therefore, under this 
regulatory option all facilities except those that have met the 
applicable requirements in accordance with Sec.  125.103(a)(1)(i) or 
Sec.  125.103(a)(4) would be required to submit a Study for both the 
impingement mortality and entrainment reduction requirements, unless 
the facility had met the applicable requirements in Sec.  
125.103(a)(1)(ii), in which case it would be required to submit a Study 
for entrainment only. The following describes the proposed application 
requirements in more detail.
a. Comprehensive Demonstration Study (Sec.  125.104(b))
    Proposed application requirements at Sec.  125.104 would require 
all existing facilities except those deemed to have met the performance 
standard in Sec.  125.103(a)(1) (reduced intake capacity to a level 
commensurate with the use of a closed-cycle, recirculating cooling 
water system, or for facilities with impingement requirements only, 
reduce intake velocity to 0.5 feet per second or less) to perform and 
submit to the Director the results of a Comprehensive Demonstration 
Study, including data and detailed analyses to demonstrate that the 
facility will meet applicable requirements contained in Sec.  
125.103(b) or established pursuant to Sec.  125.103(a)(5).
    The proposed Comprehensive Demonstration Study has seven 
components.
     Proposal for Information Collection;
     Source Waterbody Flow Information;
     Impingement Mortality and/or Entrainment Characterization 
Study;
     Technology and Compliance Assessment Information;
     Restoration Plan;
     Information to Support Site-specific Determination of Best 
Technology Available for Minimizing Adverse Environmental Impact; and
     Verification Monitoring Plan.
    All Phase III existing facilities would not be required to submit 
each of these components of the Comprehensive Demonstration Study. 
Rather, required submittals for a facility would depend on the 
compliance alternative selected. All Phase III existing facilities, 
except those deemed to have met the performance standard in accordance 
with Sec.  125.103(a)(1) or Sec.  125.103(a)(4), would be required to 
submit a Proposal for Information Collection; Source Waterbody Flow 
Information whenever the intake is on a freshwater river or stream or a 
lake or reservoir; an Impingement Mortality and/or Entrainment 
Characterization Study; Technology and Compliance Assessment 
Information; and a Verification Monitoring Plan. Facilities complying 
in accordance with Sec.  125.103(a)(4) would be required to submit 
Technology and Compliance Assessment Information and a Verification 
Monitoring Plan. Only those Phase III existing facilities that propose 
to use restoration measures in whole or in part to meet the performance 
standards in Sec.  125.103(b) or site-specific requirements in Sec.  
125.103(a)(5) would be required to submit a Restoration Plan. Only 
those facilities that choose to demonstrate that a site-specific 
standard is appropriate for their site would be required to submit 
Information to Support Site-specific Determination of Best Technology 
Available for Minimizing Adverse Environmental Impact.

Proposal for Information Collection (Sec.  125.104(a))

    Before conducting any studies, the facility would be required to 
submit to the Director for review and approval, a proposal stating what 
information would be collected to support the Comprehensive 
Demonstration Study (see Sec.  125.104(b)(1)). This proposal would 
provide: (1) A description of the proposed and/or implemented 
technology(ies) and/or supplemental restoration measures to be 
evaluated; (2) a list and description of any historical studies 
characterizing impingement mortality and entrainment and/or the 
physical and biological conditions in the vicinity of the cooling water 
intake structures and their relevance to this proposed study. If the 
facility proposes to use existing data, it would demonstrate the extent 
to which the data are representative of current conditions and that the 
data were collected using appropriate quality assurance/quality control 
procedures;

[[Page 68483]]

(3) a summary of any past or ongoing (including voluntary) 
consultations with appropriate Federal, State, and Tribal fish and 
wildlife agencies that are relevant to this study and a copy of written 
comments received as a result of such consultation; and (4) a sampling 
plan for any new field studies proposed to be conducted in order to 
ensure that the facility has sufficient data to develop a 
scientifically valid estimate of impingement mortality and entrainment 
at the site. The sampling plan would document all methods and quality 
assurance/quality control procedures for sampling and data analysis. 
The sampling and data analysis methods proposed would be appropriate 
for a quantitative survey and would take into account the methods used 
in other studies performed in the source waterbody. The sampling plan 
would include a description of the study area (including the area of 
influence of the cooling water intake structure), and provide taxonomic 
identifications of the sampled or evaluated biological assemblages 
(including all life stages of fish and shellfish).
    The proposed rule does not specify particular timing requirements 
for the information collection proposal, but does require review of the 
proposal by the Director. In general, EPA expects that it would be 
submitted well in advance of the other permit application materials, so 
that if the Director determined that additional information was needed 
to support the application, the facility would have time to collect 
this information, including additional monitoring as appropriate. In 
some cases, however, where the facility intends to rely on existing 
data and there has been no change in conditions at the site since the 
last permit renewal, a long lead time might not be necessary. This 
would most likely be the case for subsequent permit renewals following 
the first renewal after the Phase III requirements go into effect.

Source Waterbody Flow Information

    Facilities under the co-proposed regulatory option that defines 
existing Phase III facilities as those with design intakes flows 100 
MGD or more located on tidal rivers, estuaries, or oceans, or one of 
the Great Lakes would not have a requirement to submit Source Waterbody 
Flow Information. Under either of the other co-proposed options, Phase 
III existing facilities with cooling water intake structures that 
withdraw cooling water from freshwater rivers or streams, except those 
deemed to have met the performance standard in Sec.  125.103(b) (in 
accordance with 125.103(a)(1)(i)), would be required to provide the 
mean annual flow of the waterbody and any supporting documentation and 
engineering calculations that allow a determination of whether they are 
withdrawing less than or greater than five (5) percent of the annual 
mean flow. This would provide information needed to determine which 
requirements would apply to the facility (see Sec.  125.103(b)(1) and 
(2)). Facilities seeking compliance in accordance with Sec.  
125.103(a)(1)(ii) would need this information to determine whether they 
have impingement mortality and entrainment requirements, or impingement 
mortality requirements only. The documentation might include either 
publicly available flow data from a nearby U.S. Geological Survey 
(USGS) gauging station or actual instream flow monitoring data 
collected by the facility. The waterbody flow should be compared with 
the total design flow of all cooling water intake structures at the 
regulated facility.
    Under the proposed requirements at Sec.  125.103(b)(3), Phase III 
existing facilities with cooling water intake structures that withdraw 
cooling water from a lake or reservoir and that propose to increase the 
facility's design intake flow would be required to submit a narrative 
description of the waterbody's thermal stratification and any 
supporting documentation and engineering calculations to show that the 
increased flow meets the requirement not to disrupt the natural thermal 
stratification or turnover pattern (where present) of the source water 
except in cases where the disruption is determined, in consultation 
with Federal, State or Tribal fish and wildlife management agencies, to 
not adversely affect the management of fisheries. Typically, this 
natural thermal stratification would be defined by the thermocline, 
which may be affected to a certain extent by the withdrawal of cooler 
water and the discharge of heated water into the system. In cases where 
the lake or reservoir remains stratified, the Director may also 
consider changes in the relative size of the water layers due to the 
changes in withdrawals and any subsequent impacts (e.g., change in 
dissolved oxygen, change in available habitat).

Impingement Mortality and/or Entrainment Characterization Study

    The proposed regulations would require that the facility submit the 
results of an Impingement Mortality and/or Entrainment Characterization 
Study in accordance with Sec.  125.104(b). This study would include: 
(1) Taxonomic identifications of those species of fish and shellfish 
and their life stages that are in the vicinity of the cooling water 
intake structure and are most susceptible to impingement and 
entrainment; (2) a characterization of these species of fish and 
shellfish and life stages, including a description of the abundance and 
temporal/spatial characteristics in the vicinity of the cooling water 
intake structure, based on the collection of a sufficient number of 
years of data to characterize annual, seasonal, and diel variations in 
impingement mortality and entrainment (e.g., related to climate/weather 
differences, spawning, feeding and water column migration); and (3) 
documentation of the current impingement mortality and entrainment of 
all life stages of fish and shellfish at the facility and an estimate 
of impingement mortality and entrainment under the calculation 
baseline.
    This documentation would include historical data that are 
representative of the current operation of the facility and of 
biological conditions at the site. Impingement mortality and 
entrainment samples to support the calculations required would be 
collected during periods of representative operational flows for the 
cooling water intake structure and the flows associated with the 
samples would be documented. In addition, this study would include an 
identification of species that are protected under Federal, State, or 
Tribal law (including threatened or endangered species) that might be 
susceptible to impingement and entrainment by the cooling water intake 
structure(s). The Director might coordinate a review of the list of 
threatened, endangered, or other protected species with the U.S. Fish 
and Wildlife Service, National Marine Fisheries Service, or other 
relevant agencies to ensure that potential impacts to these species 
have been addressed.
    The calculation baseline is defined at Sec.  125.102 as an estimate 
of impingement mortality and entrainment that would occur at the site 
assuming: (1) The cooling water intake system has been designed as a 
once-through system; (2) the opening of the cooling water intake 
structure is located at, and the face of the standard \3/8\inch mesh 
traveling screen is oriented parallel to, the shoreline near the 
surface of the source waterbody; and (3) the baseline practices, 
procedures, and structural configuration are those that the facility 
would maintain in the absence of any structural or operational 
controls, including flow or velocity reductions, implemented in whole 
or in part for the purposes of reducing impingement mortality and 
entrainment. The facility

[[Page 68484]]

may also choose to use its current level of impingement mortality and 
entrainment as the calculation baseline. EPA has previously referred to 
this as the ``as-built approach'' (69 FR 41576).
    Reductions in impingement mortality and entrainment from the 
calculation baseline as a result of any design and construction 
technologies and/or operational measures already implemented at the 
facility should be added to the reductions expected to be achieved by 
any additional design and construction technologies and operational 
measures that will be implemented in order to meet the applicable 
performance standards or site-specific requirements. In this case, the 
calculation baseline could be estimated by evaluating existing data 
from a facility nearby without impingement and/or entrainment control 
technology (if relevant) or by evaluating the abundance of organisms in 
the source waterbody in the vicinity of the intake structure that may 
be susceptible to impingement and/or entrainment. Additionally, if a 
portion of the total design intake flow is water withdrawn for a 
closed-cycle, recirculating cooling system (but flow is not 
sufficiently reduced to satisfy the compliance option in Sec.  
125.103(a)(1)(i)), such facilities would be able to use the reduction 
in impingement mortality and entrainment that is attributed to the 
reduction in flow in meeting the performance requirements in Sec.  
125.103.
    The calculation baseline may be estimated using: historical 
impingement mortality and entrainment data from the facility or from 
another facility with comparable design, operational, and environmental 
conditions; current biological data collected in the waterbody in the 
vicinity of the cooling water intake structure; or current impingement 
mortality and entrainment data collected at the facility. A facility 
could also request that the calculation baseline be modified to be 
based on a location of the opening of the cooling water intake 
structure at a depth other than at or near the surface if it can 
demonstrate to the Director that the other depth would correspond to a 
higher baseline level of impingement mortality and/or entrainment.

Technology and Compliance Assessment Information

    The Technology and Compliance Assessment Information required under 
Sec.  125.104(b)(4) consists of two parts: (1) The Design and 
Construction Technology Plan; and (2) the Technology Installation and 
Operation Plan. If a facility plans to utilize the compliance 
alternative in Sec.  125.103(a)(4), it need only submit the Technology 
Installation and Operation Plan (and the Verification Monitoring Plan 
under Sec.  125.104(b).) If the facility plans to utilize the 
compliance alternative in Sec.  125.103(a)(2) or (3) using design and 
construction technologies and/or operational measures (either existing 
or new), it would submit both the Design and Construction Technology 
Plan and the Technology Installation and Operation Plan. Note that 
facilities seeking a site-specific determination of best technology 
available in accordance with Sec.  125.103(a)(5), would submit a Site-
Specific Technology Plan in accordance with Sec.  125.104(b) rather 
than a Design and Construction Technology Plan, as well as a Technology 
Installation and Operation Plan and the other studies discussed later 
in section VII.C.5, Alternative Site-Specific Requirements.
    The Design and Construction Technology Plan would explain the 
technologies or operational measures selected by a facility to meet the 
requirements in Sec.  125.103(a)(2) or (3). The Agency recognizes that 
selection of the specific technology or group of technologies for the 
site will depend on individual facility and waterbody conditions. 
Examples of appropriate technologies may include, but are not limited 
to, wedgewire screens, fine mesh screens, fish handling and return 
systems, barrier nets, aquatic filter barrier systems, and enlargement 
of the cooling water intake structure to reduce velocity. Examples of 
operational measures include, but are not limited to, seasonal 
shutdowns or reductions in flow, and continuous or more frequent 
rotation of traveling screens.
    Information required as part of the Design and Construction 
Technology Plan would include the following: (1) A narrative 
description of the design and operation of all design and construction 
technologies and/or operational measures that have been or will be put 
into place to meet the performance standards for reduction of 
impingement mortality of those species most susceptible to impingement, 
and information that demonstrates the efficacy of those technologies 
and/or operational measures for those species; (2) a description of the 
design and operation of all design and construction technologies or 
operational measures that have been or will be put into place, to meet 
the performance standards for reduction of entrainment for those 
species most susceptible to entrainment, if applicable to the facility, 
and information that demonstrates the efficacy of those technologies 
and/or operational measures for those species; (3) calculations of the 
reduction in impingement mortality and/or entrainment of all life 
stages of fish and shellfish that would be achieved by the technologies 
and/or operational measures selected based on the Impingement Mortality 
and/or Entrainment Characterization Study in Sec.  125.104(b); and (4) 
design and engineering calculations, drawings, and estimates to support 
the narrative descriptions required in the Design and Construction 
Technology Plan prepared by a qualified expert such as a professional 
engineer.
    In determining compliance with any requirements to reduce 
impingement mortality or entrainment, the facility would assess the 
total reduction in impingement mortality and entrainment against the 
calculation baseline developed under the Impingement Mortality and/or 
Entrainment Characterization Study.
    Under the Phase II final rule, power producing facilities with a 
capacity utilization rate of less than 15 percent are only required to 
meet the impingement mortality reduction requirements, based on EPA's 
determination that entrainment impacts below this threshold would be 
minimal. EPA defined the capacity utilization rate as the ratio between 
the average annual net generation of the power by the facility (in MW) 
and the total net capability of the facility to generate power (in MW) 
multiplied by the number of available hours during a year. Today's 
proposed rule does not contain an analogous provision for manufacturing 
facilities, as EPA has been unable to identify a similar threshold of 
operations below which impacts would be considered minimal. EPA 
requests comment on the availability of such a threshold that would 
result in lesser requirements for facilities that do not operate full 
time, thus minimizing burdens to these facilities while still 
protecting the source waterbody.
    The Technology Installation and Operation Plan is required for all 
facilities that choose the compliance alternatives in Sec.  
125.103(a)(2), (3), (4), or (5), and propose to use design and 
construction technologies and/or operational measures (either existing 
or new) to meet performance standards or site specific requirements. 
Such facilities would submit the following information to the Director 
for review and approval: (1) A schedule for the installation and 
maintenance of any new design and construction technologies; (2) a list 
of the operational parameters that will be monitored, including the 
location and the

[[Page 68485]]

frequency at which they will be monitored; (3) a list of activities to 
be undertaken to ensure to the degree practicable the efficacy of the 
installed design and construction technologies and operational 
measures, and the schedule for implementing them; (4) a schedule and 
methodology for assessing the efficacy of any installed design and 
construction technologies and operational measures in achieving 
applicable performance standards, including an adaptive management plan 
for revising design and construction technologies and/or operational 
technologies if the assessment indicates that applicable performance 
standards are not being met; and (5) for facilities that select an 
approved technology in accordance with Sec.  125.103(a)(4), 
documentation that appropriate site conditions (as specified by EPA or 
the Director in accordance with Sec.  125.108) exist at the facility. 
In developing the schedule for installation and maintenance of any new 
design and construction technologies in item 1, the facility should 
schedule any downtime to coincide with otherwise necessary downtime 
(e.g., for repair, overhaul, or routine maintenance of the) to the 
extent practicable. The Director should approve any reasonable 
scheduling provision included for this purpose. Those facilities that 
propose to use restoration measures in whole or in part would submit 
the Restoration Plan required at Sec.  125.104(b)(5).
    Today's proposed rule would require the Director to evaluate, using 
information submitted in the application, biennial status reports, and 
any other available information, the performance of any technologies, 
operational measures, and/or restoration measures the facility may have 
implemented in previous permit terms. Additional or different design 
and construction technologies, operational measures, and/or restoration 
measures may be required if the Director determines that the initial 
technologies, operational measures, and/or restoration measures 
selected and implemented will not meet the requirements of Sec.  
125.103, as provided in Sec.  125.107. The proposed rule also requires 
that the permit contain a condition requiring the facility to reduce 
impingement mortality and entrainment (if applicable) commensurate with 
the efficacy of the installed design and construction technologies and/
or operational measures. This is designed to ensure that technologies 
are operated and maintained to ensure their efficacy to the degree 
practicable, and not merely to meet the low end of the applicable 
performance standard range, if better performance is practicable.
    The Technology Installation and Operation Plan is one of the most 
important pieces of documentation for implementing the requirements of 
this proposed rule. It serves to: (1) Guide facilities in the 
installation, operation, maintenance, monitoring, and adaptive 
management of selected design and construction technologies and/or 
operational measures; (2) provide a schedule and methodology for 
assessing success in meeting applicable performance standards and site-
specific requirements; and (3) provide a basis for determining 
compliance with the requirements of Sec.  125.103(a)(2)-(5). Facilities 
and Directors are encouraged to take appropriate care in developing, 
reviewing and approving the plan. Note that for facilities employing 
restoration measures, the Restoration Plan serves the same required 
functions.

Restoration Plan

    EPA proposes restoration measures as one of several technologies 
that may be employed, alone or in combination with others, to minimize 
adverse environmental impact at existing facilities. The consideration 
of restoration measures is relevant to the section 316(b) determination 
of the requisite design of cooling water intake structures because 
restoration measures help minimize the adverse environmental impact 
attributable to such structures. Phase III existing facilities may use 
restoration measures that produce and/or result in levels of fish and 
shellfish in the facility's waterbody or watershed that are 
substantially similar to those that would result through compliance 
with the applicable performance standards or alternative site-specific 
requirements. In order to employ restoration measures, the facility 
would demonstrate to the Director that it has evaluated the use of 
design and construction technologies and/or operational measures and 
determined that the use of restoration measures is appropriate because 
meeting the applicable performance standards or site-specific 
requirements through the use of design and construction technologies 
and/or operational measures alone is less feasible, less cost-effective 
or less environmentally desirable than meeting the standards in whole 
or in part through the use of restoration measures. Facilities would 
also demonstrate to the Director that the restoration measures, alone 
or in combination with any selected design and construction 
technologies and/or operational measures, will produce ecological 
benefits and maintain fish and shellfish in the waterbody, including 
community structure and function, at a substantially similar level to 
that which would be achieved by meeting the applicable performance 
standards at Sec.  125.103(b) or the site-specific requirements 
developed pursuant to Sec.  125.103(a)(5).
    To help all parties review the proposed or existing restoration 
measures and to help ensure adequate performance of those measures, 
Sec.  125.104(b) would require facilities proposing to use restoration 
measures to submit the following information in a Restoration Plan with 
their applications to the Director for review and approval. In the 
submittal, the facility would address species identified, in 
consultation with Federal, State, and Tribal fish and wildlife 
management agencies with responsibility for fisheries and wildlife 
potentially affected by the facility's cooling water intake structures, 
as species of concern. The level of complexity of the Restoration Plan 
likely will be commensurate with the restoration measures considered or 
proposed.
    First, the facility would be required to demonstrate that it has 
evaluated the use of design and construction technologies and/or 
operational measures and explain how it determined that the use of 
restoration measures would be more feasible, cost-effective, or 
environmentally desirable than meeting the applicable performance 
standards or site-specific requirements wholly through the use of 
design and construction technologies, and/or operational measures.
    Second, the facility would be required to submit a narrative 
description of the design and operation of all restoration measures the 
facility has in place or has selected and proposes to implement to 
produce fish and shellfish. If the ecological benefits from an existing 
restoration project are required to compensate for some environmental 
impact other than the impact from impingement and entrainment by the 
cooling water intake structure (e.g., a wetland created to satisfy 
section 404 of the Clean Water Act requirements), those ecological 
benefits should not be counted towards meeting the applicable 
performance standards or site-specific requirements. The narrative 
description should identify the species targeted under any restoration 
measures.
    Third, the facility would be required to submit a quantification of 
the ecological benefits of the existing and/or proposed restoration 
measures. The facility would estimate the reduction in fish and 
shellfish impingement mortality and entrainment that would

[[Page 68486]]

be necessary to comply with applicable performance standards or site-
specific requirements, using information from the Impingement Mortality 
and/or Entrainment Characterization Study and any other available and 
appropriate information. The facility would then calculate the 
production of fish and shellfish from existing and proposed restoration 
measures. The quantification would also include a discussion of the 
nature and magnitude of uncertainty associated with the performance of 
the restoration measures and a discussion of the time frame within 
which ecological benefits are expected to accrue from the restoration 
project.
    Fourth, the facility would be required to provide design 
calculations, drawings, and estimates documenting that the proposed 
restoration measures, in combination with design and construction 
technologies and/or operational measures, or alone, will meet the 
requirements for production of fish and shellfish. Production of fish 
and shellfish as a result of relevant restoration measures already 
implemented at the facility should be added to the production expected 
to be achieved by the additional restoration measures. If the 
restoration measures address the same fish and shellfish species 
identified in the Impingement Mortality and/or Entrainment 
Characterization Study (in-kind restoration), the facility would be 
required to demonstrate that the restoration measures will produce a 
level of these fish and shellfish substantially similar to that which 
would result from meeting applicable performance standards or site-
specific requirements. In this case, the calculations should include a 
site-specific evaluation of the suitability of the restoration measures 
based on the species that are found at the site. If the restoration 
measures address fish and shellfish species different from those 
identified in the Impingement Mortality and/or Entrainment 
Characterization Study (out-of-kind restoration), the facility would be 
required to demonstrate that the restoration measures produce 
ecological benefits substantially similar to or greater than those that 
would be realized through in-kind restoration. Such a demonstration 
should be based on a watershed approach to restoration planning and 
consider applicable multi-agency watershed restoration plans, site-
specific peer-reviewed ecological studies, and/or consultation with 
appropriate Federal, State, and Tribal natural resource agencies. While 
both in-kind and out-of-kind restoration require a quantification of 
the levels of fish and shellfish the restoration measures are expected 
to produce, out-of-kind restoration could include a qualitative 
demonstration that these ecological benefits are substantially similar 
to or greater than those that would be realized through in-kind 
restoration, because different species are being produced that may not 
be directly comparable to those identified in the Impingement Mortality 
and/or Entrainment Characterization Study. The Director could require 
additional information from the facility in order to assess the results 
of the out-of-kind restoration (e.g., biological data on species 
present, function of species in the community, etc.).
    Fifth, the facility would be required to submit a plan utilizing an 
adaptive management method for implementing, maintaining, and 
demonstrating the efficacy of the restoration measures it has selected 
and for determining the extent to which restoration measures, or the 
restoration measures in combination with design and construction 
technologies and operational measures, have met the applicable 
performance standards or site-specific requirements. Adaptive 
management is a process in which a facility chooses an approach for 
meeting a project goal, monitors the effectiveness of that approach, 
and then, based on monitoring and any other available information, 
makes any adjustments necessary to ensure continued progress toward the 
project's goal. This cycle is repeated as necessary until the goal is 
met.
    The adaptive management plan would include: (1) A monitoring plan 
that includes a list of the restoration parameters that the facility 
will monitor, the frequency at which they will be monitored, and the 
success criteria for each parameter; (2) a list of activities the 
facility will undertake to ensure the efficacy of the restoration 
measures, a description of the linkages between these activities and 
the items described in the monitoring plan, and an implementation 
schedule for the activities; and (3) a process for revising the 
restoration plan as new information, including monitoring data, becomes 
available, and if the applicable performance standards or site-specific 
requirements are not being met.
    Sixth, the facility would be required to submit a summary of any 
past or ongoing consultation with Federal, State, and Tribal fish and 
wildlife management agencies on its use of restoration measures, 
including any written comments received as a result of such 
consultations.
    Seventh, if requested by the Director, the facility would be 
required to conduct a peer review of items to be submitted as part of 
the Restoration Plan. Written comments from peer reviewers would be 
submitted to the Director and made available to the public as part of 
the permit application. Peer reviewers would be selected in 
consultation with the Director who may consult with EPA, and with 
Federal, State and Tribal fish and wildlife management agencies with 
responsibility for fish and wildlife potentially affected by the 
facility's cooling water intake structure(s). Peer reviewers would be 
required to have appropriate qualifications (e.g., in the fields of 
geology, engineering and/or biology) depending upon the materials to be 
reviewed.
    Finally, the facility would be required to include in the Plan a 
description of information to be included in a status report to the 
Director every two years. The proposed regulations at Sec.  125.107(b) 
would require that this information be reviewed by the Director to 
determine whether the proposed restoration measures, in conjunction 
with (or in lieu of) design and construction technologies and/or 
operational measures, would meet the applicable performance standards 
or site-specific requirements, or, if the restoration is out-of-kind, 
would produce substantially similar ecological benefits (fish and 
shellfish) including maintenance or protection of community structure 
and function in the facility's waterbody or watershed.

Compliance Using an Approved Technology

    Today's proposed rule would offer facilities the choice of adopting 
a protective, pre-approved design and construction technology, which 
would allow them to submit a significantly streamlined Comprehensive 
Demonstration Study. Section 125.108 lists one approved technology 
(wedgewire screens) and provides an opportunity for the Director to 
pre-approve other technologies.
    If the facility chooses to comply with this compliance alternative, 
the facility would submit documentation to the Director that the 
facility meets the appropriate site conditions and the facility has 
installed and will properly operate and maintain submerged cylindrical 
wedgewire screen technology (as described in Sec.  125.108(a)(1)) or 
other technologies as approved by the Director under Sec.  125.108(b)). 
If the facility is subject to impingement mortality performance 
standards only, and plans to install

[[Page 68487]]

wedgewire screens with a maximum through-screen design intake velocity 
of 0.5 feet per second or less, the facility should choose the 
compliance alternative in Sec.  125.103(a)(1)(i), and does not need to 
demonstrate that it meets the other criteria in Sec.  125.104(a)(1) or 
prepare a Technology Installation and Operation Plan or Verification 
Monitoring Plan.
    Facilities subject to entrainment performance standards seeking 
compliance under this alternative would submit a Technology 
Installation and Operation Plan and a Verification Monitoring Plan that 
address entrainment reduction, and document that all of the appropriate 
site conditions in Sec.  125.108(a)(1) exist at their facility. To 
qualify for compliance using the cylindrical wedgewire screen 
technology, the facility would have to meet the following conditions: 
(1) The cooling water intake structure is located in a freshwater river 
or stream; (2) the cooling water intake structure is situated such that 
sufficient ambient counter-currents exist to promote cleaning of the 
screen face; (3) the maximum through-screen design intake velocity is 
0.5 feet per second or less; (4) the slot size is appropriate for the 
size of eggs, larvae, and juveniles of all fish and shellfish to be 
protected at the site; and (5) the entire main cooling water intake 
flow is directed through the technology. Facilities should demonstrate 
that they meet these criteria in the Technology Installation and 
Operation Plan. Note the submerged cylindrical wedgewire screen 
technology is only pre-approved if the cooling water intake structure 
is, among other things, located in a freshwater river or stream (see 
Sec.  125.108(a)). Therefore, this particular pre-approved technology 
would not apply under the co-proposed regulatory option that defines 
Phase III existing facilities as those with design intakes flows 100 
MGD or more located on tidal rivers, estuaries, or oceans, or one of 
the Great Lakes.
    In addition, any interested person could submit a request that a 
technology be approved for use in accordance with the compliance 
alternative in Sec.  125.103(a)(4). If the Director approves, the 
technology may be used by all facilities that have similar site 
conditions under the Director's jurisdiction. To do this, the 
interested person would submit the following as required by Sec.  
125.108(b): (1) A detailed description of the technology; (2) a list of 
design criteria for the technology and site characteristics and 
conditions that each facility would need to have in order to ensure 
that the technology can consistently meet the appropriate impingement 
mortality and entrainment performance standards in Sec.  125.103(b); 
and (3) information and data sufficient to demonstrate that all 
facilities under the jurisdiction of the Director can meet the 
applicable impingement mortality and entrainment performance standards 
in Sec.  125.103(b) if the applicable design criteria and site 
characteristics and conditions are present at the facility.
    EPA is proposing this compliance alternative in response to 
comments received under the Phase II proposed rule suggesting that EPA 
provide an additional, more streamlined compliance option under which a 
facility could implement certain specified technologies that are deemed 
highly protective in exchange for reducing the scope of the 
Comprehensive Demonstration Study. (See, 68 FR 13522, 13539; March 19, 
2003). This approach was also endorsed by small entity representatives 
and the Final Report of the Small Business Advocacy Review Panel on 
EPA's Planned Proposed Rule for Cooling Water Intake Structures at 
Section 316(b) Phase III Facilities (DCN 7-0006). EPA is soliciting 
comments on other technologies that are equally protective and may be 
used to meet the performance requirements.

Information To Support Site-Specific Determination of Best Technology 
Available for Minimizing Adverse Environmental Impact

    If a facility selects compliance alternative 5 (Sec.  
125.103(a)(5)), it would be required to demonstrate that its costs of 
compliance under the compliance alternatives 3 or 4 (Sec.  
125.103(a)(3) or (4)) would be significantly greater than the costs 
considered by the Administrator for a similar facility in establishing 
the applicable performance standards, or that its cost of compliance 
under alternatives 3 and 4 would be significantly greater than the 
benefits of complying with the applicable performance requirements. 
Depending on the approach taken, a facility would be required to 
complete the Site-Specific Technology Plan, the Comprehensive Cost 
Evaluation Study, and possibly the Benefits Valuation Study. These 
study requirements are discussed later in section VII.C.5, Alternative 
Site-Specific Requirements.

Verification Monitoring Plan

    Section 125.104(b) would require all Phase III existing facilities, 
except those deemed to have met the performance standard in Sec.  
125.103(a)(1), to submit a Verification Monitoring Plan to measure the 
efficacy of the implemented design and construction technologies and/or 
operational measures. The plan would include a monitoring study lasting 
at least two years to verify the full-scale performance of the proposed 
or already implemented technologies and of any additional operational 
measures. The plan would be required to describe the frequency of 
monitoring and the parameters to be monitored and the bases for 
determining these. The Director would use the verification monitoring 
results to confirm that the facility is meeting the level of 
impingement mortality and/or entrainment reduction expected and that 
fish and shellfish are being maintained at the level expected (as 
required in Sec.  125.105). Verification monitoring would be required 
to begin once the technologies and/or operational measures are 
implemented and continue for a sufficient period of time (but at least 
two years) to demonstrate that the facility is reducing impingement 
mortality and/or entrainment to the level of reduction required.
2. How Would the Director Determine the Appropriate Cooling Water 
Intake Structure Requirements?
    The Director's first step would be to determine whether the 
facility is covered by this proposed rule. If the answer to all the 
following questions is yes, the facility would be required to comply 
with the requirements of this proposed rule.
    (1) Is the facility a point source?
    (2) Is the facility an existing facility other than a Phase II 
existing facility?
    (3) Does the facility use at least 25 percent of water withdrawn 
exclusively for cooling purposes, measured on an average annual basis? 
and
    (4) Does the facility use, or propose to use, a cooling water 
intake structure (including a cooling water intake structure operated 
by an independent supplier) that meets the total design intake flow/
source waterbody threshold as specified under each of the three co-
proposed regulatory options to withdraw cooling water from waters of 
the United States?
    If a facility is a point source that uses a cooling water intake 
structure and has or is required to have an NPDES permit, but does not 
meet the applicability requirements in today's proposed rule, it would 
continue to be subject to permit conditions implementing section 316(b) 
of the Clean Water Act set by the Director on a case-by-case basis, 
using best professional judgment.
    The Director's second step would be to determine whether the 
facility proposes to comply: By demonstrating

[[Page 68488]]

that its existing design and construction technologies, operational 
measures, or restoration measures meet the proposed performance 
standards; by implementing design and construction technologies, 
operational measures, or restoration measures that, in combination with 
existing technologies and operational measures, meet the proposed 
performance standards; by using an approved technology; or by seeking a 
site-specific determination of best technology available to minimize 
adverse environmental impact (see Sec.  125.103(a)).
    If a facility selects compliance alternative 1 (Sec.  
125.103(a)(1)), and it demonstrates that it has reduced its flow 
commensurate with a closed-cycle recirculating system and therefore 
already meets the performance standards to reduce impingement mortality 
and entrainment, the Director would only have to verify that this is 
indeed true; no additional requirements are necessary. Under compliance 
alternative 1, a facility may demonstrate that it has already reduced 
its design intake velocity to 0.5 feet per second and therefore meets 
the performance standards to reduce impingement mortality only. Again 
the Director would only need to verify the design intake velocity and 
no further requirements would be necessary.
    Under compliance alternative 2 (Sec.  125.103(a)(2)), in which a 
Phase III existing facility chooses to demonstrate that its existing 
design and construction technologies, operational measures, or 
restoration measures meet the proposed performance standards, the 
Director would need to verify that the existing facility meets the 
impingement mortality and entrainment reduction requirements.
    To verify that existing controls meet the impingement mortality and 
entrainment reduction requirements in the proposed rule, the Director 
would need to: (1) Verify the facility's baseline calculation; (2) 
confirm the location of the facility's cooling water intake 
structure(s); (3) verify the withdrawal percentage of mean annual flow 
if applicable; (4) review impingement mortality and/or entrainment 
rates or estimates; and (5) consider any use of restoration. These same 
steps also would be part of determining requirements under other 
compliance alternatives as discussed below.
    The Director would initially review and verify the calculation 
baseline estimate submitted by the facility under Sec.  125.104(b). 
This estimate would need to be consistent with the proposed definition 
of the term ``calculation baseline'' and be representative of current 
biological conditions at the facility. The Director would then review 
the information that the facility provides to validate the source 
waterbody type in which the cooling water intake structure is located 
(freshwater river or stream; lake or reservoir; or estuary, tidal 
river, ocean, or Great Lake). The Director would review the supporting 
material the applicant provided in the permit application to document 
the physical placement of the cooling water intake structure. For 
existing facilities with one or more cooling water intake structures 
located in a freshwater river or stream, the Director would need to 
determine whether the facility withdraws more or less than five percent 
of the mean annual flow, which determines whether impingement 
mortality, or impingement mortality and entrainment controls would 
apply. For facilities with cooling water intake structures located on 
lakes or reservoirs, other than a Great Lake, for which the facility 
seeks to increase the design flow, the Director would need to determine 
whether the increased intake flow would disrupt the natural thermal 
stratification or turnover pattern of the source waterbody. In making 
this determination, the Director would need to consider anthropogenic 
factors that can influence the occurrence and location of a 
thermocline, and would need to coordinate with appropriate Federal, 
State, or Tribal fish and wildlife agencies to determine if any 
disruption adversely impacts the management of the fisheries. Both of 
these determinations would be based on the source waterbody flow 
information required under Sec.  125.104(b).
    For Phase III existing facilities that have in place existing 
restoration measures that meet the requirements of Sec.  125.103(b), 
the Director would review the evaluation of the current restoration 
measures submitted under Sec.  125.104(b). The Director could gather 
additional information and solicit input for the review from 
appropriate fishery management agencies as necessary. The Director 
would need to determine whether the current measures would maintain the 
fish and shellfish in the waterbody at comparable levels to those that 
would be achieved under Sec.  125.103, as well as review and approve 
the proposed Restoration Plan required in Sec.  125.104(b).
    Finally, the Director would need to review impingement and/or 
entrainment data or estimates to determine whether in-place controls 
achieve the performance standards proposed for the different categories 
of source waterbodies. This step would involve comparing the 
calculation baseline with the impingement and/or entrainment data or 
estimates provided as part of the Comprehensive Demonstration Study and 
the Impingement Mortality and/or Entrainment Characterization Study 
requirements under Sec.  125.104(b).
    If the Director determines that the existing technologies, 
operational measures, or supplemental restoration measures employed do 
not achieve compliance with the applicable performance standards, the 
Director would issue a permit requiring additional measures to achieve 
such compliance, based on the information submitted in the 
Comprehensive Demonstration Study (Sec.  125.107(b)(1)). If such 
studies are approved and a permit is issued on that basis, but the 
Director later determines, based on the results of subsequent 
monitoring, that the technologies, operational measures, and 
supplemental restoration measures did not meet the performance 
standards, the Director would require the existing facility to 
implement additional technologies and operational measures as necessary 
to meet the rule requirements. In general, this would occur at the next 
renewal of the permit. The Director would also review the facility's 
Verification Monitoring Plan and/or Restoration Plan (as appropriate) 
for post-operational monitoring to demonstrate that the technologies 
and/or restoration measures are performing as predicted.
    Under compliance alternative 3 (Sec.  125.103(a)(3)), the same 
general steps would be followed as described above to assess compliance 
of existing controls with applicable performance standards except that 
under this alternative, the Phase III existing facility would be 
required to demonstrate that the technologies and measures identified 
would meet (rather than currently meet) the applicable performance 
standards. This review would also be based on data submitted in the 
Comprehensive Demonstration Study required under Sec.  125.104(b).
    For facilities seeking compliance under compliance alternative 4 
(Sec.  125.103(a)(4)), through the use of an approved technology, the 
Director would review the Technology Installation and Operation Plan 
and Verification Monitoring Plan.
    These same basic steps described under compliance alternatives 2 
and 3 would also apply to facilities seeking to comply under compliance 
alternative 5 (Sec.  125.103(a)(5)); however, the Director would be 
required to make two additional determinations under this option, 
including whether the facility meets one of the applicable cost tests

[[Page 68489]]

and what alternative requirements are justified in light of the 
significantly greater costs. Phase III existing facilities seeking to 
comply under this option would be required to submit a Comprehensive 
Cost Evaluation Study under Sec.  125.104(b), which includes data that 
document the cost of implementing design and construction technologies, 
operational measures, and/or restoration measures to meet the otherwise 
applicable performance standards in Sec.  125.103(b). The Director 
would need to review these data, including detailed engineering cost 
estimates, and compare these with the costs the Agency considered in 
establishing these requirements for a like Phase III facility. Where 
the Director finds that the facility's cost of implementation is 
significantly greater than those considered during rule development, he 
or she would approve site-specific requirements and could approve 
alternative technologies or operational measures. Such alternative 
technologies or operational measures could be those proposed by the 
facility in the Site-Specific Technology Plan or Restoration Plan, but 
less protective requirements would have to be justified by the 
significantly greater costs.
    Where a Phase III existing facility seeks site-specific 
requirements based on facility costs that are significantly greater 
than the environmental benefits of compliance, the facility would also 
be required to submit a Benefits Valuation Study (along with the 
Comprehensive Cost Evaluation Study). The Director would review the 
benefits valuation, including a narrative description of non-quantified 
benefits, to determine whether it fully values the benefits of meeting 
the applicable performance standards, as required in Sec.  125.104(b), 
and whether the facility's cost of implementation is significantly 
greater than the environmental benefits of complying with the 
requirements of Sec.  125.103(b). If the Director determines that the 
compliance costs are significantly greater than the environmental 
benefits, the Director would approve site-specific requirements and 
could approve alternative technologies or operational measures. Such 
alternative technologies or operational measures could be those 
proposed by the facility in the Site-Specific Technology Plan and/or 
Restoration Plan, but less protective requirements would have to be 
justified by the significantly greater costs. EPA is interested in ways 
to decrease application review time and is requesting comments on how 
to make this process both efficient and effective.
3. What Would I Be Required To Monitor?
    Section 125.105 of today's proposed rule provides that Phase III 
existing facilities would perform monitoring in accordance with the 
Verification Monitoring Plan, the Technology Installation and Operation 
Plan, and/or the Restoration Plan, all required by Sec.  125.104(b), 
and any additional monitoring specified by the Director to demonstrate 
compliance with the applicable requirements of Sec.  125.103(e). In 
developing biological monitoring conditions, the Director should 
consider the need for the data, and only collect data sufficient to 
assess the presence, abundance, life stages (including eggs, larvae, 
juveniles, and adults), and mortality of aquatic organisms (fish and 
shellfish or other organisms required to be monitored by the Director) 
impinged or entrained during operation of the cooling water intake 
structure. This type of data may be used to develop permit conditions 
to implement the requirements of this rule. The Director should ensure, 
where appropriate, that any required monitoring will allow for the 
detection of any annual, seasonal, and diel variations in the species 
and numbers of individuals that are impinged or entrained.
    The Director may modify the monitoring program based on changes in 
physical, chemical, or biological conditions in the vicinity of the 
cooling water intake structure. The Director may also require 
monitoring of operational parameters for facilities that employ a 
Technology Installation and Operation Plan or Restoration Plan to 
comply with the requirements of Sec.  125.103. The Director would be 
required to specify what monitoring or other data is to be included in 
a status report every two years.
4. How Would Compliance Be Determined?
    This proposed rule would be implemented by the Director placing 
conditions consistent with the requirements of this part in NPDES 
permits. The application information, including components of the 
Comprehensive Demonstration Study, as appropriate, should demonstrate 
that the facility is already meeting the performance standards, or that 
it will install and properly operate and maintain design and 
construction technologies, operational measures, and/or restoration 
measures to meet the performance standards, or that a site-specific 
determination of best technology available is necessary. To support 
this demonstration, the facility should submit the following 
information to the Director:
     Data submitted with the NPDES permit application to show 
that the facility meets location, design, construction, and capacity 
requirements consistent with the compliance alternative selected;
     Data to demonstrate that the facility is meeting the 
performance standards or requirements consistent with the compliance 
alternative selected; and
     Compliance monitoring data and records as prescribed by 
the Director.
    Facilities complying using compliance alternatives in Sec.  125.103 
(a)(2)-(5) would be required to submit a Technology Installation and 
Operation Plan and Verification Monitoring Plan (or Restoration Plan, 
which includes comparable information), regardless of how the facility 
wants to measure compliance. The specifics of how success in meeting 
the performance standards may be measured (i.e, the number of species, 
whether critical species or all species) and the method of measurement 
(e.g., total biomass, total counts, etc.) would be determined by the 
Director based on review of the proposed methodology submitted by the 
facility in its Verification Monitoring Plan and/or Restoration Plan, 
and any other methods the Director considers appropriate.
    The facility may request that compliance be determined based on 
whether it has complied with the construction, operational, 
maintenance, monitoring, and adaptive management requirements of its 
Technology Installation and Operation Plan (for design and construction 
technologies and/or operational measures) or Restoration Plan (for 
restoration measures). In this case, the facility would still assess 
success in meeting applicable performance standards or restoration 
requirements but this assessment serves to guide the adaptive 
management process rather than as a basis for determining compliance. 
After the first permit term following promulgation of this rule, 
facilities are only eligible for this compliance determination 
alternative if they have been in compliance with the terms of their 
Technology Installation and Operation Plan and/or Restoration Plan 
during the preceding permit term.
    Under this compliance determination alternative, the Technology 
Installation and Operation Plan or Restoration Plan would specify 
construction, operational, maintenance, monitoring, and adaptive 
management requirements that can reasonably be expected to achieve 
success in meeting the applicable performance standards, restoration

[[Page 68490]]

requirements and/or site-specific requirements. These construction, 
operational, maintenance, monitoring, and adaptive management 
requirements would also be approved by the Director, who would be 
required to specify what verification monitoring, monitoring data and 
other information would be included in the facility's biennial status 
report.
    The required elements of the Technology Installation and Operation 
Plan include: (1) A schedule for installation and maintenance of any 
new technologies; (2) operational parameters to be monitored; (3) 
activities to ensure the efficacy of technologies and measures; (4) a 
schedule and methodology for assessing the efficacy of installed 
technologies and measures in meeting the performance standards; (5) an 
adaptive management plan; and (6) for facilities using an approved 
compliance technology, documentation that they meet the conditions for 
its use. The Restoration Plan requires corresponding information as 
appropriate for restoration measures.
    EPA believes that it is important for facilities to consider and 
document each of the components of the Technology Installation and 
Operation Plan, regardless of which compliance determination approach 
is used. However, the level of detail appropriate for some of the 
components may be different for the two different approaches. For 
facilities that comply by demonstrating success in meeting performance 
standards, particularly in cases where they are already meeting the 
standards and no significant changes in technologies or operations are 
needed, brief summaries may be sufficient for most components, though 
they would still need detailed documentation of their schedule and 
methodology for assessing efficacy of installed technologies and 
measures for meeting the standards. Conversely, for facilities where 
compliance is determined based on whether they have complied with the 
construction, operation, maintenance, monitoring, and adaptive 
management approaches required in the Technology Installation and 
Operation Plan or Restoration Plan, a fairly detailed specification of 
these requirements would be appropriate. The Director should ensure 
that the level of detail in the Technology Installation and Operation 
Plan or Restoration Plan is sufficient to support whichever compliance 
determination approach is selected.
    Section 125.106 requires existing facilities to keep records and 
report monitoring data and other information specified by the Director 
in a biennial status report, although Directors may require more 
frequent reports. Facilities would also keep records of all data used 
to complete the permit application and show compliance with the 
requirements of Sec.  125.103, any supplemental information developed 
under Sec.  125.104, and any compliance monitoring data submitted under 
Sec.  125.105, for a period of at least three (3) years from date of 
permit issuance. The Director may require that these records be kept 
for a longer period.
5. Alternative Site-Specific Requirements
    Under Sec.  125.103(a)(5), an existing facility may demonstrate to 
the Director that it has selected, installed, and is properly operating 
and maintaining, or will install and properly operate and maintain, 
design and construction technologies, operational measures, and/or 
restoration measures that the Director determines to be the best 
technology available to minimize adverse environmental impact for the 
facility based on the cost-cost test specified in Sec.  
125.103(a)(5)(i) or the cost-benefit test specified in Sec.  
125.103(a)(5)(ii) of the proposed rule.
    Section 125.103(a)(5)(i) provides that an existing facility may 
demonstrate that the costs of compliance under the compliance 
alternatives in Sec.  125.103(a)(3) and (4) of the rule would be 
significantly greater than the costs considered by the Administrator 
for a like facility in establishing the applicable performance 
standards. In such cases, the Director would make a site-specific 
determination of the best technology available for minimizing adverse 
environmental impact. The Director would establish site-specific 
alternative requirements based on new and/or existing design and 
construction technologies, operational measures, and/or restoration 
measures that achieve an efficacy that is, in the judgment of the 
Director, as close as practicable to the applicable performance 
standards in Sec.  125.103(b) of the rule without resulting in 
significantly greater costs than those considered by the Administrator 
for a like facility. Section 125.103(a)(5)(ii) provides that an 
existing facility may demonstrate that the costs of compliance under 
alternatives in Sec.  125.103(a)(3) and (4) of the rule would be 
significantly greater than the benefits of complying with the 
applicable performance standards at that facility. In such cases, the 
Director would make a site-specific determination of best technology 
available for minimizing adverse environmental impact. The Director 
would establish site-specific alternative requirements based on new 
and/or existing design and construction technologies, operational 
measures, and/or restoration measures that achieve an efficacy that, in 
the judgment of the Director, is as close as practicable to the 
applicable performance standards in Sec.  125.103(b) of the rule 
without resulting in costs significantly greater than the benefits of 
meeting the performance standards.

Facility's Costs Significantly Greater Than Costs Considered by EPA

    If the Director determines that data specific to the facility 
indicate that the costs of compliance under Sec.  125.103(a)(3) and (4) 
would be significantly greater than the costs considered by the 
Administrator for a like facility in establishing the applicable 
performance standards in Sec.  125.103(b), a facility may request a 
site-specific determination of best technology available for minimizing 
adverse environmental impacts. A facility requesting this determination 
would submit a Comprehensive Cost Evaluation Study and a Site Specific 
Technology Plan (Sec.  125.104(b)). The Comprehensive Cost Evaluation 
Study would include: engineering cost estimates in sufficient detail to 
document the costs of implementing design and construction 
technologies, operational measures, and/or restoration measures at the 
facility that would be needed to meet the applicable performance 
standards of Sec.  125.103(b); a demonstration that the documented 
costs significantly exceed the costs considered by EPA for a like 
facility in establishing the applicable performance standards; and 
engineering cost estimates in sufficient detail to document the costs 
of implementing alternative design and construction technologies, 
operational measures, and/or restoration measures in the facility's 
Site-Specific Technology Plan developed in accordance with Sec.  
125.104(b).
    To make the demonstration that compliance costs are significantly 
greater than those considered by EPA, the facility would first 
determine its actual compliance costs. To do this, the facility first 
should determine the costs for any new design and construction 
technologies, operational measures, and/or restoration measures that 
would be needed to meet the applicable performance standards in Sec.  
125.103(b), which may include the following cost categories: the 
installed capital cost of the technologies or measures; the net 
operation and maintenance (O&M) costs for the technologies or measures 
(that is,

[[Page 68491]]

the O&M costs for the final suite of technologies and measures once all 
new technologies and measures have been installed less the O&M costs of 
any existing technologies and measures); the net revenue losses (lost 
revenues minus saved variable costs) associated with net construction 
downtime (actual construction downtime minus that portion which would 
have been needed anyway for repair, overhaul or maintenance); and any 
pilot study costs associated with on-site verification and/or 
optimization of the technologies or measures. Costs should be 
annualized using a 7 percent discount rate, with an amortization period 
of 10 years for capital costs and 30 years for pilot study costs and 
construction downtime net revenue losses. Annualized costs should be 
converted to 2002 dollars ($2002), using the engineering news record 
construction cost index (see Engineering News-Record. New York: McGraw 
Hill). The annual average index value is 6538 for year 2002). Costs for 
permitting and post-construction monitoring should not be included in 
this estimate, as these are not included in the EPA-estimated costs 
against which they would be compared, as described below. Because 
existing facilities already incur monitoring and permitting costs and 
will continue to do so regardless of the compliance option selected, 
and these are largely independent of the specific performance standards 
adopted and technologies selected to meet them, EPA believes it is both 
simpler and more appropriate to conduct the cost comparison required in 
this provision using direct compliance costs (capital, net O&M, net 
construction downtime, and pilot study) only. Adding permitting and 
monitoring costs to both sides of the comparison would complicate the 
analysis without substantially changing the results.
    To facilitate the comparison of the facility-derived costs with 
those considered by the Agency in establishing the proposed 
requirements, EPA has developed an automated cost estimating tool. This 
cost test tool estimates the costs using all of the same assumptions 
that EPA considered in developing costs for the proposed rule and would 
be made available to both the facility and the permitting authority. In 
fact, EPA used this same algorithm to estimate the incremental cost 
impact for this proposed rulemaking. This approach differs from the 
approach used in the Phase II regulations; however, EPA believes that 
this will provide an easier, more exact methodology for estimating 
those costs. In particular, EPA believes that this tool is appropriate 
because of the type of data on each facility that was available for 
this rulemaking. EPA surveyed only a segment of the Phase III universe 
and, therefore had data on a limited number of facilities, which 
required EPA to extrapolate costs for the universe of facilities 
potentially covered by this proposed rule. EPA therefore used a model 
facility approach in costing manufacturing facilities, which is the 
same methodology that is used in the development of most of EPA's 
technology-based effluent guidelines. This does not allow for providing 
a table that would give EPA's cost estimates for every Phase III 
existing facility as was done for Phase II. EPA requests comments on 
the use of this Cost Test Algorithm and has provided a version for 
review in DCN 7-0004. For more details on the cost-test algorithm, see 
the cost-test tool in section VIII and the Technical Development 
Document.
    Facilities requesting site-specific performance requirements would 
be required to submit a Site-Specific Technology Plan. This plan is 
developed based on the results of the Comprehensive Cost Evaluation 
Study and would be required to contain the following information:
     A narrative description of the design and operation of all 
existing and proposed design and construction technologies, operational 
measures, and/or restoration measures selected in accordance with Sec.  
125.103(a)(5);
     An engineering estimate of the efficacy of the proposed 
and/or implemented design and construction technologies or operational 
measures, and/or restoration measures. This estimate would include a 
site-specific evaluation of the suitability of the technologies or 
operational measures for reducing impingement mortality and/or 
entrainment (as applicable) of all life stages of fish and shellfish 
based on representative studies (e.g., studies that have been conducted 
at cooling water intake structures located in the same waterbody type 
with similar biological characteristics) and, if applicable, site-
specific technology prototype or pilot studies. If restoration measures 
will be used, a Restoration Plan that includes the elements described 
in Sec.  125.104(b) would be provided;
     A demonstration that the proposed and/or implemented 
design and construction technologies, operational measures, and/or 
restoration measures achieve an efficacy that is as close as 
practicable to the applicable performance standards of Sec.  125.103(b) 
without resulting in costs significantly greater than either the costs 
considered by the Administrator for a facility like yours in 
establishing the applicable performance standards, or, if employing the 
cost-benefit test described in B below, the benefits of complying with 
the applicable performance standards at your facility; and,
     Design and engineering calculations, drawings, and 
estimates prepared by a qualified professional to support the elements 
of the Plan.

Facility's Costs Significantly Greater Than the Benefits of Complying 
With Performance Standards

    A facility demonstrating that its costs are significantly greater 
than the benefits of complying with performance standards would produce 
and submit a Comprehensive Cost Evaluation Study, a Benefits Valuation 
Study, and a Site-Specific Technology Plan.
    The Comprehensive Cost Evaluation Study is discussed in the 
previous section. It would require the same information for a cost-
benefit site-specific determination as for a cost-cost site-specific 
determination, except that the demonstration in Sec.  125.104(b) would 
show that the facility's actual compliance costs significantly exceed 
the benefits of meeting the applicable performance standards at the 
facility.
    The Benefits Valuation Study would require that a facility use a 
comprehensive methodology to fully value the impacts of impingement 
mortality and entrainment at its site and the benefits of complying 
with the applicable performance standards. In addition to the valuation 
estimates, the benefit study would include the following:
     A description of the methodology(ies) used to value 
commercial, recreational, and ecological benefits (including any non-
use benefits, if applicable);
     Documentation of the basis for any assumptions and 
quantitative estimates. If the facility plans to use an entrainment 
survival rate other than zero, they would submit a determination of 
entrainment survival at the facility based on a study approved by the 
Director;
     An analysis of the effects of significant sources of 
uncertainty on the results of the study;
     If requested by the Director, a peer review of the items 
submitted in the Benefits Valuation Study. The facility would be 
required to choose the peer reviewers in consultation with the Director 
who may consult with EPA and Federal, State, and Tribal fish and 
wildlife management agencies with responsibility for fish and wildlife 
potentially affected by the cooling water intake structure. Peer 
reviewers would be required to have appropriate

[[Page 68492]]

qualifications depending upon the materials to be reviewed.
     A narrative description of any non-monetized benefits that 
would be realized at the site if they were to meet the applicable 
performance standards and a qualitative assessment of their magnitude 
and significance.
    All benefits, whether expressed qualitatively or quantitatively, 
should be addressed in the Benefits Valuation Study and considered by 
the Director in determining whether the costs of compliance would 
significantly exceed benefits.
    The benefits assessment should begin with an impingement mortality 
and entrainment study, which quantifies both the baseline mortality as 
well as the expected change from rule compliance. The benefits 
assessment should include a qualitative and/or quantitative description 
of the benefits that would be produced by compliance with the 
applicable performance standards at the facility site and, to the 
extent feasible, monetized (dollar) estimates of all significant 
benefits categories using well established and generally accepted 
valuation methodologies. The first benefit category that would be 
considered is use benefits, which includes such benefits as those to 
commercial and recreational fishermen. Well-established revealed 
preference and market proxy methods exist for valuing use benefits, and 
these should be used in all cases where the impingement mortality and 
entrainment study identifies substantial impacts to harvested or other 
relevant species.
    The second benefit category that would be considered is non-use 
benefits. Non-use benefits may arise from reduced impacts to ecological 
resources that the public considers important, such as threatened and 
endangered species. Non-use benefits can generally only be monetized 
through the use of stated preference methods. When determining whether 
to monetize non-use benefits, permittees and permit writers should 
consider the magnitude and character of the ecological impacts implied 
by the results of the impingement mortality and entrainment study and 
any other relevant information.
     In cases where an impingement mortality and entrainment 
characterization study identifies substantial harm to a threatened or 
endangered species, to the sustainability of populations of important 
species of fish, shellfish or wildlife, or to the maintenance of 
community structure and function in a facility's waterbody or 
watershed, non-use benefits should be monetized.\41\
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    \41\ In cases where harm cannot be clearly explained to the 
public, monetization is not feasible because stated preference 
methods are not reliable when the environmental improvement being 
valued cannot be characterized in a meaningful way for survey 
respondents.
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     In cases where an impingement mortality and entrainment 
characterization study does not identify substantial harm to a 
threatened or endangered species, to the sustainability of populations 
of important species of fish, shellfish or wildlife, or to the 
maintenance of community structure and function in a facility's 
waterbody or watershed, monetization is not necessary.
    Permittees should consult with their permitting authority regarding 
their plans for assessing ecological and non-use benefits, including 
whether they plan to conduct a stated preference study and if so, the 
basic design of the study, including such items as target population, 
sampling strategy, approximate sample size, general survey design, and 
other relevant information. When conducting quantitative benefits 
assessments, permittees should carefully review and follow accepted 
best practices for such studies. A discussion of best practices 
regarding valuation can be found in EPA's Guidelines for Preparing 
Economic Analyses (EPA 2000, EPA 240-R-00-003, September 2000) and OMB 
Circular A-4: Regulatory Analysis (September 17, 2003, http://www.whitehouse.gov/omb/inforeg/circular_a4.pdf). In the benefits 
assessment, permittees should present the results, as well as clearly 
describe the methods used, the assumptions made, and the associated 
uncertainties.
    It is recommended that the permittee and Director seek peer review 
of the major biological and economic aspects of the final benefits 
assessment. The goal of the peer review process is to ensure that 
scientific and technical work products receive appropriate levels of 
critical scrutiny from independent scientific and technical experts as 
part of the overall decision-making process. In designing and 
implementing peer reviews, permittees and permit writers could look to 
EPA's Science Policy Council Handbook--Peer Review (EPA 100-B-98-00, 
January 1998, http://www.epa.gov/osa/spc/index.htm) for guidance.
    The Site Specific Technology Plan, as described in the previous 
section, would require the same information for a cost-benefit site-
specific determination as for a cost-cost site-specific determination, 
except that the demonstration in Sec.  125.104(b) would show that the 
proposed and/or implemented technologies and measures achieve an 
efficacy that is as close as practicable to the applicable performance 
standards without resulting in costs significantly greater than the 
benefits of complying with the applicable performance standards at your 
facility.

D. New Offshore Oil and Gas Extraction Facilities

    Under today's proposed rule, new offshore oil and gas extraction 
facilities would be required to submit the application requirements 
consistent with Sec.  122.21(r)(2), (3), and (4) and Sec.  125.136 of 
Subpart N if they are fixed facilities and choose to comply with the 
Track I or II requirements in Sec.  125.134(b) or (c). A fixed facility 
is defined as a bottom founded offshore oil and gas extraction facility 
permanently attached to the seabed or subsoil of the outer continental 
shelf (e.g., platforms, guyed towers, articulated gravity platforms) or 
a buoyant facility securely and substantially moored so that it cannot 
be moved without a special effort (e.g., tension leg platforms, 
permanently moored semi-submersibles) and which is not intended to be 
moved during the production life of the well. This definition does not 
include mobile offshore drilling units (MODUs) (e.g., drill ships, 
temporarily moored semi-submersibles, jack-ups, submersibles, tender-
assisted rigs, and drill barges). The Track I and Track II requirements 
are generally consistent with the Phase I requirements for new 
facilities (66 FR 65256). Under Track I, this includes source water 
baseline biological characterization data, velocity information, source 
waterbody flow information, and a design and construction technology 
plan. Track II requirements include source waterbody flow information 
and Track II comprehensive demonstration study (including source water 
biological study, evaluation of potential cooling water intake 
structure effects, and verification monitoring plan). These 
requirements are detailed later in this section.
    As described in Sec.  125.135, fixed facilities would also have the 
opportunity to conduct a cost-to-cost test and provide data to 
determine if compliance with the Subpart N requirements would result in 
compliance costs wholly out of proportion to those EPA considered in 
establishing the requirement, or would result in significant adverse 
impacts on local water resources other than

[[Page 68493]]

impingement or entrainment, or significant adverse impacts on energy 
markets. In this case, alternative requirements may be imposed in the 
permit. See the Phase I final preamble for a more detailed explanation 
of this cost-cost test which is different than the cost-cost test for 
existing sources (66 FR 65256).
    Fixed facilities with seachests and all non-fixed (or ``mobile'') 
facilities would not be required to comply with standards for 
entrainment. Fixed facilities with seachests may choose either Track I 
or Track II to comply with impingement mortality performance standards. 
Non-fixed facilities must comply with the 0.5 feet per second through-
screen design intake flow velocity performance standard for impingement 
mortality of Track I. In addition, the Director may determine 
additional design and construction technologies to minimize impingement 
mortality are necessary where there are either protected species of 
concern within the hydrologic zone of influence of the cooling water 
intake structure, or based on other information from fishery management 
services or agencies. The new mobile facility, when applying to operate 
under a general permit, would identify where it expects to be 
operating. The Director consults with the fishery management agencies, 
considers their data as well as any other relevant data, and decides 
whether to propose additional requirements based on any concerns the 
Director identifies (see Sec.  125.134(b)(4)). For example, Region 10 
has established a general permit for Cooks Inlet that established a 0.1 
feet per second through-screen design intake flow velocity performance 
standard. However, non-fixed facilities would not be required to submit 
the source water baseline biological characterization data and some 
aspects of the source water physical data requirements. Requirements 
for non-fixed facilities are described later in this section.
    EPA notes that some mobile facilities (e.g. some jack-ups) may not 
have seachests and therefore could feasibly install entrainment 
controls. EPA proposes not to require entrainment controls for these 
mobile facilities due to the transient nature of their operations and 
an expectation that they are not likely to cause significant impacts. 
EPA took a similar approach in its Phase II rule when the Agency did 
not require entrainment controls at power plants that operate less than 
15 percent of the year. EPA solicits comment and data on its proposal 
to only require impingement controls at mobile facilities that do not 
have seachests.
1. For New Offshore Oil and Gas Extraction Fixed Facilities, What 
Information Is Required To Be Collected for the NPDES Application?

Source Water Baseline Biological Characterization Data (Sec.  
122.21(r)(4)) (Both Track I and II)

    Under today's proposed rule, new offshore oil and gas extraction 
fixed facilities would be required to submit source water baseline 
biological characterization data as required under Phase I. The data 
would be used to characterize the biological community in the vicinity 
of the cooling water intake structure and to characterize the operation 
of the cooling water intake structure. The data would include existing 
data (if available) supplemented with new field studies as necessary. 
Detailed data requirements are at Sec.  122.21(r)(4). Under today's 
proposed rule, a group of fixed facilities may choose to conduct a 
regional study to collect this information as approved by the Director. 
EPA recognizes that many offshore oil and gas extraction facilities are 
regulated under NPDES general permits and that regional studies are 
typically conducted as part of the general permit requirements. EPA 
anticipates the regional studies would be conducted once each permit 
cycle. Under today's proposed rule, the regional study would also 
include annual monitoring requirements.

Velocity Information (Track I)

    Today's proposed rule would require that new offshore oil and gas 
extraction fixed facilities submit velocity information consistent with 
Sec.  125.136(b)(2). The information would be used to demonstrate to 
the Director that the facility is complying with the requirement to 
meet a maximum through-screen design intake velocity of no more than 
0.5 feet per second at the cooling water intake structure. The 
following information would be required to be submitted: (1) A 
narrative description of the design, structure, equipment, and 
operation used to meet the velocity requirement; and (2) design 
calculations showing that the velocity requirement would be met at 
minimum ambient source water surface elevations (based on best 
professional judgment using available hydrological data) and maximum 
head loss across the screens or other device or, if the facility uses 
devices other than a surface intake screen, at the point of entry to 
the device.

Source Waterbody Flow Information (Track I and II)

    Today's proposed rule would also require that new offshore oil and 
gas extraction fixed facilities submit source waterbody flow 
information in accordance with Sec.  125.136(b)(2) or (c)(1). The 
information would be used to demonstrate to the Director that the 
facility's cooling water intake structure meets the proportional flow 
requirements at Sec.  125.134(b)(3) or (c)(2). These requirements would 
include specific provisions for fixed facilities located on estuaries 
or tidal rivers to provide greater protection for these sensitive 
waters. Specifically, the proposed rule would require that the total 
design intake flow over one tidal cycle of ebb and flow must be no 
greater than one (1) percent of the volume of the water column within 
the area centered about the opening of the intake with a diameter 
defined by the distance of one tidal excursion at the mean low water 
level. Calculations and guidance on determining the tidal excursion is 
found in the preamble to the final Phase I rule at section VII.B.1.d.

Design and Construction Technology Plan (Track I)

    Today's proposed rule would also require that new offshore oil and 
gas extraction fixed facilities submit a design and construction 
technology plan consistent with Subpart N requirements at Sec.  
125.136(b)(3). The design and construction technology plan would 
demonstrate that the facility has selected and will implement the 
design and construction technologies necessary to minimize impingement 
mortality and/or entrainment in accordance with Sec.  125.134(b)(4) 
and/or (5). The design and construction technology plan would require 
delineation of the hydrologic zone of influence for the cooling water 
intake structure; a description of the technologies implemented (or to 
be implemented) at the facility; the basis for the selection of that 
technology; the expected performance of the technology, and design 
calculations, drawings and estimates to support the technology 
description and performance. The Agency recognizes that the selection 
of a specific technology or a group of technologies would depend on the 
individual facility and waterbody conditions.

Track II Comprehensive Demonstration Study (Track II)

    If a fixed facility chooses to comply under the Track II approach, 
the facility would perform and submit the results of

[[Page 68494]]

a Comprehensive Demonstration Study (Study). This information would be 
used to characterize the source water baseline in the vicinity of the 
cooling water intake structure(s); characterize operation of the 
cooling water intake(s); and to confirm that the technology(ies) 
proposed and/or implemented at the cooling water intake structure 
reduce the impacts to fish and shellfish to levels comparable to those 
the facility would achieve were it to implement the applicable 
requirements in Sec.  125.134(b)(2) and, for facilities without 
seachests, Sec.  125.134(b)(5). To meet the ``comparable level'' 
requirement, the facility would demonstrate that it has reduced both 
impingement mortality and entrainment of all life stages of fish and 
shellfish to 90 percent or greater of the reduction that would be 
achieved through the applicable requirements in Sec.  125.134(b)(2) 
and, for facilities without seachests, Sec.  125.134(b)(5).
    Similar to the Proposal for Information Collection required in 
Phase II, the facility would develop and submit a plan to the Director 
containing a proposal for how information will be collected to support 
the study. The plan would include:
     A description of the proposed and/or implemented 
technology(ies) to be evaluated in the Study;
     A list and description of any historical studies 
characterizing the physical and biological conditions in the vicinity 
of the proposed or actual intakes and their relevancy to the proposed 
Study. If the facility proposes to rely on existing source waterbody 
data, the data must be no more than 5 years old, and the facility would 
demonstrate that the existing data are sufficient to develop a 
scientifically valid estimate of potential impingement mortality and 
entrainment impacts, and provide documentation showing that the data 
were collected using appropriate quality assurance/quality control 
procedures;
     Any public participation or consultation with Federal or 
State agencies undertaken in developing the plan; and
     A sampling plan for data that will be collected using 
actual field studies in the source waterbody. The sampling plan would 
document all methods and quality assurance procedures for sampling, and 
data analysis. The sampling and data analysis methods proposed would be 
appropriate for a quantitative survey and based on consideration of 
methods used in other studies performed in the source waterbody. The 
sampling plan would include a description of the study area (including 
the area of influence of the cooling water intake structure and at 
least 100 meters beyond); taxonomic identification of the sampled or 
evaluated biological assemblages (including all life stages of fish and 
shellfish); and sampling and data analysis methods.
    The facility would submit documentation of the results of the Study 
to the Director. Documentation of the results of the Study would 
include: Source Water Biological Study, an evaluation of potential 
cooling water intake structure effects, and a verification monitoring 
plan as described below.
    Source Water Biological Study. The Source Water Biological Study 
would include:
    (1) A taxonomic identification and characterization of aquatic 
biological resources including: A summary of historical and 
contemporary aquatic biological resources; determination and 
description of the target populations of concern (those species of fish 
and shellfish and all life stages that are most susceptible to 
impingement and entrainment); and a description of the abundance and 
temporal/spatial characterization of the target populations based on 
the collection of multiple years of data to capture the seasonal and 
daily activities (e.g., spawning, feeding and water column migration) 
of all life stages of fish and shellfish found in the vicinity of the 
cooling water intake structure;
    (2) An identification of all threatened or endangered species that 
might be susceptible to impingement and entrainment by the proposed 
cooling water intake structure(s); and
    (3) A description of additional chemical, water quality, and other 
anthropogenic stresses on the source waterbody.
    Evaluation of potential cooling water intake structure effects. 
This evaluation would include:
    (1) Calculations of the reduction in impingement mortality and, if 
applicable, entrainment of all life stages of fish and shellfish that 
would need to be achieved by the technologies selected to implement to 
meet requirements under Track II. To do this, the facility would 
determine the reduction in impingement mortality and entrainment that 
would be achieved by implementing the requirements of Sec.  
125.134(b)(2) and, for facilities without seachests, Sec.  
125.134(b)(5).
    (2) An engineering estimate of efficacy for the proposed and/or 
implemented technologies used to minimize impingement mortality and, if 
applicable, entrainment of all life stages of fish and shellfish and 
maximize survival of impinged life stages of fish and shellfish. The 
facility would demonstrate that the technologies reduce impingement 
mortality and, if applicable, entrainment of all life stages of fish 
and shellfish to a comparable level to that which would be achieved if 
the facility were to implement the requirements in Sec.  125.134(b)(2) 
and, for facilities without seachests, Sec.  125.134(b)(5). The 
efficacy projection would include a site-specific evaluation of 
technology(ies) suitability for reducing impingement mortality and 
entrainment based on the results of the Source Water Biological Study. 
Efficacy estimates may be determined based on case studies that have 
been conducted in the vicinity of the cooling water intake structure 
and/or site-specific technology prototype studies.
    Verification monitoring plan. The fixed facility would include in 
the Study a plan to conduct, at a minimum, two years of monitoring to 
verify the full-scale performance of the proposed or implemented 
technologies, and/or operational measures. The verification study would 
begin at the start of operations of the cooling water intake structure 
and continue for a sufficient period of time to demonstrate that the 
facility is reducing the level of impingement mortality and entrainment 
to the level documented under the evaluation of potential cooling water 
intake structure effects. The plan would describe the frequency of 
monitoring and the parameters to be monitored. The Director would use 
the verification monitoring to confirm that the facility is meeting the 
level of impingement mortality and entrainment reduction required in 
Sec.  125.134(c), and that the operation of the technology has been 
optimized.
2. As an Owner or Operator of a New Offshore Oil and Gas Extraction 
Fixed Facility, What Monitoring Is Required?
    Monitoring requirements for new offshore oil and gas extraction 
fixed facilities include impingement mortality and entrainment if the 
facility does not have a seachest. If the fixed facility has a 
seachest, monitoring requirements include impingement mortality only.
    Under today's proposal, monitoring would characterize the 
impingement and, if applicable, entrainment rates of commercial, 
recreational, and forage base fish and shellfish species identified in 
either the Source Water Baseline Biological Characterization data 
required by 40 CFR 122.21(r)(3) or the Comprehensive Demonstration 
Study required by Sec.  125.136(c)(2), depending on whether the 
facility has a seachest.

[[Page 68495]]

The monitoring methods used would be consistent with those used for the 
Source Water Baseline Biological Characterization data required in 40 
CFR 122.21(r)(4) or the Comprehensive Demonstration Study required by 
Sec.  125.136(c)(2).
    The fixed facility would be required to follow the monitoring 
frequencies identified below for at least two (2) years after the 
initial permit issuance. After that time, the Director may approve a 
request for less frequent sampling in the remaining years of the permit 
term and when the permit is reissued, if supporting data show that less 
frequent monitoring would still allow for the detection of any seasonal 
and daily variations in the species and numbers of individuals that are 
impinged or entrained.
    Impingement sampling. The facility would collect samples to monitor 
impingement rates (simple enumeration) for each species over a 24-hour 
period and no less than once per month when the cooling water intake 
structure is in operation.
    Entrainment sampling. If the fixed facility does not use a 
seachest, it would collect samples to monitor entrainment rates (simple 
enumeration) for each species over a 24-hour period and no less than 
biweekly during the primary period of reproduction, larval recruitment, 
and peak abundance identified during the Source Water Baseline 
Biological Characterization required by 40 CFR 122.21(r)(4) or the 
Comprehensive Demonstration Study required in Sec.  125.136(c)(2). 
Samples would be collected only when the cooling water intake structure 
is in operation.
    Velocity monitoring. If the facility uses a surface intake screen 
system, it would be required to monitor head loss across the screens 
and correlate the measured value with the design intake velocity. The 
head loss across the intake screen would be measured at the minimum 
ambient source water surface elevation (using best professional 
judgment based on available hydrological data). The maximum head loss 
across the screen for each cooling water intake structure would be used 
to determine compliance with the velocity requirement in Sec.  
125.134(b)(2). If the facility uses devices other than surface intake 
screens, it would monitor velocity at the point of entry through the 
device. Head loss or velocity would be monitored during initial 
facility startup, and thereafter, at the frequency specified in the 
NPDES permit, but no less than once per quarter.
    Visual or remote inspections. The facility would conduct visual 
inspections or employ remote monitoring devices during the period the 
cooling water intake structure is in operation. Visual inspections 
would be conducted at least weekly to ensure that any design and 
construction technologies required in Sec.  125.134(b)(4), (b)(5), (c), 
and/or (d) are maintained and operated to ensure that they will 
continue to function as designed. Alternatively, the facility would be 
required to inspect via remote monitoring devices to ensure that the 
impingement and entrainment technologies are functioning as designed.
3. What Recordkeeping and Reporting Is Required for New Offshore Oil 
and Gas Extraction Fixed Facilities?
    Owners and operators of new offshore oil and gas extraction fixed 
facilities would be required to keep records of all the data used to 
complete the permit application and show compliance with the 
requirements, any supplemental information developed under Sec.  
125.136, and any compliance monitoring data submitted under Sec.  
125.137, for a period of at least three years from the date of permit 
issuance. The Director may require that these records be kept for a 
longer period.
    Additionally, today's proposal would require that new offshore oil 
and gas extraction fixed facilities submit the following in a yearly 
status report:
     Biological monitoring records for each cooling water 
intake structure as required by Sec.  125.137(a);
     Velocity and head loss monitoring records for each cooling 
water intake structure as required by Sec.  125.137(b); and
     Records of visual or remote inspections as required in 
Sec.  125.137(c).
4. For New Non-Fixed (Mobile) Offshore Oil and Gas Extraction 
Facilities, What Information Is Required To Be Collected for the NPDES 
Application?

Velocity Information (Track I)

    Today's proposed rule would require that new nonfixed (mobile) 
offshore oil and gas extraction facilities submit velocity information 
consistent with Sec.  125.136(b)(1). The information would be used to 
demonstrate to the Director that the facility is complying with the 
requirement to meet a maximum through-screen design intake velocity of 
no more than 0.5 feet per second at the cooling water intake structure. 
The following information would be required to be submitted: (1) A 
narrative description of the design, structure, equipment, and 
operation used to meet the velocity requirement; and (2) design 
calculations showing that the velocity requirement would be met at 
minimum ambient source water surface elevations (based on best 
professional judgment using available hydrological data) and maximum 
head loss across the screens or other device.

Design and Construction Technology Plan (Track I)

    Today's proposed rule would require that new nonfixed (mobile) 
offshore oil and gas extraction facilities submit a design and 
construction technology plan only when required by the Director 
consistent with Sec.  125.134(b)(4). The design and construction 
technology plan would demonstrate that the facility has selected and 
will implement the design and construction technologies necessary to 
minimize impingement mortality in accordance with Sec.  125.134(b)(4). 
The design and construction technology plan would require delineation 
of the hydrologic zone of influence for the cooling water intake 
structure; a description of the technologies implemented (or to be 
implemented) at the facility; the basis for the selection of that 
technology; the expected performance of the technology, and design 
calculations, drawings and estimates to support the technology 
description and performance. The Agency recognizes that the selection 
of a specific technology or a group of technologies would depend on the 
individual facility and waterbody conditions.
5. As an Owner or Operator of a New Non-Fixed (Mobile) Offshore Oil and 
Gas Extraction Facility, What Monitoring Is Required?
    Under today's proposal, the Director may require monitoring to 
characterize the impingement of commercial, recreational, and forage 
base fish and shellfish species as specified by the Director in 
accordance with Sec.  125.134(b)(4) or Sec.  125.134(d).
    Velocity monitoring. If the mobile facility uses a surface intake 
screen system, it would be required to monitor head loss across the 
screens and correlate the measured value with the design intake 
velocity. The head loss across the intake screen would be measured at 
the minimum ambient source water surface elevation (using best 
professional judgment based on available hydrological data). The 
maximum head loss across the screen for each cooling water intake 
structure would be used to determine compliance with the velocity 
requirement in Sec.  125.134(b)(2). If the facility uses devices other 
than surface intake screens, it would monitor velocity at the

[[Page 68496]]

point of entry through the device. Head loss or velocity would be 
monitored during initial facility startup, and thereafter, at the 
frequency specified in the NPDES permit, but no less than once per 
quarter.
    Visual or remote inspections. The facility would conduct visual 
inspections or employ remote monitoring devices during the period the 
cooling water intake structure is in operation. Visual inspections 
would be conducted at least weekly to ensure that any design and 
construction technologies required in Sec.  125.134(b)(4), (b)(5), (c), 
and/or (d) are maintained and operated to ensure that they will 
continue to function as designed. Alternatively, the facility would be 
required to inspect via remote monitoring devices to ensure that the 
impingement technologies are functioning as designed.
6. What Recordkeeping and Reporting Is Required for New Non-Fixed 
(Mobile) Offshore Oil and Gas Extraction Facilities?
    Owners and operators of new mobile offshore oil and gas extraction 
facilities would be required to keep records of all the data used to 
complete the permit application and show compliance with the 
requirements, any supplemental information developed under Sec.  
125.136, and any compliance monitoring data submitted under Sec.  
125.137, for a period of at least three years from the date of permit 
issuance. The Director may require that these records be kept for a 
longer period.
    Additionally, today's proposal would require that new mobile 
offshore oil and gas extraction facilities submit the following in a 
yearly status report:
     Velocity and head loss monitoring records for each cooling 
water intake structure as required by Sec.  125.137(b); and
     Records of visual or remote inspections as required in 
Sec.  125.137(c).

E. What Are the Respective Federal, State, and Tribal Roles?

    Section 316(b) requirements are implemented through NPDES permits. 
Under 40 CFR 123.62(e), any existing approved State or Tribal section 
402 permitting program would be revised to be consistent with new 
program requirements within one year from the date of promulgation, 
unless the NPDES-authorized State or Tribe amends or enacts a statute 
to make the required revisions. If a State or Tribe amends or enacts a 
statute to conform with any promulgated Phase III rule, the revision 
would be required to be made within two years of promulgation. States 
and Tribes seeking new EPA authorization to implement the NPDES program 
would be required to comply with the requirements when authorization is 
requested.
    This proposed regulation would not alter State authority under 
section 510 of the Clean Water Act. EPA recognizes that some States 
have invested considerable effort in developing section 316(b) 
regulations and implementing programs. EPA is proposing regulations 
that would allow States to continue to use these programs by including 
in this national rule a provision that allows States to use their 
existing program if the State establishes that such programs would 
achieve comparable environmental performance. Specifically, the 
proposed rule would allow any State to demonstrate to the Administrator 
that it has adopted alternative regulatory requirements that would 
result in environmental performance within each relevant watershed that 
is comparable to the reductions in impingement mortality and 
entrainment that would be achieved under Sec.  125.103.
    In addition to updating their programs to be consistent with 
today's proposed rule, States and Tribes authorized to implement the 
NPDES program would be required to implement the cooling water intake 
structure requirements following promulgation of the proposed 
regulations. The requirements would have to be implemented upon the 
issuance or reissuance of permits containing the requirements of 
Subpart K or N. Duties of an authorized State or Tribe under this 
regulation may include:
     Review and verification of permit application materials, 
including a permit applicant's determination of source waterbody 
classification and the flow or volume of certain waterbodies at the 
point of the intake;
     Determination of the standards in Sec.  125.103(b) or 
Sec.  125.134 that apply to the facility, or authorize alternative 
requirements in Sec.  125.135;
     Verification of a permit applicant's determination of 
whether it meets or exceeds the applicable performance standards or 
requirements;
     Verification that a permit applicant's Design and 
Construction Technology Plan demonstrates that the proposed alternative 
technologies would reduce the impacts to fish and shellfish to levels 
required;
     Verification that a permit applicant meets the cost test 
and that permit conditions developed on a site-specific basis are 
justified based on documented costs, and, if applicable, benefits;
     Verification that a permit applicant's proposed 
restoration measures would meet regulatory standards (existing 
facilities only);
     Development of draft and final NPDES permit conditions for 
the applicant implementing applicable section 316(b) requirements 
pursuant to this rule; and
     Ensuring compliance with permit conditions based on 
section 316(b) requirements.
    EPA also will implement these requirements where States or Tribes 
are authorized to implement the NPDES program but do not have 
sufficient authority to implement these requirements.
    In the discussion of Federal, State and Tribal roles in the 
preamble to the Phase II final regulations (69 FR 41643, 3rd col.), EPA 
stated that ``EPA will implement these requirements where States or 
Tribes are not authorized to implement the NPDES program. EPA also will 
implement these requirements where States or Tribes are authorized to 
implement the NPDES program but do not have sufficient authority to 
implement these requirements.'' EPA notes that the second sentence in 
this quote incorrectly stated EPA's authority. In fact, EPA does not 
have authority to issue NPDES permits where States or Tribes are 
authorized to administer the NPDES program except after EPA vetoes a 
permit. (See Sec.  123.61(c) and Sec.  123.44(h).) Today's preamble 
correctly states that States and Tribes authorized to implement the 
NPDES program would need to have or obtain sufficient authority to 
implement final Phase III regulations. EPA intends to issue guidance to 
clarify that, pursuant to Sec.  123.25(a)(36), States and Tribes 
authorized to implement the NPDES program must have or obtain 
sufficient authority to implement the Phase II regulations.

F. Are Permits for Phase III Facilities Subject to Requirements Under 
Other Federal Statutes?

    EPA's NPDES permitting regulations at 40 CFR 122.49 contain a list 
of Federal laws that might apply to Federally issued NPDES permits. 
These include the Wild and Scenic Rivers Act, 16 U.S.C. 1273 et seq.; 
the National Historic Preservation Act of 1966, 16 U.S.C. 470 et seq.; 
the Endangered Species Act, 16 U.S.C. 1531 et seq.; the Coastal Zone 
Management Act, 16 U.S.C. 1451 et seq.; and the National Environmental 
Policy Act, 42 U.S.C. 4321 et seq. See 40 CFR 122.49 for a brief 
description of each of these laws. In addition, the provisions of the 
Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. 
1801 et seq., relating to essential

[[Page 68497]]

fish habitat might be relevant. Nothing in this proposed rulemaking 
would authorize activities that are not in compliance with these or 
other applicable Federal laws.

VIII. Economic Impact Analysis

    The discussion in this section summarizes EPA's analysis of total 
social cost and economic impacts for three co-proposed options for 
existing facilities: the ``50 MGD for All Waterbodies'' option, the 
``200 MGD for All Waterbodies'' option, and the ``100 MGD for Certain 
Waterbodies'' option. These options are described more fully in section 
VI. EPA also conducted analyses for other potential regulatory 
definitions, including applying requirements to all facilities with 
design intake flow of at least 2 MGD. This definition would have 
included all 683 potentially regulated Phase III facilities. This and 
other potential regulatory specifications are not being proposed 
because of economic practicability concerns, but analyses for them can 
be found in ``Economic Analysis for the Proposed Section 316(b) Rule 
for Phase III Facilities'' (hereafter referred to as the ``EA''; DCN 7-
0002). This section also presents EPA's estimates of total social cost 
and economic impacts for new offshore oil and gas extraction 
facilities. EPA's assessment of costs and economic impacts, including 
results for all analyzed regulatory definitions, can be found in the 
EA.

A. Existing Phase III Facilities: Manufacturers and Electric Power 
Producers

1. Overview of Affected Industry Sectors
    For the economic analyses, EPA distinguished between the types of 
facilities as follows:
     Manufacturing and Other Industries (``Manufacturers'')--
facilities in the paper, aluminum, steel, chemicals, petroleum and 
other industries. In addition to engaging in production activities, 
some of these facilities also generate electricity for their own use 
and occasionally for sale.
     Electric power producers (``Electric Generators'')--
facilities owned by investor-owned utilities, municipalities, States, 
Federal authorities, cooperatives, and non-utilities.
    Within the Manufacturers group, EPA focused its analysis on five 
manufacturing industries--Paper, Chemicals, Petroleum, Aluminum, and 
Steel (the ``Primary Manufacturing Industries'')--as the industries 
using the largest amounts of cooling water outside of the electric 
power generating industry. EPA's economic analysis for these industries 
is based on a statistically-valid survey sample of facilities in these 
five industries. This analysis also considers the effect of the 
regulation on facilities in other industries (``Other Industries'') 
that use cooling water to a lesser extent than the five Primary 
Manufacturing Industries and that are also covered by the proposal. The 
analysis for Other Industries is restricted to a limited sample of 
facilities for which EPA received detailed surveys but which are not 
part of the statistically valid sample. As a result, EPA's analysis of 
facilities in the Other Industries group is limited to the known 
facilities in this group. EPA has not specifically estimated the total 
number of facilities in the Other Industries group that may be subject 
to the regulation because EPA does not believe that this number can be 
reliably extrapolated from the number of known facilities in this 
group. However, because the six surveyed industries (including electric 
power) account for 99% of total cooling water withdrawals, EPA believes 
that few additional facilities in the Other Industries group are 
potentially subject to today's proposed regulation. EPA seeks comment 
and data on the number of facilities in the Other Industries group that 
may be subject to today's proposal.
    EPA's analysis also reflects a limited number facilities in the 
Virgin Islands and Puerto Rico for which EPA received detailed survey 
responses. These facilities have also been included in EPA's economic 
analysis. EPA is clarifying today's proposal would apply to any 
facility meeting the applicability criteria in Sec.  125.101. EPA seeks 
comment and data on the total number of facilities that may be subject 
to today's proposal.
    EPA's review of the engineering characteristics of cooling water 
intake and use in the Other Industries group indicates that cooling 
water intake and use in these industries do not differ materially from 
cooling water intake and use in the Primary Manufacturing Industries 
and the electric power industry. In addition, EPA specifically analyzed 
the economic impacts of the proposed options on known facilities in the 
Other Industries group. EPA believes that its findings of no economic 
impact to the known facilities in Other Industries and the 
practicability of the proposed options are generally applicable to the 
full breadth of industries within the regulation's scope. EPA is 
seeking comment and data on the economic impact and practicability of 
the proposed options on facilities in the Other Industries group.
    EPA estimates that as many as 566 facilities in the Manufacturers 
segment (including 537 facilities in the Primary Manufacturing 
Industries and 29 known facilities in Other Industries), and 117 
Electric Generators are potentially subject to this rulemaking, based 
on a design intake flow applicability threshold of greater than 2 MGD. 
EPA excluded from the analysis for each option those facilities that 
are below the option's design intake flow applicability threshold and 
would therefore not incur compliance costs. In addition, EPA's analyses 
identified existing facilities that are in severe financial distress 
independent of regulation. These facilities, referred to as ``baseline 
closures,'' were determined as likely to terminate business operations 
independent of the proposed options and were also excluded from the 
analyses presented in this section.
    Exhibit VIII-1 presents, by waterbody type and industry, EPA's 
estimates of (1) the number of existing facilities potentially subject 
to this rulemaking, (2) the number of baseline closures, and (3) the 
number of existing facilities subject to national requirements under 
five different design intake flow applicability thresholds.

                                   Exhibit VIII-1.--Phase III Existing Facility Counts, by Waterbody Type and Industry
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Facilities subject to national requirements with DIF
                                                               Potentially                applicability threshold of greater than or equal to (in MGD),
                           Industry                             subject to    Baseline                     excluding baseline closures
                                                                regulation    closure   ----------------------------------------------------------------
                                                                                              2            20           50          100          200
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     All Waterbodies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Man. Industries......................................          537           73          464          290          127           58           23
Other Industries.............................................           29            4           25           12            9            5            2

[[Page 68498]]

 
Electric Generators..........................................          117            3          114           51            0            0            0
                                                              --------------
    Total....................................................          683           80          603          353          136           63           25
                                                              ==============
    Total DIF (MGD)..........................................       40,441        4,440       36,001       33,683       26,714       21,587       16,144
--------------------------------------------------------------
                                                                 Coastal and Great Lakes
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Man. Industries......................................          110           17           94           67           35           17           10
Other Industries.............................................            9            3            6            5            4            2            1
Electric Generators..........................................           11            0           11            4            0            0            0
                                                              --------------
    Total....................................................          130           20          111           76           39           19           11
                                                              ==============
    Total DIF (MGD)..........................................       11,010        2,423        8,587        8,179        7,190        5,747        4,418
--------------------------------------------------------------
                                                                         Inland
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Man. Industries......................................          427           56          371          223           92           41           13
Other Industries.............................................           20            1           19            7            5            3            1
Electric Generators..........................................          106            3          103           47            0            0            0
                                                              --------------
    Total....................................................          553           60          493          277           97           44           14
                                                              ==============
    Total DIF (MGD)..........................................       29,431        2,017       27,414       25,504       19,524       15,841       11,726
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Method for Estimating Costs to Manufacturers and Electric Generators
    EPA estimated capital costs of technologies, annual operation and 
maintenance costs, installation downtime costs, and permitting costs. 
The cost estimates reflect the incremental costs attributed only to 
today's proposal. For example, facilities with closed-cycle 
recirculating systems already meet the proposed performance standards, 
and therefore would not incur costs for new technologies, additional 
annual operational costs, or downtime costs (though such facilities 
would still incur some components of permitting costs).
    For estimating the incremental compliance costs attributable to the 
proposed options, EPA developed both facility-specific and model 
facility costs. Facility-specific compliance costs require detailed 
process information about many, if not all, facilities in the industry. 
These data typically include production, capacity, water use, 
wastewater generation, monitoring results, geographic location, 
financial conditions, technologies and practices already in place, and 
other facility-specific data. EPA used a detailed technical survey of 
Electric Generators and Manufacturers to collect these data (see 
section III for more information on EPA's detailed survey). These data 
and detailed process information were used to determine whether new 
controls would be necessary to meet the standards of the proposed rule, 
and to estimate the cost of installing any new or additional controls. 
While the Agency is confident that the suite of available technologies 
can achieve compliance with the proposed performance requirements (60-
90 percent reduction in entrainment and 80-95 percent reduction in 
impingement mortality relative to the calculation baseline), EPA lacks 
sufficient data and resources to determine the precise cost and 
performance of each technology on a site-specific basis. Therefore, EPA 
first calculated the facility-specific costs for 348 facilities for 
which detailed information was available, and applied the model 
facility approach to the remaining facilities to calculate the 
industry-level costs for the approximately 700 existing Manufacturers 
and Electric Generators.
    In costing each model facility, EPA, to a degree, departed from its 
traditional least-cost approach. The least-cost approach relies on the 
principle that the complying facility will choose the most cost-
effective compliance alternative to meet the regulatory requirements. 
In most cases, this means the facility will install the least-cost 
technology that meets the minimum standard. Instead of selecting the 
least-cost compliance alternative (see section VI for a description of 
the compliance alternatives), a best-performing technology was assigned 
to a model facility utilizing a spreadsheet program called the ``cost-
test tool.'' The cost-test tool determines one of two possible 
performance expectations: (1) Impingement requirements only or (2) both 
impingement and entrainment requirements. The cost-test tool then 
determines a compliance response for the facility/intake by accounting 
for existing technologies (such as wedgewire screens) and conditions 
(such as a shoreline intake location or the through-screen velocity). 
Next, the cost-test tool applies EPA's decision tree for assigning one 
of 12 technology modules as the best-performing technology to a site 
(see Figure 2-1 of the Phase III TDD for a schematic of this decision 
tree). This should not be construed to mean today's proposed options 
would require facilities to install the technologies selected by the 
cost-test tool. Under today's proposal, facilities could choose any 
technology, combination of technologies, or operational measures that 
would meet the requirements of the selected compliance alternative 
along with any other additional permit requirements. Finally, cost 
estimates are derived through a combination of calculations and 
functions that apply facility-specific data to the selected technology 
module. The cost outputs include capital costs, incremental operating 
and maintenance (O&M) costs, and installation downtime (in weeks).

[[Page 68499]]

    Based on data from EPA's detailed technical survey, EPA believes 
that cooling water intake structures at Electric Generators are, in 
general, no different from those intake structures employed by 
Manufacturers. Therefore, the Phase II costs attributed to control 
technologies were used to calculate costs for potentially regulated 
existing Phase III Manufacturers and Electric Generators. EPA generally 
utilized the original methodology published in the Phase II NODA (68 FR 
13522; March 19, 2003), accounting for comments received from the 
public. EPA also used the costing equations it developed for the final 
Phase II rule, along with the site-specific data obtained from the 
detailed surveys. EPA requests comment, including supporting data, on 
the use of technologies and costing equations from the Phase II rule in 
the Phase III analysis.
    Permit costs, including costs for permitting, monitoring, permit 
reissuance, and recordkeeping, are not included in the cost-test tool. 
Costs for these activities were developed separately as part of the 
Information Collection Request (ICR) for Cooling Water Intake 
Structures Phase III Proposed Rule (``ICR''; DCN 7-0001). The per 
facility permit costs were added to the incremental compliance costs, 
along with installation downtime costs (where appropriate), in 
developing the total model facility cost. The per facility permit costs 
may be found in Chapter B1 of the EA.
    In addition to the capital and annual operating costs of the 
selected technology module, 16 facilities (sample-weighted, with more 
than 50 MGD intake, and excluding baseline closures) incur downtime 
costs. Downtime costs generally reflect decreased revenues due to lost 
production or costs of supplemental power purchases during the retrofit 
of existing cooling water intake structures. EPA determined that an 
additional four facilities with multiple intakes could shut off any one 
intake and still meet their average intake flow without exceeding the 
total design intake flow of the remaining intakes. Furthermore, these 
facilities all have shoreline intakes, negating the need to maintain 
costly offshore equipment necessary to retrofit one intake at a time. 
EPA assumes these four facilities could retrofit one intake at a time, 
thereby avoiding downtime costs. In all other cases, the length of 
downtime (in weeks) and the general approach to estimating the cost of 
downtime are the same as used for the Phase II analysis. See chapter 5 
of the TDD for more details. EPA solicits comment and supporting data 
on this approach to estimating downtime costs.
    Total social costs are presented in section VIII.C of this 
preamble.
    Under today's proposal, facilities have five compliance 
alternatives for meeting the performance standards. Not all of these 
compliance alternatives are addressed by the cost-test tool. The cost-
test tool, and therefore total national costs, do not specifically 
adjust for site-specific requirements developed in accordance with 
compliance alternative 5 (see also section VI of this preamble). While 
costs for facilities requesting alternative requirements based on the 
cost-cost test should be comparable to EPA's estimated costs, costs for 
facilities requesting alternative requirements based on the cost-
benefit test may be less. In addition, each model facility was costed 
for a single best-performing technology module, which does not 
necessarily reflect the most cost-effective compliance alternative. 
Thus, although EPA's costs for each model facility to install a 
specified compliance technology are believed to be accurate, the total 
national costs of today's proposal may be overstated.
    EPA solicits comment on all aspects of this costing approach.
3. Social Cost for Manufacturers and Electric Generators
    EPA calculated the social cost of the three co-proposed options for 
existing Manufacturers and Electric Generators using two discount rate 
values: 3 percent and 7 percent. All dollar values presented in this 
preamble are in 2003 dollars (average or mid-year). For the analysis of 
social costs, EPA discounted all costs to the beginning of 2007, the 
date at which this proposal is assumed to become effective. EPA assumed 
that all facilities subject to the regulation would achieve compliance 
between 2010 and 2014, and estimated the time profile of compliance and 
related costs over 30 years from the year of compliance for each 
complying facility.\42\ Costs incurred by governments for administering 
the regulation were analyzed over the same time frame. The last year 
for which costs were tallied is 2043. At a 3 percent rate, EPA 
estimated total annualized social costs of $47.3 million for the ``50 
MGD for All Waterbodies'' option, $22.8 million for the ``200 MGD for 
All Waterbodies'' option, and $17.6 million for the ``100 MGD for 
Certain Water bodies'' option. At a 7 percent rate, these values are 
$50.1 million for the 50 MGD option, $24.1 million for the 200 MGD 
option, and $18.3 million for the 100 MGD option. The largest component 
of social cost is the pre-tax cost of regulatory compliance incurred by 
complying facilities; these costs include pilot study costs, one-time 
technology costs of complying with the rule, one-time costs of 
installation downtime, annual operating and maintenance costs, and 
permitting costs (initial permit costs, annual monitoring costs, and 
permit reissuance costs). Social cost also includes implementation 
costs incurred by Federal and State governments. Exhibit VIII-2 
presents the social cost of the proposed options, by type of cost and 
type of facility, using 3 percent and 7 percent discount rates.
---------------------------------------------------------------------------

    \42\ Benefits are tallied and discounted in the same way, 
although the total time profile for recognition of benefits is 
longer than the profile for recognition of costs.

                                     Exhibit VIII-2.--Annualized Social Cost
                                              [In millions, 2003 $]
----------------------------------------------------------------------------------------------------------------
                                                                                                       100 MGD
                                                                       50 MGD all      200 MGD all     certain
                                                                       waterbodies     waterbodies   waterbodies
----------------------------------------------------------------------------------------------------------------
                                                3% Discount Rate
----------------------------------------------------------------------------------------------------------------
Direct Compliance Cost:
    Primary Manufacturing Industries...............................           $42.7           $21.7   $16.7
    Other Industries...............................................             4.1             1.0     0.7
    Electric Generators............................................             0.0             0.0     0.0
                                                                    -----------------

[[Page 68500]]

 
        Total Direct Compliance Cost...............................            46.8            22.6    17.5
State and Federal Administrative Cost..............................             0.6             0.1     0.2
                                                                    -----------------
    Total Social Cost..............................................            47.3            22.8    17.6
--------------------------------------------------------------------
                                                7% Discount Rate
----------------------------------------------------------------------------------------------------------------
Direct Compliance Cost:
    Primary Manufacturing Industries...............................            45.1            23.1    17.4
    Other Industries...............................................             4.4             0.9     0.7
    Electric Generators............................................             0.0             0.0     0.0
                                                                    -----------------
        Total Direct Compliance Cost...............................            49.5            24.0    18.1
State and Federal Administrative Cost..............................             0.6             0.1     0.2
                                                                    -----------------
    Total Social Cost..............................................            50.1            24.1    18.3
----------------------------------------------------------------------------------------------------------------

    As shown in Exhibit VIII-2, compliance cost in the Manufacturers 
segment accounts for the substantial majority of total social cost and 
direct compliance cost under all three options. No Electric Generators 
would be subject to the national requirements under any of the three 
co-proposed options. On a per facility basis and at a 3 percent 
discount rate, annualized pre-tax costs in the Manufacturers segment 
amount to $349,000 under the ``50 MGD for All Waterbodies'' option, 
$920,000 under the ``200 MGD for All Waterbodies'' option, and $929,000 
under the ``100 MGD for Certain Waterbodies'' option. The corresponding 
values using a 7 percent discount rate are $369,000 under the ``50 MGD 
for All Waterbodies'' option, $974,000 under the ``200 MGD for All 
Waterbodies'' option, and $962,000 under the ``100 MGD for Certain 
Waterbodies'' option. Because the 200 MGD option and the 100 MGD option 
apply national categorical requirements to a smaller number of higher 
flow facilities than the 50 MGD option, they result in a lower total 
national cost but a higher cost per regulated facility. Individual 
facilities that are subject to the requirements of the 200 MGD option 
or the 100 MGD option incur the same compliance costs as under the 50 
MGD option (in which they are also included); however, the average 
costs per regulated facility are higher under the 200 MGD and 100 MGD 
options because only the higher flow, and therefore higher cost, 
facilities incur costs under these options.
    EPA's estimate of Federal and State government costs for 
administering this proposal is comparatively minor in relation to the 
estimated direct cost of regulatory compliance. EPA estimates 
government annual administrative costs of approximately $0.6 million 
(50 MGD option), $0.1 million (200 MGD option), and $0.2 million (100 
MGD option) under both discount rates.
4. Economic Impacts for Manufacturers and Electric Generators
    The economic impact analyses assess how facilities, and the firms 
that own them, are expected to be affected financially by the analyzed 
options. The facility impact analysis starts with compliance cost 
estimates (see section VIII.A.2) and then calculates how these 
compliance costs would affect financial performance and other economic 
conditions.
a. Manufacturers (Primary Manufacturing Industries and Other 
Industries)
    This section presents EPA's estimated economic impacts on 
Manufacturers for the three co-proposed options. Measures of economic 
impact include facility closures and associated losses in employment, 
financial stress short of closure (``moderate impacts''), and firm-
level impacts. EPA eliminated from the analysis those facilities 
showing materially inadequate financial performance in the baseline, 
that is, in the absence of the rule. EPA judges these facilities, which 
are referred to as baseline closures, to be at substantial risk of 
financial failure regardless of any additional financial burden that 
might result from the proposed Phase III regulation.
    For the remaining facilities, EPA identified a facility as a 
regulatory closure if it would have operated under baseline conditions 
but would fall below an acceptable financial performance level under 
the new regulatory requirements. EPA's analysis of regulatory closures 
is based on the estimated change in facility after-tax cash flow (cash 
flow) as a result of the regulation and specifically examines whether 
the change in cash flow would be sufficient to cause the facility's 
going concern business value to become negative. EPA calculated 
business value using a discounted cash flow framework in which cash 
flow is discounted at an estimated cost of capital to calculate the 
going concern value of the facility. The specific definition of cash 
flow used in these analyses is after-tax free cash flow available to 
all capital--equity and debt. Correspondingly, the cost of capital 
reflects the combined cost, after-tax, of equity and debt capital. For 
its analysis of economic/financial impacts on the Manufacturers 
industry segment, EPA used 7 percent as a real, after-tax cost of 
capital.
    In these analyses, EPA first calculated the baseline going concern 
value of the facility using its baseline cash flow--i.e., facility cash 
flow before compliance-related outlays. For this calculation, EPA used 
the three-year average of cash flow as reported in each facility's 
survey response and adjusted to constant 2003 dollars. In addition to 
adjusting facility cash flow values for inflation to 2003, EPA adjusted 
facility baseline cash flow to reflect the estimated real change (i.e., 
independent of inflation) in business performance in the manufacturing 
industries from the time of the facility survey, 1996-1998, to the 
present. EPA also estimated an ongoing outlay for replacement of the 
facility's capital equipment and included this as an adjustment to 
baseline cash flow. EPA included an allowance of ongoing capital 
outlays in

[[Page 68501]]

the calculation of cash flow because such outlays for replacement and 
refurbishment of capital equipment occur in the ordinary course of 
business and represent a cash outlay for the business. EPA estimated 
these outlays based on an econometric analysis of actual capital 
outlays over an 11-year period by businesses in the five Manufacturers 
industry segments. This analysis accounted for national economic 
conditions, business conditions in the specific industry segments, and 
financial performance of the individual businesses (see EA, Chapter B3 
for details of this analysis and the details of the cash flow 
calculation). Using this adjusted baseline cash flow, if EPA found the 
facility's estimated going concern value to be negative, then the 
facility was judged a baseline closure--i.e., likely to fail 
financially, independent of incurrence of compliance costs--and removed 
the facility from further consideration in the impact analysis.
    As the second step in the facility impact analysis, EPA adjusted 
the baseline cash flow to reflect the expected financial effects of 
compliance technology installation and operation. For this analysis, 
EPA assumed that none of the facility's compliance costs could be 
passed on to its customers as price and revenue increase--i.e., all 
compliance costs must be absorbed within the facility's cash flow. EPA 
then recalculated the facility's business value using the adjusted 
post-compliance cash flow. If this analysis found that the facility's 
business value would become negative as a result of meeting compliance 
requirements, then EPA judged the facility to be a regulatory closure.
    EPA also identified facilities that would likely incur moderate 
financial impacts, but that are not expected to close, as a result of 
the proposed rule. EPA established thresholds for two measures of 
financial performance and condition--interest coverage ratio (ICR) and 
pre-tax return on assets (PTRA)--and compared the facilities' 
performance before and after compliance under each regulatory option 
with these thresholds. EPA calculated ICR as pre-tax operating cash 
flow--earnings before interest, taxes, and depreciation--divided by 
interest expense. This measure provides insight into a business' 
ability to service its debt on the basis of current, ongoing financial 
performance and to borrow for capital investments. EPA calculated PTRA 
as the ratio of pre-tax operating income--earnings before interest and 
taxes--to assets. This ratio measures the operating performance and 
profitability of a business' assets independent of financial structure 
and tax circumstances. For this analysis, EPA developed industry-
specific thresholds from data compiled by Risk Management Association, 
Inc. (RMA). The threshold values represent the 25th percentile values 
of PTRA and ICR for statements received by RMA for the eight years from 
1994 to 2001 within relevant industries. Thresholds by sector ranged 
from 1.8% to 2.9% for PTRA and from 2.0 to 2.4 for ICR (see EA Chapter 
B3 for additional information). EPA attributed incremental moderate 
impacts to the rule if both financial ratios exceeded threshold values 
in the baseline (i.e., there were no moderate impacts in the baseline), 
but at least one financial ratio fell below the threshold value in the 
post-compliance case.
i. Baseline Closure Analysis
    Exhibit VIII-3 presents projected baseline closures for the 
estimated facilities in the Primary Manufacturing Industries and 
additional known facilities in Other Industries.\43\ From the analysis 
as outlined above, EPA determined that 76 facilities (or 14 percent) of 
the estimated 532 regulated facilities in the five Primary 
Manufacturing Industries are baseline closures. The highest percentages 
of baseline closures occur in the Steel industry sector (43 percent) 
and Aluminum industry sector (33 percent). An additional four 
facilities (or 18 percent) of the 22 known facilities in Other 
Industries are projected to be baseline closures. These facilities were 
excluded from the post-compliance analysis of regulatory impacts.
---------------------------------------------------------------------------

    \43\ The estimated number of Manufacturers considered in the 
impact analysis (554) differs from the number reported in the 
broader analyses (566) because of the exclusion of some sample 
surveys with missing data and the rescaling of the remaining surveys 
to extrapolate national impacts. EPA determined that the survey 
responses of 14 sample facilities lacked certain financial data 
needed for the facility impact analysis while containing sufficient 
data to support estimates of facility counts and compliance costs. 
EPA therefore retained these sample facilities (37 sample weighted 
facilities) in the broader analyses but excluded them from the 
impact analysis. When these sample facilities were excluded from the 
impact analysis, the sample weights for the remaining facilities 
within the affected sample frames were adjusted upwards to account 
for their removal. The difference in the reported facility totals in 
the impact and social cost analyses reflects the removal of these 14 
facilities and the use of adjusted sample weights. The removal of 
specific sample facilities from the analysis universe and 
simultaneous adjustment of sample weights to account for their 
removal yields the same estimate of the total combined population of 
Manufacturers and Electric Generators for the analysis. However, as 
a result of the sample stratification methodology, the estimates of 
the total facility populations for Manufacturers only differ 
slightly between the two sample facility cases. Both values are 
valid statistical estimates of the same, but unknown, value of the 
Manufacturers facility population.

                         Exhibit VIII-3.--Summary of Baseline Closures for Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                                     Number of     Percentage of
                     Sector                        Total number      baseline        baseline      Operating in
                                                   of facilities     closures        closures        baseline
----------------------------------------------------------------------------------------------------------------
Paper...........................................             230              32            13.9             198
Chemicals.......................................             178               4             2.2             173
Petroleum.......................................              36               5            13.9              30
Steel...........................................              68              29            42.6              40
Aluminum........................................              21               7            33.3              14
                                                 -----------------
    Total Facilities in Primary Manufacturing                532              76            14.3             456
     Industries.................................
Additional known facilities in Other Industries.              22               4            18.2              18
                                                 -----------------
    Total Manufacturers.........................             554              80            14.4             474
----------------------------------------------------------------------------------------------------------------


[[Page 68502]]

ii. Number of Facilities Passing the Baseline Closure Analysis and 
Subject to National Categorical Requirements
    As described above, the number of Manufacturers subject to national 
categorical requirements differs according to (1) the options' design 
intake flow (DIF) applicability thresholds, and (2) the type of 
waterbodies to which they would apply. Of the three co-proposed options 
presented here, the ``100 MGD for Certain Waterbodies'' option would 
apply to the smallest number of the facilities that passed the baseline 
closure analysis (``baseline-pass facilities'')--20 facilities, or 18 
facilities in the Primary Manufacturing Industries and two known 
facilities in Other Industries (see Exhibit VIII-4). The ``200 MGD for 
All Waterbodies'' option would apply to 24 baseline-pass facilities, or 
22 facilities in the Primary Manufacturing Industries and two known 
facilities in Other Industries. The ``50 MGD for All Waterbodies'' 
would apply to 133 baseline-pass facilities, or 127 facilities in the 
Primary Manufacturing Industries and 6 known facilities in Other 
Industries.

           Exhibit VIII-4.--Number of Baseline-Pass Manufacturing Facilities Subject to National Categorical Requirements by Option and Sector
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Number of facilities subject to national categorical requirements
                                                                           -----------------------------------------------------------------------------
                                                                  Total      50 MGD all waterbodies    200 MGD all waterbodies       100 MGD certain
                            Sector                              operating  ----------------------------------------------------        waterbodies
                                                               in baseline                                                     -------------------------
                                                                               Number      Percent       Number      Percent       Number      Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
Paper........................................................          198           37         18.7            3          1.5            0          0.0
Chemicals....................................................          173           52         30.1            5          2.9            7          4.0
Petroleum....................................................           30           13         43.3            3         10.0            5         16.7
Steel........................................................           40           22         55.0            9         22.5            6         15.0
Aluminum.....................................................           14            5         35.7            1          7.1            0          0.0
                                                              --------------
    Total Facilities in Primary Manufacturing Industries.....          456          127         27.9           22          4.8           18          3.9
Additional known facilities in Other Industries..............           18            6         33.3            2         11.1            2         11.1
                                                              --------------
    Total Manufacturers......................................          474          133         28.1           24          5.1           20         4.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: May not sum to totals due to independent rounding.

iii. Post-Compliance Impact Analysis; Summary of Impacts
    Of the 474 Manufacturers potentially subject to regulation after 
baseline closures, EPA estimated that no facilities would close or 
incur employment losses as a result of the three co-proposed options 
considered here. EPA also found that none of the 474 baseline-pass 
facilities would incur a moderate economic impact as a result of the 
three co-proposed options.
    Exhibit VIII-5 summarizes the estimated impacts of the proposed 
rule on Manufacturers by option, including facility impacts and total 
annualized compliance costs on an after-tax basis. The reported costs 
include no compliance costs for facilities assessed as baseline 
closures. The total annualized, after-tax compliance cost reported in 
Exhibit VIII-5 represents the cost actually incurred by complying 
firms, taking into account the reductions in tax liability resulting 
from compliance outlays and assuming no recovery of costs from 
customers through increased prices. The after-tax analysis uses a 
combined Federal/State tax rate, and accounts for facilities' baseline 
tax circumstances. Specifically, tax offsets to compliance costs are 
limited not to exceed facility-level tax payments as reported in 
facility questionnaire responses. The total annualized, after-tax 
compliance cost reported here is the sum of annualized, after-tax costs 
by facility at the year of compliance, using a 7 percent after-tax cost 
of capital. This cost calculation differs in concept from the 
calculation of compliance costs as included in the calculation of the 
total social costs of the regulation. For the social cost calculation, 
which is presented in section VIII.A.2, the year-by-year stream of 
total pre-tax compliance costs for all facilities is discounted to the 
assumed effectiveness date of the 316(b) Phase III final rule--
beginning of year 2007--and then annualized. Two social discount rate 
values, 3 percent and 7 percent, are used in the social cost analysis.

                               Exhibit VIII-5.--Facility Impacts for Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                                                                     100 MGD
                                                                  50 MGD all      200 MGD all        certain
                                                                 waterbodies      waterbodies      waterbodies
----------------------------------------------------------------------------------------------------------------
                                        Primary Manufacturing Industries
----------------------------------------------------------------------------------------------------------------
Number of Facilities Operating in Baseline...................            456              456              456
Number of Facilities Subject to National Requirements........            127               22               18
Percentage of Facilities Subject to National Requirements....             27.9              4.8              3.9
Number of Closures (Severe Impacts)..........................              0                0                0
Percentage of Facilities Closing.............................              0.0              0.0              0.0
Number of Facilities with Moderate Impacts...................              0                0                0
Percentage of Facilities with Moderate Impacts...............              0.0              0.0              0.0
Annualized Compliance Costs (after tax, million $2003).......            $32.8            $13.7            $15.8
--------------------------------------------------------------

[[Page 68503]]

 
                                 Additional Known Facilities in Other Industries
----------------------------------------------------------------------------------------------------------------
Number of Facilities Operating in Baseline...................             18               18               18
Number of Facilities Subject to National Requirements........              6                2                2
Percentage of Facilities Subject to National Requirements....             33.3             11.1             11.1
Number of Closures (Severe Impacts)..........................              0                0                0
Percentage of Facilities Closing.............................              0.0              0.0              0.0
Number of Facilities with Moderate Impacts...................              0                0                0
Percentage of Facilities with Moderate Impacts...............              0.0              0.0              0.0
Annualized Compliance Costs (after tax, million $2003).......             $5.2             $0.7             $0.6
----------------------------------------------------------------------------------------------------------------

iv. Firm-Level Impact
    In addition to analyzing the impact of the regulation at the 
facility level, EPA also examined the impact of the proposed rule on 
firms that own manufacturing facilities with cooling water intake 
structures. A firm that owns multiple facilities could be adversely 
affected due to the cumulative burden of regulatory requirements over 
these facilities. EPA also used the firm-level analysis to compare 
impacts on small versus large firms, as required by the Regulatory 
Flexibility Act as amended by the Small Business Regulatory Enforcement 
Fairness Act. Section XI.C of this preamble discusses RFA/SBREFA 
issues. For the assessment of firm-level effects, EPA calculated 
annualized after-tax compliance costs as a percentage of firm revenue 
and reports here the estimated number and percentage of affected firms 
incurring compliance costs in three cost-to-revenue ranges: less than 1 
percent; at least 1 percent but less than 3 percent; and 3 percent or 
higher.
    EPA's sample-based analysis of facilities in the Primary 
Manufacturing Industries supports specific estimates of the number of 
facilities expected to be affected by the regulation and the total 
compliance costs expected to be incurred in these facilities. However, 
the sample-based analysis does not support specific estimates of the 
number of firms that own facilities in the Primary Manufacturing 
Industries. In addition, and as a corollary, the sample-based analysis 
does not support specific estimates of the number of regulated 
facilities that may be owned by a single firm, or of the total of 
compliance costs across regulated facilities that may be owned by a 
single firm. For the firm-level analysis, EPA therefore considered two 
approximate bounding cases based on the sample weights developed from 
the facility survey. These cases provide a range of estimates for the 
number of firms incurring compliance costs and the costs incurred by 
any firm owning a regulated facility. The cases are as follows:
    1. Upper bound estimate of number of firms owning facilities that 
face requirements under the regulation; lower bound estimate of total 
compliance costs that a firm may incur. For this case, EPA assumed (1) 
that a firm owns only the regulated sample facility(ies) that it is 
known to own from the sample analysis and (2) that this pattern of 
ownership, observed for sampled facilities and their owning firms, 
extends over the facility population represented by the sample 
facilities. This case minimizes the possibility of multi-facility 
ownership by a single firm and thus maximizes the count of affected 
firms, but also minimizes the potential cost burden to any single firm.
    2. Lower bound estimate of number of firms owning facilities that 
face requirements under the regulation; upper bound estimate of total 
compliance costs that a firm may incur. For this case, EPA inverted the 
prior assumption and assumed that any firm owning a regulated sample 
facility(ies), owns the known sample facility(ies) and all of the 
sample weights associated with the sample facility(ies). This case 
yields an approximate lower bound estimate of the count of affected 
firms, and an approximate upper bound estimate of the potential cost 
burden to any single firm (see EA Chapter B3 for information on the 
analysis of firm-level impacts).
    EPA included the additional known facilities in Other Industries in 
these analyses but since these facilities have no sample weight (i.e., 
they are not modeled to represent facilities other than themselves), 
the upper and lower bound estimates were not applicable to them.
    Exhibit VIII-6 summarizes the results of the firm-level analysis 
for these two analytic cases.

                                Exhibit VIII-6.--Firm-Level After-Tax Annual Compliance Costs as a Percentage of Revenue
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        No costs          Number and percentage with after tax annual compliance costs/
                                                                 ----------------------                         annual revenue of
                                                                                       -----------------------------------------------------------------
           Number of firms in the analysis             Pot. reg.                            Less than 1%              1-3%               At Least 3%
                                                                    Number    Percent  -----------------------------------------------------------------
                                                                                          Number    Percent     Number    Percent     Number    Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Primary Manufacturing Industries
--------------------------------------------------------------------------------------------------------------------------------------------------------
Case 1: Upper bound estimate of number of firms owning facilities that face requirements under the regulation; lower bound estimate of total compliance
 costs that a firm may incur
--------------------------------------------------------------------------------------------------------------------------------------------------------
50 MGD All Waterbodies...............................        313        208         66        105         34          0          0          0          0
200 MGD All Waterbodies..............................        313        292         93         21          7          0          0          0          0
100 MGD Certain Waterbodies..........................        313        293         94         21          7          0          0          0          0
------------------------------------------------------

[[Page 68504]]

 
Case 2: Lower bound estimate of number of firms owning facilities that face requirements under the regulation; upper bound estimate of total compliance
 costs that a firm may incur
--------------------------------------------------------------------------------------------------------------------------------------------------------
50 MGD All Waterbodies...............................        100         54         54         46         46          0          0          0          0
200 MGD All Waterbodies..............................        100         86         86         14         14          0          0          0          0
100 MGD Certain Waterbodies..........................        100         88         88         12         12          0          0          0          0
------------------------------------------------------
                                                                    Other Industries
--------------------------------------------------------------------------------------------------------------------------------------------------------
50 MGD All Waterbodies...............................         14         10         71          4         29          0          0          0          0
200 MGD All Waterbodies..............................         14         13         93          1          7          0          0          0          0
100 MGD Certain Waterbodies..........................         14         13         93          1          7          0          0          0          0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As presented in Exhibit VIII-6, EPA estimated that the number of 
firms owning regulated facilities in the Primary Manufacturing 
Industries range from 100 (Case 2 estimate) to 313 (Case 1 estimate), 
depending on the assumed ownership cases outlined above. An additional 
14 firms are known to own facilities in Other Industries. No firms are 
estimated to incur total compliance costs equal to or exceeding 1 
percent of revenue under any of the regulatory options.
b. Electric Generators
    All Electric Generators with a design intake flow of 50 MGD or 
greater were already covered by the final Phase II regulation. As a 
result, no Electric Generators are subject to the national categorical 
requirements of the three co-proposed options.

B. New Offshore Oil and Gas Extraction Facilities

1. Overview of Affected Industry Sectors
    The proposed rule establishes requirements for new facilities that 
would apply to new offshore oil and gas extraction facilities that 
employ a cooling water intake structure (CWIS) and are designed to 
withdraw greater than 2 million gallons per day (MGD) from waters of 
the United States.\44\ Offshore oil and gas extraction facilities 
(``Oil and Gas Facilities'') are facilities primarily engaged in oil 
and gas production and drilling activities. This analysis includes oil 
and gas production platforms/structures and mobile offshore drilling 
units (MODUs). EPA estimates that 21 new oil and gas extraction 
platforms and 103 new MODUs would be subject to the national 
requirements of the proposed option, assuming a 20-year period of 
construction from 2007 (the assumed effective date of the rule) to 
2026. Each newly-constructed facility is assumed to operate for 30 
years, extending the entire analysis period over 49 years (2007 to 
2055). Different methods of discounting over time are used for the 
social cost and impact analyses. Social costs are discounted to 2007, 
the assumed effective date of the rule, and then annualized over 30 
years using 3% and 7% discount rates. For the impact analysis, 
compliance costs are discounted for each individual facility to the 
year of compliance (the year the vessel is launched or the platform/
structure comes on line, which ranges from 2007 to 2026) and then 
summed to produce an aggregate present value of compliance costs. This 
aggregate present value is then annualized over 30 years using 3% and 
7% discount rates.
---------------------------------------------------------------------------

    \44\ See section II.B for a definition of a new offshore oil and 
gas extraction facility for the purposes of this proposal.
---------------------------------------------------------------------------

2. Social Cost for New Offshore Oil and Gas Extraction Facilities
    The total annualized social cost of the proposed option for new Oil 
and Gas facilities is estimated at $3.7 million using a 3 percent 
discount rate, and $3.0 million using a 7 percent discount rate. The 
largest component of social cost is the pre-tax cost of regulatory 
compliance incurred by complying facilities; these costs include one-
time technology costs of complying with the rule, annual operating and 
maintenance costs, and permitting costs (initial permit costs, annual 
monitoring costs, and permit reissuance costs). Social cost also 
includes implementation costs incurred by the Federal government. EPA 
expects that for the most part, the proposed regulation would be 
implemented under general permits, two in the Gulf of Mexico, and one 
in Cook Inlet Alaska.\45\ States are thus not likely to be involved in 
administering the permits for new regulated offshore oil and gas 
facilities because the facilities in the Gulf of Mexico operate in non-
State waters (beyond the 3-mile limit) and Alaska does not have NPDES 
authority. EPA requests comment on its projections about the operating 
locations of new facilities.
---------------------------------------------------------------------------

    \45\ Because individual permits are not issued, costs for pre-
permitting and re-permitting studies are assumed to be shared among 
groups of new facilities expected to be covered by the general 
permits (see DCN 7-4036 for detailed information on how permitting 
costs are assumed to be shared under the general permits).
---------------------------------------------------------------------------

    EPA estimates that direct compliance costs would be $3.2 million 
and $2.7 million, using a 3 percent and 7 percent discount rate, 
respectively. The estimated Federal government cost for administering 
the rule for new facilities is comparatively minor in relation to the 
estimated direct cost of regulatory compliance. Federal administrative 
costs are estimated to be $0.4 million and $0.3 million per year under 
the 3 percent and 7 percent discount rates, respectively.
3. Economic Impacts for New Offshore Oil and Gas Extraction Facilities
    The following two subsections present economic impacts for MODUs 
and production platforms/structures, respectively. Certain aspects of 
the methodology differ between the two segments. Oil and gas production 
operations involve production of a finite resource, which limits the 
potential life of a production platform. Thus, the analysis for 
production platforms/structures must account for the production and 
resulting exhaustion of the finite oil and gas resource. Key 
considerations in the platforms analysis are: (1) When does production

[[Page 68505]]

terminate? and (2) would the year of termination change due to 
regulation? The economic life of a MODU is not limited by such 
considerations and the analysis for MODUs is accordingly simpler. The 
EA and the rulemaking record contain additional data and details on the 
methodology and assumptions used in these analyses.
a. MODUs
    EPA projects that 80 new jackups, 20 new semi-submersibles, and 
three new drill ships will be constructed over the 20 years for which 
new facility additions are analyzed. The economic impact analysis for 
these new MODUs is conducted at two levels: the vessel level and the 
firm level. EPA conducted two vessel-level analyses and one firm-level 
analysis:
     The first vessel-level analysis is a closure analysis, 
which assesses changes in vessel cash flow and net income. Because the 
financial condition of new vessels is unknown, EPA used financial 
information from representative existing vessels, collected in EPA's 
316(b) survey of MODUs (DCN 7-0008), to represent the financial 
characteristics of new facilities. The financial information from these 
representative vessels is used for a general assessment of how well 
these vessels would perform financially if costs of the proposed option 
applied. This analysis is used as an alternative assessment of the 
potential for a barrier to entry.
     The second vessel-level analysis is a standard barrier-to-
entry analysis for new facilities. This analysis computes the present 
value of estimated initial permitting costs, which are assumed to be 
incurred over five years prior to the incorporation of section 316(b) 
permit requirements in the applicable general permits (see DCN 7-4036) 
and are discounted to the year of compliance (the year the vessel is 
assumed to be launched). The one-time capital costs of compliance 
(assumed to be incurred in the year of compliance) are then added to 
this figure. These summed compliance costs are then compared to the 
baseline construction costs for each type of MODU. Neither recurring 
costs of compliance (e.g., repermitting costs or recurring capital 
costs of CWIS controls) nor recurring baseline costs (e.g., O&M, 
refitting costs) are considered in this analysis. The analysis compares 
baseline start-up costs and incremental start-up costs associated with 
the proposed rule.
     The firm-level analysis is a cost-to-revenue test which 
compares the annualized compliance costs for representative new vessels 
to the revenues of firms likely to construct MODUs, assuming each of 
these firms builds a share of the 103 new MODUs expected to be 
constructed over the 20-year construction time frame. This analysis was 
conducted on a pre-tax and after-tax basis.
i. Vessel-Level Closure Analysis
    To estimate potential closures (or more precisely, decisions not to 
proceed with constructing and placing a vessel into service) as a 
result of today's proposal for new MODUs, EPA used two models: (1) A 
net income model, which computes the estimated present value of 
baseline after-tax net income (i.e., without compliance costs) for 
representative MODUs (based on survey data from existing MODUs) over a 
30-year operating period for each new facility,\46\ and (2) an after-
tax cost calculation model, which estimates the present value of after-
tax compliance costs using engineering and permitting cost inputs. 
Comparing the results of these two models shows the potential effect of 
costs on vessel net income.
---------------------------------------------------------------------------

    \46\ Consistent with generally accepted methods of business 
value analysis, EPA would have preferred to use the present value of 
after-tax cash flow instead of net income as the basis for this 
analysis. However, because it could not reliably estimate all of the 
elements of cash flow, the Agency instead used the present value of 
net income for its closure test. In particular, EPA was unable to 
estimate the ongoing capital outlays (apart from those resulting 
from regulatory compliance) that MODUs would need to make as part of 
their ordinary business operations. In performing the analysis in 
this way, the Agency essentially used the facility's reported 
depreciation and amortization--which, being non-cash items, are 
normally excluded from cash flow accounting--as an approximation of 
ongoing capital outlays. How use of reported depreciation and 
amortization, instead of a reliable estimate of capital outlays, 
affects the findings from this analysis cannot be precisely known. 
For some businesses--in particular those with relatively strong 
financial performance--depreciation and amortization may be less 
than ongoing capital outlays; for these businesses, the analysis 
will tend to overstate business value and understate the potential 
effect of compliance outlays on financial performance and business 
value. On the other hand, for some businesses--in particular those 
with relatively weak financial performance--depreciation and 
amortization may exceed ongoing capital outlays; for these 
businesses, the analysis will tend to understate business value and 
overstate the potential effect of compliance outlays on financial 
performance and business value.
---------------------------------------------------------------------------

    EPA estimated after-tax net income for eight MODUs, using data 
provided by surveyed operators of existing MODUs (EPA received economic 
surveys for three semi-submersibles, three jackups, and two drill 
ships). EPA was only able to undertake financial analysis for those 
MODUs with a positive net income for the three years of financial 
information provided in the survey (2000 to 2002). EPA assumed that any 
MODU whose net income is negative over the three years is unlikely to 
be a viable operation in the baseline and cannot be analyzed with 
respect to compliance costs.
    EPA used the net income over the three years of survey data to 
create a moving cycle of net income over the period of analysis. Among 
the years of data collected (2000 to 2002), 2002 was generally a poor 
year of financial condition for the industry as a whole. EPA was thus 
able to represent industry financials in both good and bad years. The 
three-year cycle simulates the effect of volatility in oil and gas 
prices and other business conditions (e.g., rig utilization rates) over 
each facility's 30-year operating period. Future operating periods are 
likely to include major swings in the prices of oil and gas, the 
driving force behind the level of operations, rig pricing, and, thus, 
financial performance of the newly constructed vessels. EPA assumed 
that net income will be flat, on a three-year average basis, over the 
30 years of analysis and thus did not apply any factors to increase or 
decrease net income over the years of analysis. The net income figures 
from the survey, therefore, repeat every three years for 30 years. EPA 
then computed the present value of that stream of net income and 
compared it to the present value of after-tax compliance costs for the 
proposed option.
    EPA used the estimated compliance cost elements--capital, O&M, and 
permitting costs--for each new MODU to calculate the present value of 
the after-tax cost of compliance with today's proposed requirements. 
Each compliance-related cost was accounted for in the year it is 
assumed to be incurred. Tax effects of compliance outlays were based on 
the owner company's marginal tax rate as determined from the firm's 
average taxable earnings over the three years of survey data (converted 
to a mid-year 2003 basis). EPA calculated depreciation for the 
compliance capital outlay using the modified accelerated cost recovery 
system (MACRS) and included it in the pre-tax compliance cost stream. 
The compliance cost stream was then reduced by the amount of avoided 
tax liability, based on the estimated marginal tax rate, to yield the 
after-tax compliance cost stream (for more information on these 
calculations, see DCN 7-4016). The final result of these calculations 
is the present value of after-tax compliance costs.
    The present value of after-tax compliance costs was then subtracted 
from the present value of baseline net income for the vessel. If the 
present value of net income remained positive

[[Page 68506]]

after accounting for compliance costs, EPA assumed that the MODU would 
operate post-compliance. If the present value of net income became 
negative, EPA assumed that the new MODU would not be a financially 
viable project and was counted as a potential ``regulatory closure.''
    The analysis is based on the assumption that costs cannot be passed 
through to customers. Because existing MODUs will not have to meet the 
requirements of the proposal, and new MODUs must compete with these 
existing MODUs, assuming zero cost pass-through provides a realistic 
estimate of potential economic impacts on new MODUs.
    This analysis found that no new MODUs (based on an assumption that 
finances for new MODUs will look like those for existing MODUs) would 
be a regulatory closure as a result of the incremental compliance costs 
associated with the proposed option (detailed results are provided in 
the CBI portion of today's record; DCN 7-4020).
ii.Vessel-Level Barrier-to-Entry Analysis
    The barrier-to-entry analysis compares the present value of 
compliance costs (including the present value of initial permitting 
costs discounted to the compliance year and first-time capital/
installation costs, excluding recurring costs), to the costs of 
constructing a new MODU. If compliance costs comprised a small fraction 
of construction costs, EPA assumed that compliance costs would have no 
effect on the decision to build a new MODU.
    EPA developed incremental compliance costs for new MODUs using 
estimated initial permitting costs and technology cost estimates. The 
initial permitting costs are based on each new MODU's share of regional 
permitting costs (EPA expects that facilities in a particular 
geographic region would collect data from representative facilities in 
that region) and individual administrative start-up and permit 
application costs. The technology costs are based on the weighted 
average cost of installing controls at existing MODUs, by type of MODU, 
for all existing MODUs with technical data. The estimated present value 
of the initial permitting cost stream, plus the first-time capital/
installation costs of compliance costs, sum to $127,000 for semi-
submersibles, $258,000 for jackups, and $247,000 for drill ships. 
According to IADC (May/June, 2003), the cost of new MODUs planned to be 
built in the next few years averages $250 million for semi-submersibles 
and $125 million for jackups. A drill ship completed in 1998 cost 
approximately $275 million (R&B Falcon's Pathfinder). The present value 
of initial permitting costs plus one-time capital/installation 
compliance costs is therefore estimated to range from 0.05 percent to 
0.21 percent of construction costs for the three types of MODU. Because 
total up-front costs represent a very small fraction of total costs of 
construction (and even of contingency costs, which typically range from 
10 percent to 20 percent of capital costs), EPA believes that these 
costs would not have a material effect on decisions to build new MODUs.
iii. Firm-Level Cost-to-Revenue Analysis
    EPA's research showed that firms likeliest to build MODUs with a 
design intake flow of greater than 2 MGD are those that currently own 
such MODUs. EPA identified seven firms owning jackups, semi-
submersibles, or drill ships that would be subject to the proposed 
requirements for new facilities if newly constructed. They also are 
among the largest firms in the industry and are thus likely to be 
involved in new construction. EPA estimates that these seven firms 
would own the 103 new MODUs subject to the proposed national 
requirements for new facilities. To determine the potential impact of 
the proposed option on the seven firms determined likely to build new 
MODUs subject to regulation, EPA used a cost-to-revenue test, which 
compares the annualized pre-tax and after-tax costs of compliance 
(calculated for representative new MODUs), with 2002 revenues reported 
by these firms. Because nearly all of the firms (other than foreign-
owned) are publicly owned, EPA relied on revenue data compiled from 
corporate 10K reports (see Chapter C2 of the EA). EPA then assigned a 
number of MODUs potentially subject to regulation to each of the firms 
and used the average per-MODU compliance costs multiplied by the number 
of these MODUs to calculate the total compliance costs that might be 
faced by these firms.
    Estimated total annual pre-tax compliance costs are approximately 
$15,000 for a semi-submersible, $33,000 for a jackup, and $37,000 for a 
drill ship. Estimated after-tax costs are approximately $10,000, 
$21,000, and $24,000, respectively, based on a 35 percent marginal 
corporate tax rate assumption. These annualized costs are very small 
compared to the revenues a MODU might receive for drilling even one 
exploratory well in deepwater, which could approach $25 to $30 million 
(DCN 7-4017). They are also small compared to the typical day rates 
(daily charges) paid to MODUs while drilling wells. These rates can 
range from $150,000 to $250,000 per day (DCN 7-4042). Five firms are 
assumed to build 12 jackups or semi-submersibles over the time frame of 
the analysis (approximately one MODU every other year). The two 
additional firms, GlobalSantaFe and Transocean, are the dominant firms 
in the industry. These two firms are each assumed to build 20 jackup or 
semi-submersibles, plus one drill ship and two drill ships, 
respectively, over the time frame of the analysis for a total of 21 or 
22 MODUs in total. EPA used the higher cost of a jackup rig to 
represent the cost of compliance for both jackups and semi-
submersibles. For simplicity, and to be conservative, EPA assumed that 
the annualized costs of compliance for all MODUs constructed over the 
period of analysis by each firm are incurred in one year for comparison 
to one year's revenues.
    Using these assumptions, EPA estimates that the annualized pre-tax 
costs per firm range from $0.4 to $0.7 million, and the after-tax costs 
range from $0.3 to $0.5 million. The pre-tax cost-to-revenue ratio 
ranges from 0.03 percent to 0.06 percent, while the after-tax ratios 
range from 0.02 percent to 0.04 percent. Given that the highest 
estimated ratio is 0.06 percent, EPA concludes that firm-level impacts 
would not pose a barrier to entry.
b. Oil and Gas Production Platforms
    EPA projects that 20 deepwater platforms and one Alaska platform 
will be constructed over the 20 years over which new facility additions 
are analyzed. The economic impact analysis for these new platforms is 
conducted at two levels: the platform level and the firm level. EPA 
conducted two platform-level analyses and one firm-level analysis:
     The first platform-level analysis assesses the potential 
effects of compliance costs on platform operation. Two effects of the 
proposed option are considered: (1) A reduction in the expected 
economic value of the platform, driven by all costs of compliance, 
which could prevent oil and gas resources from being brought into 
production, and (2) earlier production shut-in, driven by the increase 
in O&M costs. The baseline operating and financial profile for this 
analysis is based on data from existing platforms whose cooling water 
intake rates would cause them to be subject to the proposed rule if 
they were being newly constructed after rule promulgation. These 
existing platforms serve as a baseline model of the

[[Page 68507]]

operating and financial conditions of new platforms that would be 
regulated under the proposal. Estimated compliance costs are added to 
the baseline cost profile in the analysis of compliance costs on 
platform operations.
     The second platform-level analysis is a barrier-to-entry 
analysis for new facilities. This analysis compares the present value 
of estimated initial permitting costs plus the one-time capital costs 
of compliance (excluding any recurring costs) to the construction costs 
for each type of platform.
     The firm-level analysis is a cost-to-revenue test, which 
compares the annualized compliance costs for representative new 
platforms to the revenues of firms likely to construct new platforms/
structures. This analysis assumes that each firm likely to build a 
deepwater platform/structure subject to regulation would bring four 
platforms/structures on line over the time frame of the analysis; and 
that only one firm will build an Alaska platform during the analysis 
period. For simplicity and to be conservative, firms assumed to bring 
four deepwater structures on line are assigned the annualized costs of 
compliance for four platforms in one year for comparison against one 
year's revenues. This analysis was conducted on a pre-tax and after-tax 
basis.
i. Platform-Level Production/Shut-In Analysis
    Compliance costs resulting from the proposed option may affect a 
platform's financial performance and related operating decisions in two 
ways. First, increased costs from regulatory compliance will reduce the 
expected economic value of an oil and gas production project, and may 
prevent an otherwise financially viable project from being undertaken. 
Second, even if a project overall remains financially viable, increased 
operating costs may lead to an earlier production shut-in than would 
occur in the baseline. Details of the analysis of these effects are 
provided below.
    For the analysis of these effects, EPA constructed a general 
platform analysis model, which simulates the operations and economics 
of oil and gas development and production. The platform model analyzes 
production over a period extending as long as 30 years. Pre-tax costs 
(including costs incurred in pre-production years, O&M, monitoring 
costs, and repermitting costs) are input into the model in the year in 
which they occur, until the model shows the platform is uneconomical to 
operate. To determine the shut-in year, projected net revenue is 
compared to operating costs in each production year. Net revenue is 
based on an assumed price of oil, current and projected production of 
oil and gas, well production decline rates, and severance and royalty 
rates. Operating costs are based on a calculated cost per barrel of oil 
equivalent (BOE) produced. The model simulates operations for the 
lesser of 30 years or to the year when operating costs exceed 
production revenue, at which point the operator is assumed to terminate 
production. The model calculates the lifetime of the project, total 
production, and the net present value of the operation (net income of 
the operation over the life of the project in terms of today's 
dollars). A comparison of the baseline model outputs to the post-
compliance model outputs yields any losses of production and project 
lifetimes and the net present value of the operation. If the net 
present value of the operation is positive in the baseline but negative 
post-compliance, the project is considered nonviable post-compliance. 
It is assumed the platform would not be built.
    The model uses as baseline data, financial information from 
representative existing platforms, collected in EPA's 316(b) survey of 
production platforms (DCN 7-0008) to represent the financial 
characteristics of future platforms that would be subject to this 
proposed regulation. EPA received an economic survey from only one 
deepwater platform with cooling water intake structure flows meeting 
the proposed regulatory criteria. EPA used data from this survey and 
from other sources of publicly available information, such as the 
Minerals Management Service, to develop a model new deepwater oil and 
gas production platform. EPA also received a survey from a platform in 
Alaska but did not include it in the analysis because the surveyed 
platform is a very old structure and at the end of its productive life. 
It is likely that it would not be representative of new platforms being 
built after the Phase III rule is finalized. The Alaska platform is 
therefore analyzed only in the barrier to entry analysis.

Analysis of Project Viability

    As noted above, any increase in costs, whether operating, capital, 
or permitting, will reduce the expected economic value of an oil and 
gas project, as represented by the present value of project net income, 
and may cause an otherwise economic oil and gas production project to 
never be undertaken. In this case, the entire economic value of the 
project and its otherwise recoverable oil and gas production are 
assumed to be lost (note: this loss need not be permanent but may only 
be delayed until higher product prices, or reduced development and 
production costs allow the project to become financially viable). For 
this potential impact, EPA analyzed whether the reduction in value from 
all regulatory compliance outlays would be sufficient to cause the 
expected discounted net income of an otherwise economically viable oil 
and gas production project to be negative--at the outset. In this case, 
the operator is assumed not to proceed with development and production. 
If the platform has a positive net present value under baseline 
conditions but a negative net present value in the post-compliance 
scenario, EPA notes an impact on the platform and estimates the lost 
production resulting from the costs of regulatory compliance.

Analysis of Production Shut-In Effects

    Although a project overall remains financially viable, the 
increased operating costs from regulatory compliance may lead to an 
earlier production shut-in than would occur in the baseline. Shut-in 
refers to lost production from non-production of producible reserves 
for reasons such as tests, repairs, or to await construction of 
gathering lines. Apart from the financial impact, an earlier shut-in 
will also lead to reduced production of otherwise economically 
recoverable oil and gas. For this analysis, projected net revenue is 
compared to operating costs at each year for the model project.\47\ Net 
revenue (after subtracting royalties and severance, which are payments 
to the lease owner and a State, if relevant) is based on an assumed 
price of oil, current and projected production of oil and gas, well 
production decline rates, and severance and royalty rates. Operating 
costs are based on a calculated cost per barrel of oil equivalent (BOE) 
produced. The model simulates operations for the lesser of 30 years or 
to the year when operating costs exceed production revenue, at which 
point the operator is assumed to terminate production. A comparison of 
total production and total project lifetime in the baseline vs. post-
compliance shows any differences in these variables following the 
imposition of compliance costs.
---------------------------------------------------------------------------

    \47\ Following engineering review of surveyed deepwater 
platforms/structures, only one was determined to have a total design 
CWIS intake flow rate meeting the proposed 316(b) thresholds for 
regulation of oil and gas facilities, had the structure been newly 
constructed, so only one model of deepwater structures was 
developed.

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[[Page 68508]]

    This analysis found no impacts on deepwater oil and gas development 
or production as a result of the incremental compliance costs 
associated with the proposed option for the one platform that was 
analyzed. Impacts on net present value were very small. (Detailed 
results are included in the CBI portion of today's record; DCN 7-4038.)
ii. Platform-Level Barrier-to-Entry Analysis
    The barrier-to-entry analysis compares the present value of the 
initial permitting cost stream (discounted to the year of compliance) 
plus one-time capital/installation costs to the costs of constructing a 
new platform. If compliance costs comprise a small fraction of 
construction costs, EPA assumes that compliance costs would not have an 
effect on the decision to build a new platform.
    The estimated total present values of incremental compliance costs 
are $291,000 for deepwater projects and $685,000 for Alaska projects. 
Costs for constructing new deepwater platforms are estimated to range 
from $114 million to $2.3 billion (see EA for the Synthetic Drilling 
Fluid Effluent Limitations Guidelines in the rulemaking record, DCN 7-
4017). For Alaska, EPA used a value of $120 million (DCN 7-4028). The 
ratio of incremental compliance costs to current total construction 
costs therefore ranges from 0.01 percent to 0.3 percent for deepwater 
projects and 0.6 percent for an Alaska project. Because this represents 
a small fraction of total construction costs (and even of contingency 
costs), EPA believes that these costs would not have a material effect 
on decisions to build new platforms.
iii. Firm-Level Cost-to-Revenue Analysis
    To determine the potential impact of the proposed option on firms, 
EPA used a cost-to-revenue test, which compares the annualized pre-tax 
and after-tax costs of compliance (calculated for a representative new 
platform times the maximum number of platforms assumed built by each 
firm in any one year), with 2002 revenues reported by all firms 
determined likely to be affected by this regulation. The firms that are 
considered affected are (1) those identified as currently having 
existing deepwater platforms or structures that would be subject to 
regulation if they were newly constructed and (2) the likeliest type of 
firm to build a new Alaska platform during the time frame of the 
analysis. EPA assumed each of the five firms operating in the deepwater 
Gulf would bring on-line four platforms during the period of analysis 
(for a total of 20 platforms). For simplicity and to be conservative, 
EPA assumes the four platforms come on line in one year for comparison 
with one year's revenues at each firm. One small firm is assumed to 
build the one Alaska platform over the period of analysis, and the 
annualized compliance cost is also compared to one year's revenues at 
that firm.
    Using these assumptions, EPA estimates that the annualized pre-tax 
costs per firm are about $0.3 million, and the after-tax costs are 
about $0.2 million. The pre-tax cost-to-revenue ratio ranges from 
<0.001 percent to 0.01 percent, while the after-tax ratios range from 
<0.001 percent to 0.007 percent. Given that the highest estimated ratio 
is 0.01 percent, EPA concludes that firm-level impacts would not pose a 
barrier to entry.
c. Total Facility Compliance Costs and Impacts for All New Offshore Oil 
and Gas Extraction Facilities
    Exhibit VIII-7 summarizes the total facility compliance costs and 
impacts associated with the proposed option for Phase III new offshore 
oil and gas extraction facilities. Annualized after-tax costs total 
$1.8 million per year for MODUs and $1.2 million per year for 
platforms, or a total of $3.1 million per year for all affected new oil 
and gas operations estimated to be constructed over the period of the 
analysis (using a 7 percent discount rate).\48\
---------------------------------------------------------------------------

    \48\ Costs are incurred assuming 20 years of new facility 
construction, with each facility incurring costs over a 30-year 
operating period, discounted to the year the facility is launched or 
comes on-line. The present value of private after-tax costs is less 
than the previously described present value of social costs, which 
are based on pre-tax costs, because of differences in the 
discounting for private costs and social costs. Private costs are 
discounted, for each analysis, only to the first year of compliance. 
In contrast, for the social cost calculation, all costs are 
discounted to the beginning of 2007, regardless of when new 
facilities come into operations. Because new facilities are 
scheduled to begin operation for a 20 year period following rule 
promulgation, the total effect of discounting is much greater for 
the present value of social cost calculation than for the private 
cost calculation. As a result, the present value of social costs, 
even though based on pre-tax costs, is less than the present value 
of private, after-tax cost.

              Exhibit VIII-7.--Summary of Private Costs and Impacts for New Oil and Gas Facilities
----------------------------------------------------------------------------------------------------------------
                                                                    Annualized
                                                                  private after-
                                                   Number of new  tax compliance     Facility
              Type of O&G facility                  facilities      costs  (in        impacts      Firm impacts
                                                                  millions, 2003
                                                                        $)
----------------------------------------------------------------------------------------------------------------
MODUs...........................................             103            $1.8               0               0
Platforms.......................................              21             1.2               0               0
                                                 -----------------
    Total.......................................             124             3.1               0              0
----------------------------------------------------------------------------------------------------------------
Note: Component values may not sum to the reported total due to independent rounding.

C. Summary of Total Social Costs and Impacts

    As discussed earlier, EPA is proposing national categorical 
requirements for existing Phase III facilities, as defined by one of 
the three co-proposed flow-threshold-based options, and is proposing 
requirements similar to certain provisions of the rule for new offshore 
oil and gas extraction facilities. EPA estimated a total annualized 
social cost for the ``50 MGD for All Waterbodies'' option for existing 
facilities and the proposed option for new oil and gas extraction 
facilities of $51.0 million at a 3 percent discount rate, and $53.1 
million, at a 7 percent discount rate. EPA estimates that 260 
facilities would be subject to national requirements and that none of 
these facilities would experience adverse impacts. Exhibit VIII-8 
summarizes these findings.

[[Page 68509]]



  Exhibit VIII-8.--Summary of Economic Analysis: ``50 MGD for All Waterbodies'' Option for Existing Facilities
                                Plus New Offshore Oil and Gas Facilities > 2 MGD
----------------------------------------------------------------------------------------------------------------
                                                    Annualized social cost  (in      Number of
                                                         millions, 2003 $)          facilities       Number of
                                                 --------------------------------   subject to      facilities
                                                    3% Discount     7% Discount      national      with impacts*
                                                       rate            rate        requirements
----------------------------------------------------------------------------------------------------------------
Direct Compliance Cost:
    Manufacturing Industries....................           $42.7           $45.1             127               0
    Other Industries............................             4.1             4.4               9               0
    Electric Generators.........................             N/A             N/A             N/A             N/A
    New O&G Facilities..........................             3.2             2.7             124               0
                                                 -----------------
        Total...................................            50.0            52.2             260               0
State and Federal Administrative Cost...........             1.0             0.9  ..............  ..............
                                                 -----------------
    Total Social Cost...........................            51.0            53.1  ..............  ..............
----------------------------------------------------------------------------------------------------------------
 * The impact measures for existing Manufacturers are facility closure and moderate financial impact (see also
  section VIII.A.3.a). The two impact measures for new Oil and Gas facilities are facility closures and barrier
  to entry (see also section VIII.B.3). Numbers may not add up to totals due to independent rounding.

    EPA estimated a total annualized social cost for the ``200 MGD for 
All Waterbodies'' option for existing facilities and the proposed 
option for new oil and gas extraction facilities of $26.4 million at a 
3 percent discount rate, and $27.2 million, at a 7 percent discount 
rate. EPA estimates that 149 facilities would be subject to national 
requirements and that none of these facilities would experience adverse 
impacts. Exhibit VIII-9 summarizes these findings.

  Exhibit VIII-9.--Summary of Economic Analysis: ``200 MGD for All Waterbodies'' Option for Existing Facilities
                               Plus New Offshore Oil and Gas Extraction Facilities
----------------------------------------------------------------------------------------------------------------
                                                    Annualized social cost  (in      Number of
                                                         millions, 2003 $)          facilities       Number of
                                                 --------------------------------   subject to      facilities
                                                    3% Discount     7% Discount      national      with impacts*
                                                       rate            rate        requirements
----------------------------------------------------------------------------------------------------------------
Direct Compliance Cost:
    Manufacturing Industries....................           $21.7           $23.1              23               0
    Other Industries............................             1.0             0.9               2               0
    Electric Generators.........................             N/A             N/A             N/A             N/A
    New O&G Facilities..........................             3.2             2.7             124               0
                                                 -----------------
        Total...................................            25.9            26.7             149               0
State and Federal Administrative Cost...........             0.5             0.4  ..............  ..............
                                                 -----------------
    Total Social Cost...........................            26.4            27.2  ..............  ..............
----------------------------------------------------------------------------------------------------------------
* The impact measures for existing Manufacturers are facility closure and moderate financial impact (see also
  section VIII.A.3.a). The two impact measures for new Oil and Gas facilities are facility closures and barrier
  to entry (see also section VIII.B.3). Numbers may not add up to totals due to independent rounding.

    EPA estimated a total annualized social cost for the ``100 MGD for 
Certain Waterbodies'' option for existing facilities and the proposed 
option for new oil and gas extraction facilities of $21.3 million at 
both a 3 percent and 7 percent discount rate. EPA estimates that 143 
facilities would be subject to national requirements and that none of 
these facilities would experience adverse impacts. Exhibit VIII-10 
summarizes these findings.

     Exhibit VIII-10.--Summary of Economic Analysis: ``100 MGD for Certain Waterbodies'' Option for Existing
                         Facilities Plus New Offshore Oil and Gas Extraction Facilities
----------------------------------------------------------------------------------------------------------------
                                                    Annualized social cost  (in      Number of
                                                         millions, 2003 $)          facilities       Number of
                                                 --------------------------------   subject to      facilities
                                                    3% Discount     7% Discount      national      with impacts*
                                                       rate            rate        requirements
----------------------------------------------------------------------------------------------------------------
Direct Compliance Cost:
    Manufacturing Industries....................           $16.7           $17.4              17               0
    Other Industries............................             0.7             0.7               2               0
    Electric Generators.........................             N/A             N/A             N/A             N/A
    New O&G Facilities..........................             3.2             2.7             124               0
                                                 -----------------

[[Page 68510]]

 
        Total...................................            20.7            20.8             143               0
State and Federal Administrative Cost...........             0.6             0.5  ..............  ..............
                                                 -----------------
    Total Social Cost...........................            21.3            21.3  ..............  ..............
----------------------------------------------------------------------------------------------------------------
* The impact measures for existing Manufacturers are facility closure and moderate financial impact (see also
  section VIII.A.3.a). The two impact measures for new Oil and Gas facilities are facility closures and barrier
  to entry (see also section VIII.B.3). Numbers may not add up to totals due to independent rounding.

IX. Benefits Analysis

A. Introduction

    This section presents EPA's estimates of the national economic 
benefits of the three co-proposed regulatory options for the section 
316(b) regulation for Phase III existing facilities: The ``50 MGD for 
All Waterbodies'' option, the ``200 MGD for All Waterbodies'' option, 
and the ``100 MGD for Certain Waterbodies'' option. The benefits occur 
due to the reduction in impingement mortality and entrainment at 
cooling water intake structures affected by this rulemaking (see 
section II for a description of the facilities to which this rulemaking 
potentially applies). By reducing impingement mortality and 
entrainment, the co-proposed options would increase the number of fish, 
shellfish, and other aquatic life in local aquatic ecosystems. This, in 
turn, will directly and indirectly generate use benefits such as those 
associated with recreational and commercial fishing. Other types of 
benefits that are independent of any current or anticipated uses of the 
resource could also be realized; these are known as non-use values. 
Section IX.D provides an overview of types and sources of benefits 
anticipated, how these benefits were estimated, and what level of 
benefits have been estimated for each of the three co-proposed options. 
For a comparison of social benefits and total social costs, refer to 
Section X.
    To estimate the economic benefits of reducing impingement mortality 
and entrainment at cooling water intake structures, all the beneficial 
outcomes need to be identified and, where possible, quantified and 
assigned appropriate monetary values. Estimating economic benefits can 
be challenging because of the many steps of analysis that are necessary 
to link a reduction in impingement mortality and entrainment to changes 
in impacted fisheries and other aspects of relevant aquatic ecosystems, 
and then to link these ecosystem changes to the resulting changes in 
quantities and values for the associated environmental goods and 
services that ultimately are linked to human welfare. The methodologies 
used in the estimation of benefits of the proposed regulatory options 
are largely built upon those used for estimating benefits of the final 
rule for Phase II facilities (see 69 FR 41576). The Regional Benefits 
Assessment for the Proposed Section 316(b) Rule for Phase III 
Facilities (see DCN 7-0003), hereafter known as the Regional Analysis 
Document, provides EPA's analyses for the benefit assessment for the 
proposed options.
    The benefit estimates for this rule are derived from a series of 
regional studies for a range of waterbody types throughout the U.S. 
Section IX.B provides detail on the regional study design. Sections 
IX.C and IX.D describe the methods EPA used to estimate impingement 
mortality and entrainment impacts at potentially regulated existing 
facilities and to derive an economic value of such losses. National 
benefits were estimated using a set of statistical weights for each 
potentially regulated facility. The weights were developed as part of 
EPA's design of the survey of the industries.
    The benefit estimates presented in the following sections reflect 
changes in impingement mortality and entrainment reductions at existing 
facilities only. EPA was unable to assess benefits of reducing 
impingement and entrainment at new offshore oil and gas extraction 
facilities due to significant data gaps at the time of proposal. 
Therefore, the benefits estimates presented in this section should be 
compared only to the cost estimates for existing Phase III facilities. 
EPA solicits submission of data on impingement mortality and 
entrainment impacts at offshore oil and gas extraction facilities.

B. Study Design and Methods

    EPA's evaluation of impingement mortality and entrainment data had 
four main objectives: (1) To develop a national estimate of the 
magnitude of impingement and entrainment at potentially regulated 
facilities; (2) to standardize impingement and entrainment rates using 
common biological metrics so that rates could be compared across 
species, years, facilities, and geographical regions; (3) to estimate 
changes in these metrics as a result of projected reductions in 
impingement and entrainment under the proposed rule options; and (4) to 
obtain data that can be used to estimate the national economic benefits 
of reduced impingement and entrainment.
    Harvested species were the main focus of EPA's analysis, primarily 
because of the availability of economic methods for valuing these 
species. EPA's approach to estimating changes in harvest assumed that 
impingement and entrainment losses result in a reduction in the number 
of harvestable adults in the years following the time that individual 
fish are killed by impingement and entrainment and that future 
reductions in impingement and entrainment will lead to future increases 
in fish harvest. This approach only estimates the incremental yield 
that is foregone because of the number of deaths due to impingement and 
entrainment and is not intended to provide an estimate of absolute 
population levels. EPA intends to investigate the feasibility of 
applying a population modeling approach to estimate expected changes in 
harvest levels and fish population sizes. Such an approach would use 
available data and life-stage specific estimates of natural mortality, 
impingement and entrainment mortality, and fishing mortality, plus an 
explicit function describing density-dependent reproductive success to 
attempt to estimate long-term changes in average

[[Page 68511]]

harvest levels and stock sizes. A population model could serve as a 
supplement or as an alternative to the current modeling approach based 
on age one equivalent losses. EPA invites comment on ways that it might 
develop a population model to support an estimate of the national 
benefits of this rulemaking.
1. Extrapolation of Impingement and Entrainment Rates
    To obtain a national estimate of losses at all potentially 
regulated facilities, it was necessary to extrapolate impingement and 
entrainment rates from facilities with data (model facilities) to 
facilities without data. Extrapolation of impingement and entrainment 
rates was necessary because not all potentially regulated facilities 
within a given region have conducted impingement and entrainment 
studies. Model facilities included both Phase II facilities and 
potentially regulated Phase III facilities,\49\ based on the assumption 
that impingement and entrainment rates at Phase II and Phase III 
facilities are similar after normalization by intake flow. Phase II 
facilities were included to make use of the largest possible data set 
and to accommodate the lack of impingement and entrainment data from 
potentially regulated Phase III facilities in some regions. Impingement 
and entrainment data from 72 Phase II facilities and 16 potentially 
regulated Phase III facilities were evaluated.
---------------------------------------------------------------------------

    \49\ ``Potentially regulated Phase III facilities'' refers to 
all existing facilities with design intake flows greater than 2 MGD, 
not regulated in the Phase II rule.
---------------------------------------------------------------------------

    Impingement and entrainment data were extrapolated on the basis of 
operational intake flow in millions of gallons per day (MGD), where MGD 
is the average operational flow over the period 1996-1998 as reported 
by facilities in response to EPA's survey of the industry. Operational 
flow at each facility was rescaled using factors reflecting the 
relative effectiveness of currently in-place technologies for reducing 
impingement and entrainment. The extrapolation procedure is described 
in Chapter A1 of Part A of the Regional Analysis Document. While there 
may be variations from these estimates in the actual losses (and 
benefits) per MGD across individual facilities, EPA believes that this 
method of extrapolation is a reasonable basis for developing an 
estimate of national-level benefits.
2. Study Regions and Facilities
    EPA's analysis examined cooling water intake structure impacts and 
regulatory benefits at the regional scale, and then combined regional 
results to develop national estimates. The Agency evaluated the 
benefits of the proposed regulatory options in six study regions based 
on the locations of potentially regulated Phase III facilities and 
similarities in the affected ecosystems, aquatic species present, and 
characteristics of commercial and recreational fishing activities 
within each region. The four coastal regions (California, North 
Atlantic, Mid-Atlantic, and Gulf of Mexico) correspond to those of the 
National Oceanographic and Atmospheric Association (NOAA) Fisheries 
agency (formerly the National Marine Fisheries Service). The Great 
Lakes region includes all potentially regulated Phase III facilities 
that withdraw water from Lakes Ontario, Erie, Michigan, Huron, and 
Superior, or are located on a waterway with open fish passage to a 
Great Lake and within 30 miles of the lake. The Inland region includes 
the remaining facilities that withdraw water from freshwater lakes, 
rivers, and reservoirs. Exhibit IX-1 indicates the number of 
potentially regulated Phase III facilities in each study region. The 
exhibit also shows the number of facilities subject to national 
technology requirements under each of the co-proposed regulatory 
options.

                               Exhibit IX-1.--Phase III Facilities in Each Region
----------------------------------------------------------------------------------------------------------------
                                                     Number of       Number of facilities subject to national
                                                    potentially       technology requirements under proposed
                                                     regulated           regulatory options \b\ (weighted)
                     Region                       existing phase -----------------------------------------------
                                                        III                                           100 MGD
                                                  facilities \a\    50 MGD all      200 MGD all       certain
                                                     (weighted)     waterbodies     waterbodies     waterbodies
----------------------------------------------------------------------------------------------------------------
California......................................               9               1               0               0
North Atlantic..................................               5               4               1               3
Mid-Atlantic....................................              13               3               2               2
South Atlantic..................................               4               0               0               0
Gulf of Mexico..................................              11               7               2               7
Great Lakes.....................................              68              19               5               6
Inland..........................................             493              69              12               0
                                                 -----------------
    Total, Study Regions........................             599             103              22              18
                                                 -----------------
    National total \c\..........................             603             103              22             18
----------------------------------------------------------------------------------------------------------------
\a\ Potentially regulated existing Phase III facilities include electric generators with CWIS that withdraw more
  than 2 MGD but less than 50 MGD and manufacturers with CWIS that withdraw more than 2 MGD, that use at least
  25% of the water for cooling purposes.
\b\ Numbers of facilities reflect only those that are subject to technology requirements; those facilities that
  only have permitting costs are excluded.
\c\ Eighty potentially regulated facilities estimated to close under the baseline scenario are excluded from
  this analysis.

3. Species Groups
    Life history data are very limited for many of the species that are 
impinged and entrained, and as a result, there are many data gaps for 
individual species. To overcome this limitation in its national benefit 
analysis, EPA used available life history data to construct 
representative life histories for groups of closely related species. 
Aggregation of species into groups of similar species with a common 
life history type facilitated parameterization of the fisheries models 
used by EPA to evaluate facility impingement and entrainment monitoring 
data. Groups were based on family groups and groups used by NOAA 
Fisheries for landings

[[Page 68512]]

data. For example, bay goby, blackeye goby, yellowfin goby, and other 
gobies were grouped together as ``gobies.'' An exception was made for 
species of exceptionally high commercial or recreational value (e.g., 
striped bass), which were evaluated as single species.

C. Impingement and Entrainment

    EPA's analysis is based on facility-provided biological monitoring 
data. As discussed in Chapter A2 of Part A of the Regional Analysis 
Document, there are several types of uncertainty associated with these 
data. Major sources of uncertainty are the imperfect precision and 
accuracy of impingement and entrainment data reported by facilities and 
of growth and mortality rates obtained from the scientific literature. 
This results from unavoidable sampling and measurement errors. While 
these uncertainties may lead to imprecision in impingement and 
entrainment estimates, EPA found no evidence of statistical bias. Given 
the goal of its benefit analysis, EPA believes that the data available 
from facility studies are sufficiently robust for developing estimates 
of the relative magnitude of impingement and entrainment nationwide.
    Using standard fishery modeling techniques,\50\ EPA constructed 
models that combined facility-derived impingement and entrainment 
counts with relevant life history data to derive estimates of (1) age-
one equivalent losses (the number of individuals of different ages 
impinged and entrained by facility intakes expressed as an equivalent 
number of age-one fish), and (2) foregone fishery yield (pounds of 
commercial harvest and numbers of recreational fish and shellfish that 
are not harvested due to impingement and entrainment). In addition to 
direct losses of harvested species, estimates of foregone fishery yield 
include the yield of harvested species that is lost due to losses of 
forage species, which provide food for harvested species. Details of 
the methods used to calculate these metrics are provided in Chapter A1 
of Part A of the Regional Analysis Document. For all analyses, EPA used 
the impingement and entrainment estimates provided by the facility and 
assumed 100 percent entrainment mortality based on the analysis of 
entrainment survival studies presented in Chapter A7 of Part A of the 
Regional Analysis Document. If there is some entrainment survival, this 
last assumption may lead to some overestimate of baseline entrainment 
losses.
---------------------------------------------------------------------------

    \50\ Ricker, W.E. 1975. Computation and interpretation of 
biological statistics of fish populations. Fisheries Research Board 
of Canada, Bulletin 191; Hilbourn, R. and C.J. Walters. 1992. 
Quantitative Fisheries Stock Assessment, Choice, Dynamics and 
Uncertainty. Chapman and Hall, London and New York; Quinn, T.J., II. 
and R.B. Deriso. 1999. Quantitative Fish Dynamics. Oxford University 
Press, Oxford and New York; Dixon, D.A. 1999. Catalog of Assessment 
Methods for Evaluating the Effects of Power Plant Operations on 
Aquatic Communities. Final Report. Report number TR-112013.
---------------------------------------------------------------------------

1. Summary of Current Annual Impingement and Entrainment by Region
    Exhibit IX-2 presents EPA's estimates of current annual impingement 
and entrainment (I&E) in the study regions.

                                          Exhibit IX-2.--Current Annual Impingement and Entrainment, by Region
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Impingement                     Entrainment                     Total I & E
                                                         -----------------------------------------------------------------------------------------------
                         Region                                              Foregone                        Foregone                        Foregone
                                                               Age-1       fishery yield       Age-1       fishery yield       Age-1       fishery yield
                                                            equivalents        (lbs)        equivalents        (lbs)        equivalents        (lbs)
--------------------------------------------------------------------------------------------------------------------------------------------------------
California..............................................          21,000             701       1,290,000          95,100       1,310,000          95,800
North Atlantic..........................................          20,100             141       2,320,000          44,800       2,340,000          45,000
Mid-Atlantic............................................       3,890,000         540,000      19,400,000         381,000      23,200,000         920,000
South Atlantic..........................................         423,000          49,100       1,090,000          73,700       1,520,000         123,000
Gulf of Mexico..........................................       6,140,000         623,000       6,580,000       1,370,000      12,700,000       1,990,000
Great Lakes.............................................      31,800,000         413,000       2,570,000          76,400      34,400,000         489,000
Inland..................................................      28,600,000         232,000      15,700,000         263,000      44,200,000         495,000
                                                         -----------------
    National total a....................................      70,900,000       1,860,000      48,900,000       2,300,000     120,000,000       4,160,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The estimates in Exhibit IX-2 make use of data from available 
impingement and entrainment studies conducted at both Phase II and 
Phase III facilities. Using data solely from the limited number of 
Phase III studies available (4 studies for the Great Lakes region and 
11 studies for the Inland region), estimates of loss of age-1 
equivalents to impingement and entrainment are 5,160,000 at Great Lakes 
facilities and 14,700,000 at Inland facilities. Estimates of foregone 
fishery yield are 16,500 pounds at Great Lakes facilities and 250,000 
pounds at Inland facilities.
2. Summary of Annual Reductions in Impingement and Entrainment for 
Three Options
    Exhibit IX-3 presents EPA's estimates of annual impingement and 
entrainment reductions under the ``50 MGD for All Waterbodies'' option. 
Exhibit IX-4 presents EPA's estimates of annual impingement and 
entrainment reductions under the ``200 MGD for All Waterbodies'' 
option. Exhibit IX-5 presents results for the ``100 MGD for Certain 
Waterbodies'' option.
a. Reductions in Annual Impingement and Entrainment for the ``50 MGD 
for All Waterbodies'' Option
    See Exhibit IX-3 for reductions in annual impingement and 
entrainment for the ``50 MGD for All Waterbodies'' option.

[[Page 68513]]



 Exhibit IX-3.--Reductions In Annual Impingement and Entrainment for the
            ``50 MGD for All Waterbodies'' Option, by Region
------------------------------------------------------------------------
                                                             Foregone
                 Region                        Age-1       fishery yield
                                            equivalents        (lbs)
------------------------------------------------------------------------
California..............................         383,000          28,000
North Atlantic..........................         930,000          17,900
Mid-Atlantic............................      13,400,000         600,000
Gulf of Mexico..........................       8,380,000       1,250,000
Great Lakes.............................      11,600,000         169,000
Inland..................................      14,800,000         157,000
                                         -----------------
    National total......................      49,500,000       2,220,000
------------------------------------------------------------------------

    The estimates in Exhibit IX-3 make use of data from available 
impingement and entrainment studies conducted at both Phase II and 
Phase III facilities. Using data solely from the limited number of 
Phase III studies available (4 studies for the Great Lakes region and 
11 studies for the Inland region), estimates of reductions in loss of 
age-1 equivalents to impingement and entrainment are 1,700,000 at Great 
Lakes facilities and 5,450,000 at Inland facilities. Estimates of 
reductions of foregone fishery yield are 5,570 pounds at Great Lakes 
facilities and 93,000 pounds at Inland facilities.
    b. Reductions in Annual Impingement and Entrainment for the ``200 
MGD for All Waterbodies'' Option
    See Exhibit IX-4 for reductions in annual impingement and 
entrainment for the ``200 MGD for All Waterbodies'' option.

 Exhibit IX-4.--Reductions In Annual Impingement and Entrainment for the
            ``200 MGD for All Waterbodies'' Option, by Region
------------------------------------------------------------------------
                                                             Foregone
                 Region                        Age-1       fishery yield
                                            equivalents        (lbs)
------------------------------------------------------------------------
California..............................               0               0
North Atlantic..........................         198,000           3,800
Mid Atlantic............................      11,900,000         534,000
Gulf of Mexico..........................       4,580,000         682,000
Great Lakes.............................       7,710,000         116,000
Inland..................................       9,650,000         107,000
                                         -----------------
    National total......................      34,000,000       1,440,000
------------------------------------------------------------------------

    The estimates in Exhibit IX-4 make use of data from available 
impingement and entrainment studies conducted at both Phase II and 
Phase III facilities. Using data solely from the limited number of 
Phase III studies available (4 studies for the Great Lakes region and 
11 studies for the Inland region), estimates of reductions in loss of 
age-1 equivalents to impingement and entrainment are 1,100,000 at Great 
Lakes facilities and 3,270,000 at Inland facilities. Estimates of 
reductions in foregone fishery yield are 3,690 pounds at Great Lakes 
facilities and 55,700 pounds at Inland facilities.
c. Reductions in Annual Impingement and Entrainment for the ``100 MGD 
for Certain Waterbodies'' Option
    See Exhibit IX-5 for reductions in annual impingement and 
entrainment for the ``100 MGD for Certain Waterbodies'' option.

 Exhibit IX-5.--Reductions In Annual Impingement and Entrainment for the
          ``100 MGD for Certain Waterbodies'' Option, by Region
------------------------------------------------------------------------
                                                             Foregone
                 Region                        Age-1       fishery yield
                                            equivalents        (lbs)
------------------------------------------------------------------------
California..............................               0               0
North Atlantic..........................         754,000          14,500
Mid Atlantic............................      11,900,000         534,000
Gulf of Mexico..........................       8,380,000       1,250,000
Great Lakes.............................       8,740,000         130,000
                                         -----------------
    National total......................      29,800,000       1,930,000
------------------------------------------------------------------------

    The estimates in Exhibit IX-5 make use of data from available 
impingement and entrainment studies conducted at both Phase II and 
Phase III facilities. Using data solely from the limited number of 
Phase III studies available (4 studies for the Great Lakes region), the 
estimate of reductions in loss of age-1 equivalents to impingement and

[[Page 68514]]

entrainment is 1,260,000 and the estimate of reductions in foregone 
fishery yield is 4,190 pounds at Great Lakes facilities.
d. Reductions in Annual Impingement and Entrainment for Other Policy 
Options
    EPA considered a wide range of policy options in developing the 
proposed section 316(b) regulation for the Phase III facilities. The 
Regional Analysis Document provides results for all evaluated options 
considered in this rulemaking.

D. National Benefits

1. Overview
    Economic benefits of the co-proposed options for the section 316(b) 
regulation for Phase III existing facilities can be broadly defined 
according to categories of goods and services provided by the species 
affected by impingement and entrainment by cooling water intake 
structures.
    The first category includes benefits that pertain to the use 
(direct or indirect) of the affected fishery resources. Use value 
reflects the value of all current direct and indirect physical uses of 
a good or service (Mitchell and Carson, 1989; DCN 5-1287). The direct 
use benefits can be further categorized according to whether or not 
affected goods and services are traded in the market. The ``direct 
use'' benefits of the section 316(b) regulation stem both 
from''market'' commodities (e.g., commercial fisheries) and from 
``nonmarket'' goods (e.g., recreational angling). Indirect use benefits 
also can be linked to either market or nonmarket goods and services--
for example, the manner in which reduced impingement and entrainment-
related losses of forage species leads through the aquatic ecosystem 
food web to enhance the biomass of species targeted for commercial 
(market) and recreational (nonmarket) uses.
    The second category includes benefits that are independent of any 
current or anticipated use of the resource; these are known as ``non-
use'' or ``passive use'' values.\51\ Non-use values include 
``nonmarketed'' goods and services, which reflect human values 
associated with existence, bequest, and altruistic motives. Existence 
value is the value that individuals may hold for simply knowing that a 
particular good exists regardless of their present or expected use. For 
example, ecological goods and services such as diversity of aquatic and 
terrestrial species and habitat for threatened and endangered species 
are often valued for their existence. Bequest value exists when someone 
gains utility through the knowledge that an amenity will be available 
for others (family or future generations) in the future (Fisher and 
Raucher, 1984; DCN 4-0043). Altruistic values arise from interpersonal 
concerns (valuing the happiness that others get from enjoying the 
resource).
---------------------------------------------------------------------------

    \51\ The benefits analysis of the proposed options for 
potentially regulated Phase III facilities does not assess option 
value as a distinct component of value because it is increasingly 
recognized that option value ``cannot be a separate component of 
value'' (Freeman, 2003; p. 249).
---------------------------------------------------------------------------

    The economic value of benefits from the proposed options for Phase 
III facilities is estimated using a range of valuation methods, with 
the specific approach being dependent on the type of benefit category, 
data availability, and other suitable factors. Commercial fishery 
benefits are valued using market data. Recreational angling benefits 
are valued using a combination of primary and secondary research 
methods. Methodologies for estimating use values for recreational (non-
market values) and commercial (market values) species are well 
developed, and some of these species have been extensively studied. As 
a result, these values are relatively easy to estimate. A detailed 
description of the approaches used for valuing commercial and 
recreational benefits of the proposed options can be found in Chapters 
A4 and A5 of the Regional Analysis Document.
    Estimating benefits from reduced impingement and entrainment of 
forage species is more challenging because these species are not 
targeted directly by commercial or recreational anglers and have no 
direct use values that can be observed in markets or inferred from 
revealed actions of anglers. To estimate a portion of the indirect use 
benefits from reducing impingement and entrainment losses to forage 
species, EPA used a trophic transfer model that translates changes in 
impingement and entrainment losses of forage fish into changes in the 
harvest of commercial and recreational species that are subject to 
impingement and entrainment (i.e., not the whole food web). This method 
is described in Chapter A1 of Part A of the Regional Analysis Document.
    Stated preference methods, or benefit transfer based on stated 
preference studies, are the generally accepted techniques for 
estimating non-use values.
    Stated preference methods rely on carefully designed surveys, which 
ask people either to state their willingness to pay for particular 
ecological improvements, such as increased protection of aquatic 
species or habitats with particular attributes; or to choose between 
competing hypothetical ``packages'' of ecological improvements and 
household cost. In either case, analysis of survey responses allows 
estimation of values.
    Economists generally consider non-use values more difficult to 
assess than use values for several reasons:
    a. Non-use values are not associated with easily observable 
behavioral trails;
    b. Non-use values may be held by both users and non-users of a 
resource, and non-users may be less familiar with particular services 
provided by affected resources;
    c. The development of a defensible stated preference survey that 
meets the NOAA blue ribbon panel requirements is often a time and 
resource intensive process,\52\ and
---------------------------------------------------------------------------

    \52\ The NOAA blue ribbon panel provided an extensive set of 
guidelines for survey construction, administration, and analysis to 
ensure that ``* * * CV produces estimates reliable enough to be the 
starting point of a judicial process of damage assessment, including 
passive-use values [i.e. non-use values]'' (see FR 58:10 pp.4601-
4614, 1993).
---------------------------------------------------------------------------

    d. Even carefully designed surveys may be subject to certain biases 
associated with the hypothetical nature of survey responses (Mitchell 
and Carson 1989).
    Reducing impingement and entrainment losses of fish and shellfish 
may result in both use and non-use benefits. Of the organisms which are 
anticipated to be protected by the proposed options for the section 
316(b) regulation for Phase III facilities, approximately 3.3 percent 
will eventually be harvested by commercial and recreational fishers and 
therefore can be valued with direct use valuation techniques. 
Unharvested fish, which have no direct use value, represent 96.7 
percent of the total loss. These unlanded fish include forage fish and 
the unlanded portion of the stock of harvested species. Because 
unlanded fish contribute to the yield of harvested fish, they have an 
indirect use value that is captured by the direct use value of the fish 
that are caught. However, this indirect use value represents only a 
portion of the total value of unlanded fish. In fact, society may value 
both landed and unlanded fish for reasons unrelated to their use value. 
Such non-use values include the value that people may hold simply for 
knowing these fish exist. While non-use values are difficult to 
quantify, EPA believes it is important to consider such values, 
particularly since 96.7 percent of impinged and entrained organisms 
have no direct use value.
    EPA considered several approaches to quantifying non-use values for 
the

[[Page 68515]]

proposed rule, including a stated preference study and meta-analysis of 
surface water valuation studies. The Agency has begun exploring the 
development of a stated preference survey that would measure non-use 
benefits from reduced impingement and entrainment attributable to the 
proposed options for the section 316(b) regulation for Phase III 
facilities. Although this primary study effort could not be completed 
in time for the publication of the proposed regulation, EPA expects to 
complete the study in time to rely on its findings for the final 
regulation. A number of studies have found that meta-analysis has 
considerable promise in benefits transfer and that meta-analysis can 
produce more reliable results than other benefit transfer methods 
(Bergstrom and De Civita, 1999, DCN 6-3109; Florax et al., 2002, pp. 
117-135, DCN 7-5132). However, the usefulness of meta-analysis results 
is dependent on both the quality of the underlying studies and their 
applicability to the policy question at hand. Given the difficulties in 
estimating non-use benefits at the national level using benefit 
transfer methods and the small number of studies that have attempted to 
value fish losses, particularly those related to impingement and 
entrainment at cooling water intake sites, EPA has not included 
monetary measures of non-use values in the benefit analysis for the 
proposed options. Instead, the Agency analyzed potential non-use 
benefits of the proposed options qualitatively.
2. Timing of Benefits
    Discounting is the economic conversion of future benefits and costs 
to their present values, accounting for the fact that individuals tend 
to value future outcomes less than comparable near-term outcomes. 
Discounting is important when the value of benefits (or costs) may vary 
from year to year and when the time profiles of benefits and costs are 
not the same. Discounting enables a consistent comparison of benefits 
to costs across time periods.
    For the section 316(b) rulemaking, the difference in timing in 
costs and benefits arises from two sources. First, facilities are not 
expected to achieve compliance with the regulation until several years 
after its promulgation. Benefits are equal to zero from the 
promulgation of the rule (i.e., beginning of 2007) until facilities 
reach compliance. Thus, EPA discounted the benefits from each facility 
by the number of years between the year in which the rule is 
promulgated and the year in which the facility complies. Since benefits 
were estimated on a regional basis, EPA estimated benefits from each 
facility by multiplying total regional benefits by the percentage of 
total regional flow that is attributable to each facility. EPA used 
current permit expiration information for model facilities to identify 
the projected year of compliance for each facility in the analysis.
    The second difference in timing in costs and benefits arises from 
the fact that additional time will pass between implementation of best 
technology available and resulting increased fishery yields. This is 
because one or more years may pass between the time an organism is 
spared impingement and entrainment and the time of its ultimate 
harvest. For example, a larval fish spared from entrainment (in effect, 
at age 0) may be caught by a recreational angler at age 3, meaning that 
a 3-year time lag arises between the installation of best technology 
available and the realization of the estimated recreational benefit. 
Likewise, if a 1-year old fish is spared from impingement and is then 
harvested by a commercial fisherman at age 2, there is a 1-year lag 
between the installation of best technology available and the 
subsequent commercial fishery benefit.
    Recognizing that avoided fish deaths occur mainly in fish that are 
younger than harvestable age (eggs, larvae and juveniles), and that the 
benefits from avoided impingement and entrainment of these fish would 
be realized typically 3-4 years after their avoided death, EPA 
developed a benefits recognition schedule for facilities in each 
region. The benefits schedule is based on an estimate of benefit delay 
that reflects the estimated age and species composition of impingement 
and entrainment losses, by region. Following achievement of compliance, 
benefits from facilities in most regions are assumed to increase over a 
7-year period to a long-term, steady State average, equal to the 
approximated per-facility benefit value discussed above, according to a 
numerical profile of < 0.0, 0.1, 0.2, 0.8, 0.9, 0.95, 1.0 >. This 
profile indicates the fraction of the steady State benefit value that 
is realized in each of the first seven years following the achievement 
of compliance at a facility. After seven years, this fraction remains 
1.0 for 23 additional years. After these combined 30 years the facility 
is assumed to cease compliance, which is consistent with the time 
period over which costs are evaluated. In the same way that the 
benefits profile builds up over time following compliance, the benefits 
profile declines at the end of the compliance period. Specifically, in 
the seven years following the end of compliance, the fraction of the 
steady State benefit value achieved follows the profile of < 1.0, 0.9, 
0.8, 0.2, 0.1, 0.05, 0.0 >. Therefore, the analysis of benefits 
encompasses a 37-year period starting with the first year of 
compliance. There are 35 years when benefits do not equal zero for a 
facility; 25 years when benefits are 100%; 10 years when benefits are a 
percentage of the total. These profile values are approximations based 
on a review of the age-specific fishing mortality rates that were used 
in the impingement and entrainment analysis and best professional 
judgment. Although EPA believes this approach is sufficient for this 
analysis, EPA could potentially refine these profile values through the 
use of a population model and will consider the feasibility of doing 
so.
    For regions with a relatively high contribution of impingement to 
total impingement and entrainment (Inland, Great Lakes, and the Gulf of 
Mexico regions), EPA used an adjusted benefits profile of < 0.1, 0.2, 
0.8, 0.9, 0.95, 1.0 >. This adjusted profile reflects that impinged 
fish are usually larger and older than entrained fish and thus benefits 
will be realized sooner in these regions.
    EPA used these profiles of benefits to calculate a total present 
value of benefits and then to calculate a constant annual equivalent 
value (annualized value) of the present value. EPA performed the 
calculations of present value and annualized value using two discount 
rate values: a rate of 3% and a rate of 7%. As described above, the 
time profile of benefits, and therefore the discounting analysis, 
varies by facility. For all facilities, the first year of the analysis 
is 2007 (the promulgation of the rule). However, the first year in 
which benefits are realized varies by facility. Following this year, as 
outlined above, benefits increase over a six-or seven-year period, 
remain constant until the 30th year, and then decline over a six-or 
seven-year period. For a detailed discussion of the discounting 
methodology, refer to Chapter A8, ``Discounting Benefits'' and for a 
discussion of the time line of benefits, refer to Chapter H1, ``Total 
National Benefits'' in the Regional Analysis Document (DCN 7-0003).
3. Recreational Fishing Valuation
    The recreational fishing benefits of the proposed options for the 
section 316(b) rule for Phase III facilities were estimated for six 
study regions (North Atlantic, Mid-Atlantic, Gulf of Mexico, 
California, Great Lakes, Inland) based on similarities in the affected 
ecosystems, aquatic species present, and characteristics of 
recreational fishing

[[Page 68516]]

activities within each of the six regions. To estimate recreational 
benefits of the proposed options for Phase III facilities, EPA 
developed a benefit transfer approach based on a meta-analysis of 
recreational fishing valuation studies designed to measure the various 
factors that determine willingness-to-pay for catching an additional 
fish per trip. To validate the meta-analysis results, EPA also used 
regional models of recreational fishing behavior developed for the 
Phase II analysis (DCN 6-0003) to estimate benefits from reduced 
impingement and entrainment at potentially regulated Phase III 
facilities for the four coastal regions and the Great Lakes region.\53\
---------------------------------------------------------------------------

    \53\ No RUM model was generated in the Phase II analysis for the 
Inland region because of a lack of data for that region so we could 
not verify the meta-analysis results for the Inland region.
---------------------------------------------------------------------------

a. Valuation Methods for Recreational Fishing
    As the first step in its recreational fishing analysis, EPA 
conducted a comprehensive review of recreational fishing valuation 
literature to identify prior estimates of recreational use benefits 
that may be applicable to the section 316(b) regulation. Based on this 
review, EPA identified 48 studies that use established economic 
estimation techniques to measure the value of changes in marine or 
freshwater recreational catch (DCN 7-0003). All of these studies 
provide estimates of the marginal value to fishermen of catching an 
additional fish, or provide enough information for EPA to calculate 
such a value.
    To examine the relative influence of methodology, sample, and 
fishery characteristics on the marginal value of catching an additional 
fish, EPA conducted a regression-based meta-analysis of these 48 
studies. Although the valuation studies include estimates for a large 
number of different species, for the purposes of the model these 
species were aggregated into groups of similar species, including four 
saltwater species groups (big game, small game, flatfish, and other 
saltwater), two anadromous species groups (salmon and steelhead trout), 
and six freshwater species groups (panfish, bass, walleye/pike, 
muskellunge, rainbow trout, and other trout). The other saltwater group 
includes bottom fish species, species caught by anglers not targeting 
any particular species, and species that did not clearly fit in one of 
the other groups. The panfish group includes freshwater species such as 
yellow perch, catfish, and other warm water species. For the meta-
analysis, some species groups were modeled interactively with regional 
variables to allow for variation in species value across different 
geographic regions.
    The regression results from this analysis reveal both statistically 
significant and intuitively correct patterns in the way that factors 
influence the value to fishermen of catching an additional fish. These 
results allow for calculation of the marginal value per fish for 
different species based on resource and policy context characteristics. 
Additional detail on the methods EPA used in this analysis can be found 
in Chapter A5 of the Regional Analysis Document.
b. Validating the Recreational Analysis Based on the Region-Specific 
RUM Models
    EPA also analyzed recreational fishing benefits from reduced 
impingement and entrainment based on region-specific random utility 
models (RUM) of recreational anglers' behavior for the four coastal 
regions and the Great Lakes region. These models were initially 
developed by the Agency for analysis of the final section 316(b) 
regulation for Phase II facilities.\54\ For that regulation, EPA 
developed original RUM models for three of the four coastal regions 
(California, the Mid-Atlantic, and the Gulf of Mexico) and the Great 
Lakes region. For the North Atlantic region, EPA used a model developed 
by the National Marine Fisheries Service (NMFS) by Hicks et al. (Hicks, 
Steinback, Gautam, and Thunberg, 1999. Volume II: The Economic Value of 
New England and Mid-Atlantic Sportfishing in 1994--DCN 5-1271). Chapter 
A11 of the Phase II Regional Analysis Document provide more detailed 
discussion of the methodology used in EPA's RUM analysis (DCN 7-0003).
---------------------------------------------------------------------------

    \54\ The RUM models for the North Atlantic, Mid-Atlantic, Gulf 
of Mexico, and California have not changed from the Phase II 
analysis. The Great Lakes RUM model was slightly refined for the 
Phase III analysis. The main differences between the Phase III and 
Phase II models include: (1) The ability to estimate separate values 
for yellow perch and bass and (2) the inclusion of site amenity 
effects in the site choice model (Besedin et al., 2004: DCN 7-5000).
---------------------------------------------------------------------------

    The regional recreational fishing studies used information on 
recreational anglers' behavior to infer anglers' economic value for the 
quality of fishing in the case study areas. The models' main assumption 
is that anglers will get greater satisfaction, and thus greater 
economic value, from sites where the catch rate is higher due to 
reduced impingement and entrainment, all else being equal. This benefit 
may occur in two ways: first, an angler may get greater enjoyment from 
a given fishing trip when catch rates are higher, and thus get a 
greater value per trip; second, anglers may take more fishing trips 
when catch rates are higher, resulting in greater overall value for 
fishing in the region. EPA modeled an angler's decision to visit a site 
as a function of site-specific cost, fishing trip quality, and 
additional site attributes such as presence of boat launching 
facilities or fish stocking at the site.
    The Agency used 5-year historical catch rates per hour of fishing 
as a measure of baseline fishing quality in the regional studies. Catch 
rate is a policy variable of concern because catch rate is a function 
of fish abundance, which is affected by fish mortality caused by 
impingement and entrainment.
    The Agency used the estimated model coefficients in conjunction 
with the estimated changes in impingement and entrainment in a given 
region to estimate per-day welfare gain to recreational anglers due to 
the proposed regulatory options for Phase III facilities. For the North 
Atlantic region, EPA used model coefficients estimated by Hicks et al. 
(1999) (DCN 5-1271).
    To estimate the total economic value to recreational anglers for 
changes in catch rates resulting from changes in impingement and 
entrainment in a given region, EPA multiplied the total number of 
fishing days for a given region by the estimated per-day welfare gain 
due to the regulation. EPA estimated that the proposed regulatory 
options for Phase III facilities would cause only negligible changes in 
recreational fishing participation due to the improved quality of the 
fishing sites. Therefore, the welfare estimates for the four coastal 
regions and the Great Lakes are based on estimates of baseline 
recreational fishing participation provided by NOAA Fisheries and the 
Fish and Wildlife Service's Annual Survey of Fishing, Hunting, and 
Wildlife-Related Recreation (U.S. Department of the Interior, 2001, DCN 
6-3231).
    Results of the RUM models are presented in Chapter B4 through F4 of 
the Regional Analysis Document. In general, the RUM-based results fall 
within the range of values estimated based on the meta-model.\55\ That 
the values from the two independent analyses are relatively close 
corroborates the use of meta-analysis in

[[Page 68517]]

estimating the value of incremental recreational fishing improvments 
resulting from the proposed section 316(b) regulation for Phase III 
facilities.
---------------------------------------------------------------------------

    \55\ The RUM models produced lower estimated recreational 
benefits in the Gulf of Mexico, Mid-Atlantic, and California 
regions, and higher estimates in the Great Lakes and North Atlantic 
regions. But no RUM estimates were outside of the lower and upper 
bound meta analysis values computed using the Krinksy and Robb 
approach.
---------------------------------------------------------------------------

c. Application of the Meta-Analysis Results to the Analysis of 
Recreational Benefits of the Proposed 316(b) Rule
    This section briefly discusses the use of the meta-analysis results 
to estimate the recreational benefits of the regulatory options 
evaluated for the proposed rule. Additional detail on this analysis, 
including EPA's treatment of uncertainty in per fish values, can be 
found in the Regional Analysis Document in Chapter A5. EPA began by 
calculating per fish values from the meta-analysis regression 
coefficients, based on regional and species specific values of the 
input variables. Because estimates from regression meta-models are 
subject to uncertainty, EPA used the Krinksy and Robb approach to 
estimate lower and upper bound marginal values for each species (DCN 6-
3160). EPA also conducted a sensitivity analysis to determine how per 
fish values could change based on different selections for the 
independent variables. The per fish values and bounds used in this 
analysis of the recreational benefits of the regulatory options are 
based on EPA's best estimates of values for independent variables. The 
resulting per fish values are presented in Exhibit IX-6.

                    Exhibit IX-6.--Estimated Marginal Value per Fish to Recreational Anglers
----------------------------------------------------------------------------------------------------------------
                                     Marginal value per fish caught, by region: saltwater fish \a\ (June 2003 $)
                                   -----------------------------------------------------------------------------
              Region                                             Other
                                     Small game    Flatfish    saltwater
                                                                  \b\
----------------------------------------------------------------------------------------------------------------
California........................       $12.57       $15.61        $4.52
North Atlantic....................         7.64         8.06         4.20
Mid-Atlantic......................         6.87         6.91         3.73
Gulf of Mexico....................         5.32  ...........         2.88
-----------------------------------
                                    Marginal value per fish caught, by region: freshwater fish \a\ (June 2003 $)
                                   --------------
              Region                 Small game    Walleye/       Bass       Panfish       Salmon     Trout \d\
                                        \c\          Pike
-----------------------------------
Great Lakes.......................  ...........        $4.58        $5.90        $1.06       $11.19        $7.99
Inland............................        $7.38         5.15         6.96         0.97  ...........        2.79
----------------------------------------------------------------------------------------------------------------
\a\ Marginal values per fish are presented only for species in regions in which they are affected by one of the
  regulatory options evaluated for the proposed rule.
\b\ Other saltwater species include bottom fish and other miscellaneous species.
\c\ Anadromous species such as striped bass and American shad can be found in freshwater coastal rivers as well
  as in saltwater.
\d\ The trout category includes all trout species except rainbow trout and lake trout.

    To estimate the benefits of the alternative regulatory options, EPA 
multiplied the per fish values from Exhibit IX-6 by the number of 
additional fish that would be caught by anglers under each regulatory 
option due to reductions in impingement and entrainment, compared to 
current levels of recreational catch. Exhibits IX-7, IX-8, and IX-9 
present the results of these calculations for the ``50 MGD for All 
Waterbodies,'' ``200 MGD for All Waterbodies,'' and ``100 MGD for 
Certain Waterbodies'' options. The proportion of impingement and 
entrainment losses of fishery species that were valued as lost 
recreational catch was determined from stock-specific fishing mortality 
rates, which indicate the fraction of a stock that is harvested by 
recreational anglers. Because fishing mortality rates are typically 
less than 20 percent, a proportion of the losses of fishery species 
were not valued in the recreational benefits analysis.
    Exhibit IX-7 shows the annual increase in total recreational catch 
and resulting monetized benefits resulting from the ``50 MGD for All 
Waterbodies'' option. The exhibit shows that compared to the current 
national level of recreational catch, anglers would catch 620,000 
additional fish per year under this option, resulting in total 
undiscounted benefits of $2.12 million per year. The annualized value 
of these additional fish is $1.77 million and $1.39 million, evaluated 
at 3 percent and 7 percent discount rates, respectively. Increased 
recreational catch is largest in the Gulf of Mexico region, where the 
rule would increase annual recreational catch by 183,000 fish, 
resulting in an undiscounted recreational welfare gain of $0.67 
million.
    Exhibit IX-7 also presents lower and upper confidence bounds for 
the benefits of the ``50 MGD for All Waterbodies'' option. These bounds 
are based on using the Krinsky and Robb technique to estimate the 95th 
and 5th confidence limits on the marginal value per fish predicted by 
the meta-analysis. Undiscounted national benefits of this option range 
from $1.02 million to $4.47 million per year, and benefits in the Gulf 
of Mexico region range from $0.30 million to $1.50 million per year, 
based on 90 percent confidence limits on the marginal value per fish 
predicted by the meta-analysis.

              Exhibit IX-7.--Recreational Benefits Under the ``50 MGD for All Waterbodies'' Option
----------------------------------------------------------------------------------------------------------------
                                                    Increase in    Annualized benefits  (thousands, 2003 $) \a\
                                                      annual     -----------------------------------------------
                                                   recreational
                                                  catch compared
                     Region                         to current
                                                   recreational         Low            Mean            High
                                                       catch
                                                   (thousands of
                                                       fish)
----------------------------------------------------------------------------------------------------------------
California......................................               5             $12             $28             $66

[[Page 68518]]

 
North Atlantic..................................              13              36              77             169
Mid-Atlantic....................................             159             290             612           1,301
Gulf of Mexico..................................             183             298             667           1,499
Great Lakes.....................................              92             192             385             756
Inland..........................................             167             189             358             675
 
National total (evaluated at 3%) \c\............             620             843           1,765           3,704
National total (evaluated at 7%) \c\............             620             665           1,391          2,919
----------------------------------------------------------------------------------------------------------------
\a\ Lower and upper bounds are calculated using the Krinsky and Robb technique to estimate the 95th and 5th
  percentile limits on the marginal value per fish predicted by the meta-analysis.
\b\ Undiscounted benefits are calculated from the annual increase in recreational catch, evaluated at a steady
  State condition. All regional results presented in this table are undiscounted. Undiscounted benefits are not
  directly comparable to cost.
\c\ Annualized benefits represent the value of all recreational benefits generated over the time frame of the
  analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of
  the discounting methodology, refer to section IX.D.2 of this preamble.

    Exhibit IX-8 shows the annual increase in recreational catch and 
resulting monetized benefits resulting from the ``200 MGD for All 
Waterbodies'' option. The exhibit shows that compared to the current 
national level of recreational catch, anglers would catch 419,000 
additional fish per year under this option, resulting in total 
undiscounted benefits of $1.43 million per year. The annualized value 
of these additional fish is $1.18 million and $0.92 million, evaluated 
at 3 percent and 7 percent, respectively. Increased recreational catch 
is largest in the Mid-Atlantic region, where this option would increase 
annual recreational catch by 141,000 fish, resulting in an undiscounted 
welfare gain of $0.55 million.
    The exhibit also presents lower and upper confidence bounds for the 
benefits of the ``200 MGD for All Waterbodies'' option. Undiscounted 
national benefits of this option range from $0.69 million to $2.99 
million per year, and benefits in the Mid-Atlantic region range from 
$0.26 million to $1.16 million per year, based on 90 percent confidence 
limits on the marginal value per fish predicted by the meta-analysis.

              Exhibit IX-8.--Recreational Benefits Under the ``200 MGD for All Waterbodies'' Option
----------------------------------------------------------------------------------------------------------------
                                                    Increase in     Annualized benefits (thousands, 2003 $) \a\
                                                      annual     -----------------------------------------------
                                                   recreational
                                                  catch compared
                     Region                         to current
                                                   recreational         Low            Mean            High
                                                       catch
                                                   (thousands of
                                                       fish)
----------------------------------------------------------------------------------------------------------------
California......................................               0              $0              $0              $0
North Atlantic..................................               3               8              16              36
Mid-Atlantic....................................             141             258             545           1,158
Gulf of Mexico..................................             100             163             364             819
Great Lakes.....................................              64             132             266             523
Inland..........................................             111             128             242             456
 
National total (evaluated at 3%) \c\............             419             567           1,181           2,463
National total (evaluated at 7%) \c\............             419             443             922          1,922
----------------------------------------------------------------------------------------------------------------
\a\ Lower and upper bounds are calculated using the Krinsky and Robb technique to estimate the 95th and 5th
  percentile limits on the marginal value per fish predicted by the meta-analysis.
\b\ Undiscounted benefits are calculated from the annual increase in recreational catch, evaluated at a steady
  State condition. All regional results presented in this table are undiscounted. Undiscounted benefits are not
  directly comparable to cost.
\c\ Annualized benefits represent the value of all recreational benefits generated over the time frame of the
  analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of
  the discounting methodology, refer to section IX.D.2 of this preamble.

    Exhibit IX-9 shows the annual increase in recreational catch and 
resulting monetized benefits resulting from the ``100 MGD for Certain 
Waterbodies'' option. The exhibit shows that compared to the current 
national level of recreational catch, anglers would catch 407,000 
additional fish per year under this option, resulting in total 
undiscounted benefits of $1.57 million per year. The annualized value 
of these additional fish is $1.29 million and $1.01 million, evaluated 
at 3 percent and 7 percent, respectively. Increased recreational catch 
is largest in the Gulf of Mexico, where this option would increase 
annual recreational catch by 183,000 fish, resulting in an

[[Page 68519]]

undiscounted welfare gain of $0.67 million.
    The exhibit also presents lower and upper confidence bounds for the 
benefits of the ``100 MGD for Certain Waterbodies'' option. 
Undiscounted national benefits of this option range from $0.73 million 
to $3.38 million per year, and benefits in the Gulf of Mexico region 
range from $0.30 million to $1.50 million per year, based on 90 percent 
confidence limits on the marginal value per fish predicted by the meta-
analysis.

            Exhibit IX-9.--Recreational Benefits Under the ``100 MGD for Certain Waterbodies'' Option
----------------------------------------------------------------------------------------------------------------
                                                    Increase in    Annualized benefits  (thousands, 2003 $) \a\
                                                      annual     -----------------------------------------------
                                                   recreational
                                                  catch compared
                     Region                         to current
                                                   recreational         Low            Mean            High
                                                       catch
                                                   (thousands of
                                                       fish)
----------------------------------------------------------------------------------------------------------------
California......................................               0              $0              $0              $0
North Atlantic..................................              11              29              63             137
Mid-Atlantic....................................             141             258             545           1,158
Gulf of Mexico..................................             183             298             667           1,499
Great Lakes.....................................              72             148             299             586
Inland..........................................               0               0               0               0
                                                 -----------------
National total (undiscounted) \b\...............             407             733           1,573           3,380
National total (evaluated at 3%) \c\............             407             602           1,292           2,779
National total (evaluated at 7%) \c\............             407             468           1,006          2,164
----------------------------------------------------------------------------------------------------------------
\a\ Lower and upper bounds are calculated using the Krinsky and Robb technique to estimate the 95th and 5th
  percentile limits on the marginal value per fish predicted by the meta-analysis.
\b\ Undiscounted benefits are calculated from the annual increase in recreational catch, evaluated at a steady
  State condition. All regional results presented in this table are undiscounted. Undiscounted benefits are not
  directly comparable to cost.
\c\ Annualized benefits represent the value of all recreational benefits generated over the time frame of the
  analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of
  the discounting methodology, refer to section IX.D.2 of this preamble.

d. Limits and Uncertainties
    Benefit transfers by definition are characterized by a difference 
between the context in which resource values are estimated and that in 
which benefit estimates are desired. The ability of meta-analysis to 
adjust for the influence of study, economic, and resource 
characteristics on recreational values can minimize, but not eliminate, 
potential biases. The meta-analysis model presented here provides a 
close but not perfect match to the context in which values are desired. 
Some of the key limitations inherent to the meta-model and the 
subsequent benefit transfer are the following:
    A. The per fish values estimated from the model depend on the 
values of the input variables in the meta-analysis. EPA assigned values 
to the input variables based on established economic theory and 
characteristics of the affected species and regions. However, because 
the input values for some variables are uncertain, the resulting per 
fish values and benefits estimates are also uncertain.
    B. As mentioned above, the economic and resource characteristics of 
the 48 studies used in the meta-analysis are not perfectly matched to 
the economic and resource characteristics of sites affected by the 
regulatory options evaluated for the proposed rule. In particular, 
although most of the Inland studies take place in the Great Lakes 
region, the regulatory options affect sites all across the Inland 
region. However, EPA believes that regional differences in per fish 
values for specific Inland species are relatively small.
    C. By aggregating species into categories, EPA was able to improve 
the fit of the meta-analysis model. However, this aggregation results 
in a lower level of detail in the values that can be predicted. In 
particular, the panfish category and other saltwater category include 
relatively diverse species.
    D. Projected changes in recreational catch may be overestimated 
because potential compensatory effects in affected species' 
reproduction or survival rates were not taken into account.
    E. In estimating recreational fishery losses, EPA used impingement 
and entrainment data provided by the facilities. While EPA used the 
most current data available, in some cases these data are 20 years old 
or older. Thus, they may not reflect current conditions. Also, data 
from Phase II facilities may not be representative of Phase III 
facilities.
    F. Impingement and entrainment estimates include only individuals 
directly lost to impingement and entrainment, not their progeny, and 
may therefore be underestimates.
    G. In estimating the benefits of improved recreational angling, the 
Agency only assigned a monetary benefit to the increases in consumer 
surplus for the baseline number of fishing days. Thus, benefits will be 
understated if participation increases in response to increased 
availability of fishery species as a result of reduced impingement and 
entrainment. This approach omits the portion of recreational fishing 
benefits that arise when improved conditions lead to higher levels of 
participation. Empirical evidence suggests that the omission of 
increased angling days can lead to an underestimate of total 
recreational fishing benefits. However, the magnitude of this error is 
likely to be small.
4. Commercial Fishing Valuation
    Reductions in impingement and entrainment at cooling water intake 
structures are expected to benefit the commercial fishing industry. The 
effect is straightforward: Reducing the number of fish killed will 
probably increase the number of fish available for harvest. Measuring 
the benefits of this effect is less straightforward. This section 
presents the methods EPA used to estimate commercial benefits, as well 
as the resulting benefits estimates.
a. Methods
    EPA estimated commercial benefits by first estimating the value of 
total losses under current impingement and entrainment conditions (or 
the total

[[Page 68520]]

benefits of eliminating all impingement and entrainment). Then, based 
on review of the empirical literature, EPA assumed that producer 
surplus is equal to 40 percent of baseline losses. Finally, EPA 
estimated benefits under different options for the proposed section 
316(b) rule for Phase III facilities by applying the estimated 
percentage reduction in impingement and entrainment to the estimated 
producer surplus to obtain the estimated increase in producer surplus 
attributable to the option. This methodology was applied in each region 
except the Inland region (which does not include any significant 
commercial fishing). See Chapter A4 of the Regional Analysis Document 
for details about EPA's methodology.
    To determine regional losses and benefits, EPA conducted several 
analyses. EPA estimated losses to commercial harvest (in pounds of 
fish) attributable to impingement and entrainment under current 
conditions by modeling these fish losses by applying a linear stock-to-
harvest assumption (i.e., a 10 percent change in the stock would result 
in a 10 percent change in harvest). The percentage of fish harvested is 
based on data on historical fishing mortality rates. EPA estimated 
gross revenue of lost commercial catch (i.e., the increase in gross 
revenue that would be expected if all current impingement and 
entrainment were eliminated) by using landings and dockside prices ($/
lb) as reported by the NOAA Fisheries for the period 1991-2001. The 
conceptually suitable measure of benefits is the sum of any changes in 
producer and consumer surplus. The methods used for estimating the 
change in surplus depend on whether the physical impact on the 
commercial fishery market appears sufficiently small such that it is 
reasonable to assume there will be no appreciable price changes in the 
markets for the impacted fisheries.
    For the regions and magnitude of losses included in this analysis, 
it is reasonable to assume no change in price, which implies that the 
welfare change is limited to changes in producer surplus. This change 
in producer surplus is assumed to be equivalent to a portion of the 
change in gross revenues. EPA assumes a range of 0 percent to 40 
percent of the estimated gross revenue losses as a means of estimating 
the change in producer surplus. This is based on a review of empirical 
literature and is consistent with recommendations made in comments on 
the Phase II proposal.
    EPA believes this is a reasonable approach to estimating producer 
surplus when there are no anticipated price changes. EPA's (2000) 
Guidelines for Preparing Economic Analyses (EPA 240-R-00-003) describes 
options for estimating ecological benefits for fisheries, and notes 
that ``if changes in service flows are small, current market prices can 
be used as a proxy for expected benefit * * * a change in the 
commercial fish catch might be valued using the market price for the 
affected species.'' In EPA's review of the commercial fishing 
literature two alterative methods for computing producer surplus as a 
percentage of gross revenues also came to the fore. The more common 
approach to calculating benefits relies on estimating normal profit as 
a percentage of gross revenue. In the surveyed studies this percentage 
of gross review ranges from -5 percent to 91.2 percent. The second 
approach to estimating commercial benefits, which may produce the more 
appropriate measure of welfare, computes the producer surplus as a 
percentage of gross revenue. The studies that use this method return 
percentages that range from 0 to 37, due to reduced profit estimates 
that include a return to the owners as part of costs. In light of these 
findings EPA has chosen to use 0 percent to 40 percent as the estimated 
range of percent of gross revenue that best captures the additional 
benefit that will accrue to commercial fishers.
    Once the commercial surplus losses associated with impingement and 
entrainment under baseline conditions have been estimated, EPA 
estimates the percentage reduction in impingement and entrainment at 
each facility under each regulatory option. This analysis is conducted 
for each region.
b. Results
    Exhibit IX-10 presents the estimated annualized commercial fishing 
benefits attributable to three co-proposed options: The ``50 MGD for 
All Waterbodies'' option (50 MGD All); the ``200 MGD for All 
Waterbodies'' option (200 MGD All); and the ``100 MGD for Certain 
Waterbodies'' option (100 MGD oceans, estuaries, tidal rivers, or one 
of the Great Lakes). The results reported include the total reduction 
in losses in pounds of fish and the value of this reduction discounted 
at 0 percent, 3 percent, and 7 percent. Total annualized commercial 
fishing benefits, applying a 3 percent discount rate, are estimated to 
be $0 to $132,000 per year for the 50 MGD option, $0 to $79,000 per 
year for the 200 MGD option, and $0 to $118,000 per year for the 100 
MGD for certain waterbodies option. When a 7 percent discount rate is 
applied, the total annualized commercial fishing benefits for the 50 
MGD option are estimated to be $0 to $104,000, under the 200 MGD option 
benefits equal $0 to $79,000, and for the 100 MGD for certain 
waterbodies option the discounted benefits are $0 to $93,000.

  Exhibit IX-10.--Annualized Commercial Fishing Benefits for Impinged and Entrained Fish Expected Under the Co-
                                               Proposed Options a
----------------------------------------------------------------------------------------------------------------
                                    Reduction in lost yield (thousands of     Benefits (thousands; $ 2003) c d
                                                     lbs)                 --------------------------------------
                                   ---------------------------------------
            Region \b\                                          100 MGD                                100 MGD
                                    50 MGD  all  200 MGD all    certain    50 MGD  all  200 MGD all    certain
                                                              waterbodies                            waterbodies
----------------------------------------------------------------------------------------------------------------
California........................           16            0            0           $6           $0           $0
North Atlantic....................            8            2            6            4            1            3
Mid-Atlantic......................          459          408          408           31           27           27
Gulf of Mexico....................          313          171          313           93           51           93
Great Lakes.......................           86           59           66           25           17           19
                                   --------------
National total,\e\ (undiscounted).          882          640          794          159           96          143
National total, (evaluated at 3%).          882          640          794          132           79          118
National total, (evaluated at 7%).          882          640          794          104           62          93
----------------------------------------------------------------------------------------------------------------
\a\ Benefits are upper bound benefits based on 40% of gross revenue. The lower bound is $0.
\b\ No significant commercial fishing takes place in the Inland region, and thus this region is excluded from
  this analysis.
\c\ Discounted to account for lag in implementation and lag in time required for fish lost to I&E to reach a
  harvestable age.

[[Page 68521]]

 
\d\ Annualized benefits represent the value of all commercial benefits generated over the time frame of the
  analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of
  the discounting methodology, refer to Section IX.D.2 of this preamble.
\e\ Undiscounted benefits are not comparable to costs.

c. Limitations and Uncertainties
    Some of the major uncertainties and assumptions of EPA's commercial 
fishing analysis include:
    A. The analysis only includes individuals that are directly killed 
by impingement and entrainment, not their progeny and may therefore 
underestimate projected changes in harvest.
    B. Projected changes in commercial catch may be overestimated 
because potential compensatory effects in affected species' 
reproduction or survival rates were not taken into account.
    C. Projected changes in harvest may be too high or too low because 
interactions with other stressors are not considered.
    D. EPA used impingement and entrainment data provided by the 
facilities. While EPA used the most current data available, in some 
cases these data are 20 years old or older. Thus, they may not reflect 
current conditions. Also data from Phase II facilities may not be 
representative of Phase III facilities.
    E. EPA assumes a linear stock to harvest relationship (i.e., a 10 
percent change in stock would have a 10 percent change in landings); 
this may be low or high, depending on the condition of the stocks. 
Region-specific fisheries regulations also will affect the validity of 
the linear assumption.
    F. EPA assumes that NOAA Fisheries landings data are accurate and 
complete. However, in some cases prices and/or quantities may be 
reported incorrectly.
    G. EPA currently estimates that the increase in producer surplus as 
a result of the rule will be between 0 percent and 40 percent of the 
estimated change in gross revenues. The research used to develop this 
range is not region-specific; thus the true value may fall outside this 
range for some regions and species.
5. Non-Use Benefits
    To assess public policy significance or importance of the 
ecological gains from the proposed regulation for Phase III facilities, 
EPA developed the relevant information and considered non-use benefits 
of the proposed options qualitatively. This assessment is discussed 
below.
a. Qualitative Assessment
    EPA is able to assign direct use value to only a very small 
fraction of the fish lost to impingement and entrainment. As shown in 
Exhibit IX-11, fish with a direct use value, which include only those 
fish that are harvested, account for only 3.3 percent of the total age-
1 equivalent impingement and entrainment loss. Unharvested fish (i.e., 
forage fish and the unlanded portion of the stock of harvested 
species), which have no direct use value, represent 96.7 percent of the 
total loss. A portion of the total benefits of these unharvested 
commercial, recreational, and forage species, can be derived indirectly 
from the estimated use values of the harvested animals. As noted in 
section IX.D.1, society may value both landed and unlanded fish for 
reasons unrelated to their use value. Such non-use values include the 
value that people may hold simply for knowing these fish exist. EPA 
believes it is important to consider such values, at least 
qualitatively, particularly since such a large percentage of impinged 
and entrained organisms have no direct use value.

    Exhibit IX-11.--Number and Percentage of Baseline Impingement and Entrainment Losses by Species Category
----------------------------------------------------------------------------------------------------------------
                                                              Age-1 adult equivalents  (millions)
                                              ------------------------------------------------------------------
                                                                                                        I&E of
                                                                          Commercial     Harvested    harvested
                    Region                                     Forage         and       commercial    species as
                                               All species    species    recreational       and       percentage
                                                                            species    recreational    of total
                                                                                          species        I&E
----------------------------------------------------------------------------------------------------------------
California...................................         1.31        0.666         0.642        0.0594         4.54
North Atlantic...............................         2.34        1.77          0.572        0.0542         2.32
Mid-Atlantic.................................        23.2        14.8           8.47         1.46           6.29
South Atlantic...............................         1.52        0.78          0.74          .011          7.41
Gulf of Mexico...............................        12.7         3.71          9.01         1.2            9.43
Great Lakes..................................        34.4        32.8           1.54         0.543          1.58
Inland.......................................        44.2        35.6           8.6          0.511          1.15
                                              --------------
    National total \a\.......................       120          90.2          29.6          3.94          3.29
----------------------------------------------------------------------------------------------------------------
\a\ The national total includes baseline impingement and entrainment losses at four sample-weighted potentially
  regulated facilities in the South Atlantic region.

    Changes in cooling water intake system design or operations 
resulting from the proposed section 316(b) regulations for Phase III 
facilities are expected to reduce impingement and entrainment losses of 
fish, shellfish, and other aquatic organisms and, as a result, are 
expected to increase the numbers of individuals present and benefit 
local and regional fishery populations. Depending on the nature and 
magnitude of the reduced losses and of conditions at a given site, this 
may ultimately contribute to the enhanced environmental functioning of 
affected waterbodies (rivers, lakes, estuaries, and oceans) and 
associated ecosystems. EPA does not have the data to determine whether 
reducing impingement and entrainment losses at Phase III facilities 
will have significant ecological benefits. However, the discussion that 
follows describes benefits that may result from reducing impingement 
and entrainment losses generally.
    EPA believes that reducing fish mortality from impingement and

[[Page 68522]]

entrainment would contribute to the health and sustainability of the 
affected fish populations by reducing the overall level of mortality 
for those populations. Fish populations suffer from numerous sources of 
mortality; some are natural and others are anthropogenic. Natural 
sources include weather, predation by other fish, and the availability 
of food. Human impacts that affect fish populations include fishing, 
pollution, habitat changes, and impingement and entrainment losses at 
cooling water intake structures. Fish populations decline when they are 
unable to sufficiently compensate for their overall level of mortality. 
Lowering the overall mortality level increases the probability that a 
population will be able to compensate for mortality at a level 
sufficient to maintain the long-term health of the population.
    In addition to their importance in providing food and other goods 
of direct use to humans, the organisms lost to impingement and 
entrainment may be critical to the continued functioning of the 
ecosystems of which they are a part depending on the magnitude of the 
actual impingement and mortality losses attributable to Phase III 
facilities. The discussion that follows describes the kinds of impacts 
that EPA believes may be due to impingement mortality and entrainment 
losses generally, not necessarily those at Phase III facilities. Fish 
are essential for energy transfer in aquatic food webs, regulation of 
food web structure, nutrient cycling, maintenance of sediment 
processes, redistribution of bottom substrates, the regulation of 
carbon fluxes from water to the atmosphere, and the maintenance of 
aquatic biodiversity (Peterson and Lubchenco, 1997; Postel and 
Carpenter, 1997; Holmlund and Hammer, 1999; Wilson and Carpenter, 
1999). Examples of impacts on ecological conditions, functions and 
services that may result from impingement and entrainment include: (1) 
Decreased numbers of ecological keystone, rare, sensitive, or 
threatened and endangered species; (2) decreased numbers of popular 
commercial and recreational fish species that are not fished, perhaps 
because the fishery is closed; (3) increased numbers of exotic or 
disruptive species that compete well in the absence of species lost to 
impingement and entrainment (impingement and entrainment may also help 
remove some exotic or disruptive organisms); (4) disruption of 
ecological niches and ecological strategies used by aquatic species; 
(5) disruption of energy transfer through the food web; (6) decreased 
local biodiversity; (7) disruption of predator-prey relationships; (8) 
disruption of age class structures of species; (9) disruption of 
natural succession processes. Many of these functions and services can 
only be maintained by the continued presence of all life stages of fish 
and other aquatic species in their natural habitats. While some 
ecological services of aquatic species have been studied, other 
ecosystems services, relationships, and interrelationships are unknown 
or poorly understood. To the extent that the latter are not captured in 
the benefits analyses, total benefits may be underestimated.
    Scientific and public interest in protecting ecosystem services is 
increasing with the recognition that these services are vulnerable to a 
wide range of human activities and are difficult, if not impossible, to 
replace with human technologies (Meffe, 1992; DCN 7-5250). Reducing 
impingement and entrainment losses could contribute to restoring (or 
preserving) the biological integrity of the ecosystems of substantial 
national importance.
    In the 1987 amendments to the CWA, Congress established the 
National Estuary Program because the ``Nation's estuaries are of great 
importance to fish and wildlife resources and recreation and economic 
opportunity * * * [, and] maintaining the health and ecological 
integrity of these estuaries is in the national interest (Water Quality 
Act of 1987 (Pub. L. 100-4), Sec.  317(a)(1)(A) and (B) adding Sec.  
320 to the CWA, 33 US.C. 1330). So far, there are 28 estuaries 
designated under the National Estuary Program (NEP). In addition, the 
largest estuary in the United States, Chesapeake Bay, is protected 
under its own Federally mandated program, separate but related to NEP. 
Of the 15 estuaries from which the potentially regulated Phase III 
facilities withdraw cooling water, 12 are nationally significant 
estuaries designated under NEP or the Chesapeake Bay Program.
    Substantial Federal and State resources have been directed to NEP 
to enhance conservation and knowledge about the estuaries designated 
under this program. Since 1998, more than $95 million dollars has been 
devoted to NEP to benefit the health of the nationally significant 
estuaries (NEP, 2004, DCN 7-5125).
    Reducing impingement and entrainment at potentially regulated Phase 
III facilities may also benefit freshwater ecosystems of national 
significance, including the Great Lakes Basin, Mississippi River, and 
Columbia River. These waterbodies are subject to large-scale ecosystem 
restoration efforts that are good indicators of great public interest 
in restoring the ecological health of these ecosystems (U.S. Fish and 
Wildlife Service, 2004, DCN 7-5126; U.S. Department of the Interior, 
2004, DCN 7-5127; Northeast Midwest Institute, 2004, DCN 7-5128; The 
Upper Mississippi River Basin Association, 2004, DCN 7-5129). The 
ecosystem restoration efforts focus on many issues, including coastal 
habitat restoration, protection of fish species, conservation of 
migratory birds and endangered species. For example, between 1992 and 
2001, more than $17 million was devoted to projects to restore and 
conserve the Great Lakes ecosystem, and $102 million was spent on 
improving the Mississippi River ecosystem (U.S. EPA, 2004, DCN 7-5130; 
and Brescia, 2002, DCN 7-5131). Reducing impingement and entrainment of 
aquatic organisms may improve the quality of aquatic habitat and 
contribute to improvement of the biological integrity and health of 
these ecosystems.
    Finally, reducing impingement and entrainment in waterbodies that 
do not have national significance may contribute to restoration or 
protection of ecosystems of regional or local importance.
    Today's proposed rule may also help preserve threatened and 
endangered species by reducing the number of individuals lost to 
impingement and entrainment. Threatened and endangered (T&E) and other 
special status species directly affected by impingement and entrainment 
include, pallid sturgeon, delta smelt, Sacramento splittail, and 
longfin smelt. Threatened and endangered species can also suffer 
indirect impacts if impingement and entrainment at cooling water intake 
structures disrupts their food source or their critical habitat. The 
loss of individuals of listed species from impingement and entrainment 
is particularly important because, by definition, these species are 
already rare and at risk of irreversible decline because of other 
stressors. EPA explored several methods for valuing reductions in 
threatened and endangered species losses. However, EPA has not included 
quantitative measures of non-use values associated with protection of 
threatened and endangered species in the proposed section 316(b) rule 
for Phase III facilities benefit analysis due to current uncertainty 
about the extent of Phase III facilities' impact on threatened and 
endangered species at the national level and EPA's inability to 
monetize such benefits given the available economic valuation 
literature. Details about possible non-use benefits valuation 
approaches are presented in Chapter A9

[[Page 68523]]

of the 316(b) Regional Analysis Document (DCN 7-0003).
6. National Benefits
    Quantifying and monetizing reduction in impingement and entrainment 
losses due to today's proposed rule is challenging, and the preceding 
sections discuss specific limitations and uncertainties associated with 
estimation of commercial, recreational, and non-use benefit categories. 
National benefit estimates are subject to uncertainties inherent in 
valuation approaches used for assessing the three benefits categories. 
The combined effect of these uncertainties is of unknown magnitude or 
direction (i.e., the estimates may over or under state the anticipated 
national-level benefits); however, EPA has no data to indicate that the 
results for each benefit category are atypical or unreasonable. Since 
the Agency was unable to monetize non-use benefits, the estimates of 
total benefits reflect use values only.
    Exhibit IX-13 presents EPA's estimates of the total monetized 
benefits from impingement and entrainment reduction under the ``50 MGD 
for All Waterbodies'' option. The annualized use benefits from 
impingement and entrainment reduction post regulation are $1.90 million 
per year (2003$), with lower and upper bounds of $0.98 million and 
$3.84 million, discounted at three percent. Discounted at seven 
percent, annualized use benefits are $1.50 million per year, with lower 
and upper bounds of $0.77 million and $3.02 million.

                               Exhibit IX-13.--Summary of Monetized Social Benefits ``50 MGD for All Waterbodies'' Option
                                                                 [Thousands; 2003 $] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Annualized recreational fishing     Total annualized value of monetizable
                                                                Annualized                 benefits                     impingement and entrainment
                            Region                              commercial ---------------------------------------             reductions \b\
                                                                 fishing                                          --------------------------------------
                                                                 benefits       Low          Mean         High         Low          Mean         High
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Evaluated at a 3 percent discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California...................................................        $0-$5          $10          $24          $57          $16          $29          $62
North Atlantic...............................................          0-3           29           63          138           32           66          141
Mid-Atlantic.................................................         0-25          235          497        1,057          260          522        1,082
Gulf of Mexico...............................................         0-78          249          558        1,254          327          636        1,332
Great Lakes..................................................         0-20          157          316          621          178          337          641
Inland \c\...................................................            0          162          306          577          162          306          577
                                                              --------------
    National total...........................................        0-132          843        1,765        3,704          975        1,897        3,836
--------------------------------------------------------------
                                                         Evaluated at a 7 percent discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California...................................................          0-4            9           20           47           13           24           51
North Atlantic...............................................          0-2           22           49          107           25           51          109
Mid-Atlantic.................................................         0-19          181          382          811          200          401          830
Gulf of Mexico...............................................         0-62          198          444          998          260          506        1,061
Great Lakes..................................................         0-16          122          246          483          138          262          499
Inland \c\...................................................            0          133          251          473          133          251          473
                                                              --------------
    National total...........................................        0-104          665        1,391        2,919          769        1,495       3,023
--------------------------------------------------------------------------------------------------------------------------------------------------------
 \a\ All benefits presented in this exhibit are annualized. These annualized benefits represent the value of all benefits generated over the time frame
  of the analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of the discounting methodology,
  refer to section IX.D.2 of this preamble.
 \b\ The total monetizable value of impingement and entrainment reductions includes use benefits only. EPA evaluated non-use benefits only
  qualitatively. A range of recreational fishing benefits is provided, based on the Krinsky and Robb technique to estimate the 95th and 5th percentile
  limits on the marginal value per fish predicted by the meta-analysis. Commercial fishing benefits are computed based on a range from 0 percent to 40
  percent of the change in gross revenue, as explained in the text. To calculate the total monetizable value columns (low, mean, and high), the high end
  value for commercial fishing benefits is added to the low, medium and high values for recreational fishing benefits respectively.
 \c\ There are no commercial fishing benefits in the Inland region.

    Exhibit IX-14 presents EPA's estimates of the total monetized 
benefits from impingement and entrainment reduction under the ``200 MGD 
for All Waterholes'' option. The annualized use benefits from 
impingement and entrainment reduction post regulation are $1.26 million 
per year (2003$), with lower and upper bounds of $0.65 million and 
$2.54 million, discounted at three percent. Discounted at seven 
percent, annualized use benefits are $0.98 million per year, with lower 
and upper bounds of $0.51 million and $1.98 million.

[[Page 68524]]



                               Exhibit IX-14.--Summary of Monetized Social Benefits ``200 MGD for All Waterbodies'' Option
                                                                 [Thousands; 2003 $] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Annualized recreational fishing     Total annualized value of monetizable
                                                                Annualized                 benefits                     impingement and entrainment
                            Region                              commercial ---------------------------------------             reductions \b\
                                                                 fishing                                          --------------------------------------
                                                                 benefits       Low          Mean         High         Low          Mean         High
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Evaluated at a 3 percent discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California...................................................           $0           $0           $0           $0           $0           $0           $0
North Atlantic...............................................          0-1            6           13           28            7           14           29
Mid-Atlantic.................................................         0-22          208          440          934          230          462          956
Gulf of Mexico...............................................         0-43          136          305          685          179          347          728
Great Lakes..................................................         0-14          108          216          425          122          230          439
Inland \c\...................................................            0          110          207          390          110          207          390
                                                              --------------
    National total...........................................         0-79          567        1,181        2,463          647        1,260        2,542
--------------------------------------------------------------
                                                          Evaluated at a 7 percent discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California...................................................            0            0            0            0            0            0            0
North Atlantic...............................................            0            4           10           21            5           10           21
Mid-Atlantic.................................................         0-17          158          334          709          175          350          726
Gulf of Mexico...............................................         0-34          108          243          545          142          277          579
Great Lakes..................................................         0-11           83          166          326           93          177          337
Inland \c\...................................................            0           90          170          321           90          170          321
                                                              --------------
    National total...........................................           62          443          922        1,922          505          984       1,984
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ All benefits presented in this exhibit are annualized. These annualized benefits represent the value of all benefits generated over the time frame
  of the analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of the discounting methodology,
  refer to section IX.D.2 of this preamble.
\b\ The estimate of the total monetizable value of impingement and entrainment reductions includes use benefits only.
\c\ There are no commercial fishing benefits in the Inland region.

    Exhibit IX-15 presents EPA's estimates of the total monetized 
benefits from impingement and entrainment reduction under the ``100 MGD 
for Certain Waterbodies'' option. The annualized use benefits from 
impingement and entrainment reduction post regulation are $1.41 million 
per year (2003$), with lower and upper bounds of $0.72 million and 
$2.90 million, discounted at three percent. Discounted at seven 
percent, annualized use benefits are $1.10 million per year, with lower 
and upper bounds of $0.56 million and $2.26 million.

                             Exhibit IX-15.--Summary of Monetized Social Benefits ``100 MGD for Certain Waterbodies'' Option
                                                                 [Thousands; 2003 $] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Annualized recreational fishing     Total annualized value of monetizable
                                                                Annualized                 benefits                     impingement and entrainment
                            Region                              commercial ---------------------------------------             reductions \b\
                                                                 fishing                                          --------------------------------------
                                                                 benefits       Low          Mean         High         Low          Mean         High
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Evaluated at a 3 percent discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California...................................................           $0           $0           $0           $0           $0           $0           $0
North Atlantic...............................................          0-2           24           52          113           26           54          115
Mid-Atlantic.................................................         0-22          208          440          934          230          462          956
Gulf of Mexico...............................................         0-78          249          558        1,254          327          636        1,332
Great Lakes..................................................         0-16          121          243          478          137          259          494
Inland \c\...................................................            0            0            0            0            0            0            0
                                                              --------------
    National total...........................................        0-118          602        1,292        2,779          720        1,411        2,897
--------------------------------------------------------------
                                                         Evaluated at a 7 percent discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California...................................................            0            0            0            0            0            0            0
North Atlantic...............................................          0-2           19           40           88           20           42           90
Mid-Atlantic.................................................         0-17          158          334          709          175          350          726
Gulf of Mexico...............................................         0-62          198          444          998          260          506        1,061
Great Lakes..................................................         0-12           93          188          368          105          200          381
Inland \c\...................................................            0            0            0            0            0            0            0
                                                              --------------

[[Page 68525]]

 
    National total...........................................         0-93          468        1,006        2,164          561        1,099       2,257
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ All benefits presented in this exhibit are annualized. These annualized benefits represent the value of all benefits generated over the time frame
  of the analysis, discounted to 2007, and then annualized over a thirty year period. For a more detailed discussion of the discounting methodology,
  refer to section IX.D.2 of this preamble.
\b\ The estimate of the total monetizable value of impingement and entrainment reductions includes use benefits only.
\c\ There are no commercial fishing benefits in the Inland region.

    EPA considered a wide range of policy options in developing the 
proposed section 316(b) regulation for the Phase III facilities. The 
Regional Analysis Document provides EPA's complete benefit assessment 
for the alternative policy options considered in this rulemaking.

X. Comparison of Benefits and Costs

    This section presents two measures that compare the benefits and 
costs of the regulatory options: (1) A benefit-cost analysis, and (2) a 
break-even analysis of the minimum non-use benefits required for total 
annualized benefits to equal total annualized costs, on a per household 
basis. Each measure is presented by study region.

A. Benefit-Cost Analysis

    The benefit-cost analysis for each of the co-proposed regulatory 
options compares total annualized use benefits to total annualized pre-
tax costs (social costs) at existing facilities that remain open in the 
baseline.\56\ Benefits and costs were discounted using both a 3 percent 
and 7 percent discount rate. The cost estimates include costs of 
compliance to facilities subject to the proposed rule as well as 
administrative costs incurred by State and local governments and by the 
Federal government. The benefits estimates include monetized benefits 
to commercial and recreational fishing. The total monetizable benefits 
include only use benefits. The non-use benefits were evaluated 
qualitatively. Thus, the benefit-cost analysis compares a generally 
complete measure of social costs with an incomplete measure of social 
benefits and should be interpreted bearing in mind this inconsistency.
---------------------------------------------------------------------------

    \56\ This section only includes benefits and costs for existing 
facilities because EPA was unable to assess benefits of reducing 
impringement mortality and entrainment at new offshore oil and gas 
facilities.
---------------------------------------------------------------------------

1. Benefit-Cost Analysis Results
    Exhibit X-1 presents a summary of total annualized use benefits, 
total annualized costs, and net benefits for the ``50 MGD for All 
Waterbodies'' option. Under this option, 136 facilities (excluding 
baseline closures) are subject to the regulation. Of those facilities, 
it is assumed that 103 are required to install technologies to reduce 
impingement mortality and entrainment, and 32 will incur permitting 
costs only. The exhibit shows that the use benefits of the 50 MGD 
option are not projected to exceed the costs in any of the study 
regions. In the California region, costs exceed use benefits by $0.8 
million or $0.9 million when discounted at 3 percent and 7 percent 
respectively. In the Inland region, costs are $19.4 million or $20.4 
million greater than the use benefits. At the national level, EPA 
projects the costs of this option to exceed its use benefits by $45.4 
million per year, discounted at 3 percent, or by $48.6 million per 
year, discounted at 7 percent.

                                Exhibit X-1.--Summary of Social Benefits and Costs ``50 Mgd for All Waterbodies'' Option
                                                                   [Millions; $ 2003]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Number of   Total annualized use value                     Net benefits \c\
                                                           Number of  facilities     of I&E  reductions \a\        Total   -----------------------------
                      Study region                        facilities             ------------------------------ annualized
                                                          subject to  installing                                 costs \b\     Low      Mean      High
                                                            option    technology     Low      Mean      High
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Evaluated at a 3% discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California..............................................          1           1      $0.02     $0.03     $0.06       $0.8      -$0.8     -$0.8     -$0.8
North Atlantic..........................................          5           4       0.03      0.07      0.14        4.6       -4.5      -4.5      -4.5
Mid-Atlantic............................................          3           3       0.26      0.52      1.08        2.6       -2.3      -2.0      -1.5
Gulf of Mexico..........................................          7           7       0.33      0.64      1.33        9.1       -8.7      -8.4      -7.7
Great Lakes.............................................         23          19       0.18      0.34      0.64       10.1       -9.9      -9.7      -9.4
Inland..................................................         97          69       0.16      0.31      0.58       19.7      -19.5     -19.4     -19.1
                                                         -------------
    National total......................................        136         103       0.97      1.90      3.84       47.3      -46.4     -45.4     -43.5
---------------------------------------------------------
                                                              Evaluated at a 7% discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California..............................................          1           1       0.01      0.02      0.05        1.0       -1.0      -0.9      -0.9
North Atlantic..........................................          5           4       0.02      0.05      0.11        5.0       -5.0      -5.0      -4.9
Mid-Atlantic............................................          3           3       0.20      0.40      0.83        2.4       -2.2      -2.0      -1.6

[[Page 68526]]

 
Gulf of Mexico..........................................          7           7       0.26      0.51      1.06       10.2       -9.9      -9.7      -9.1
Great Lakes.............................................         23          19       0.14      0.26      0.50       10.2      -10.1      -9.9      -9.7
Inland..................................................         97          69       0.13      0.25      0.47       20.6      -20.5     -20.4     -20.2
                                                         -------------
    National total......................................        136         103       0.77      1.50      3.02       50.1      -49.3     -48.6    -47.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The total monetizable value of I&E reductions includes use benefits only. EPA evaluated non-use benefits only qualitatively. The ranges (low,
  medium, and high) for annualized use value is computed by adding the high end value for commercial fishing benefits (based on assumed producer surplus
  of 40% of gross revenue) to the low, mean, and high values for recreational fishing benefits respectively (see Section IX).
\b\ Total costs are based on pre-tax facility costs. National total costs also include State, local, and Federal administrative costs of $0.6 million
  that cannot be attributed to individual study regions.
\c\ Net benefits are computed by subtracting total annualized costs from total annual use values. The net benefits presented here are based on the
  comparison of a generally complete measure of social costs with an incomplete measure of social benefits, and should be interpreted with caution.

    Exhibit X-2 presents a summary of total annualized benefits, total 
annualized costs, and net benefits for the ``200 MGD for All 
Waterbodies'' option. Under this option, 25 facilities (excluding 
baseline closures) are subject to the regulation. Of those facilities, 
it is assumed that 22 are required to install technologies to reduce 
impingement mortality and entrainment. The exhibit shows that the use 
benefits of the 200 MGD option are not projected to exceed the costs in 
any of the study regions. In the North Atlantic region, costs exceed 
use benefits by $0.5 million, evaluated at both the 3 percent and 7 
percent discount rates. In the Inland region, costs are $12.1 million 
or $13.5 million greater than the use benefits. At the national level, 
EPA projects the costs of this option to exceed its use benefits by 
$21.5 million per year, discounted at 3 percent, or by $23.1 million 
per year, discounted at 7 percent.

                                Exhibit X-2.--Summary of Social Benefits and Costs ``200 MGD for All Waterbodies'' Option
                                                                    [Millions; $2003]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Number of   Number of   Total annualized use value of                       Net benefits \c\
                                                    facilities  facilities         I&E reductions \a\           Total   --------------------------------
                   Study region                     subject to  installing --------------------------------- annualized
                                                      option    technology     Low        Mean       High     costs \b\     Low        Mean       High
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Evaluated at a 3% discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California........................................           0           0      $0.00      $0.00      $0.00        $0.0       $0.0       $0.0       $0.0
North Atlantic....................................           1           1       0.01       0.01       0.03         0.5       -0.5       -0.5       -0.5
Mid-Atlantic......................................           2           2       0.23       0.46       0.96         2.0       -1.7       -1.5       -1.0
Gulf of Mexico....................................           2           2       0.18       0.35       0.73         3.8       -3.6       -3.5       -3.1
Great Lakes.......................................           5           5       0.12       0.23       0.44         4.1       -3.9       -3.8       -3.6
Inland............................................          14          12       0.11       0.21       0.39        12.3      -12.2      -12.1      -11.9
                                                   -------------
    National total................................          25          22       0.65       1.26       2.54        22.8      -22.1      -21.5      -20.2
---------------------------------------------------
                                                             Evaluated at a 7% discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California........................................           0           0      $0.00      $0.00      $0.00        $0.0       $0.0       $0.0       $0.0
North Atlantic....................................           1           1       0.00       0.01       0.02         0.5       -0.5       -0.5       -0.4
Mid-Atlantic......................................           2           2       0.17       0.35       0.73         1.8       -1.6       -1.4       -1.1
Gulf of Mexico....................................           2           2       0.14       0.28       0.58         4.4       -4.2       -4.1       -3.8
Great Lakes.......................................           5           5       0.09       0.18       0.34         3.7       -3.6       -3.5       -3.3
Inland............................................          14          12       0.09       0.17       0.32        13.7      -13.6      -13.5      -13.4
                                                   -------------
    National total................................          25          22       0.51       0.98       1.98        24.1      -23.6      -23.1     -22.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The total monetizable value of I&E reductions includes use benefits only. EPA did not estimate non-use benefits quantitatively. The low and high use
  values reflect the range of recreational fishing values presented in Section 9 of the preamble. They were calculated using the Krinsky and Robb
  technique to estimate the 95th and 5th percentile limits on the marginal value per fish predicted by the meta-analysis.
\b\ Total costs are based on pre-tax facility costs. National total costs also include State, local, and Federal administrative costs of $0.1 million
  that cannot be attributed to individual study regions.
\c\ The net benefits presented here are based on the comparison of a generally complete measure of social costs with an incomplete measure of social
  benefits, and should be interpreted with caution.


[[Page 68527]]

    Exhibit X-3 presents a summary of total annualized benefits, total 
annualized costs, and net benefits for the regulatory option with a 
design intake flow of 100 MGD or more for facilities withdrawing from 
oceans, estuaries, and tidal rivers, or the Great Lakes (``100 MGD for 
Certain Waterbodies''). Under this option, 19 facilities (excluding 
baseline closures) are subject to the regulation. Of those facilities, 
it is assumed that 18 are required to install technologies to reduce 
impingement mortality and entrainment, and one will incur permitting 
costs only. The exhibit shows that the use benefits of the 100 MGD for 
certain waterbodies option are not projected to exceed the costs in any 
of the study regions. In the Mid-Atlantic region, costs exceed use 
benefits by $1.5 million or $1.4 million, evaluated at 3 percent and 7 
percent discount rates. In the Gulf of Mexico region, costs are $8.4 
million or $9.7 million greater than the use benefits. At the national 
level, EPA projects the costs of this option to exceed its use benefits 
by $16.2 million per year, discounted at 3 percent, or by $17.2 million 
per year, discounted at 7 percent.

                               Exhibit X-3.--Summary of Social Benefits and Costs 100 MGD for Certain Waterbodies'' Option
                                                                    [millions; $2003]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Number of   Number of   Total annualized use value of                       Net benefits c
                                                     facilities  facilities          I&E reductions a           Total   --------------------------------
                    Study region                     subject to  installing --------------------------------- annualize
                                                       option    technology     Low        Mean       High    d Costs b     Low        Mean       High
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Evaluated at a 3% discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California.........................................           0           0      $0.00      $0.00      $0.00       $0.0       $0.0       $0.0       $0.0
North Atlantic.....................................           3           3       0.03       0.05       0.12        2.0       -2.0       -1.9       -1.9
Mid Atlantic.......................................           2           2       0.23       0.46       0.96        2.0       -1.7       -1.5       -1.0
Gulf of Mexico.....................................           7           7       0.33       0.64       1.33        9.1       -8.7       -8.4       -7.7
Great Lakes........................................           8           6       0.14       0.26       0.49        4.5       -4.3       -4.2       -4.0
Inland.............................................           0           0       0.00       0.00       0.00        0.0        0.0        0.0        0.0
                                                    -------------
    National total.................................          19          18       0.72       1.41       2.90       17.6      -16.9      -16.2      -14.7
----------------------------------------------------
                                                             Evaluated at a 7% discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
California.........................................           0           0      $0.00      $0.00      $0.00       $0.0       $0.0       $0.0       $0.0
North Atlantic.....................................           3           3       0.02       0.04       0.09        2.0       -2.0       -2.0       -1.9
Mid Atlantic.......................................           2           2       0.17       0.35       0.73        1.8       -1.6       -1.4       -1.1
Gulf of Mexico.....................................           7           7       0.26       0.51       1.06       10.2       -9.9       -9.7       -9.1
Great Lakes........................................           8           6       0.11       0.20       0.38        4.1       -4.0       -3.9       -3.7
Inland.............................................           0           0       0.00       0.00       0.00        0.0        0.0        0.0        0.0
                                                    -------------
    National total.................................          19          18       0.56       1.10       2.26       18.3      -17.7      -17.2     -16.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The total monetizable value of I&E reductions includes use benefits only. EPA did not estimate non-use benefits quantitatively. The low and high use
  values reflect the range of recreational fishing values presented in Section 9 of the preamble. They were calculated using the Krinsky and Robb
  technique to estimate the 95th and 5th percentile limits on the marginal value per fish predicted by the meta-analysis.
\b\ Total costs are based on pre-tax facility costs. National total costs also include State, local, and Federal administrative costs of $0.2 million
  that cannot be attributed to individual study regions.
\c\ The net benefits presented here are based on the comparison of a generally complete measure of social costs with an incomplete measure of social
  benefits, and should be interpreted with caution.

B. Break-even Analysis

    Estimating non-use values is an extremely challenging and uncertain 
exercise, particularly when, due to time and resource constraints, 
primary research using stated preference methods was not a feasible 
option for this proposed rule. In Section IX.D.5 above, EPA described 
possible alternative approaches for developing non-use benefit 
estimates based on benefits transfer and associated methods. Due to the 
uncertainties of providing estimates of the magnitude of non-use values 
associated with the regulatory options considered for this proposal, 
this section provides an alternative approach for evaluating the 
significance of non-use values. The approach used here applies a 
``break-even'' analysis to identify what non-use values would have to 
be in order for the options to have monetized benefits that are equal 
to costs.
    The break-even approach uses EPA's estimated commercial and 
recreational use benefits for the regulatory options and subtracts them 
from the estimated annual compliance costs incurred by existing 
facilities subject to the regulatory options. The resulting ``net 
cost'' enables one to work backwards to estimate what non-use values 
would need to be in order for total annual benefits to equal annualized 
costs. EPA computed the per household willingness-to-pay for all three 
options proposed today and found that the non-use values necessary to 
equate total annual benefits with total annual social cost ranged from 
$1.43 per household, for the ``100 MGD for Certain Waterbodies'' option 
discounted at 3 percent, to $2.13 per household for the ``50 MDG for 
All Water bodies'' option discounted at 7 percent. EPA also calculated 
the break-even non-use value per (age-1 equivalent) fish saved. The per 
fish value necessary to have the total annual costs and benefits of the 
proposed options equate range from $0.54 for the ``100 MGD for Certain 
Waterbodies'' option, discounted at 3 percent, to $0.98 for the ``50 
MDG for All Water bodies'' option, discounted at 7 percent. For a 
detailed discussion of the estimation and results of both the per 
household and per fish break-even values see the Regional Analysis 
Document.

[[Page 68528]]

XI. Statutory and Executive Order Reviews

A. E.O. 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to Office of Management and Budget (OMB) review 
and the requirements of the Executive Order. The order defines a 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
     Have an annual effect on the economy of $100 million or 
more or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or 
communities;
     Create a serious inconsistency or otherwise interfere with 
an action taken or planned by another agency;
     Materially alter the budgetary impact of entitlements, 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or
     Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, it has been 
determined that this proposed rule is a ``significant regulatory 
action.'' As such, this action was submitted to OMB for review. Changes 
made in response to OMB suggestions or recommendations will be 
documented in the public record.

B. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The 
Information Collection Request (ICR) document prepared by EPA has been 
assigned EPA ICR number 2169.01.
    The information collected under today's proposed rule would assist 
EPA in regulating environmental impacts, namely impingement mortality 
and entrainment, at cooling water intake structures at Phase III 
facilities and new offshore oil and gas extraction facilities. This 
information would be used by these parties to prepare comprehensive 
demonstration studies, monitor impingement mortality and entrainment, 
verify compliance, and prepare annual/biennial reports as required 
under today's proposal. The information collected would be reviewed by 
EPA and State Directors to ensure that appropriate National Pollutant 
Discharge Elimination System (NPDES) permit conditions regulating 
cooling water intake structures would be developed. Compliance with the 
applicable information collection requirements imposed under this 
proposed rule is mandatory (see Sec. Sec.  122.21(r), 125.136, 125.137, 
125.138, 125.104, 125.105, 125.106, 125.107, 125.108).
    EPA does not consider the specific data that would be collected 
under this proposed rule to be confidential business information. 
However, if a respondent does consider this information to be 
confidential, the respondent may request that such information be 
treated as confidential. All confidential data will be handled in 
accordance with 40 CFR 122.7, 40 CFR Part 2, and EPA's Security Manual 
Part III, Chapter 9, dated August 9, 1976.
    Today's proposed rule would modify regulations at Sec.  122.21 to 
require existing Phase III facilities and new offshore oil and gas 
extraction facilities to prepare and submit some of the same 
information required for Phase I and Phase II facilities. The proposed 
application requirements would require owners or operators of Phase III 
existing facilities to submit two general categories of information 
when they apply for a reissued NPDES permit. The general categories of 
information would include (1) permit application information, and (2) 
verification monitoring data. A detailed list of required data items is 
provided below.
    As discussed in section II of the preamble, EPA is proposing three 
regulatory options for existing facilities in today's proposed rule 
based on design intake flow including: (1) A 50 MGD option for 
facilities withdrawing water from all waterbody types; (2) a 200 MGD 
option for facilities withdrawing water from all waterbody types; and 
(3) a 100 MGD option for facilities which withdraw water specifically 
from an ocean, estuary, tidal river, or one of the Great Lakes. Under 
the co-proposed 50 MGD threshold-based option, the total average annual 
burden, during the first three years after promulgation of the rule, of 
the information collection requirements associated with today's 
proposed rule is estimated at 215,885 hours. The corresponding 
estimates of average annual cost other than labor (labor and non-labor 
costs are included in the total cost of the proposed rule discussed in 
section VIII of this preamble) is $2.81 million for 87 facilities (56 
existing manufacturers and 31 new offshore oil and gas facilities) and 
45 States and one Territory during the first three years after 
promulgation of the rule. Under the co-proposed 200 MGD threshold-based 
option, the total average annual burden, during the first three years 
after promulgation of the rule, of the information collection 
requirements is estimated at 62,280 hours. The corresponding average 
annual non-labor cost is $1.46 million for 44 facilities (13 existing 
manufacturers and 31 new offshore oil and gas facilities), and 45 
States and one Territory during the first three years after 
promulgation of the rule. Under the co-proposed 100 MGD threshold-based 
option, the total average annual burden, during the first three years 
after promulgation of the rule, of the information collection 
requirements is estimated at 85,622 hours. The corresponding average 
annual non-labor cost is $1.62 million for 42 facilities (11 existing 
manufacturers and 31 new offshore oil and gas facilities), and 45 
States and one Territory during the first three years after 
promulgation of the rule.
    Non-labor costs include activities such as capital costs for remote 
monitoring devices, laboratory services, photocopying, and the purchase 
of supplies. The burden and costs are for the information collection, 
reporting, and recordkeeping requirements for the three-year period 
beginning with the assumed effective date of today's rule. Additional 
information collection requirements will occur after this initial 
three-year period as existing facilities continue to be issued permit 
renewals, new offshore oil and gas extraction facilities are issued 
permits, and such requirements will be counted in a subsequent 
information collection request.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; develop, acquire, install, and utilize 
technology and systems for the purposes of collecting, validating, and 
verifying information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    Studies to be submitted by both Phase III existing facilities and 
new offshore oil and gas extraction facilities under today's proposed 
rule are listed below. Both Phase III existing facilities and

[[Page 68529]]

new offshore oil and gas fixed platforms would be required to collect 
the general information listed below.
     Source Water Physical Data (Sec.  122.21(r)(2)) (both 
Phase III existing facilities and new offshore oil and gas facilities)
     Cooling Water Intake Structure Data (Sec.  122.21(r)(3)) 
((both Phase III existing facilities and new offshore oil and gas 
facilities)
     Cooling Water System Description (Sec.  122.21(r)(5)) 
(Phase III existing facilities only)
    Depending on the compliance alternative selected by the individual 
facility, Phase III existing facilities may be required to submit the 
following information:
     Proposal for Information Collection (Sec.  125.104(b)(1))
     Source Waterbody Flow Information (Sec.  125.104(b)(2))
     Impingement Mortality and/or Entrainment Characterization 
Study (Sec.  125.104(b)(3))
     Technology Compliance and Assessment Information (Sec.  
125.104(b)(4))
     Restoration Plan (Sec.  125.104(b)(5))
     Information to Support Site-specific Determination of Best 
Technology Available for Minimizing Adverse Environmental Impact (Sec.  
125.104(b)(6))
     Verification Monitoring Plan (Sec.  125.104(b)(7))
    New offshore oil and gas extraction facilities would be required to 
submit the following information under Track I:
     Source Water Baseline Biological Characterization Data 
(Sec.  122.21(r)(4)) (not required for non-fixed facilities)
     Velocity Information (Sec.  125.136(b)(2))
     Source Waterbody Flow Information (Sec.  125.136(b)(3)) 
(not required for non-fixed facilities)
     Design and Construction Technology Plan (Sec.  
125.136(b)(4))
    In addition to the information requirements of the permit renewal 
application, NPDES permits normally specify monitoring and reporting 
requirements to be met by the permitted entity. Existing facilities 
that fall within the scope of this proposed rule would be required to 
perform biological monitoring as required by the Director to 
demonstrate compliance. New offshore oil and gas extraction fixed 
facilities would be required to perform monitoring as determined by the 
Track I or Track II requirements in Sec.  125.136. Additional ambient 
water quality monitoring may also be required of facilities depending 
on the specifications of their permits. New offshore oil and gas 
extraction facilities would be expected to analyze the results from 
their monitoring efforts and provide these results in an annual status 
report to the permitting authority. Existing Phase III facilities would 
be required to submit a status report every two years that included 
appropriate monitoring data and any other information specified by the 
Director. Finally, facilities would be required to maintain records of 
all submitted documents, supporting materials, and monitoring results 
for at least three years. (Note that the Director may require that 
records be kept for a longer period to coincide with the life of the 
NPDES permit.)
    All impacted facilities would carry out the specific activities 
necessary to fulfill the general information collection requirements. 
The estimated burden includes developing a water balance diagram that 
can be used to identify the proportion of intake water used for 
cooling, make-up, and process water. Facilities would also gather data 
to calculate the reduction in impingement mortality and entrainment of 
all life stages of fish and shellfish that would be achieved by the 
technologies and operational measures they select. The burden estimates 
include sampling, assessing the source waterbody, estimating the 
magnitude of impingement mortality and entrainment, and reporting 
results in a comprehensive demonstration study. The burden may also 
include conducting a pilot study to evaluate the suitability of the 
technologies and operational measures based on the species that are 
found at the site.
    Some of the Phase III existing facilities (those choosing to use 
restoration measures to maintain fish and shellfish) would need to 
prepare a plan documenting the restoration measures they would 
implement and how they would demonstrate that the restoration measures 
were effective. However, for purposes of this paperwork burden 
analysis, EPA assumed all facilities would comply using design and 
construction technologies.
    Some facilities may choose to request a site-specific determination 
of best technology available because of costs significantly greater 
than those EPA considered in establishing the performance standards or 
because costs are significantly greater than the benefits of complying 
with the performance standards. These facilities would be required to 
perform a comprehensive cost evaluation study and, if applicable, a 
valuation of the monetized benefits of reducing impingement mortality 
and entrainment, as well as submitting a site-specific technology plan 
characterizing the design and construction technologies, operational 
measures and restoration measures they have selected. However, for 
purposes of this paperwork burden estimate, EPA assumed all facilities 
would comply by meeting the applicable performance standards.
    The assumption that facilities will not use restoration or request 
a site-specific determination of best technology available may lead to 
an underestimate of paperwork burden, since there are additional 
documentation requirements associated with both of these approaches. 
However, since both are optional, EPA assumes that facilities would not 
choose them unless total burden, including both paperwork burden and 
compliance costs is less than the total burden under the approach EPA 
assumed for its PRA analysis.
    Exhibits XI-1 through 3 present a summary of the average burden 
estimates for a facility to prepare a permit application and monitor 
and report on cooling water intake structure operations for the three 
options for existing manufacturers as required by this proposed rule. 
Exhibit XI-4 presents a summary of the average burden estimates for a 
facility to prepare a permit application and monitor and report on 
cooling water intake structure operations for new offshore oil and gas 
extraction facilities as required by this proposed rule. For the 
purpose of estimating the average burden for new offshore oil and gas 
extraction facilities, EPA assumed all facilities would pursue Track I 
of today's proposed rule. It is unknown how many facilities would 
select Track I versus Track II so the actual burden estimate may be 
slightly higher or lower than that presented in this section.

[[Page 68530]]



       Exhibit XI-1.--Average Annual Reporting Burden and Costs per Facility for NPDES Permit Application and Monitoring and Reporting Activities
                                                             [50 MGD all waterbodies option]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Average
                                                     Annual       Annual       Annual     Annual O&M   Three year     annual      Average      Average
                   Activities                      hours per    labor cost    capital      cost per    respondent   frequency      annual    annual cost
                                                    facility       per        cost per    facility a     total          of         hours          b
                                                                 facility     facility                              responses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Start-up Activities.............................           43        2,121            0           50           56           19          803       40,527
Permit Application Activities...................          247        9,951            0          510           56           19        4,611      195,279
Proposal for Collection of Information for                272       12,344            0          770           43           14        3,899      187,964
 Comprehensive Demonstration Study..............
FW River/Stream Source Water Body Flow                    100        3,381            0          200           15            5          500       17,904
 Information....................................
FW Lake/Reservoir Source Water Body Flow                  112        3,946            0          200            2            1           75        2,764
 Information....................................
Design and Construction Technology Plan                    31        1,368            0            0           31           10          320       14,132
 (Impingement)..................................
Design and Construction Technology Plan                    31        1,368            0            0           20            7          207        9,117
 (Entrainment)..................................
Design and Construction Technology Plan (All)...           30          922            0          380           33           11          330       14,322
Freshwater Baseline Monitoring for Impingement          2,210      102,549            0        1,538           23           13       29,460    1,387,834
 Mortality and/or Entrainment Study.............
Freshwater Monitoring for Impingement Mortality         1,105       51,544            0          773           23           13       14,727      697,560
 Study..........................................
Freshwater Monitoring for Entrainment Study.....          845       39,727            0       39,596            4            3        2,252      211,527
Marine Baseline Monitoring for Impingement              2,841      131,350            0        1,970           20           19       53,041    2,488,651
 Mortality and/or Entrainment Study.............
Marine Monitoring for Impingement Mortality             1,414       65,430            0          981           16           15       21,680    1,018,309
 Study..........................................
Marine Monitoring for Entrainment Study.........        1,076       50,083            0       51,451           20           19       20,090    1,895,311
Impingement Mortality & Entrainment                       373       22,042            0            0           43           14        5,346      315,931
 Characterization Study Initial Analysis........
Impingement Mortality & Entrainment                       399       18,875            0          614           33           11        4,389      214,381
 Characterization Study Final Report............
Pilot Study Impingement Monitoring (Freshwater)           661       33,927      804,252            0            1            0          220      279,393
 for Pilot Study................................
Pilot Study Entrainment Monitoring (Freshwater)           541       28,473            0        6,000            1            0          180       11,491
 for Pilot Study................................
Pilot Study Impingement Monitoring (Marine) for           831       41,572      189,062            0           10            3        2,768      768,781
 Pilot Study....................................
Pilot Study Entrainment Monitoring (Marine) for           675       34,482            0        7,800           10            3        2,248      140,941
 Pilot Study....................................
Pilot Study Entrainment Monitoring (All) for              354       17,487            0        1,020           11            4        1,298       67,858
 Pilot Study....................................
Technology Installation and Operation Plan......           52        2,372            0           80           35           12          607       28,611

[[Page 68531]]

 
Verification Monitoring Plan....................          128        5,918            0          410           35           12        1,493       73,827
                                                 --------------
    Total for NPDES Permit Application            ...........  ...........  ...........  ...........           56          227      170,544   10,082,416
     Activities.................................
-------------------------------------------------
                                  Average Burden and Costs per Facility for Annual Monitoring and Reporting Activities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Monitoring for Impingement (Freshwater)..          379       18,504            0          510           11            5        2,021      101,406
Annual Monitoring for Impingement (Marine)......          482       23,564            0          660           12            5        2,569      129,193
Annual Monitoring for Entrainment (Freshwater)..          614       30,376            0        8,310            4            2        1,228       77,371
Annual Monitoring for Entrainment (Marine)......          776       38,069            0       10,800           14            7        5,173      325,790
Biannual Status Report Activities...............          324       16,618            0          770           27            9        2,916      156,492
Verification Study..............................          118        6,772            0          510           27            9        1,062       65,540
                                                 --------------
    Total for Annual Activities.................  ...........  ...........  ...........  ...........           27           37       14,969     855,792
--------------------------------------------------------------------------------------------------------------------------------------------------------
a Cost of supplies, filing cabinets, photocopying, boat renting, etc.
b Costs for restoration activities and site-specific studies were not estimated as EPA cannot determine how many facilities would choose to select this
  option and the option is voluntary.


       Exhibit XI-2.--Average Annual Reporting Burden and Costs per Facility for NPDES Permit Application and Monitoring and Reporting Activities
                                                            [200 MGD all waterbodies option]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Average
                                                     Annual       Annual       Annual     Annual O&M   Three year     annual      Average
                    Activity                       hours per    labor cost    capital      cost per    respondent   frequency      annual      Average
                                                    facility       per        cost per    facilitya      total          of         hours     annual cost
                                                                 facility     facility                              responses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Start-up Activities.............................           43       $2,121           $0          $50           13            4          186       $9,408
Permit Application Activities...................          247        9,951            0          510           13            4        1,070       45,333
Proposal for Collection of Information for                272       12,344            0          770            9            3          816       39,341
 Comprehensive Demonstration Study..............
FW River/Stream Source Water Body Flow                    100        3,381            0          200            1            0           33        1,194
 Information....................................
FW Lake/Reservoir Source Water Body Flow          ...........            0            0          200  ...........            0            0            0
 Information....................................
Design and Construction Technology Plan                    31        1,368            0            0            5            2           52        2,279
 (Impingement)..................................
Design and Construction Technology Plan                    31        1,368            0            0            4            1           41        1,823
 (Entrainment)..................................
Design and Construction Technology Plan (All)...           30          922            0          380            5            2           50        2,170
Freshwater Baseline Monitoring for Impingement          2,210      102,549            0        1,538            2            1        2,210      104,088
 Mortality and/or Entrainment Study.............
Freshwater Monitoring for Impingement Mortality         1,105       51,544            0          773            2            1        1,105       52,317
 Study..........................................
Freshwater Monitoring for Entrainment Study.....  ...........            0            0       39,596  ...........            0            0            0

[[Page 68532]]

 
Marine Baseline Monitoring for Impingement              2,841      131,350            0        1,970            7            6       17,049      799,923
 Mortality and/or Entrainment Study.............
Marine Monitoring for Impingement Mortality             1,414       65,430            0          981            6            5        7,541      354,194
 Study..........................................
Marine Monitoring for Entrainment Study.........        1,076       50,083            0       51,451            7            6        6,458      609,207
Impingement Mortality & Entrainment                       373       22,042            0            0            9            3        1,119       66,125
 Characterization Study Initial Analysis........
Impingement Mortality & Entrainment                       399       18,875            0          614            5            2          665       32,482
 Characterization Study Final Report............
Pilot Study Impingement Monitoring (Freshwater)           661       33,927      804,252            0            1            0          220      279,393
 for Pilot Study................................
Pilot Study Entrainment Monitoring (Freshwater)           541       28,473            0        6,000            1            0          180       11,491
 for Pilot Study................................
Pilot Study Impingement Monitoring (Marine) for           831       41,572      183,241            0            4            1        1,107      299,751
 Pilot Study....................................
Pilot Study Entrainment Monitoring (Marine) for           675       34,482            0        7,800            4            1          899       56,376
 Pilot Study....................................
Pilot Study Entrainment Monitoring (All) for              354       17,487            0        1,020            5            2          590       30,845
 Pilot Study....................................
Technology Installation and Operation Plan......           52        2,372            0           80            6            2          104        4,905
Verification Monitoring Plan....................          128        5,918            0          410            6            2          256       12,656
                                                 --------------
    Total for NPDES Permit Application            ...........  ...........  ...........  ...........           13           50       41,752    2,815,302
     Activities.................................
-------------------------------------------------
                                  Average Burden and Costs per Facility for Annual Monitoring and Reporting Activities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Monitoring for Impingement (Freshwater)..          379       18,504            0          510            1            1          253       12,676
Annual Monitoring for Impingement (Marine)......          482       23,564            0          660            3            1          482       24,224
Annual Monitoring for Entrainment (Freshwater)..          614       30,376            0        8,310            1            0          205       12,895
Annual Monitoring for Entrainment (Marine)......          776       38,069            0       10,800            3            1          776       48,869
Biannual Status Report Activities...............          324       16,618            0          770            5            2          540       28,980
Verification Study..............................          118        6,772            0          510            5            2          197       12,137
                                                 --------------
    Total for Annual Activities.................  ...........  ...........  ...........  ...........            5            7        2,452     139,780
--------------------------------------------------------------------------------------------------------------------------------------------------------
a Cost of supplies, filing cabinets, photocopying, boat renting, etc.


[[Page 68533]]


       Exhibit XI-3.--Average Annual Reporting Burden and Costs per Facility for NPDES Permit Application and Monitoring and Reporting Activities
                                                          [100 MGD certain waterbodies option]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Average
                                                     Annual       Annual       Annual     Annual O&M   Three year     annual       Aveage
                    Activity                       hours per    labor cost    capital      cost per    respondent   frequency      annual      Average
                                                    facility       per        cost per     facility      total          of         hours     annual cost
                                                                 facility     facility       \a\                    responses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Start-up Activities.............................           43       $2,121           $0          $50           11            4          158       $7,961
Permit Application Activities...................          247        9,951            0          510           11            4          906       38,358
Proposal for Collection of Information for                272       12,344            0          770           11            4          997       48,084
 Comprehensive Demonstration Study..............
FW River/Stream Source Water Body Flow                     --            0            0            0           --            0            0            0
 Information....................................
FW Lake/Reservoir Source Water Body Flow                   --            0            0            0           --            0            0            0
 Information....................................
Design and Construction Technology Plan                    31        1,368            0            0            8            3           83        3,647
 (Impingement)..................................
Design and Construction Technology Plan                    31        1,368            0            0            8            3           83        3,647
 (Entrainment)..................................
Design and Construction Technology Plan (All)...           30          922            0          380            8            3           80        3,472
Freshwater Baseline Monitoring for Impingement             --            0            0        1,538           --            0            0            0
 Mortality and/or Entrainment Study.............
Freshwater Monitoring for Impingement Mortality            --            0            0          773           --            0            0            0
 Study..........................................
Freshwater Monitoring for Entrainment Study.....           --            0            0      039,596           --            0            0            0
Marine Baseline Monitoring for Impingement              2,841      131,350            0        1,970           11           10       28,415    1,333,206
 Mortality and/or Entrainment Study.............
Marine Monitoring for Impingement Mortality             1,414       65,430            0          981           10            9      13,1976       19,840
 Study..........................................
Marine Monitoring for Entrainment Study.........        1,076       50,083            0      051,451           11           10       10,763    1,015,345
Impingement Mortality & Entrainment                       373       22,042            0            0           11            4        1,368       80,820
 Characterization Study Initial Analysis........
Impingement Mortality & Entrainment                       399       18,875            0          614            8            3        1,064       51,971
 Characterization Study Final Report............
Pilot Study Impingement Monitoring (Freshwater)            --            0            0            0           --            0            0            0
 for Pilot Study................................
Pilot Study Entrainment Monitoring (Freshwater)            --            0            0        6,000           --            0            0            0
 for Pilot Study................................
Pilot Study Impingement Monitoring (Marine) for           831       41,572      221,548            0            6            2        1,661      526,240
 Pilot Study....................................
Pilot Study Entrainment Monitoring (Marine) for           675       34,482            0        7,800            6            2        1,349       84,564
 Pilot Study....................................
Pilot Study Entrainment Monitoring (All) for              354       17,487            0        1,020            6            2          708       37,014
 Pilot Study....................................
Technology Installation and Operation Plan......           52        2,372            0           80            8            3          139        6,540

[[Page 68534]]

 
Verification Monitoring Plan....................          128        5,918            0          410            8            3          341       16,875
                                                 --------------
    Total for NPDES Permit Application            ...........  ...........  ...........  ...........           11           66       61,310    3,877,583
     Activities.................................
-------------------------------------------------
                                  Average Burden and Costs per Facility for Annual Monitoring and Reporting Activities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Monitoring for Impingement (Freshwater)..           --            0            0          510           --            0            0            0
 
Annual Monitoring for Impingement (Marine)......          482       23,564            0          660            7            3        1,284       64,596
Annual Monitoring for Entrainment (Freshwater)..           --            0            0        8,310           --            0            0            0
Annual Monitoring for Entrainment (Marine)......          776       38,069            0       10,800            7            3        2,069      130,316
Biannual Status Report Activities...............          324       16,618            0          770            7            2          756       40,572
Verification Study..............................          118        6,772            0          510            7            2          275       16,992
                                                 --------------
    Total for Annual Activities.................  ...........  ...........  ...........  ...........            7           10        4,385     252,476
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Cost of supplies, filing cabinets, photocopying, boat renting, etc.


       Exhibit XI-4.--Average Annual Reporting Burden and Costs per Facility for NPDES Permit Application and Monitoring and Reporting Activities
                                                  [New offshore oil and gas extraction facilities \a\]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Average
                                                     Annual       Annual    Annuallized   Annual O&M   Three year     annual      Average
                    Activity                       hours per    labor cost    capital      cost per    respondent   frequency      annual      Average
                                                    facility       per        cost per   facilitya b     total          of         hours     annual cost
                                                                 facility     facility                              responses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Start-up Activities.............................           43       $2,121           $0          $50           31           10          444      $22,435
Permit Application Activities...................           25          795            0          130           19            6          158        5,857
Source Water Body Flow Information..............           38        1,341            0           75           19            6          241        8,968
CWIS Velocity Information.......................           --            0            0            0           --            0            0            0
Design and Construction Technology Plan                    35        1,021            0          120           15            5          175        5,706
 (Impingement Only).............................
Design and Construction Technology Plan                    35        1,021            0          120            1            0           12          380
 (Entrainment Only).............................
Design and Construction Technology Plan                    38        1,162            0          120            3            1           38        1,282
 (Impingement & Entrainment)....................
Develop Regional Study Design and Submit to                78        5,007            0            0            2            1           52        3,338
 Director.......................................
Deep Water Baseline Monitoring for Source Water           309       17,260            0       43,200            9            9        2,778      544,137
 Baseline Biological Characterization Study.....
Deep Water Impingement Monitoring for Source              144        7,987        7,621          667            9            9        1,296      146,473
 Water Baseline Biological Characterization
 Study..........................................

[[Page 68535]]

 
Deep Water Entrainment Monitoring for Source              144        7,987            0        3,120            3            3          432       33,321
 Water Baseline Biological Characterization
 Study..........................................
Alaska Basline Monitoring for Source Water                384       20,337            0       49,200            1            1          384       69,537
 Baseline Biological Characterization Study.....
Alaska Entrainment Monitoring for Source Water            192       10,169            0        3,120            1            1          192       13,289
 Baseline Biological Characterization Study.....
Initial Sourcewater Baseline Biological                   366       20,584            0            0           10            3        1,220       68,613
 Characterization Data..........................
Sourcewater Baseline Biological Characterization          288       18,389            0            0            2            1          192       12,259
 Data Study Final Regional Report...............
Use Regional Study Results for Individual                 166        7,591            0            0           19            6        1,051       48,079
 Facility Studies...............................
Source Water Baseline Biological                           --            0            0       13,270            9            3            0       39,810
 Characterization Study Other Direct Costs for
 Deep Water.....................................
Source Water Baseline Biological                           --            0            0       19,910            1            0            0        6,637
 Characterization Study Other Direct Costs for
 Alaska.........................................
                                                 --------------
    Total for NPDES Permit Application            ...........  ...........  ...........  ...........           31           67        8,665    1,030,123
     Activities.................................
-------------------------------------------------
                                  Average Burden and Costs per Facility for Annual Monitoring and Reporting Activities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Biological Monitoring for Impingement...........          530       25,823            0        1,660           --            0            0            0
Biological Monitoring for Entrainment...........          370       17,647            0       15,780           --            0            0            0
Biological Monitoring for Entrainment (Alaska)..          516       24,298            0       21,780           --            0            0            0
Velocity Monitoring.............................          163        5,692            0          500           13            7        1,087       41,283
Yearly Status Report Activities.................          223       11,304            0          770           13            7        1,487       80,495
                                                 --------------
    Total for Annual Activities.................  ...........  ...........  ...........  ...........           13           14        2,573     121,778
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Track I requirements only estimated.
\b\ Cost of supplies, filing cabinets, photocopying, boat renting, etc.

    EPA believes that all 45 States and one Territory with NPDES 
permitting authority would undergo start-up activities in preparation 
for administering the provisions of the proposed rule. As part of these 
start-up activities, States and Territories would be expected to train 
junior technical staff to review materials submitted by facilities, and 
then use these materials to evaluate compliance with the specific 
conditions of each facility's NPDES permit.
    Each State's/Territory's actual burden associated with reviewing 
submitted materials, writing permits, and tracking compliance would 
depend on the number of in-scope facilities that would come up for 
permit renewal in the State/Territory during the ICR approval period 
and which flow threshold-based option EPA selects for Phase III 
existing facilities. EPA expects that State and Territory technical and 
clerical staff will spend time gathering, preparing, and submitting the 
various documents. EPA's burden estimates reflect the general staffing 
and level of expertise that is typical in States/Territories that 
administer the NPDES permitting program. EPA considered the time and 
qualifications necessary to complete various tasks such as reviewing

[[Page 68536]]

submitted documents and supporting materials, verifying data sources, 
planning responses, determining specific permit requirements, writing 
the actual permit, and conferring with facilities and the interested 
public. Exhibits XI-5 through 7 provide a summary of the average burden 
estimates for States/Territories performing various activities for 
existing manufacturing facilities required by the proposed rule. 
States/Territories are not involved in administering the permits for 
new offshore oil and gas extraction facilities since the offshore oil 
and gas industry is currently permitted under general permits at the 
regional EPA level. This practice is likely to continue in the 
forseeable future.

                                    Exhibit XI-5.--Estimating State/Territory Average Burden and Costs for Activities
                                                             [50 MGD all waterbodies option]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Average
                                                    Average       Annual       Annual     Annual O&M   Three year     annual      Average
                    Activity                         annual     labor cost    capital      cost per    respondent   frequency      annual      Average
                                                   hours per       per        cost per     facility      total          of         hours     annual cost
                                                    facility     facility     facility       \a\                    responses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Director Start-up Activities....................          100       $3,894           $0          $50           46           15        1,533      $60,475
Director Permit Issuance Activities.............          803       35,979            0          310           56           19       14,989      677,398
Verification Study Review.......................           --            0            0           10           --            0            0            0
Annual Director Activities......................           50        1,851            0           30           27            9          450       16,932
                                                 --------------
    Total for Director Activities...............  ...........  ...........  ...........  ...........           46           43       16,972      754,804
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Cost of supplies, filing cabinets, photocopying, boat renting, etc.


                                    Exhibit XI-6.--Estimating State/Territory Average Burden and Costs for Activities
                                                            [200 MGD all waterbodies option]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Average
                                                    Average       Annual       Annual     Annual O&M   Three year     annual      Average
                    Activity                         annual     labor cost    capital      cost per    respondent   frequency      annual      Average
                                                   hours per       per        cost per     facility      total          of         hours     annual cost
                                                    facility     facility     facility       \a\                    responses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Director Start-up Activities....................          100       $3,894           $0          $50           46           15        1,533      $60,475
Director Permit Issuance Activities.............          706       31,417            0          310           13  ...........       43,060      137,482
Verification Study Review.......................           --            0            0           10           --            0            0            0
Annual Director Activities......................           50        1,851            0           30            5            2           83        3,136
                                                 --------------
    Total for Director Activities...............  ...........  ...........  ...........  ...........           46           21        4,677      201,092
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Cost of supplies, filing cabinets, photocopying, boat renting, etc.


                                    Exhibit XI-7.--Estimating State/Territory Average Burden and Costs for Activities
                                                            [100 MGD All Waterbodies Option]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Average
                                                    Average       Annual       Annual     Annual O&M   Three year     annual      Average
                    Activity                         annual     labor cost    capital      cost per    respondent   frequency      annual      Average
                                                   hours per       per        cost per     facility      total          of         hours     annual cost
                                                    facility     facility     facility       \a\                    responses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Director Start-up Activities....................          100       $3,894           $0          $50           46           15        1,533      $60,475
Director Permit Issuance Activities.............         1330       60,163            0          310           11            4        4,878      221,733
Verification Study Review.......................           --            0            0           10           --            0            0            0
Annual Director Activities......................           50        1,851            0           30            7            2          117        4,390
                                                 --------------
    Total for Director Activities...............  ...........  ...........  ...........  ...........           46           21        6,528      286,598
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Cost of supplies, filing cabinets, photocopying, boat renting, etc.

    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR Part 9.
    To comment on the Agency's need for this information, the accuracy 
of the provided burden estimates, and any suggested methods for 
minimizing respondent burden, including the use of automated collection 
techniques, EPA has established a public docket for this rule, which 
includes this ICR, under Docket ID number OW-2003-0005. Submit any 
comments related to the ICR for this proposed rule to EPA and OMB. See 
``Addresses'' section at the beginning of this notice for where to 
submit comments to EPA. Send comments to OMB at the Office of 
Information and Regulatory Affairs,

[[Page 68537]]

Office of Management and Budget, 725 17th Street, NW., Washington, DC 
20503, Attention: Desk Office for EPA. Since OMB is required to make a 
decision concerning the ICR between 30 and 60 days after November 24, 
2004, a comment to OMB is best assured of having its full effect if OMB 
receives it by December 27, 2004. The final rule will respond to any 
OMB or public comments on the information collection requirements 
contained in this proposal.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) as amended by the Small 
Business Regulatory Flexibility Act generally requires an agency to 
prepare a regulatory flexibility analysis of any rule subject to notice 
and comment rulemaking requirements under the Administrative Procedure 
Act or any other statute unless the agency certifies that the rule will 
not have a significant economic impact on a substantial number of small 
entities. This section summarizes EPA's analyses in compliance with the 
RFA.
1. Definition of Small Entity
    Small entities include small businesses, small organizations, and 
small governmental jurisdictions. For assessing the impacts of today's 
proposal on small entities, a small entity is defined as: (1) A small 
business as defined by the Small Business Administration's (SBA) 
regulations at 13 CFR 121.201; (2) a small governmental jurisdiction 
that is a government of a city, county, town, school district or 
special district with a population of less than 50,000; and (3) a small 
organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
    The SBA small business size standards changed from a SIC code-based 
system to a NAICS code-based system on October 1, 2000. Since EPA 
conducted its data collection effort for existing facilities before 
this change, EPA performed the small entity analysis for existing 
facilities based on SIC codes. EPA then conducted a subsequent analysis 
to determine if the size standards based on NAICS codes would have any 
effect on the results of the small entity analysis. This analysis 
showed that for the three co-proposed options, there would be no 
changes to the small entity determination, and therefore to small 
entity impacts, as a result of switching from SIC-based size standards 
to NAICS-based size standards.
2. Certification Statement
    After considering the economic impacts of today's proposal on small 
entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. This 
proposal applies to existing facilities that employ a cooling water 
intake structure and are designed to withdraw either (1) 50 MGD or more 
from all waterbodies, (2) 100 MGD or more from certain waterbodies, or 
(3) 200 MGD or more from all waterbodies that are waters of the United 
States. It also applies to new offshore oil and gas extraction 
facilities that withdraw greater than 2 MGD from waters of the United 
States.
3. Statement of Basis
    EPA estimates that this proposal will not apply national 
categorical standards to any small entities in the Manufacturers or 
Electric Generators industry segments (entities that operate facilities 
subject to permitting based on best professional judgement are excluded 
from this analysis). In the new offshore oil and gas extraction 
industry segment, EPA estimates that the proposed option will apply 
national standards to only one small entity, a new offshore oil and gas 
platform. EPA estimates that this entity would incur annualized, after-
tax compliance costs of less than 0.1 percent of annual revenue. EPA 
does not know precisely which firms would be undertaking construction 
of new offshore oil and gas extraction facilities. However, based on 
the firms that are currently active in building the types of facilities 
representative of those covered by the rulemaking, EPA believes that 
the small firm analyzed represents the smallest firm that would be 
involved in such activities over the period of the analysis.
4. Summary of Small Business Advocacy Review Panel
    Although the RFA does not require a Small Business Advocacy Review 
(SBAR) Panel for this rule (because EPA has determined that this 
proposal would not have a significant economic impact on a substantial 
number of small entities), EPA convened a panel to obtain advice and 
recommendations from small entity representatives (SERs) potentially 
subject to this proposed rule's requirements because at the time EPA 
had not yet determined the scope of the proposed rule and thus the 
potential for small entity impacts. This section summarizes EPA's small 
entity outreach and information on the composition, process, and 
findings of the SBAR panel.
a. Summary of Small Entity Outreach
    EPA actively involved stakeholders, including small entities, in 
the development of the proposed rule in order to ensure the quality of 
information, identify and understand potential implementation and 
compliance issues, and explore regulatory alternatives. EPA conducted 
numerous meetings with the electric power industry over the past six 
years and met twice with manufacturing industry representatives in the 
past two years; during these meetings, EPA received direct input about 
the impacts of the proposed rule on the industry.
    In the past three years, EPA held two conference calls with small 
entity representatives from the manufacturing and electric power 
industries to improve the Agency's understanding of cooling water 
intakes in these industries, and of the potential impacts of new 
requirements from an economic and business perspective. Before 
convening the Panel, EPA held a conference call/meeting on October 1, 
2002, and another on January 22, 2004, to receive information from 
prospective SERs about plans for convening the Panel and their early 
concerns about the planned proposed regulation.
b. Panel Members
    The Panel consisted of EPA's Small Business Advocacy Chairperson, 
the Director of the Engineering and Analysis Division of the Office of 
Science and Technology (EPA/OW), the Administrator of the Office of 
Information and Regulatory Affairs within the Office of Management and 
Budget (OMB), and the Chief Counsel for Advocacy of the Small Business 
Administration (SBA).
c. SERs
    After consultation with the Small Business Administration Office of 
Advocacy, EPA invited six municipal power plant representatives and six 
representatives from manufacturing industries to serve as potential 
SERs during the pre-panel outreach process. Ultimately, three municipal 
power plant representatives and four representatives from manufacturing 
industries provided comments to the Panel.
d. Summary of Panel Process
    The Panel convened on February 27, 2004. The Panel held an outreach 
meeting and telephone conference for SERs on March 16, 2004. Materials 
were provided to SERs in advance of the meeting and additional 
materials on specific topics of interest to SERs were provided during 
the Panel process. SERs provided comments to the Panel on (1)

[[Page 68538]]

the number and types of small entities affected; (2) potential 
reporting, record keeping, and compliance requirements; (3) related 
Federal rules; (4) regulatory flexibility alternatives; and (5) 
methodological issues.
    The Panel evaluated the assembled materials and small entity 
comments on issues related to the elements of the initial regulatory 
flexibility analysis (IRFA). A copy of the Panel report, ``Final Report 
of the Small Business Advocacy Review Panel on EPA's Planned Proposed 
Rule for Cooling Water Intake Structures at Section 316(b) Phase III 
Facilities,'' is included in the docket for this proposed rule (DCN 7-
0006).
e. Panel Recommendations
    The Panel provided several recommendations pertaining to reporting, 
record keeping, and compliance requirements; regulatory flexibility 
alternatives; and methodological issues relevant to the assessment of 
the impacts of a Phase III rule on small entities. The following is a 
summary of the Panel's recommendations and EPA's responses:
     Recommendation: The Panel noted that significant 
implementation flexibility was included in the Phase II rule. For 
example, facilities were allowed up to three and one half years 
following rule promulgation to submit their initial demonstration study 
and related application materials. The Panel recommended that this 
level of flexibility be provided for Phase III requirements. The Panel 
also recommended that EPA consider the availability of contractor 
resources as it develops the implementation schedule for Phase III.
    Response: EPA has provided in the proposed rule the same 
implementation flexibility contained in the Phase II rule. EPA will 
consider the availability of contractor resources and would like to 
receive comments on this issue.
     Recommendation: The Panel recommended that EPA analyze a 
range of potential applicability thresholds, particularly those between 
20 MGD and 50 MGD. The Panel believed that an effective way to 
substantially reduce potential economic impacts on small entities would 
be to set an applicability threshold of 20 MGD. Facilities below 20 MGD 
represent a small proportion of the total flow associated with the 
Phase III rulemaking.
    Response: In response to the Panel's recommendations, EPA analyzed 
several policy options with different regulatory requirements and 
applicability thresholds based on flow range categories. As a result of 
these analyses, EPA is co-proposing three options with minimum 
applicability thresholds of 50 MGD, 100 MGD, and 200 MGD, respectively. 
Under these thresholds, no Phase III existing facilities owned by small 
entities would be subject to national categorical requirements.
     Recommendation: The Panel recognized the implementation 
challenges associated with using actual flows instead of design flows 
to structure regulatory requirements. However, the Panel believed that 
this approach merits further consideration.
    Response: EPA notes that since the proposed thresholds exclude 
existing small entities, no implementation challenges to small entities 
would result. With regard to facilities within the scope of the 
proposed rule, EPA believes that it would be most appropriate to be 
consistent with the regulatory approach taken in Phase II.
     Recommendation: The American Public Power Association 
(APPA) raised several methodological issues regarding EPA's analysis of 
the impacts of a Phase III rule on small entities, including alternate 
estimates of the number of regulated small electric utilities and 
issues concerning the downtime required for retrofitting. The Panel 
recommended that EPA seek further information from APPA to identify any 
necessary modifications to the assumptions used for its cost and 
economic impact analyses. The Panel also recommended that EPA review 
its assumptions used to develop costs and economic impacts to ensure 
that these assumptions are appropriate for facilities with smaller 
budgets and staffs.
    Response: Because of the choice EPA made to propose larger design 
intake flow thresholds (i.e., 50 MGD, 100 MGD, and 200 MGD), all 
electric power producers not covered by Phase II will be exempt from 
the national categorical requirements of this proposed rule, but will 
continue to be subject to site-specific 316(b) requirements based on 
the best professional judgment of the permit writer.
5. Small Entity Flexibility Analysis
    Despite the determination that this rule would not have a 
significant economic impact on a substantial number of small entities, 
EPA prepared a Small Entity Flexibility Analysis that has all the 
components of an Initial Regulatory Flexibility Analysis (IRFA). An 
IRFA examines the impact of a proposed rule on small entities along 
with regulatory alternatives that could reduce that impact. The Small 
Entity Flexibility Analysis (which is described in detail in the 
Economic Analysis document) is available for review in the docket.
    Under the three co-proposed options, EPA estimates that only one 
small entity (a new offshore oil and gas extraction facility) would be 
subject to the national categorical requirements. Under these 
thresholds, no Phase III existing facilities owned by small entities 
would be subject to national categorical requirements. This facility is 
estimated to have a cost-to-revenue ratio of less than 0.1 percent.
    EPA continues to be interested in the potential impacts of this 
proposal on small entities and welcomes comments on issues related to 
such impacts.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and Tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective, or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective, or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including Tribal governments, it must have developed under 
section 203 of the UMRA, a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with regulatory requirements.

[[Page 68539]]

    The following subsections present a brief summary of UMRA 
considerations for the proposed rule. Each subsection includes the 
results of the proposed option for new offshore oil and gas extraction 
facilities together with one of the three co-proposed options for 
existing facilities.\57\
---------------------------------------------------------------------------

    \57\ These sections exclude facilities estimated to be baseline 
closures and their costs (see discussion in section VIII.B.2) and 
administrative costs for Federal agencies.
---------------------------------------------------------------------------

     2 MGD Option for new facilities and 50 MGD All Waterbodies 
Option for existing facilities: EPA estimates the total annualized 
after-tax costs of compliance to be $44.8 million (2003$). All of these 
direct facility costs are incurred by the private sector (including 136 
manufacturing facilities and 124 offshore oil and gas extraction 
facilities). No facility owned by State or local governments is subject 
to the national requirements under this proposed option. Additionally, 
State and local permitting authorities are estimated to incur $0.5 
million annually to administer this option, including labor costs to 
write permits and to conduct compliance monitoring and enforcement 
activities. As required per section 202 of the UMRA, EPA estimates that 
the highest undiscounted after-tax cost incurred by the private sector 
in any one year is approximately $280 million in 2011.
     2 MGD Option for new facilities and 200 MGD All 
Waterbodies Option for existing facilities: EPA estimates the total 
annualized after-tax costs of compliance to be $21.4 million (2003$). 
All of these direct facility costs are incurred by the private sector 
(including 25 manufacturing facilities and 124 offshore oil and gas 
extraction facilities). No facility owned by State or local governments 
is subject to the national requirements under this proposed option. 
Additionally, State and local permitting authorities are estimated to 
incur $0.1 million annually to administer this option, including labor 
costs to write permits and to conduct compliance monitoring and 
enforcement activities. As required per section 202 of the UMRA, EPA 
estimates that the highest undiscounted after-tax cost incurred by the 
private sector in any one year is approximately $91 million in 2010.
     2 MGD Option for new facilities and 100 MGD for Certain 
Waterbodies Option for existing facilities: EPA estimates the total 
annualized after-tax costs of compliance to be $17.4 million (2003$). 
All of these direct facility costs are incurred by the private sector 
(including 19 manufacturing facilities and 124 offshore oil and gas 
extraction facilities). No facility owned by State or local governments 
is subject to the national requirements under this proposed option. 
Additionally, State and local permitting authorities are estimated to 
incur $0.1 million annually to administer this option, including labor 
costs to write permits and to conduct compliance monitoring and 
enforcement activities. As required per section 202 of the UMRA, EPA 
estimates that the highest undiscounted after-tax cost incurred by the 
private sector in any one year is approximately $236 million in 2011.
    Thus, EPA has determined that this proposal contains a Federal 
mandate that may result in expenditures of $100 million or more for 
State, local, and Tribal governments, in the aggregate, or the private 
sector in any one year. Accordingly, EPA prepared a written statement 
under section 202 of the UMRA, which is summarized below. (See Economic 
Analysis, Chapter D2: UMRA Analysis, for more detailed information.)
1. Summary of Written Statement
a. Authorizing Legislation
    This proposal is issued under the authority of sections 101, 301, 
304, 306, 308, 316, 401, 402, 501, and 510 of the Clean Water Act 
(CWA), 33 U.S.C. 1251, 1311, 1314, 1316, 1318, 1326, 1341, 1342, 1361, 
and 1370. This proposal fulfills an obligation of the U.S. 
Environmental Protection Agency (EPA) under a consent decree in 
Riverkeeper, Inc. et al. v. Leavitt, United States District Court, 
Southern District of New York, No. 93 Civ. 0314 (AGS). See section II 
of this preamble for detailed information on the legal authority of 
this regulation.
b. Cost-Benefit Analysis
    For the analysis of costs and benefits to society of this proposal, 
the Agency calculated a total present value of estimated costs and 
benefits and then calculated the constant annual equivalent value 
(annualized value) of these present values. The Agency calculated these 
present values and annualized values using two social discount rate 
values: 3 percent and 7 percent. Since benefits for new offshore oil 
and gas extraction facilities could not be estimated, EPA's comparison 
of costs and benefits includes only costs associated with Phase III 
existing facilities (i.e., the Manufacturers industry segments--no 
Electric Generators are subject to the national requirements under any 
of the co-proposed options).\58\ Benefit-cost relationships for Phase 
III existing facilities under the three co-proposed options are as 
follows:\59\
---------------------------------------------------------------------------

    \58\ Total social costs of this proposal, including existing and 
new facilities, are presented in section VIII.C of this preamble.
    \59\ Benefits include only use benefits from commercial and 
recreational fishing. EPA was unable to monetize non-use benefits.
---------------------------------------------------------------------------

     50 MGD All Waterbodies Option: Total annualized social 
costs are estimated at $47.3 (3 percent discount rate) and $50.1 
million (7 percent discount rate). Total mean value of annualized use 
benefits are estimated at $1.9 million (3 percent discount rate) and 
$1.5 million (7 percent discount rate). Thus, social costs exceed total 
use benefits by $45.4 million (3 percent discount rate) and $48.6 
million (7 percent discount rate).
     200 MGD All Waterbodies Option: Total annualized social 
costs are estimated at $22.8 (3 percent discount rate) and $24.1 
million (7 percent discount rate). Total mean value of annualized use 
benefits are estimated at $1.3 million (3 percent discount rate) and 
$1.0 million (7 percent discount rate). Thus, social costs exceed total 
use benefits by $21.5 million (3 percent discount rate) and $23.1 
million (7 percent discount rate)
     100 MGD for Certain Waterbodies Option: Total annualized 
social costs are estimated at $17.6 (3 percent discount rate) and $18.3 
million (7 percent discount rate). Total mean value of annualized use 
benefits are estimated at $1.4 million (3 percent discount rate) and 
$1.1 million (7 percent discount rate). Thus, social costs exceed total 
use benefits by $16.2 million (3 percent discount rate) and $17.2 
million (7 percent discount rate).
    It should be noted that this cost-benefit analysis compares a 
relatively complete measure of social costs with an incomplete measure 
of benefits, and should be interpreted with caution. For a more 
detailed comparison of the costs and benefits of the proposed rule, 
including a qualitative discussion and ``break-even'' analysis of non-
use benefits, refer to section X of this preamble.
    EPA notes that States may be able to use existing sources of 
financial assistance to revise permits and implement the proposed 
options, when promulgated. Section 106 of the Clean Water Act 
authorizes EPA to award grants to States, Tribes, intertribal 
consortia, and interstate agencies for administering programs for the 
prevention, reduction, and elimination of water pollution. These grants 
may be used for various activities to develop

[[Page 68540]]

and carry out a water pollution control program, including permitting, 
monitoring, and enforcement. Thus, State and Tribal NPDES permit 
programs represent one type of State program that can be funded by 
section 106 grants.
c. Macro-Economic Effects
    EPA estimates that this proposal would not measurably affect the 
national economy, including productivity, economic growth, employment 
and job creation, and international competitiveness of U.S. goods and 
services. Macroeconomic effects on the economy are generally not 
considered to be measurable unless the total economic impact of a rule 
reaches at least 0.25 percent to 0.5 percent of Gross Domestic Product 
(GDP). In 2003, the Bureau of Economic Analysis reported the nominal 
U.S. GDP at $11.0 trillion. Thus, in order to be considered measurable, 
this proposal would have to generate annualized costs of at least $27 
billion to $55 billion. Since EPA estimates that total social costs 
(including existing and new facilities) under the most costly of the 
three proposed options for existing facilities, the 50 MGD All 
Waterbodies option, would be $51 million at a 3 percent discount rate 
and $53 million at a 7 percent discount rate, the Agency believes that 
this proposal would not perceptibly affect the national economy.
d. Summary of State, Local, and Tribal Government Input
    EPA consulted with State governments and representatives of local 
governments in developing the regulation. The outreach activities are 
discussed in section III of this preamble.
e. Least Burdensome Option
    EPA considered and analyzed several alternative regulatory options 
for existing facilities to determine the best technology available for 
minimizing adverse environmental impact. These regulatory options are 
discussed in section VI of this preamble. EPA is co-proposing these 
three options because they would meet the requirement of section 316(b) 
of the CWA--that the location, design, construction, and capacity of 
cooling water intake structures reflect the best technology available 
for minimizing adverse environmental impact--and because they are 
economically achievable, address a large percentage of flow (in 
combination with the Phase II rule), are highly flexible, and impact a 
minimal number of small businesses. EPA believes the three co-proposed 
options would reflect the most cost-effective and flexible approaches 
among the options considered. They regulate 74 percent (50 MGD All 
Waterbodies Option), 45 percent (200 MGD All Waterbodies Option), and 
16 percent (100 MGD for Certain Waterbodies Option), respectively, of 
total design intake flow potentially covered under Phase III, result in 
no closures, and affect only one small entity (a new offshore oil and 
gas facility). By providing five compliance alternatives, this proposal 
would offer Phase III existing facilities a high degree of flexibility 
in selecting the most cost-effective approach to meeting section 316(b) 
requirements. Under the proposal, these facilities would be able to 
demonstrate that existing flow or cooling water intake structure 
technologies fulfill section 316(b), by identifying impingement and 
entrainment design and control technologies, and/or use operational 
measures or restoration measures to fulfill the proposal's 
requirements. The proposal would also ensure that any applicable 
requirements are economically practicable through the inclusion of the 
site-specific compliance alternative at Sec.  125.103(a)(5). EPA 
further notes that the compliance alternative specified in Sec.  
125.103(a)(4) and 125.108(a) and (b) would be included in part to 
provide additional flexibility to Phase III existing facilities, as 
well as to reduce the burden of determining, implementing, and 
administering section 316(b) requirements among all relevant parties. 
Finally, the Agency believes that the three co-proposed options would 
extend additional flexibility to States by providing that where a State 
has adopted alternative regulatory requirements that achieve 
environmental performance comparable to that required under the rule, 
the Administrator would approve such alternative requirements.
2. Impact on Small Governments
    EPA has determined that this proposal would contain no regulatory 
requirements that might significantly or uniquely affect small 
governments. No government-owned facility would be subject to the 
national categorical requirements of the three co-proposed options.

E. Executive Order 13132: Federalism

    Executive Order 13132 (64 FR 43255, August 10, 1999) requires EPA 
to develop an accountable process to ensure ``meaningful and timely 
input by State and local officials in the development of regulatory 
policies that have federalism implications.'' ``Policies that have 
federalism implications'' are defined in the Executive Order to include 
regulations that have ``substantial direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government.''
    Under section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute unless the 
Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law, unless 
the Agency consults with State and local officials early in the process 
of developing the proposed regulation.
    This proposed rule would not have federalism implications. It would 
not have substantial direct effects on the States, on the relationship 
between the Federal government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. Rather, this proposed rule would 
result in minimal administrative costs to States that have an 
authorized NPDES program. Under the co-proposed 50 MGD All Waterbodies 
Option, EPA expects an annual burden of 16,972 hours with an annual 
cost of $6,823 (non-labor costs) for States to collectively administer 
this proposed rule. Under the co-proposed 200 MGD All Waterbodies 
Option, EPA expects an annual burden of 4,677 hours with an annual cost 
of $2,160 (non-labor costs) for States to collectively administer this 
proposed rule. Under the co-proposed 100 MGD Certain Waterbodies 
Option, EPA expects an annual burden of 6,528 hours with an annual cost 
of $1,973 (non-labor costs) for States to collectively administer this 
proposed rule. It is noted that States do not incur any burden hours 
and non-labor costs to administer the proposed rule for new offshore 
oil and gas extraction facilities since these facilities are outside of 
the jurisdiction of the States. EPA has identified zero Phase III 
existing facilities that are owned by federal, state or local 
government entities; therefore, the annual impacts on these facilities 
is zero.
    The proposed national cooling water intake structure requirements 
would be implemented through permits issued under the NPDES program. 
Forty-five

[[Page 68541]]

States and the Virgin Islands are currently authorized pursuant to 
section 402(b) of the Clean Water Act to implement the NPDES program. 
In States not authorized to implement the NPDES program, EPA issues 
NPDES permits. Under the Clean Water Act, States are not required to 
become authorized to administer the NPDES program. Rather, such 
authorization is available to States if they operate their programs in 
a manner consistent with section 402(b) and applicable regulations. 
Generally, these provisions require that State NPDES programs include 
requirements that are as stringent as Federal program requirements. 
States retain the ability to implement requirements that are broader in 
scope or more stringent than Federal requirements. (See section 510 of 
the Clean Water Act.)
    Today's proposed rule would not have substantial direct effects on 
either authorized or nonauthorized States or on local governments 
because it would not change how EPA and the States and local 
governments interact or their respective authority or responsibilities 
for implementing the NPDES program. Today's proposed rule would 
establish national requirements for Phase III facilities with cooling 
water intake structures. NPDES-authorized States that currently do not 
comply with the regulations based on today's proposal might need to 
amend their regulations or statutes to ensure that their NPDES programs 
are consistent with Federal section 316(b) requirements. See 40 CFR 
123.62(e). For purposes of this proposed rule, the relationship and 
distribution of power and responsibilities between the Federal 
government and the States and local governments are established under 
the Clean Water Act (e.g., sections 402(b) and 510); nothing in this 
proposed rule would alter that. Thus, the requirements of section 6 of 
the Executive Order do not apply to this rule.
    Although section 6 of Executive Order 13132 does not apply to this 
rule, EPA did consult with State governments and representatives of 
local governments in developing the proposed rule. During the 
development of the proposed and final Phase I and Phase II section 
316(b) rules, EPA conducted several outreach activities through which 
State and local officials were informed about this proposal and they 
provided information and comments to the Agency. The outreach 
activities were intended to provide EPA with feedback on issues such as 
adverse environmental impact, best technology available, and the 
potential cost associated with various regulatory alternatives. These 
outreach activities are discussed in section I.C of the preamble to 
today's proposed rule.
    In the spirit of this Executive Order and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed rule 
from State and local officials.

F. E.O. 13175: Consultation and Coordination With Indian Tribal 
Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' ``Policies that have tribal 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on one or more Indian Tribes, on 
the relationship between the Federal government and the Indian Tribes, 
or on the distribution of power and responsibilities between the 
Federal government and Indian Tribes.''
    This proposed rule would not have tribal implications. It would not 
have substantial direct effects on tribal governments, on the 
relationship between the Federal government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian Tribes, as specified in Executive Order 13175. 
EPA's analyses show that no facility subject to this proposed rule is 
owned by tribal governments. This proposed rule would not affect Tribes 
in any way in the foreseeable future. Accordingly, the requirements of 
Executive Order 13175 do not apply to this rule.

G. E.O. 13045: Protection of Children From Environmental Health Risks 
and Safety Risks

    Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any 
rule that (1) is determined to be ``economically significant'' as 
defined under Executive Order 12866, and (2) concerns an environmental 
health or safety risk that EPA has reason to believe might have a 
disproportionate effect on children. If the regulatory action meets 
both criteria, the Agency must evaluate the environmental health and 
safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency. This 
proposed rule is not an economically significant rule as defined under 
Executive Order 12866 ($100 million threshold). Further, it does not 
concern an environmental health or safety risk that would have a 
disproportionate effect on children. Therefore, it is not subject to 
Executive Order 13045.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This proposal is not a ``significant energy action'' as defined in 
Executive Order 13211, (``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355, May 22, 2001)) because it is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. Based on 
our analysis (see section VIII), EPA has determined that the proposal 
contains no compliance requirements that would:
     Reduce crude oil supply in excess of 10,000 barrels per 
day;
     Reduce fuel production in excess of 4,000 barrels per day;
     Reduce coal production in excess of 5 million tons per 
day;
     Reduce electricity production in excess of 1 billion 
kilowatt hours per day or in excess of 500 megawatts of installed 
capacity;
     Increase energy prices in excess of 10 percent;
     Increase the cost of energy distribution in excess of 10 
percent;
     Significantly increase dependence on foreign supplies of 
energy; or
     Have other similar adverse outcomes, particularly 
unintended ones.
    EPA analyzed the potential for impacts of the three co-proposed 
options and the proposed rule for new offshore oil and gas extraction 
facilities and found that none of them would lead to adverse outcomes. 
From these analyses, EPA concludes that this proposal would have 
minimal energy effects at a national and regional level. As a result, 
EPA did not prepare a Statement of Energy Effects. For more detail on 
the potential energy effects of this proposal, see the ``Economic 
Analysis for the Proposed Section 316(b) Rule for Phase III 
Facilities'' (DCN 7-0002). EPA requests comments on these 
determinations.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act (NTTAA) of 1995, Public Law 104-113, Sec. 12(d) directs EPA to use 
voluntary consensus standards in its regulatory activities unless to do 
so would be inconsistent with applicable law or otherwise impractical. 
Voluntary consensus standards are technical

[[Page 68542]]

standards (e.g., materials specifications, test methods, sampling 
procedures, and business practices) that are developed or adopted by 
voluntary consensus standard bodies. The NTTAA directs EPA to provide 
Congress, through the Office of Management and Budget (OMB), 
explanations when the Agency decides not to use available and 
applicable voluntary consensus standards.
    This proposed rule does not involve such technical standards. 
Therefore, EPA is not considering the use of any voluntary consensus 
standards. EPA welcomes comments on this aspect of the proposed rule 
and, specifically, invites the public to identify potentially 
applicable voluntary consensus standards and to explain why such 
standards should be used in this proposed rule.

J. E.O. 12898: Federal Actions To Address Environmental Justice in 
Minority Populations and Low-Income Populations

    Executive Order 12898 requires that, to the greatest extent 
practicable and permitted by law, each Federal agency must make 
achieving environmental justice part of its mission. E.O. 12898 
provides that each Federal agency must conduct its programs, policies, 
and activities that substantially affect human health or the 
environment in a manner that ensures such programs, policies, and 
activities do not have the effect of excluding persons (including 
populations) from participation in, denying persons (including 
populations) the benefits of, or subjecting persons (including 
populations) to discrimination under such programs, policies, and 
activities because of their race, color, or national origin.
    Today's proposed rule would require that the location, design, 
construction, and capacity of cooling water intake structures at Phase 
III existing facilities reflect the best technology available for 
minimizing adverse environmental impact. For several reasons, EPA does 
not expect that this proposed rule would have an exclusionary effect, 
deny persons the benefits of the participating in a program, or subject 
persons to discrimination because of their race, color, or national 
origin.
    To assess the impact of the rule on low-income and minority 
populations, EPA calculated the poverty rate and the percentage of the 
population classified as non-white for populations living within a 50-
mile radius of each of the 348 (unweighted) facilities in the Phase III 
universe. The results of the analysis, presented in the Economic 
Analysis, show that the populations affected by the in-scope facilities 
have poverty levels and racial compositions that are quite similar to 
the U.S. population as a whole. Based on these results, EPA does not 
believe that this rule would have an exclusionary effect, deny persons 
the benefits of the NPDES program, or subject persons to discrimination 
because of their race, color, or national origin.
    In fact, because EPA expects that this proposed rule would help to 
preserve the health of aquatic ecosystems located in reasonable 
proximity to Phase III existing facilities, it believes that all 
populations, including minority and low-income populations, would 
benefit from improved environmental conditions as a result of this 
rule.

K. E.O. 13158: Marine Protected Areas

    Executive Order 13158 (65 FR 34909, May 31, 2000) requires EPA to 
``expeditiously propose new science-based regulations, as necessary, to 
ensure appropriate levels of protection for the marine environment.'' 
EPA may take action to enhance or expand protection of existing marine 
protected areas and to establish or recommend, as appropriate, new 
marine protected areas. The purpose of the Executive Order is to 
protect the significant natural and cultural resources within the 
marine environment, which means ``those areas of coastal and ocean 
waters, the Great Lakes and their connecting waters, and submerged 
lands thereunder, over which the United States exercises jurisdiction, 
consistent with international law.''
    This proposed rule recognizes the biological sensitivity of tidal 
rivers, estuaries, oceans, and the Great Lakes and their susceptibility 
to adverse environmental impact from cooling water intake structures. 
This proposal provides requirements for reducing both impingement and 
entrainment using technologies to minimize adverse environmental impact 
for cooling water intake structures located on these types of 
waterbodies.
    EPA expects that this proposed rule would reduce impingement and 
entrainment at Phase III existing facilities. The rule would afford 
protection of aquatic organisms at individual, population, community, 
or ecosystem levels of ecological structures. Therefore, EPA expects 
today's proposed rule would advance the objective of the Executive 
Order to protect marine areas.

L. Plain Language Directive

    Executive Order 12866 and the President's memorandum of June 1, 
1998, require each agency to write all rules in plain language. We 
invite your comments on how to make this proposed rule easier to 
understand. For example: Have we organized the material to suit your 
needs? Are the requirements in the rule clearly stated? Does the rule 
contain technical language or jargon that is not clear? Would a 
different format (grouping and order of sections, use of headings, 
paragraphing) make the rule easier to understand? Would more (but 
shorter) sections be better? Could we improve clarity by adding tables, 
lists, or diagrams? What else could we do to make the rule easier to 
understand?

List of Subjects

40 CFR Part 9

    Environmental protection, Reporting and recordkeeping requirements.

40 CFR Part 122

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Hazardous substances, Reporting and 
recordkeeping requirements, Water pollution control.

40 CFR Part 123

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Hazardous substances, Indians-lands, 
Intergovernmental relations, Penalties, Reporting and recordkeeping 
requirements, Water pollution control.

40 CFR Part 124

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Hazardous waste, Indians-lands, Reporting and 
recordkeeping requirements, Water pollution control, Water supply.

40 CFR Part 125

    Environmental protection, Cooling water intake structure, Reporting 
and recordkeeping requirements, Waste treatment and disposal, Water 
pollution control.

    Dated: November 1, 2004.
Michael O. Leavitt,
Administrator.
    For the reasons set forth in the preamble, chapter I of title 40 of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 9--OMB APPROVALS UNDER THE PAPERWORK REDUCTION ACT

    1. The authority citation for part 9 continues to read as follows:

    Authority: 7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003, 
2005, 2006, 2601-2671,

[[Page 68543]]

21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 U.S.C. 1251 et seq., 
1311, 1313d, 1314, 1318, 1321, 1326, 1330, 1342, 1344, 1345 (d) and 
(e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971-1975 Comp. p. 973; 
42 U.S.C. 241, 242b, 243, 246, 300f, 300g, 300g-1, 300g-2, 300g-3, 
300g-4, 300g-5, 300g-6, 300j-1, 300j-2, 300j-3, 300j-4, 300j-9, 1857 
et seq., 6901-6992k, 7401-7671q, 7542, 9601-9657, 11023, 11048.

    2. In Sec.  9.1 the table is amended by revising the entry for 
``122.21(r)'' and by adding entries in numerical order under the 
indicated heading to read as follows:


Sec.  9.1  OMB approvals under the Paperwork Reduction Act.

* * * * *

------------------------------------------------------------------------
           40 CFR citation                      OMB Control No.
------------------------------------------------------------------------
 
                              * * * * * * *
-------------------------------------
   EPA Administered Permit Programs: The National Pollutant Discharge
                           Elimination System
------------------------------------------------------------------------
 
                              * * * * * * *
122.21(r)...........................     2040-0241, 2040-0257, xxxx-xxxx
 
                              * * * * * * *
-------------------------------------
 Criteria and Standards for the National Pollutant Discharge Elimination
                                 System
------------------------------------------------------------------------
 
                              * * * * * * *
125.103.............................                           xxxx-xxxx
125.104.............................                           xxxx-xxxx
125.106.............................                           xxxx-xxxx
125.107.............................                           xxxx-xxxx
125.108.............................                           xxxx-xxxx
 
                              * * * * * * *
------------------------------------------------------------------------

PART 122--EPA ADMINISTERED PERMIT PROGRAMS: THE NATIONAL POLLUTANT 
DISCHARGE ELIMINATION SYSTEM

    1. The authority citation for part 122 continues to read as 
follows:

    Authority: The Clean Water Act, 33 U.S.C. 1251 et seq.

    2. Section 122.21 is amended as follows:
    a. Revising paragraph (r)(1).
    b. Adding a new paragraph (r)(2)(iv).
    c. Revising paragraph (r)(4) introductory text.
    d. Revising paragraph (r)(5) introductory text.


Sec.  122.21  Application for a permit (applicable to State programs, 
see Sec.  123.25)

* * * * *
    (r) Application requirements for facilities with cooling water 
intake structures--(1)(i) New facilities with new or modified cooling 
water intake structures. New facilities (other than offshore oil and 
gas extraction facilities) with cooling water intake structures as 
defined in part 125, subpart I, of this chapter must submit to the 
Director for review the information required under paragraphs (r)(2) 
(except (r)(2)(iv)), (3), and (4) of this section and Sec.  125.86 of 
this chapter as part of their application. New offshore oil and gas 
extraction facilities with cooling water intake structures as defined 
in part 125, subpart N, of this chapter that are fixed facilities must 
submit to the Director for review the information required under 
paragraphs (r)(2) (except (r)(2)(iv)), (3), and (4) of this section and 
Sec.  125.136 of this chapter as part of their application. New 
offshore oil and gas extraction facilities that are not fixed 
facilities must submit to the Director for review only the information 
required under paragraphs (r)(2)(iv), (r)(3) (except (r)(3)(ii)), and 
Sec.  125.136 of this chapter as part of their application. Requests 
for alternative requirements under Sec.  125.85 or Sec.  125.135 of 
this chapter must be submitted with your permit application.
    (ii) Phase II existing facilities. Phase II existing facilities as 
defined in part 125, subpart J, of this chapter must submit to the 
Director for review the information required under paragraphs (r)(2) 
(except (r)(2)(iv)), (3), and (5) of this section and all applicable 
provisions of Sec.  125.95 of this chapter as part of their application 
except for the Proposal for Information Collection which must be 
provided in accordance with Sec.  125.95(b)(1).
    (iii) Phase III existing facilities. Phase III existing facilities 
as defined in part 125, subpart K, of this chapter must submit to the 
Director for review the information required under paragraphs (r)(2) 
(except (r)(2)(iv)), (3), and (5) of this section and all applicable 
provisions of Sec.  125.104 of this chapter as part of their 
application except for the Proposal for Information Collection which 
must be provided in accordance with Sec.  125.104(b)(1) of this 
chapter.
    (2) * * *
    (iv) For new offshore oil and gas facilities that are not fixed 
facilities, a narrative description and/or locational maps providing 
information on predicted locations within the waterbody during the 
permit term in sufficient detail for the Director to determine the 
appropriateness of additional impingement requirements under Sec.  
125.134(b)(4) of this chapter.
* * * * *
    (4) Source water baseline biological characterization data. This 
information is required to characterize the biological community in the 
vicinity of the cooling water intake structure and to characterize the 
operation of the cooling water intake structures. The Director may also 
use this information in subsequent permit renewal proceedings to 
determine if your Design and Construction Technology Plan as required 
in Sec.  125.86(b)(4) or Sec.  125.136(b)(3) of this chapter should be 
revised. This supporting information must include existing data (if 
they are available). However, you may supplement the data using newly 
conducted field studies if you choose to do so. The information you 
submit must include:
* * * * *
    (5) Cooling water system data. Phase II and III existing facilities 
as defined in part 125, subparts J and K, respectively, of this chapter 
must provide the

[[Page 68544]]

following information for each cooling water intake structure they use:
* * * * *
    3. Section 122.44 is amended by revising paragraph (b)(3) to read 
as follows:


Sec.  122.44  Establishing limitations, standards, and other permit 
conditions (applicable to State NPDES programs, see Sec.  123.25).

* * * * *
    (b) * * *
    (3) Requirements applicable to cooling water intake structures 
under section 316(b) of the CWA, in accordance with part 125, subparts 
I, J, K, and N of this chapter.
* * * * *

PART 123--STATE PROGRAM REQUIREMENTS

    1. The authority citation for part 123 continues to read as 
follows:

    Authority: Clean Water Act, 33 U.S.C. 1251 et seq.

    2. Section 123.25 is amended by revising paragraph (a)(36) to read 
as follows:


Sec.  123.25  Requirements for permitting.

    (a) * * *
    (36) Subparts A, B, D, H, I, J, K, and N of part 125 of this 
chapter;
* * * * *

PART 124--PROCEDURES FOR DECISIONMAKING

    1. The authority citation for part 124 continues to read as 
follows:

    Authority: Resource Conservation and Recovery Act, 42 U.S.C. 
6901 et seq.; Safe Drinking Water Act, 42 U.S.C. 300f et seq.; Clean 
Water Act, 33 U.S.C. 1251 et seq.; Clean Air Act, 42 U.S.C. 7401 et 
seq.
    2. Section 124.10 is amended by revising paragraph (d)(1)(ix) to 
read as follows:


Sec.  124.10  Public notice of permit actions and public comment 
period.

* * * * *
    (d) * * *
    (1) * * *
    (ix) Requirements applicable to cooling water intake structures 
under section 316(b) of the CWA, in accordance with part 125, subparts 
I , J, K, and N of this chapter.
* * * * *

PART 125--CRITERIA AND STANDARDS FOR THE NATIONAL POLLUTANT 
DISCHARGE ELIMINATION SYSTEM

    1. The authority citation for part 125 continues to read as 
follows:

    Authority: Clean Water Act, 33 U.S.C. 1251 et seq.; unless 
otherwise noted.

    2. Add subpart K to part 125 to read as follows:
Subpart K--Requirements Applicable to Cooling Water Intake Structures 
for Phase III Existing Facilities Under Section 316(b) of the Act
Sec.
125.100 What are the purpose and scope of this subpart?
125.101 What is a ``Phase III existing facility''?
125.102 What special definitions apply to this subpart?
125.103 How will requirements reflecting best technology available 
for minimizing adverse environmental impact be established for my 
Phase III existing facility?
125.104 As an owner or operator of a Phase III existing facility, 
what must I collect and submit when I apply for my reissued NPDES 
permit?
125.105 As an owner or operator of a Phase III existing facility, 
what monitoring must I perform?
125.106 As an owner or operator of a Phase III existing facility, 
what records must I keep and what information must I report?
125.107 As the Director, what must I do to comply with the 
requirements of this subpart?
125.108 What are Approved Design and Construction Technologies?

Subpart K--Requirements Applicable to Cooling Water Intake 
Structures for Phase III Existing Facilities Under Section 316(b) 
of the Act


Sec.  125.100  What are the purpose and scope of this subpart?

    (a) This subpart establishes requirements that apply to the 
location, design, construction, and capacity of cooling water intake 
structures at existing facilities that are subject to this subpart 
(i.e., Phase III existing facilities). The purpose of these 
requirements is to establish the best technology available for 
minimizing adverse environmental impact associated with the use of 
cooling water intake structures. These requirements are implemented 
through National Pollutant Discharge Elimination System (NPDES) permits 
issued under section 402 of the Clean Water Act (CWA).
    (b) Existing facilities that are not subject to requirements under 
this or another subpart of this Part must meet requirements under 
section 316(b) of the CWA determined by the Director on a case-by-case, 
best professional judgment (BPJ) basis.
    (c) Alternative regulatory requirements. Notwithstanding any other 
provision of this subpart, if a State demonstrates to the Administrator 
that it has adopted alternative regulatory requirements in its NPDES 
program that will result in environmental performance within a 
watershed that is comparable to the reductions of impingement mortality 
and entrainment that would otherwise be achieved under Sec.  125.103, 
the Administrator must approve such alternative regulatory 
requirements.
    (d) Nothing in this subpart shall be construed to preclude or deny 
the right of any State or political subdivision of a State or any 
interstate agency under section 510 of the CWA to adopt or enforce any 
requirement with respect to control or abatement of pollution that is 
not less stringent than those required by Federal law.


Sec.  125.101  What is a ``Phase III existing facility''?

OPTION A FOR PARAGRAPH (a)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 50 MGD or more, located on any waterbody type]:

    (a) An existing facility, as defined in Sec.  125.102, is a Phase 
III existing facility subject to this subpart if it meets each of the 
following criteria:
    (1) It is a point source;
    (2) It uses or proposes to use cooling water intake structures with 
a total design intake flow of 50 million gallons per day (MGD) or more 
to withdraw cooling water from waters of the United States;
    (3) It is an existing facility other than a Phase II existing 
facility as defined in Sec.  125.91 and Sec.  125.93; and
    (4) It uses at least 25 percent of water withdrawn exclusively for 
cooling purposes, measured on an average annual basis.

OPTION B FOR PARAGRAPH (a)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 200 MGD or more, located on any waterbody type]:

    (a) An existing facility, as defined in Sec.  125.102, is a Phase 
III existing facility subject to this subpart if it meets each of the 
following criteria:
    (1) It is a point source;
    (2) It uses or proposes to use cooling water intake structures with 
a total design intake flow of 200 million gallons per day (MGD) or more 
to withdraw cooling water from waters of the United States;
    (3) It is an existing facility other than a Phase II existing 
facility as defined in Sec.  125.91 and Sec.  125.93; and
    (4) It uses at least 25 percent of water withdrawn exclusively for 
cooling

[[Page 68545]]

purposes, measured on an average annual basis.

OPTION C FOR PARAGRAPH (a)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 100 MGD or more, located on oceans, estuaries, tidal 
rivers, or one of the Great Lakes]:

    (a) An existing facility, as defined in Sec.  125.102, is a Phase 
III existing facility subject to this subpart if it meets each of the 
following criteria:
    (1) It is a point source;
    (2) It uses or proposes to use cooling water intake structures with 
a total design intake flow of 100 million gallons per day (MGD) or more 
to withdraw cooling water from waters of the United States;
    (3) It withdraws cooling water from an ocean, estuary, tidal river, 
or one of the Great Lakes;
    (4) It is an existing facility other than a Phase II existing 
facility as defined in Sec.  125.91 and Sec.  125.93; and
    (5) It uses at least 25 percent of water withdrawn exclusively for 
cooling purposes, measured on an average annual basis.
    (b) If an existing manufacturing facility is co-located with one or 
more existing facilities (that are not Phase II existing facilities as 
defined in Sec.  125.91 and Sec.  125.93), each of the co-located 
facilities would be considered a Phase III existing facility if the 
combined total design intake flow of the co-located facilities is 
greater than the flow threshold established in paragraph (a)(2) of this 
section and each of the facilities meets the remaining applicability 
criteria in paragraph (a) of this section.
    (c) Use of a cooling water intake structure includes obtaining 
cooling water by any sort of contract or arrangement with one or more 
independent suppliers of cooling water if the supplier withdraws water 
from waters of the United States but is not itself a Phase II existing 
facility (as defined in Sec.  125.91 and Sec.  125.93) or Phase III 
existing facility, except as provided in paragraph (d) of this section. 
This provision is intended to prevent circumvention of these 
requirements by creating arrangements to receive cooling water from an 
entity that is not itself a Phase II or Phase III existing facility.
    (d) Notwithstanding paragraph (c) of this section, obtaining 
cooling water from a public water system or using treated effluent as 
cooling water at a Phase III existing facility does not constitute use 
of a cooling water intake structure for purposes of this subpart.


Sec.  125.102  What special definitions apply to this subpart?

    In addition to the definitions provided in Sec.  122.3 of this 
chapter, the following special definitions apply to this subpart:
    Adaptive management method is a type of project management method 
where a facility chooses an approach to meeting the project goal, 
monitors the effectiveness of that approach, and then based on 
monitoring and any other relevant information, makes any adjustments 
necessary to ensure continued progress toward the project's goal. This 
cycle of activity is repeated as necessary to reach the project's goal.
    All life stages means eggs, larvae, juveniles, and adults.
    Annual mean flow means the average of daily flows over a calendar 
year.
    Calculation baseline means an estimate of impingement mortality and 
entrainment that would occur at your site assuming that: the cooling 
water system has been designed as a once-through system; the opening of 
the cooling water intake structure is located at, and the face of the 
standard 3/8-inch mesh traveling screen is oriented parallel to, the 
shoreline near the surface of the source waterbody; and the baseline 
practices, procedures, and structural configuration are those that your 
facility would maintain in the absence of any structural or operational 
controls, including flow or velocity reductions, implemented in whole 
or in part for the purposes of reducing impingement mortality and 
entrainment. You may also choose to use the current level of 
impingement mortality and entrainment as the calculation baseline. The 
calculation baseline may be estimated using: historical impingement 
mortality and entrainment data from your facility or from another 
facility with comparable design, operational, and environmental 
conditions; current biological data collected in the waterbody in the 
vicinity of your cooling water intake structure; or current impingement 
mortality and entrainment data collected at your facility. You may 
request that the calculation baseline be modified to be based on a 
location of the opening of the cooling water intake structure at a 
depth other than at or near the surface if you can demonstrate to the 
Director that the other depth would correspond to a higher baseline 
level of impingement mortality and/or entrainment.
    Closed-cycle recirculating system means a system designed, using 
minimized make-up and blowdown flows, to withdraw water from a natural 
or other water source to support contact and/or noncontact cooling uses 
within a facility. The water is usually sent to a cooling canal or 
channel, lake, pond, or tower to allow waste heat to be dissipated to 
the atmosphere and then is returned to the system. (Some facilities 
divert the waste heat to other process operations.) New source water 
(make-up water) is added to the system to replenish losses that have 
occurred due to blowdown, drift, and evaporation.
    Cooling water means water used for contact or noncontact cooling, 
including water used for equipment cooling, evaporative cooling tower 
makeup, and dilution of effluent heat content. The intended use of the 
cooling water is to absorb waste heat rejected from the process or 
processes used, or from auxiliary operations on the facility's 
premises. Cooling water that is used in a manufacturing process either 
before or after it is used for cooling is considered process water for 
the purposes of calculating the percentage of a facility's intake flow 
that is used for cooling purposes in Sec.  125.101(a)(4).
    Cooling water intake structure means the total physical structure 
and any associated constructed waterways used to withdraw cooling water 
from waters of the U.S. The cooling water intake structure extends from 
the point at which water is withdrawn from the surface water source up 
to, and including, the intake pumps.
    Design and construction technology means any physical configuration 
of the cooling water intake structure, or a technology that is placed 
in the water body in front of the cooling water intake structure, to 
reduce impingement mortality and/or entrainment. Design and 
construction technologies include, but are not limited to, location of 
the intake structure, intake screen systems, passive intake systems, 
fish diversion and/or avoidance systems, and fish handling and return 
systems. Restoration measures are not design and construction 
technologies for purposes of this definition.
    Design intake flow means the value assigned (during the cooling 
water intake structure design) to the total volume of water withdrawn 
from a source waterbody over a specific time period.
    Design intake velocity means the value assigned (during the design 
of a cooling water intake structure) to the average speed at which 
intake water passes through the open area of the intake screen (or 
other device) against which organisms might be impinged or through 
which they might be entrained.
    Diel means daily and refers to variation in organism abundance and 
density over a 24-hour period due to the

[[Page 68546]]

influence of water movement, physical or chemical changes, and changes 
in light intensity.
    Entrainment means the incorporation of any life stages of fish and 
shellfish with intake water flow entering and passing through a cooling 
water intake structure and into a cooling water system.
    Estuary means a semi-enclosed body of water that has a free 
connection with open seas and within which the seawater is measurably 
diluted with fresh water derived from land drainage. The salinity of an 
estuary exceeds 0.5 parts per thousand (by mass) but is typically less 
than 30 parts per thousand (by mass).
    Existing facility means any facility that commenced construction as 
described in 40 CFR 122.29(b)(4) on or before January 17, 2002 ( or [60 
days from publication of the final rule] for an offshore oil and gas 
extraction facility); and any modification of, or any addition of a 
unit at such a facility that does not meet the definition of a new 
facility at Sec.  125.83.
    Freshwater river or stream means a lotic (free-flowing) system that 
does not receive significant inflows of water from oceans or bays due 
to tidal action. For the purposes of this rule, a flow-through 
reservoir with a retention time of 7 days or less will be considered a 
freshwater river or stream.
    Impingement means the entrapment of any life stages of fish and 
shellfish on the outer part of an intake structure or against a 
screening device during periods of intake water withdrawal.
    Lake or reservoir means any inland body of open water with some 
minimum surface area free of rooted vegetation and with an average 
hydraulic retention time of more than 7 days. Lakes or reservoirs might 
be natural water bodies or impounded streams, usually fresh, surrounded 
by land or by land and a man-made retainer (e.g., a dam). Lakes or 
reservoirs might be fed by rivers, streams, springs, and/or local 
precipitation.
    Moribund means dying; close to death.
    Natural thermal stratification means the naturally occurring and/or 
existing division of a waterbody into horizontal layers of differing 
densities as a result of variations in temperature at different depths.
    Ocean means marine open coastal waters with a salinity greater than 
or equal to 30 parts per thousand (by mass).
    Once-through cooling water system means a system designed to 
withdraw water from a natural or other water source, use it at the 
facility to support contact and/or noncontact cooling uses, and then 
discharge it to a waterbody without recirculation. Once-through cooling 
systems sometimes employ canals/channels, ponds, or non-recirculating 
cooling towers to dissipate waste heat from the water before it is 
discharged.
    Operational measure means a modification to any operation at a 
facility that serves to minimize impact to fish and shellfish from the 
cooling water intake structure. Examples of operational measures 
include, but are not limited to: reductions in cooling water intake 
flow through the use of variable speed pumps and seasonal flow 
reductions or shutdowns; and more frequent rotation of traveling 
screens.
    Source water means the waters of the U.S. from which the cooling 
water is withdrawn.
    Supplier means an entity, other than the regulated facility, that 
owns and operates its own cooling water intake structure and directly 
withdraws water from waters of the United States. The supplier sells 
the cooling water to other facilities for their use, but may also use a 
portion of the water itself. An entity that provides potable water to 
residential populations (e.g., public water system) is not a supplier 
for purposes of this subpart.
    Thermocline means the middle layer of a thermally stratified lake 
or a reservoir. In this layer, there is a rapid change in temperatures 
between the top and bottom of the layer.
    Tidal river means the most seaward reach of a river or stream where 
the salinity is typically less than or equal to 0.5 parts per thousand 
(by mass) at a time of annual low flow and whose surface elevation 
responds to the effects of coastal lunar tides.


Sec.  125.103  How will requirements reflecting best technology 
available for minimizing adverse environmental impact be established 
for my Phase III existing facility?

    (a) Compliance Alternatives. You must select and implement one of 
the following five alternatives for establishing best technology 
available for minimizing adverse environmental impact at your facility:
    (1)(i) You may demonstrate to the Director that you have reduced, 
or will reduce, your flow commensurate with a closed-cycle 
recirculating system. In this case, you are deemed to have met the 
applicable performance standards and will not be required to 
demonstrate further that your facility meets the impingement mortality 
and entrainment performance standards specified in paragraph (b) of 
this section. In addition, you are not subject to the requirements in 
Sec. Sec.  125.104, 125.105, 125.106, or 125.107. However, you may 
still be subject to any more stringent requirements established under 
paragraph (e) of this section; or
    (ii) You may demonstrate to the Director that you have reduced, or 
will reduce, your maximum through-screen design intake velocity to 0.5 
ft/s or less. In this case, you are deemed to have met the impingement 
mortality performance standards and will not be required to demonstrate 
further that your facility meets the performance standards for 
impingement mortality specified in paragraph (b) of this section and 
you are not subject to the requirements in Sec. Sec.  125.104, 125.105, 
125.106, or 125.107 as they apply to impingement mortality. However, 
you are still subject to any applicable requirements for entrainment 
reduction and may still be subject to any more stringent requirements 
established under paragraph (e) of this section.
    (2) You may demonstrate to the Director that your existing design 
and construction technologies, operational measures, and/or restoration 
measures meet the performance standards specified in paragraph (b) of 
this section and/or the restoration requirements in paragraph (c) of 
this section;
    (3) You may demonstrate to the Director that you have selected, and 
will install and properly operate and maintain, design and construction 
technologies, operational measures, and/or restoration measures that 
will, in combination with any existing design and construction 
technologies, operational measures, and/or restoration measures, meet 
the performance standards specified in paragraph (b) of this section 
and/or the restoration requirements in paragraph (c) of this section;
    (4) You may demonstrate to the Director that you have installed, or 
will install, and properly operate and maintain an approved design and 
construction technology in accordance with Sec.  125.108(a) or (b); or
    (5) You may demonstrate to the Director that you have selected, 
installed, and are properly operating and maintaining, or will install 
and properly operate and maintain design and construction technologies, 
operational measures, and/or restoration measures that the Director has 
determined to be the best technology available to minimize adverse 
environmental impact for your facility in accordance with paragraphs 
(a)(5)(i) or (a)(5)(ii) of this section.
    (i) If the Director determines that data specific to your facility 
demonstrate that the costs of compliance under

[[Page 68547]]

alternatives in paragraphs (a)(2) through (4) of this section would be 
significantly greater than the costs considered by the Administrator 
for a facility like yours in establishing the applicable performance 
standards in paragraph (b) of this section, the Director must make a 
site-specific determination of the best technology available for 
minimizing adverse environmental impact. This determination must be 
based on reliable, scientifically valid cost and performance data 
submitted by you and any other information that the Director deems 
appropriate. The Director must establish site-specific alternative 
requirements based on new and/or existing design and construction 
technologies, operational measures, and/or restoration measures that 
achieve an efficacy that is, in the judgment of the Director, as close 
as practicable to the applicable performance standards in paragraph (b) 
of this section, without resulting in costs that are significantly 
greater than the costs considered by the Administrator for a facility 
like yours in establishing the applicable performance standards. The 
Director's site-specific determination may conclude that design and 
construction technologies, operational measures, and/or restoration 
measures in addition to those already in place are not justified 
because of the significantly greater costs. To calculate the costs 
considered by the Administrator for a facility like yours in 
establishing the applicable performance standards you must:
    (A) Determine which technology the Administrator modeled as the 
most appropriate compliance technology for your facility;
    (B) Using the Administrator's costing equations, calculate the 
annualized capital and net operation and maintenance (O&M) costs for a 
facility with your design intake flow using this technology;
    (C) Determine the annualized net revenue loss associated with net 
construction downtime that the Administrator modeled for your facility 
to install this technology;
    (D) Determine the annualized pilot study costs that the 
Administrator modeled for your facility to test and optimize this 
technology;
    (E) Sum the cost items in paragraphs (a)(5)(i)(B), (a)(5)(i)(C), 
and (a)(5)(i)(D) of this section; and
    (F) Determine if the performance standards that form the basis of 
these estimates (i.e., impingement mortality reduction only or 
impingement mortality and entrainment reduction) are applicable to your 
facility, and if necessary, adjust the estimates to correspond to the 
applicable performance standards.
    (ii) If the Director determines that data specific to your facility 
demonstrate that the costs of compliance under alternatives in 
paragraphs (a)(2) through (4) of this section would be significantly 
greater than the benefits of complying with the applicable performance 
standards at your facility, the Director must make a site-specific 
determination of best technology available for minimizing adverse 
environmental impact. This determination must be based on reliable, 
scientifically valid cost and performance data submitted by you and any 
other information the Director deems appropriate. The Director must 
establish site-specific alternative requirements based on new and/or 
existing design and construction technologies, operational measures, 
and/or restoration measures that achieve an efficacy that, in the 
judgment of the Director, is as close as practicable to the applicable 
performance standards in paragraph (b) of this section without 
resulting in costs that are significantly greater than the benefits at 
your facility. The Director's site-specific determination may conclude 
that design and construction technologies, operational measures, and/or 
restoration measures in addition to those already in place are not 
justified because the costs would be significantly greater than the 
benefits at your facility.

OPTION A FOR PARAGRAPH (b)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 50 MGD or more, located on any waterbody type or the 
regulatory option that defines a Phase III existing facility as one 
with design intake flows 200 MGD or more, located on any waterbody 
type]:

    (b) National Performance Standards--(1) Impingement Mortality 
Performance Standards. If you choose compliance alternatives in 
paragraphs (a)(2), (a)(3), or (a)(4) of this section, you must reduce 
impingement mortality for all life stages of fish and shellfish by 80 
to 95 percent from the calculation baseline.
    (2) Entrainment Performance Standards. If you choose compliance 
alternatives in paragraphs (a)(1)(ii), (a)(2), (a)(3), or (a)(4) of 
this section, you must also reduce entrainment of all life stages of 
fish and shellfish by 60 to 90 percent from the calculation baseline 
if:
    (i) Your facility is a Phase III existing facility; and
    (ii)(A) Your facility uses cooling water withdrawn from a tidal 
river, estuary, ocean, or one of the Great Lakes; or
    (B) Your facility uses cooling water withdrawn from a freshwater 
river or stream and the design intake flow of your cooling water intake 
structures is greater than five percent of the mean annual flow.
    (3) Additional Performance Standards for Facilities Withdrawing 
from a Lake (Other Than One of the Great Lakes) or a Reservoir. If your 
facility withdraws cooling water from a lake (other than one of the 
Great Lakes) or a reservoir and you propose to increase the design 
intake flow of cooling water intake structures it uses, your increased 
design intake flow must not disrupt the natural thermal stratification 
or turnover pattern (where present) of the source water, except in 
cases where the disruption does not adversely affect the management of 
fisheries. In determining whether any such disruption does not 
adversely affect the management of fisheries, you must consult with 
Federal, State, or Tribal fish and wildlife management agencies.
    (4) Use of Performance Standards for Site-Specific Determinations 
of Best Technology Available. The performance standards in paragraphs 
(b)(1) and (2) of this section must also be used for determining 
eligibility for site-specific determinations of best technology 
available for minimizing adverse environmental impact and establishing 
site-specific requirements that achieve an efficacy as close as 
practicable to the applicable performance standards without resulting 
in costs that are significantly greater than those considered by the 
Administrator for a facility like yours in establishing the performance 
standards or costs that are significantly greater than the benefits at 
your facility, pursuant to paragraph (a)(5) of this section.

OPTION B FOR PARAGRAPH (b)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 100 MGD or more, located on oceans, estuaries, tidal 
rivers, or one of the Great Lakes]:

    (b) National Performance Standards--(1) Impingement Mortality 
Performance Standards. If you choose compliance alternatives in 
paragraphs (a)(2), (a)(3), or (a)(4) of this section, you must reduce 
impingement mortality for all life stages of fish and shellfish by 80 
to 95 percent from the calculation baseline.
    (2) Entrainment Performance Standards. If you choose compliance 
alternatives in paragraphs (a)(1)(ii), (a)(2), (a)(3), or (a)(4) of 
this section, you must also reduce entrainment of all life stages of 
fish and shellfish by 60 to 90 percent from the calculation baseline.

[[Page 68548]]

    (3) Use of Performance Standards for Site-Specific Determinations 
of Best Technology Available. The performance standards in paragraphs 
(b)(1) and (2) of this section must also be used for determining 
eligibility for site-specific determinations of best technology 
available for minimizing adverse environmental impact and establishing 
site specific requirements that achieve an efficacy as close as 
practicable to the applicable performance standards without resulting 
in costs that are significantly greater than those considered by the 
Administrator for a facility like yours in establishing the performance 
standards or costs that are significantly greater than the benefits at 
your facility, pursuant to paragraph (a)(5) of this section.
    (c) Requirements for Restoration Measures. With the approval of the 
Director, you may implement and adaptively manage restoration measures 
that produce and result in increases of fish and shellfish in your 
facility's watershed in place of or as a supplement to installing 
design and control technologies and/or adopting operational measures 
that reduce impingement mortality and entrainment. You must demonstrate 
to the Director that:
    (1) You have evaluated the use of design and construction 
technologies and operational measures for your facility and determined 
that the use of restoration measures is appropriate because meeting the 
applicable performance standards or site-specific requirements through 
the use of design and construction technologies and/or operational 
measures alone is less feasible, less cost-effective, or less 
environmentally desirable than meeting the standards or requirements in 
whole or in part through the use of restoration measures; and
    (2) The restoration measures you will implement, alone or in 
combination with design and construction technologies and/or 
operational measures, will produce ecological benefits (fish and 
shellfish), including maintenance or protection of community structure 
and function in your facility's waterbody or watershed, at a level that 
is substantially similar to the level you would achieve by meeting the 
applicable performance standards under paragraph (b) of this section, 
or that satisfies alternative site-specific requirements established 
pursuant to paragraph (a)(5) of this section.
    (d)(1) Compliance Using a Technology Installation and Operation 
Plan or Restoration Plan. If you choose one of the compliance 
alternatives in paragraphs (a)(2), (3), (4), or (5) of this section, 
you may request that compliance with the requirements of paragraphs 
(a)(5) and (b) of this section during the first permit containing 
requirements consistent with this subpart be determined based on 
whether you have complied with the construction, operational, 
maintenance, monitoring, and adaptive management requirements of a 
Technology Installation and Operation Plan developed in accordance with 
Sec.  125.104(b)(4)(ii) (for any design and construction technologies 
and/or operational measures) and/or a Restoration Plan developed in 
accordance with Sec.  125.104(b)(5) (for any restoration measures). The 
Technology Installation and Operation Plan must be designed to meet 
applicable performance standards in paragraph (b) of this section or 
alternative site-specific requirements developed pursuant to paragraph 
(a)(5) of this section. The Restoration Plan must be designed to 
achieve compliance with the applicable requirements in paragraph (c) of 
this section.
    (2) During subsequent permit terms, if you selected and installed 
design and construction technologies and/or operational measures and 
have been in compliance with the construction, operational, 
maintenance, monitoring, and adaptive management requirements of your 
Technology Installation and Operation Plan during the preceding permit 
term, you may request that compliance with the requirements of this 
section during the following permit term be determined based on whether 
you remain in compliance with your Technology Installation and 
Operation Plan, revised in accordance with your adaptive management 
plan in Sec.  125.104(b)(4)(ii)(C) if applicable performance standards 
are not being met. Each request and approval of a Technology 
Installation and Operation Plan shall be limited to one permit term.
    (3) During subsequent permit terms, if you selected and installed 
restoration measures and have been in compliance with the construction, 
operational, maintenance, monitoring, and adaptive management 
requirements in your Restoration Plan during the preceding permit term, 
you may request that compliance with the requirements of this section 
during the following permit term be determined based on whether you 
remain in compliance with your Restoration Plan, revised in accordance 
with your adaptive management plan in Sec.  125.104(b)(5)(v) if 
applicable performance standards are not being met. Each request and 
approval of a Restoration Plan shall be limited to one permit term.
    (e) More Stringent Standards. The Director may establish more 
stringent requirements as best technology available for minimizing 
adverse environmental impact if the Director determines that your 
compliance with the applicable requirements of this section would not 
meet the requirements of applicable State and Tribal law, or other 
Federal law.


Sec.  125.104  As an owner or operator of a Phase III existing 
facility, what must I collect and submit when I apply for my reissued 
NPDES permit?

    (a)(1) You must submit to the Director the Proposal for Information 
Collection required in paragraph (b)(1) of this section prior to the 
start of information collection activities;
    (2) You must submit to the Director the information required in 40 
CFR 122.21(r)(2) (except (r)(2)(iv)), (r)(3) and (r)(5) and any 
applicable portions of the Comprehensive Demonstration Study (Study), 
except for the Proposal for Information Collection required by 
paragraph (b)(1) of this section; and
    (i) You must submit your NPDES permit application in accordance 
with the time frames specified in 40 CFR 122.21(d)(2).
    (ii) If you are a Phase III existing facility and your existing 
permit expires before [4 years from publication of the final rule], you 
may request that the Director establish a schedule for you to submit 
the information required by this section as expeditiously as 
practicable, but not later than [3 years and 180 days from publication 
of the final rule]. Between the time your existing permit expires and 
the time an NPDES permit containing requirements consistent with this 
subpart is issued to your facility, the best technology available to 
minimize adverse environmental impact will continue to be determined 
based on the Director's best professional judgment.
    (3) In subsequent permit terms, the Director may approve a request 
to reduce the information required to be submitted in your permit 
application on the cooling water intake structure(s) and the source 
waterbody, if conditions at your facility and in the waterbody remain 
substantially unchanged since your previous application. You must 
submit your request for reduced cooling water intake structure and 
waterbody application information to the Director at least one year 
prior to the expiration of the permit. Your request must identify each 
required information item in 40 CFR 122.21(r) and this section that you 
determine has not substantially changed since the previous permit

[[Page 68549]]

application and the basis for your determination.

OPTION A FOR PARAGRAPH (b)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 50 MGD or more, located on any waterbody type or the 
regulatory option that defines a Phase III existing facility as one 
with design intake flows 200 MGD or more, located on any waterbody 
type]:

    (b) Comprehensive Demonstration Study The purpose of the 
Comprehensive Demonstration Study (Study) is to characterize 
impingement mortality and entrainment, to describe the operation of 
your cooling water intake structures, and to confirm that the 
technologies, operational measures, and/or restoration measures you 
have selected and installed, or will install, at your facility meet the 
applicable requirements of Sec.  125.103. All facilities except those 
that have met the applicable requirements in accordance with Sec. Sec.  
125.103(a)(1)(i), 125.103(a)(1)(ii), and 125.103(a)(4) must submit all 
applicable portions of the Comprehensive Demonstration Study to the 
Director in accordance with paragraph (a) of this section. Facilities 
that meet the requirements in Sec.  125.103(a)(1)(i) by reducing their 
flow commensurate with a closed-cycle, recirculating system are not 
required to submit a Comprehensive Demonstration Study. Facilities that 
meet the requirements in Sec.  125.103(a)(1)(ii) by reducing their 
design intake velocity to 0.5 ft/sec or less are required to submit a 
Study only for the entrainment requirements, if applicable. Facilities 
that meet the requirements in Sec.  125.103(a)(4) and have installed 
and properly operate and maintain an approved design and construction 
technology (in accordance with Sec.  125.108) are required to submit 
only the Technology Installation and Operation Plan in paragraph (b)(4) 
of this section and the Verification Monitoring Plan in paragraph 
(b)(7) of this section. Facilities that are required to meet only 
impingement mortality performance standards in Sec.  125.103(b)(1) are 
required to submit only a Study for the impingement mortality reduction 
requirements. The Comprehensive Demonstration Study must include:
    (1) Proposal For Information Collection. You must submit to the 
Director for review and comment a description of the information you 
will use to support your Study. The Proposal for Information Collection 
must be submitted prior to the start of information collection 
activities, but you may initiate such activities prior to receiving 
comment from the Director. The proposal must include:
    (i) A description of the proposed and/or implemented technologies, 
operational measures, and/or restoration measures to be evaluated in 
the Study;
    (ii) A list and description of any historical studies 
characterizing impingement mortality and entrainment and/or the 
physical and biological conditions in the vicinity of the cooling water 
intake structures and their relevance to this proposed Study. If you 
propose to use existing data, you must demonstrate the extent to which 
the data are representative of current conditions and that the data 
were collected using appropriate quality assurance/quality control 
procedures;
    (iii) A summary of any past or ongoing consultations with 
appropriate Federal, State, and Tribal fish and wildlife agencies that 
are relevant to this Study and a copy of written comments received as a 
result of such consultations; and
    (iv) A sampling plan for any new field studies you propose to 
conduct in order to ensure that you have sufficient data to develop a 
scientifically valid estimate of impingement mortality and entrainment 
at your site. The sampling plan must document all methods and quality 
assurance/quality control procedures for sampling and data analysis. 
The sampling and data analysis methods you propose must be appropriate 
for a quantitative survey and include consideration of the methods used 
in other studies performed in the source waterbody. The sampling plan 
must include a description of the study area (including the area of 
influence of the cooling water intake structure(s)), and provide a 
taxonomic identification of the sampled or evaluated biological 
assemblages (including all life stages of fish and shellfish).
    (2) Source Waterbody Flow Information. You must submit to the 
Director the following source waterbody flow information:
    (i) If your cooling water intake structure is located in a 
freshwater river or stream, you must provide the annual mean flow of 
the waterbody and any supporting documentation and engineering 
calculations to support your analysis of whether your design intake 
flow is greater than five percent of the mean annual flow of the river 
or stream for purposes of determining applicable performance standards 
under Sec.  125.103(b). Representative historical data (from a period 
of time up to 10 years, if available) must be used; and
    (ii) If your cooling water intake structure is located in a lake 
(other than one of the Great Lakes) or a reservoir and you propose to 
increase its design intake flow, you must provide a description of the 
thermal stratification in the waterbody, and any supporting 
documentation and engineering calculations to show that the total 
design intake flow after the increase will not disrupt the natural 
thermal stratification and turnover pattern in a way that adversely 
impacts fisheries, including the results of any consultations with 
Federal, State, or Tribal fish and wildlife management agencies.
    (3) Impingement Mortality and/or Entrainment Characterization 
Study. You must submit to the Director an Impingement Mortality and/or 
Entrainment Characterization Study whose purpose is to provide 
information to support the development of a calculation baseline for 
evaluating impingement mortality and entrainment and to characterize 
current impingement mortality and entrainment. The Impingement 
Mortality and/or Entrainment Characterization Study must include the 
following, in sufficient detail to support development of the other 
elements of the Comprehensive Demonstration Study:
    (i) Taxonomic identifications of all life stages of fish, 
shellfish, and any species protected under Federal, State, or Tribal 
Law (including threatened or endangered species) that are in the 
vicinity of the cooling water intake structure(s) and are susceptible 
to impingement and entrainment;
    (ii) A characterization of all life stages of fish, shellfish, and 
any species protected under Federal, State, or Tribal Law (including 
threatened or endangered species) identified pursuant to paragraph 
(b)(3)(i) of this section, including a description of the abundance and 
temporal and spatial characteristics in the vicinity of the cooling 
water intake structure(s), based on sufficient data to characterize 
annual, seasonal, and diel variations in impingement mortality and 
entrainment (e.g., related to climate and weather differences, 
spawning, feeding and water column migration). These may include 
historical data that are representative of the current operation of 
your facility and of biological conditions at the site;
    (iii) Documentation of the current impingement mortality and 
entrainment of all life stages of fish, shellfish, and any species 
protected under Federal, State, or Tribal Law (including threatened or 
endangered species)

[[Page 68550]]

identified pursuant to paragraph (b)(3)(i) of this section and an 
estimate of impingement mortality and entrainment to be used as the 
calculation baseline. The documentation may include historical data 
that are representative of the current operation of your facility and 
of biological conditions at the site. Impingement mortality and 
entrainment samples to support the calculations required in paragraphs 
(b)(4)(i)(C) and (b)(5)(iii) of this section must be collected during 
periods of representative operational flows for the cooling water 
intake structure and the flows associated with the samples must be 
documented;
    (4) Technology and Compliance Assessment Information--(i) Design 
and Construction Technology Plan. If you choose to use design and 
construction technologies and/or operational measures, in whole or in 
part to meet the requirements of Sec.  125.103(a)(2) or (3), you must 
submit a Design and Construction Technology Plan to the Director for 
review and approval. The plan must explain the technologies and/or 
operational measures you have in place and/or have selected to meet the 
requirements in Sec.  125.103. (Examples of potentially appropriate 
technologies may include, but are not limited to, wedgewire screens, 
fine mesh screens, fish handling and return systems, barrier nets, 
aquatic filter barrier systems, vertical and/or lateral relocation of 
the cooling water intake structure, and enlargement of the cooling 
water intake structure opening to reduce velocity. Examples of 
potentially appropriate operational measures may include, but are not 
limited to, seasonal shutdowns, reductions in flow, and continuous or 
more frequent rotation of traveling screens.) The plan must contain the 
following information:
    (A) A narrative description of the design and operation of all 
design and construction technologies and/or operational measures 
(existing and proposed), including fish handling and return systems, 
that you have in place or will use to meet the requirements to reduce 
impingement mortality of those species expected to be most susceptible 
to impingement, and information that demonstrates the efficacy of the 
technologies and/or operational measures for those species;
    (B) A narrative description of the design and operation of all 
design and construction technologies and/or operational measures 
(existing and proposed) that you have in place or will use to meet the 
requirements to reduce entrainment of those species expected to be the 
most susceptible to entrainment, if applicable, and information that 
demonstrates the efficacy of the technologies and/or operational 
measures for those species;
    (C) Calculations of the reduction in impingement mortality and 
entrainment of all life stages of fish and shellfish that would be 
achieved by the technologies and/or operational measures you have 
selected based on the Impingement Mortality and/or Entrainment 
Characterization Study in paragraph (b)(3) of this section. In 
determining compliance with any requirements to reduce impingement 
mortality or entrainment, you must assess the total reduction in 
impingement mortality and entrainment against the calculation baseline 
determined in accordance with paragraph (b)(3) of this section. 
Reductions in impingement mortality and entrainment from this 
calculation baseline as a result of any design and construction 
technologies and/or operational measures already implemented at your 
facility should be added to the reductions expected to be achieved by 
any additional design and/or construction technologies and operational 
measures that will be implemented, and any increases in fish and 
shellfish within the waterbody attributable to your restoration 
measures. Facilities that recirculate a portion of their flow, but do 
not reduce flow sufficiently to satisfy the compliance option in Sec.  
125.103(a)(1)(i) may take into account the reduction in impingement 
mortality and entrainment associated with the reduction in flow when 
determining the net reduction associated with existing design and 
construction technologies and/or operational measures. This estimate 
must include a site-specific evaluation of the suitability of the 
technologies and/or operational measures based on the species that are 
found at the site, and may be determined based on representative 
studies (i.e., studies that have been conducted at a similar facility's 
cooling water intake structures located in the same waterbody type with 
similar biological characteristics) and/or site-specific technology 
prototype or pilot studies; and
    (D) Design and engineering calculations, drawings, and estimates 
prepared by a qualified professional to support the descriptions 
required by paragraphs (b)(4)(i)(A) and (B) of this section.
    (ii) Technology Installation and Operation Plan. If you choose the 
compliance alternative in Sec.  125.103(a)(2), (3), (4), or (5) and use 
design and construction technologies and/or operational measures in 
whole or in part to comply with the applicable requirements of Sec.  
125.103, you must submit the following information with your 
application for review and approval by the Director:
    (A) A schedule for the installation and maintenance of any new 
design and construction technologies. Any downtime of generating units 
to accommodate installation and/or maintenance of these technologies 
should be scheduled to coincide with otherwise necessary downtime 
(e.g., for repair, overhaul, or routine maintenance of the generating 
units) to the extent practicable. Where additional downtime is 
required, you may coordinate scheduling of this downtime with the North 
American Electric Reliability Council and/or other generators in your 
area to ensure that impacts to reliability and supply are minimized;
    (B) List of operational and other parameters to be monitored, and 
the location and frequency that you will monitor them;
    (C) List of activities you will undertake to ensure to the degree 
practicable the efficacy of installed design and construction 
technologies and operational measures, and your schedule for 
implementing them;
    (D) A schedule and methodology for assessing the efficacy of any 
installed design and construction technologies and operational measures 
in meeting applicable performance standards or site-specific 
requirements, including an adaptive management plan for revising design 
and construction technologies, operational measures, operation and 
maintenance requirements, and/or monitoring requirements if your 
assessment indicates that applicable performance standards or site-
specific requirements are not being met; and
    (E) If you choose the compliance alternative in Sec.  
125.103(a)(4), documentation that the appropriate site conditions in 
Sec.  125.108(a) or (b) exist at your facility.
    (5) Restoration Plan. If you propose to use restoration measures, 
in whole or in part, to meet the applicable requirements in Sec.  
125.103, you must submit the following information with your 
application for review and approval by the Director. You must address 
species of concern identified in consultation with Federal, State, and 
Tribal fish and wildlife management agencies with responsibility for 
fisheries and wildlife potentially affected by your cooling water 
intake structure(s).
    (i) A demonstration to the Director that you have evaluated the use 
of design and construction technologies and/or operational measures for 
your facility and an explanation of how you determined that restoration 
would be

[[Page 68551]]

more feasible, cost-effective, or environmentally desirable;
    (ii) A narrative description of the design and operation of all 
restoration measures (existing and proposed) that you have in place or 
will use to produce fish and shellfish;
    (iii) Quantification of the ecological benefits of the proposed 
restoration measures. You must use information from the Impingement 
Mortality and/or Entrainment Characterization Study required in 
paragraph (b)(3) of this section, and any other available and 
appropriate information, to estimate the reduction in fish and 
shellfish impingement mortality and/or entrainment that would be 
necessary for your facility to comply with Sec.  125.103(c)(2). You 
must then calculate the production of fish and shellfish that you will 
achieve with the restoration measures you will or have already 
installed. You must include a discussion of the nature and magnitude of 
uncertainty associated with the performance of these restoration 
measures. You must also include a discussion of the time frame within 
which these ecological benefits are expected to accrue;
    (iv) Design calculations, drawings, and estimates to document that 
your proposed restoration measures in combination with design and 
construction technologies and/or operational measures, or alone, will 
meet the requirements of Sec.  125.103(c)(2). If the restoration 
measures address the same fish and shellfish species identified in the 
Impingement Mortality and/or Entrainment Characterization Study (in-
kind restoration), you must demonstrate that the restoration measures 
will produce a level of these fish and shellfish substantially similar 
to that which would result from meeting applicable performance 
standards in Sec.  125.103(b), or that they will satisfy site-specific 
requirements established pursuant to Sec.  125.103(a)(5). If the 
restoration measures address fish and shellfish species different from 
those identified in the Impingement Mortality and/or Entrainment 
Characterization Study (out-of-kind restoration), you must demonstrate 
that the restoration measures produce ecological benefits substantially 
similar to or greater than those that would be realized through in-kind 
restoration. Such a demonstration should be based on a watershed 
approach to restoration planning and consider applicable multi-agency 
watershed restoration plans, site-specific peer-reviewed ecological 
studies, and/or consultation with appropriate Federal, State, and 
Tribal fish and wildlife management agencies.
    (v) A plan utilizing an adaptive management method for 
implementing, maintaining, and demonstrating the efficacy of the 
restoration measures you have selected and for determining the extent 
to which the restoration measures, or the restoration measures in 
combination with design and construction technologies and operational 
measures, have met the applicable requirements of Sec.  125.103(c)(2). 
The plan must include:
    (A) A monitoring plan that includes a list of the restoration 
parameters that will be monitored, the frequency at which you will 
monitor them, and success criteria for each parameter;
    (B) A list of activities you will undertake to ensure the efficacy 
of the restoration measures, a description of the linkages between 
these activities and the items in paragraph (b)(5)(v)(A) of this 
section, and an implementation schedule; and
    (C) A process for revising the Restoration Plan as new information, 
including monitoring data, becomes available, if the applicable 
requirements under Sec.  125.103(c)(2) are not being met.
    (vi) A summary of any past or ongoing consultation with appropriate 
Federal, State, and Tribal fish and wildlife management agencies on 
your use of restoration measures including a copy of any written 
comments received as a result of such consultations;
    (vii) If requested by the Director, a peer review of the items you 
submit for the Restoration Plan. You must choose the peer reviewers in 
consultation with the Director who may consult with EPA and Federal, 
State, and Tribal fish and wildlife management agencies with 
responsibility for fish and wildlife potentially affected by your 
cooling water intake structure(s). Peer reviewers must have appropriate 
qualifications (e.g., in the fields of geology, engineering, and/or 
biology, etc.) depending upon the materials to be reviewed; and
    (viii) A description of the information to be included in a 
biennial status report to the Director.
    (6) Information to Support Site-specific Determination of Best 
Technology Available for Minimizing Adverse Environmental Impact. If 
you have requested a site-specific determination of best technology 
available for minimizing adverse environmental impact pursuant to Sec.  
125.103(a)(5)(i) because of costs significantly greater than those 
considered by the Administrator for a facility like yours in 
establishing the applicable performance standards of Sec.  125.103(b), 
you are required to provide to the Director the information specified 
in paragraphs (b)(6)(i) and (b)(6)(iii) of this section. If you have 
requested a site-specific determination of best technology available 
for minimizing adverse environmental impact pursuant to Sec.  
125.103(a)(5)(ii) because of costs significantly greater than the 
benefits of meeting the applicable performance standards of Sec.  
125.103(b) at your facility, you must provide the information specified 
in paragraphs (b)(6)(i), (b)(6)(ii), and (b)(6)(iii) of this section:
    (i) Comprehensive Cost Evaluation Study. You must perform and 
submit the results of a Comprehensive Cost Evaluation Study, that 
includes:
    (A) Engineering cost estimates in sufficient detail to document the 
costs of implementing design and construction technologies, operational 
measures, and/or restoration measures at your facility that would be 
needed to meet the applicable performance standards of Sec.  
125.103(b);
    (B) A demonstration that the costs documented in paragraph 
(b)(6)(i)(A) of this section significantly exceed either those 
considered by the Administrator for a facility like yours in 
establishing the applicable performance standards or the benefits of 
meeting the applicable performance standards at your facility; and
    (C) Engineering cost estimates in sufficient detail to document the 
costs of implementing the design and construction technologies, 
operational measures, and/or restoration measures in your Site-Specific 
Technology Plan developed in accordance with paragraph (b)(6)(iii) of 
this section.
    (ii) Benefits Valuation Study. If you are seeking a site-specific 
determination of best technology available for minimizing adverse 
environmental impact because of costs significantly greater than the 
benefits of meeting the applicable performance standards of Sec.  
125.103(b) at your facility, you must use a comprehensive methodology 
to fully value the impacts of impingement mortality and entrainment at 
your site and the benefits achievable by meeting the applicable 
performance standards. In addition to the valuation estimates, the 
benefit study must include the following:
    (A) A description of the methodology(ies) used to value commercial, 
recreational, and ecological benefits (including any non-use benefits, 
if applicable);
    (B) Documentation of the basis for any assumptions and quantitative 
estimates. If you plan to use an entrainment survival rate other than 
zero, you must

[[Page 68552]]

submit a determination of entrainment survival at your facility based 
on a study approved by the Director;
    (C) An analysis of the effects of significant sources of 
uncertainty on the results of the study; and
    (D) If requested by the Director, a peer review of the items you 
submit in the Benefits Valuation Study. You must choose the peer 
reviewers in consultation with the Director who may consult with EPA 
and Federal, State, and Tribal fish and wildlife management agencies 
with responsibility for fish and wildlife potentially affected by your 
cooling water intake structure. Peer reviewers must have appropriate 
qualifications depending upon the materials to be reviewed.
    (E) A narrative description of any non-monetized benefits that 
would be realized at your site if you were to meet the applicable 
performance standards and a qualitative assessment of their magnitude 
and significance.
    (iii) Site-Specific Technology Plan. Based on the results of the 
Comprehensive Cost Evaluation Study required by paragraph (b)(6)(i) of 
this section, and the Benefits Valuation Study required by paragraph 
(b)(6)(ii) of this section, if applicable, you must submit a Site-
Specific Technology Plan to the Director for review and approval. The 
plan must contain the following information:
    (A) A narrative description of the design and operation of all 
existing and proposed design and construction technologies, operational 
measures, and/or restoration measures that you have selected in 
accordance with Sec.  125.103(a)(5);
    (B) An engineering estimate of the efficacy of the proposed and/or 
implemented design and construction technologies or operational 
measures, and/or restoration measures. This estimate must include a 
site-specific evaluation of the suitability of the technologies or 
operational measures for reducing impingement mortality and/or 
entrainment (as applicable) of all life stages of fish and shellfish 
based on representative studies (e.g., studies that have been conducted 
at cooling water intake structures located in the same waterbody type 
with similar biological characteristics) and, if applicable, site-
specific technology prototype or pilot studies. If restoration measures 
will be used, you must provide a Restoration Plan that includes the 
elements described in paragraph (b)(5) of this section.
    (C) A demonstration that the proposed and/or implemented design and 
construction technologies, operational measures, and/or restoration 
measures achieve an efficacy that is as close as practicable to the 
applicable performance standards of Sec.  125.103(b) without resulting 
in costs significantly greater than either the costs considered by the 
Administrator for a facility like yours in establishing the applicable 
performance standards, or as appropriate, the benefits of complying 
with the applicable performance standards at your facility;
    (D) Design and engineering calculations, drawings, and estimates 
prepared by a qualified professional to support the elements of the 
Plan.
    (7) Verification Monitoring Plan. If you comply using compliance 
alternatives in Sec.  125.103(a)(2), (3), (4), or (5) using design and 
construction technologies and/or operational measures, you must submit 
a plan to conduct, at a minimum, two years of monitoring to verify the 
full-scale performance of the proposed or already implemented 
technologies and/or operational measures. The verification study must 
begin once the design and construction technologies and/or operational 
measures are installed and continue for a period of time that is 
sufficient to demonstrate to the Director whether the facility is 
meeting the applicable performance standards in Sec.  125.103(b) or 
site-specific requirements developed pursuant to Sec.  125.103(a)(5). 
The plan must provide the following:
    (i) Description of the frequency and duration of monitoring, the 
parameters to be monitored, and the basis for determining the 
parameters and the frequency and duration for monitoring. The 
parameters selected and duration and frequency of monitoring must be 
consistent with any methodology for assessing success in meeting 
applicable performance standards in your Technology Installation and 
Operation Plan as required by paragraph (b)(4)(ii) of this section.
    (ii) A proposal on how naturally moribund fish and shellfish that 
enter the cooling water intake structure would be identified and taken 
into account in assessing success in meeting the performance standards 
in Sec.  125.103(b) or site-specific requirements developed pursuant to 
Sec.  125.103(a)(5).
    (iii) A description of the information to be included in a biennial 
status report to the Director.

OPTION B FOR PARAGRAPH (b)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 100 MGD or more, located on oceans, estuaries, tidal 
rivers, or one of the Great Lakes]:

    (b) Comprehensive Demonstration Study. The purpose of the 
Comprehensive Demonstration Study (Study) is to characterize 
impingement mortality and entrainment, to describe the operation of 
your cooling water intake structures, and to confirm that the 
technologies, operational measures, and/or restoration measures you 
have selected and installed, or will install, at your facility meet the 
applicable requirements of Sec.  125.103. All facilities except those 
that have met the applicable requirements in accordance with Sec. Sec.  
125.103(a)(1)(i), 125.103(a)(1)(ii), and 125.103(a)(4) must submit all 
applicable portions of the Comprehensive Demonstration Study to the 
Director in accordance with paragraph (a) of this section. Facilities 
that meet the requirements in Sec.  125.103(a)(1)(i) by reducing their 
flow commensurate with a closed-cycle, recirculating system are not 
required to submit a Comprehensive Demonstration Study. Facilities that 
meet the requirements in Sec.  125.103(a)(1)(ii) by reducing their 
design intake velocity to 0.5 ft/sec or less are required to submit a 
Study only for the entrainment requirements. Facilities that meet the 
requirements in Sec.  125.103(a)(4) and have installed and properly 
operate and maintain an approved design and construction technology (in 
accordance with Sec.  125.108) are required to submit only the 
Technology Installation and Operation Plan in paragraph (b)(4) of this 
section and the Verification Monitoring Plan in paragraph (b)(7) of 
this section. The Comprehensive Demonstration Study must include:
    (1) Proposal for Information Collection. You must submit to the 
Director for review and comment a description of the information you 
will use to support your Study. The Proposal for Information Collection 
must be submitted prior to the start of information collection 
activities, but you may initiate such activities prior to receiving 
comment from the Director. The proposal must include:
    (i) A description of the proposed and/or implemented technologies, 
operational measures, and/or restoration measures to be evaluated in 
the Study;
    (ii) A list and description of any historical studies 
characterizing impingement mortality and entrainment and/or the 
physical and biological conditions in the vicinity of the cooling water 
intake structures and their relevance to this proposed Study. If you 
propose to use existing data, you must demonstrate the extent to which 
the data are representative of current conditions and that the data 
were

[[Page 68553]]

collected using appropriate quality assurance/quality control 
procedures;
    (iii) A summary of any past or ongoing consultations with 
appropriate Federal, State, and Tribal fish and wildlife agencies that 
are relevant to this Study and a copy of written comments received as a 
result of such consultations; and
    (iv) A sampling plan for any new field studies you propose to 
conduct in order to ensure that you have sufficient data to develop a 
scientifically valid estimate of impingement mortality and entrainment 
at your site. The sampling plan must document all methods and quality 
assurance/quality control procedures for sampling and data analysis. 
The sampling and data analysis methods you propose must be appropriate 
for a quantitative survey and include consideration of the methods used 
in other studies performed in the source waterbody. The sampling plan 
must include a description of the study area (including the area of 
influence of the cooling water intake structure(s)), and provide a 
taxonomic identification of the sampled or evaluated biological 
assemblages (including all life stages of fish and shellfish).
    (2) Impingement Mortality and Entrainment Characterization Study. 
You must submit to the Director an Impingement Mortality and 
Entrainment Characterization Study whose purpose is to provide 
information to support the development of a calculation baseline for 
evaluating impingement mortality and entrainment and to characterize 
current impingement mortality and entrainment. The Impingement 
Mortality and Entrainment Characterization Study must include the 
following, in sufficient detail to support development of the other 
elements of the Comprehensive Demonstration Study:
    (i) Taxonomic identifications of all life stages of fish, 
shellfish, and any species protected under Federal, State, or Tribal 
Law (including threatened or endangered species) that are in the 
vicinity of the cooling water intake structure(s) and are susceptible 
to impingement and entrainment;
    (ii) A characterization of all life stages of fish, shellfish, and 
any species protected under Federal, State, or Tribal Law (including 
threatened or endangered species) identified pursuant to paragraph 
(b)(2)(i) of this section, including a description of the abundance and 
temporal and spatial characteristics in the vicinity of the cooling 
water intake structure(s), based on sufficient data to characterize 
annual, seasonal, and diel variations in impingement mortality and 
entrainment (e.g., related to climate and weather differences, 
spawning, feeding and water column migration). These may include 
historical data that are representative of the current operation of 
your facility and of biological conditions at the site;
    (iii) Documentation of the current impingement mortality and 
entrainment of all life stages of fish, shellfish, and any species 
protected under Federal, State, or Tribal Law (including threatened or 
endangered species) identified pursuant to paragraph (b)(2)(i) of this 
section and an estimate of impingement mortality and entrainment to be 
used as the calculation baseline. The documentation may include 
historical data that are representative of the current operation of 
your facility and of biological conditions at the site. Impingement 
mortality and entrainment samples to support the calculations required 
in paragraphs (b)(3)(i)(C) and (b)(4)(iii) of this section must be 
collected during periods of representative operational flows for the 
cooling water intake structure and the flows associated with the 
samples must be documented;
    (3) Technology and Compliance Assessment Information--(i) Design 
and Construction Technology Plan. If you choose to use design and 
construction technologies and/or operational measures, in whole or in 
part to meet the requirements of Sec.  125.103(a)(2) or (3), you must 
submit a Design and Construction Technology Plan to the Director for 
review and approval. The plan must explain the technologies and/or 
operational measures you have in place and/or have selected to meet the 
requirements in Sec.  125.103. (Examples of potentially appropriate 
technologies may include, but are not limited to, wedgewire screens, 
fine mesh screens, fish handling and return systems, barrier nets, 
aquatic filter barrier systems, vertical and/or lateral relocation of 
the cooling water intake structure, and enlargement of the cooling 
water intake structure opening to reduce velocity. Examples of 
potentially appropriate operational measures may include, but are not 
limited to, seasonal shutdowns, reductions in flow, and continuous or 
more frequent rotation of traveling screens.) The plan must contain the 
following information:
    (A) A narrative description of the design and operation of all 
design and construction technologies and/or operational measures 
(existing and proposed), including fish handling and return systems, 
that you have in place or will use to meet the requirements to reduce 
impingement mortality of those species expected to be most susceptible 
to impingement, and information that demonstrates the efficacy of the 
technologies and/or operational measures for those species;
    (B) A narrative description of the design and operation of all 
design and construction technologies and/or operational measures 
(existing and proposed) that you have in place or will use to meet the 
requirements to reduce entrainment of those species expected to be the 
most susceptible to entrainment and information that demonstrates the 
efficacy of the technologies and/or operational measures for those 
species;
    (C) Calculations of the reduction in impingement mortality and 
entrainment of all life stages of fish and shellfish that would be 
achieved by the technologies and/or operational measures you have 
selected based on the Impingement Mortality and Entrainment 
Characterization Study in paragraph (b)(2) of this section. In 
determining compliance with any requirements to reduce impingement 
mortality and entrainment, you must assess the total reduction in 
impingement mortality and entrainment against the calculation baseline 
determined in accordance with paragraph (b)(2) of this section. 
Reductions in impingement mortality and entrainment from this 
calculation baseline as a result of any design and construction 
technologies and/or operational measures already implemented at your 
facility should be added to the reductions expected to be achieved by 
any additional design and/or construction technologies and operational 
measures that will be implemented, and any increases in fish and 
shellfish within the waterbody attributable to your restoration 
measures. Facilities that recirculate a portion of their flow, but do 
not reduce flow sufficiently to satisfy the compliance option in Sec.  
125.103(a)(1)(i) may take into account the reduction in impingement 
mortality and entrainment associated with the reduction in flow when 
determining the net reduction associated with existing design and 
construction technologies and/or operational measures. This estimate 
must include a site-specific evaluation of the suitability of the 
technologies and/or operational measures based on the species that are 
found at the site, and may be determined based on representative 
studies (i.e., studies that have been conducted at a similar facility's 
cooling water intake structures located in the same waterbody type with 
similar biological characteristics) and/or site-specific technology 
prototype or pilot studies; and

[[Page 68554]]

    (D) Design and engineering calculations, drawings, and estimates 
prepared by a qualified professional to support the descriptions 
required by paragraphs (b)(3)(i)(A) and (B) of this section.
    (ii) Technology Installation and Operation Plan. If you choose the 
compliance alternative in Sec.  125.103(a)(2), (3), (4), or (5) and use 
design and construction technologies and/or operational measures in 
whole or in part to comply with the applicable requirements of Sec.  
125.103, you must submit the following information with your 
application for review and approval by the Director:
    (A) A schedule for the installation and maintenance of any new 
design and construction technologies. Any downtime of generating units 
to accommodate installation and/or maintenance of these technologies 
should be scheduled to coincide with otherwise necessary downtime 
(e.g., for repair, overhaul, or routine maintenance of the generating 
units) to the extent practicable. Where additional downtime is 
required, you may coordinate scheduling of this downtime with the North 
American Electric Reliability Council and/or other generators in your 
area to ensure that impacts to reliability and supply are minimized;
    (B) List of operational and other parameters to be monitored, and 
the location and frequency that you will monitor them;
    (C) List of activities you will undertake to ensure to the degree 
practicable the efficacy of installed design and construction 
technologies and operational measures, and your schedule for 
implementing them;
    (D) A schedule and methodology for assessing the efficacy of any 
installed design and construction technologies and operational measures 
in meeting applicable performance standards or site-specific 
requirements, including an adaptive management plan for revising design 
and construction technologies, operational measures, operation and 
maintenance requirements, and/or monitoring requirements if your 
assessment indicates that applicable performance standards or site-
specific requirements are not being met; and
    (E) If you choose the compliance alternative in Sec.  
125.103(a)(4), documentation that the appropriate site conditions in 
Sec.  125.108(b) exist at your facility.
    (4) Restoration Plan. If you propose to use restoration measures, 
in whole or in part, to meet the applicable requirements in Sec.  
125.103, you must submit the following information with your 
application for review and approval by the Director. You must address 
species of concern identified in consultation with Federal, State, and 
Tribal fish and wildlife management agencies with responsibility for 
fisheries and wildlife potentially affected by your cooling water 
intake structure(s).
    (i) A demonstration to the Director that you have evaluated the use 
of design and construction technologies and/or operational measures for 
your facility and an explanation of how you determined that restoration 
would be more feasible, cost-effective, or environmentally desirable;
    (ii) A narrative description of the design and operation of all 
restoration measures (existing and proposed) that you have in place or 
will use to produce fish and shellfish;
    (iii) Quantification of the ecological benefits of the proposed 
restoration measures. You must use information from the Impingement 
Mortality and Entrainment Characterization Study required in paragraph 
(b)(2) of this section, and any other available and appropriate 
information, to estimate the reduction in fish and shellfish 
impingement mortality and entrainment that would be necessary for your 
facility to comply with Sec.  125.103(c)(2). You must then calculate 
the production of fish and shellfish that you will achieve with the 
restoration measures you will or have already installed. You must 
include a discussion of the nature and magnitude of uncertainty 
associated with the performance of these restoration measures. You must 
also include a discussion of the time frame within which these 
ecological benefits are expected to accrue;
    (iv) Design calculations, drawings, and estimates to document that 
your proposed restoration measures in combination with design and 
construction technologies and/or operational measures, or alone, will 
meet the requirements of Sec.  125.103(c)(2). If the restoration 
measures address the same fish and shellfish species identified in the 
Impingement Mortality and Entrainment Characterization Study (in-kind 
restoration), you must demonstrate that the restoration measures will 
produce a level of these fish and shellfish substantially similar to 
that which would result from meeting applicable performance standards 
in Sec.  125.103(b), or that they will satisfy site-specific 
requirements established pursuant to Sec.  125.103(a)(5). If the 
restoration measures address fish and shellfish species different from 
those identified in the Impingement Mortality and Entrainment 
Characterization Study (out-of-kind restoration), you must demonstrate 
that the restoration measures produce ecological benefits substantially 
similar to or greater than those that would be realized through in-kind 
restoration. Such a demonstration should be based on a watershed 
approach to restoration planning and consider applicable multi-agency 
watershed restoration plans, site-specific peer-reviewed ecological 
studies, and/or consultation with appropriate Federal, State, and 
Tribal fish and wildlife management agencies.
    (v) A plan utilizing an adaptive management method for 
implementing, maintaining, and demonstrating the efficacy of the 
restoration measures you have selected and for determining the extent 
to which the restoration measures, or the restoration measures in 
combination with design and construction technologies and operational 
measures, have met the applicable requirements of Sec.  125.103(c)(2). 
The plan must include:
    (A) A monitoring plan that includes a list of the restoration 
parameters that will be monitored, the frequency at which you will 
monitor them, and success criteria for each parameter;
    (B) A list of activities you will undertake to ensure the efficacy 
of the restoration measures, a description of the linkages between 
these activities and the items in paragraph (b)(4)(v)(A) of this 
section, and an implementation schedule; and
    (C) A process for revising the Restoration Plan as new information, 
including monitoring data, becomes available, if the applicable 
requirements under Sec.  125.103(c)(2) are not being met.
    (vi) A summary of any past or ongoing consultation with appropriate 
Federal, State, and Tribal fish and wildlife management agencies on 
your use of restoration measures including a copy of any written 
comments received as a result of such consultations;
    (vii) If requested by the Director, a peer review of the items you 
submit for the Restoration Plan. You must choose the peer reviewers in 
consultation with the Director who may consult with EPA and Federal, 
State, and Tribal fish and wildlife management agencies with 
responsibility for fish and wildlife potentially affected by your 
cooling water intake structure(s). Peer reviewers must have appropriate 
qualifications (e.g., in the fields of geology, engineering, and/or 
biology, etc.) depending upon the materials to be reviewed; and
    (viii) A description of the information to be included in a 
biennial status report to the Director.
    (5) Information to Support Site-specific Determination of Best

[[Page 68555]]

Technology Available for Minimizing Adverse Environmental Impact. If 
you have requested a site-specific determination of best technology 
available for minimizing adverse environmental impact pursuant to Sec.  
125.103(a)(5)(i) because of costs significantly greater than those 
considered by the Administrator for a facility like yours in 
establishing the applicable performance standards of Sec.  125.103(b), 
you are required to provide to the Director the information specified 
in paragraphs (b)(5)(i) and (b)(5)(iii) of this section. If you have 
requested a site-specific determination of best technology available 
for minimizing adverse environmental impact pursuant to Sec.  
125.103(a)(5)(ii) because of costs significantly greater than the 
benefits of meeting the applicable performance standards of Sec.  
125.103(b) at your facility, you must provide the information specified 
in paragraphs (b)(5)(i), (b)(5)(ii), and (b)(5)(iii) of this section:
    (i) Comprehensive Cost Evaluation Study. You must perform and 
submit the results of a Comprehensive Cost Evaluation Study, that 
includes:
    (A) Engineering cost estimates in sufficient detail to document the 
costs of implementing design and construction technologies, operational 
measures, and/or restoration measures at your facility that would be 
needed to meet the applicable performance standards of Sec.  
125.103(b);
    (B) A demonstration that the costs documented in paragraph 
(b)(5)(i)(A) of this section significantly exceed either those 
considered by the Administrator for a facility like yours in 
establishing the applicable performance standards or the benefits of 
meeting the applicable performance standards at your facility; and
    (C) Engineering cost estimates in sufficient detail to document the 
costs of implementing the design and construction technologies, 
operational measures, and/or restoration measures in your Site-Specific 
Technology Plan developed in accordance with paragraph (b)(5)(iii) of 
this section.
    (ii) Benefits Valuation Study. If you are seeking a site-specific 
determination of best technology available for minimizing adverse 
environmental impact because of costs significantly greater than the 
benefits of meeting the applicable performance standards of Sec.  
125.103(b) at your facility, you must use a comprehensive methodology 
to fully value the impacts of impingement mortality and entrainment at 
your site and the benefits achievable by meeting the applicable 
performance standards. In addition to the valuation estimates, the 
benefit study must include the following:
    (A) A description of the methodology(ies) used to value commercial, 
recreational, and ecological benefits (including any non-use benefits, 
if applicable);
    (B) Documentation of the basis for any assumptions and quantitative 
estimates. If you plan to use an entrainment survival rate other than 
zero, you must submit a determination of entrainment survival at your 
facility based on a study approved by the Director;
    (C) An analysis of the effects of significant sources of 
uncertainty on the results of the study; and
    (D) If requested by the Director, a peer review of the items you 
submit in the Benefits Valuation Study. You must choose the peer 
reviewers in consultation with the Director who may consult with EPA 
and Federal, State, and Tribal fish and wildlife management agencies 
with responsibility for fish and wildlife potentially affected by your 
cooling water intake structure. Peer reviewers must have appropriate 
qualifications depending upon the materials to be reviewed.
    (E) A narrative description of any non-monetized benefits that 
would be realized at your site if you were to meet the applicable 
performance standards and a qualitative assessment of their magnitude 
and significance.
    (iii) Site-Specific Technology Plan. Based on the results of the 
Comprehensive Cost Evaluation Study required by paragraph (b)(5)(i) of 
this section, and the Benefits Valuation Study required by paragraph 
(b)(5)(ii) of this section, if applicable, you must submit a Site-
Specific Technology Plan to the Director for review and approval. The 
plan must contain the following information:
    (A) A narrative description of the design and operation of all 
existing and proposed design and construction technologies, operational 
measures, and/or restoration measures that you have selected in 
accordance with Sec.  125.103(a)(5);
    (B) An engineering estimate of the efficacy of the proposed and/or 
implemented design and construction technologies or operational 
measures, and/or restoration measures. This estimate must include a 
site-specific evaluation of the suitability of the technologies or 
operational measures for reducing impingement mortality and entrainment 
of all life stages of fish and shellfish based on representative 
studies (e.g., studies that have been conducted at cooling water intake 
structures located in the same waterbody type with similar biological 
characteristics) and, if applicable, site-specific technology prototype 
or pilot studies. If restoration measures will be used, you must 
provide a Restoration Plan that includes the elements described in 
paragraph (b)(4) of this section.
    (C) A demonstration that the proposed and/or implemented design and 
construction technologies, operational measures, and/or restoration 
measures achieve an efficacy that is as close as practicable to the 
applicable performance standards of Sec.  125.103(b) without resulting 
in costs significantly greater than either the costs considered by the 
Administrator for a facility like yours in establishing the applicable 
performance standards, or as appropriate, the benefits of complying 
with the applicable performance standards at your facility;
    (D) Design and engineering calculations, drawings, and estimates 
prepared by a qualified professional to support the elements of the 
Plan.
    (6) Verification Monitoring Plan. If you comply using compliance 
alternatives in Sec.  125.103(a)(2), (3), (4), or (5) using design and 
construction technologies and/or operational measures, you must submit 
a plan to conduct, at a minimum, two years of monitoring to verify the 
full-scale performance of the proposed or already implemented 
technologies and/or operational measures. The verification study must 
begin once the design and construction technologies and/or operational 
measures are installed and continue for a period of time that is 
sufficient to demonstrate to the Director whether the facility is 
meeting the applicable performance standards in Sec.  125.103(b) or 
site-specific requirements developed pursuant to Sec.  125.103(a)(5). 
The plan must provide the following:
    (i) Description of the frequency and duration of monitoring, the 
parameters to be monitored, and the basis for determining the 
parameters and the frequency and duration for monitoring. The 
parameters selected and duration and frequency of monitoring must be 
consistent with any methodology for assessing success in meeting 
applicable performance standards in your Technology Installation and 
Operation Plan as required by paragraph (b)(3)(ii) of this section.
    (ii) A proposal on how naturally moribund fish and shellfish that 
enter the cooling water intake structure would be identified and taken 
into account in assessing success in meeting the performance standards 
in Sec.  125.103(b).

[[Page 68556]]

    (iii) A description of the information to be included in a biennial 
status report to the Director.


Sec.  125.105  As an owner or operator of a Phase III existing 
facility, what monitoring must I perform?

OPTION A FOR Sec.  125.105--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 50 MGD or more, located on any waterbody type or the 
regulatory option that defines a Phase III existing facility as one 
with design intake flows 200 MGD or more, located on any waterbody 
type]:

    As an owner or operator of a Phase III existing facility, you must 
perform monitoring, as applicable, in accordance with the Technology 
Installation and Operation Plan required by Sec.  125.104(b)(4)(ii), 
the Restoration Plan required by Sec.  125.104(b)(5), the Verification 
Monitoring Plan required by Sec.  125.104(b)(7), and any additional 
monitoring specified by the Director to demonstrate compliance with the 
applicable requirements of Sec.  125.103.

OPTION B FOR Sec.  125.105--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 100 MGD or more, located on oceans, estuaries, tidal 
rivers, or one of the Great Lakes]:

    As an owner or operator of a Phase III existing facility, you must 
perform monitoring, as applicable, in accordance with the Technology 
Installation and Operation Plan required by Sec.  125.104(b)(3)(ii), 
the Restoration Plan required by Sec.  125.104(b)(4), the Verification 
Monitoring Plan required by Sec.  125.104(b)(6), and any additional 
monitoring specified by the Director to demonstrate compliance with the 
applicable requirements of Sec.  125.103.


Sec.  125.106  As an owner or operator of a Phase III existing 
facility, what records must I keep and what information must I report?

    As an owner or operator of a Phase III existing facility you are 
required to keep records and report information and data to the 
Director as follows:
    (a) You must keep records of all the data used to complete the 
permit application and show compliance with the requirements of Sec.  
125.103, any supplemental information developed under Sec.  125.104, 
and any compliance monitoring data submitted under Sec.  125.105, for a 
period of at least three (3) years from date of permit issuance. The 
Director may require that these records be kept for a longer period.
    (b) You must submit a status report to the Director for review 
every two years that includes appropriate monitoring data and other 
information as specified by the Director in accordance with Sec.  
125.107(b)(5).


Sec.  125.107  As the Director, what must I do to comply with the 
requirements of this subpart?

    (a) Permit Application. As the Director, you must review materials 
submitted by the applicant under 40 CFR 122.21(r) and Sec.  125.104 
before each permit renewal or reissuance.
    (1) You must review and comment on the Proposal for Information 
Collection submitted by the facility in accordance with Sec.  
125.104(a)(1). You are encouraged to provide comments expeditiously so 
that the permit applicant can make responsive modifications to its 
information gathering activities. If a facility submits a request in 
accordance with Sec.  125.104(a)(2)(ii) for an alternate schedule for 
submitting the information required in Sec.  125.104, you must approve 
a schedule that is as expeditious as practicable, but does not extend 
beyond [3 years and 180 days from publication of the final rule] for 
Phase III existing facilities. If a facility submits a request in 
accordance with Sec.  125.104(a)(3) to reduce the information about 
their cooling water intake structures and the source waterbody required 
to be submitted in their permit application (other than with the first 
permit application [60 days from publication of the final rule] for 
Phase III existing facilities), you must approve the request within 60 
days if conditions at the facility and in the waterbody remain 
substantially unchanged since the previous application.
    (2) After receiving the permit application from the owner or 
operator of a Phase III existing facility, you must determine which of 
the requirements specified in Sec.  125.103 apply to the facility. In 
addition, you must review materials to determine compliance with the 
applicable requirements.
    (3) At each permit renewal, you must review the application 
materials and monitoring data to determine whether new or revised 
requirements for design and construction technologies, operational 
measures, or restoration measures should be included in the permit to 
meet the applicable performance standards in Sec.  125.103(b) or 
alternative site-specific requirements established pursuant to Sec.  
125.103(a)(5).

OPTION A FOR PARAGRAPH (b)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 50 MGD or more, located on any waterbody type or the 
regulatory option that defines a Phase III existing facility as one 
with design intake flows 200 MGD or more, located on any waterbody 
type]:

    (b) Permitting Requirements. Section 316(b) requirements are 
implemented for a facility through an NPDES permit. As the Director, 
you must consider the information submitted by the Phase III existing 
facility in its permit application, and determine the appropriate 
requirements and conditions to include in the permit based on the 
compliance alternatives in Sec.  125.103(a). The following requirements 
must be included in each permit:
    (1) Cooling Water Intake Structure Requirements. The permit 
conditions must include the requirements that implement the applicable 
provisions of Sec.  125.103. You must evaluate the performance of the 
design and construction technologies, operational measures, and/or 
restoration measures proposed and implemented by the facility and 
require additional or different design and construction technologies, 
operational measure, and/or restoration measures, and/or improved 
operation and maintenance of existing technologies and measures, if 
needed to meet the applicable performance standards, restoration 
requirements, or alternative site-specific requirements. In determining 
compliance with the performance standards for facilities proposing to 
increase withdrawals of cooling water from a lake (other than a Great 
Lake) or a reservoir in Sec.  125.103(b)(3), you must consider 
anthropogenic factors (those not considered ``natural'') unrelated to 
the Phase III existing facility's cooling water intake structures that 
can influence the occurrence and location of a thermocline. These 
include source water inflows, other water withdrawals, managed water 
uses, wastewater discharges, and flow/level management practices (e.g., 
some reservoirs release water from deeper bottom layers). As the 
Director, you must coordinate with appropriate Federal, State, or 
Tribal fish and wildlife management agencies to determine if any 
disruption of the natural thermal stratification resulting from the 
proposed increased withdrawal of cooling water does not adversely 
affect the management of fisheries. Specifically:
    (i) You must review and approve the Design and Construction 
Technology Plan required in Sec.  125.104(b)(4) to evaluate the 
suitability and feasibility of the design and construction technology 
and/or operational measures proposed to meet the performance standards 
in

[[Page 68557]]

Sec.  125.103(b) or site-specific requirements developed pursuant to 
Sec.  125.103(a)(5).
    (ii) If the facility proposes restoration measures in accordance 
with Sec.  125.103(c), you must review and approve the Restoration Plan 
required under Sec.  125.104(b)(5) to determine whether the proposed 
measures, alone or in combination with design and construction 
technologies and/or operational measures, will meet the requirements 
under Sec.  125.103(c).
    (iii) In each reissued permit, you must include a condition in the 
permit requiring the facility to reduce impingement mortality and 
entrainment (or to increase fish production, if applicable) 
commensurate with the efficacy at the facility of the installed design 
and construction technologies, operational measures, and/or restoration 
measures.
    (iv) If the facility implements design and construction 
technologies and/or operational measures and requests that compliance 
with the requirements in Sec.  125.103 be measured for the first permit 
term (or subsequent permit terms, if applicable) employing the 
Technology Installation and Operation Plan in accordance with Sec.  
125.104(b)(4)(ii), you must review the Technology Installation and 
Operation Plan to ensure it meets the requirements of Sec.  
125.104(b)(4)(ii). If the Technology Installation and Operation Plan 
meets the requirements of Sec.  125.104(b)(4)(ii), you must approve the 
Technology Installation and Operation Plan and require the facility to 
meet the terms of the plan including any revision to the plan that may 
be necessary if applicable performance standards or alternative site-
specific requirements are not being met. If the facility implements 
restoration measures and requests that compliance with the requirements 
in Sec.  125.103 be measured for the first permit term (or subsequent 
permit terms, if applicable) employing a Restoration Plan in accordance 
with Sec.  125.104(b)(5), you must review the Restoration Plan to 
ensure it meets the requirements of Sec.  125.104(b)(5). If the 
Restoration Plan meets the requirements of Sec.  125.104(b)(5), you 
must approve the plan and require the facility to meet the terms of the 
plan including any revision to the plan that may be necessary if 
applicable performance standards or site-specific requirements are not 
being met. In determining whether to approve a Technology Installation 
and Operation Plan or Restoration Plan, you must evaluate whether the 
design and construction technologies, operational measures, and/or 
restoration measures the facility has installed, or proposes to 
install, can reasonably be expected to meet the applicable performance 
standards in Sec.  125.103(b), restoration requirements in Sec.  
125.103(c)(2), and/or alternative site-specific requirements 
established pursuant to Sec.  125.103(a)(5), and whether the Technology 
Installation and Operation Plan and/or Restoration Plan complies with 
the applicable requirements of Sec.  125.104(b). In reviewing the 
Technology Installation and Operation Plan, you must approve any 
reasonable scheduling provisions that are designed to ensure that 
impacts to energy reliability and supply are minimized, in accordance 
with Sec.  125.104(b)(4)(ii)(A). If the facility does not request that 
compliance with the requirements in Sec.  125.103 be measured employing 
a Technology Installation and Operation Plan and/or Restoration Plan, 
or the facility has not been in compliance with the terms of its 
current Technology Installation and Operation Plan and/or Restoration 
Plan during the preceding permit term, you must require the facility to 
comply with the applicable performance standards in Sec.  125.103(b), 
restoration requirement in Sec.  125.103(c)(2), and/or alternative 
site-specific requirements developed pursuant to Sec.  125.103(a)(5). 
In considering a permit application, you must review the performance of 
the design and construction technologies, operational measures, and/or 
restoration measures implemented and require additional or different 
design and construction technologies, operational measures, and/or 
restoration measures, and/or improved operation and maintenance of 
existing technologies and measures, if needed to meet the applicable 
performance standards, restoration requirements, and/or alternative 
site-specific requirements.
    (v) You must review and approve the proposed Verification 
Monitoring Plan submitted under Sec.  125.104(b)(7) (for design and 
construction technologies) and/or monitoring provisions of the 
Restoration Plan submitted under Sec.  125.104(b)(5)(v) and require 
that the monitoring continue for a sufficient period of time to 
demonstrate whether the design and construction technology, operational 
measures, and/or restoration measures meet the applicable performance 
standards in Sec.  125.103(b), restoration requirements in Sec.  
125.103(c)(2) and/or site-specific requirements established pursuant to 
Sec.  125.103(a)(5).
    (vi) If a facility requests requirements based on a site-specific 
determination of best technology available for minimizing adverse 
environmental impact, you must review the application materials 
submitted under Sec.  125.104(b)(6) and any other information you may 
have, including quantitative and qualitative benefits, that would be 
relevant to a determination of whether alternative requirements are 
appropriate for the facility. If a facility submits a study to support 
entrainment survival at the facility, you must review and approve the 
results of that study. If you determine that alternative requirements 
are appropriate, you must make a site-specific determination of best 
technology available for minimizing adverse environmental impact in 
accordance with Sec.  125.103(a)(5). You, as the Director, may request 
revisions to the information submitted by the facility in accordance 
with Sec.  125.104(b)(6) if it does not provide an adequate basis for 
you to make this determination. Any alternative site-specific 
requirements established based on new and/or existing design and 
construction technologies, operational measures, and/or restoration 
measures, must achieve an efficacy that is, in your judgment, as close 
as practicable to the applicable performance standards of Sec.  
125.103(b) without resulting in costs that are significantly greater 
than the costs considered by the Administrator for a like facility in 
establishing the applicable performance standards in Sec.  125.103(b), 
determined in accordance with Sec.  125.103(a)(5)(i)(A) through (F), or 
the benefits of complying with the applicable performance standards at 
the facility. A ``like facility'' is one that is subject to the same 
requirements as those that would otherwise be applicable to the 
facility seeking a site-specific determination. In other words, ``like 
facilities'' for Phase III existing facilities include only other Phase 
III existing facilities; and
    (vii) You must review the proposed methods for assessing success in 
meeting applicable performance standards and/or restoration 
requirements submitted by the facility under Sec.  125.104(b)(4)(ii)(D) 
and/or (b)(5)(v)(A), evaluate those and other available methods, and 
specify how assessment of success in meeting the performance standards 
and/or restoration requirements must be determined including the 
averaging period for determining the percent reduction in impingement 
mortality and entrainment and/or the production of fish and shellfish. 
Compliance for facilities who request that compliance be measured 
employing a Technology Installation and Operation Plan and/or 
Restoration Plan must be determined in accordance with Sec.  
125.107(b)(1)(iv).
    (2) Monitoring Conditions. You must require the facility to perform

[[Page 68558]]

monitoring in accordance with the Technology Installation and Operation 
Plan in Sec.  125.104(b)(4)(ii), the Restoration Plan required by Sec.  
125.104(b)(5), if applicable, and the Verification Monitoring Plan 
required by Sec.  125.104(b)(7). In determining any additional 
applicable monitoring requirements in accordance with Sec.  125.105, 
you must consider the facility's Verification Monitoring, Technology 
Installation and Operation, and/or Restoration Plans, as appropriate. 
You may modify the monitoring program based on changes in physical or 
biological conditions in the vicinity of the cooling water intake 
structure.
    (3) Record Keeping and Reporting. At a minimum, the permit must 
require the facility to report and keep records specified in Sec.  
125.106.
    (4) Design and Construction Technology Approval. (i) For a facility 
that chooses to demonstrate that it has installed and properly operate 
and maintain a design and construction technology approved in 
accordance with Sec.  125.108, the Director must review and approve the 
information submitted in the Technology Installation and Operation Plan 
in Sec.  125.104(b)(4)(ii) and determine if it meets the criteria in 
Sec.  125.108.
    (ii) If a person requests approval of a technology under Sec.  
125.108(b), the Director must review and approve the information 
submitted and determine its suitability for widespread use at 
facilities with similar site conditions in its jurisdiction with 
minimal study. As the Director, you must evaluate the adequacy of the 
technology when installed in accordance with the required design 
criteria and site conditions to consistently meet the performance 
standards in Sec.  125.103. You, as the Director, may only approve a 
technology following public notice and consideration of comment 
regarding such approval.
    (5) Biennial Status Report. You must specify monitoring data and 
other information to be included in a status report every two years. 
The other information may include operation and maintenance records, 
summaries of adaptive management activities, or any other information 
that is relevant to determining compliance with the terms of the 
facility's Technology Operation and Installation Plan and/or 
Restoration Plan.

OPTION B FOR PARAGRAPH (b)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 100 MGD or more, located on oceans, estuaries, tidal 
rivers, or one of the Great Lakes]:

    (b) Permitting Requirements. Section 316(b) requirements are 
implemented for a facility through an NPDES permit. As the Director, 
you must consider the information submitted by the Phase III existing 
facility in its permit application, and determine the appropriate 
requirements and conditions to include in the permit based on the 
compliance alternatives in Sec.  125.103(a). The following requirements 
must be included in each permit:
    (1) Cooling Water Intake Structure Requirements. The permit 
conditions must include the requirements that implement the applicable 
provisions of Sec.  125.103. You must evaluate the performance of the 
design and construction technologies, operational measures, and/or 
restoration measures proposed and implemented by the facility and 
require additional or different design and construction technologies, 
operational measure, and/or restoration measures, and/or improved 
operation and maintenance of existing technologies and measures, if 
needed to meet the applicable performance standards, restoration 
requirements, or alternative site-specific requirements. Specifically:
    (i) You must review and approve the Design and Construction 
Technology Plan required in Sec.  125.104(b)(3) to evaluate the 
suitability and feasibility of the design and construction technology 
and/or operational measures proposed to meet the performance standards 
in Sec.  125.103(b) or site-specific requirements developed pursuant to 
Sec.  125.103(a)(5).
    (ii) If the facility proposes restoration measures in accordance 
with Sec.  125.103(c), you must review and approve the Restoration Plan 
required under Sec.  125.104(b)(4) to determine whether the proposed 
measures, alone or in combination with design and construction 
technologies and/or operational measures, will meet the requirements 
under Sec.  125.103(c).
    (iii) In each reissued permit, you must include a condition in the 
permit requiring the facility to reduce impingement mortality and 
entrainment (or to increase fish production, if applicable) 
commensurate with the efficacy at the facility of the installed design 
and construction technologies, operational measures, and/or restoration 
measures.
    (iv) If the facility implements design and construction 
technologies and/or operational measures and requests that compliance 
with the requirements in Sec.  125.103 be measured for the first permit 
term (or subsequent permit terms, if applicable) employing the 
Technology Installation and Operation Plan in accordance with Sec.  
125.104(b)(3)(ii), you must review the Technology Installation and 
Operation Plan to ensure it meets the requirements of Sec.  
125.104(b)(3)(ii). If the Technology Installation and Operation Plan 
meets the requirements of Sec.  125.104(b)(3)(ii), you must approve the 
Technology Installation and Operation Plan and require the facility to 
meet the terms of the plan including any revision to the plan that may 
be necessary if applicable performance standards or alternative site-
specific requirements are not being met. If the facility implements 
restoration measures and requests that compliance with the requirements 
in Sec.  125.103 be measured for the first permit term (or subsequent 
permit terms, if applicable) employing a Restoration Plan in accordance 
with Sec.  125.104(b)(4), you must review the Restoration Plan to 
ensure it meets the requirements of Sec.  125.104(b)(4). If the 
Restoration Plan meets the requirements of Sec.  125.104(b)(4), you 
must approve the plan and require the facility to meet the terms of the 
plan including any revision to the plan that may be necessary if 
applicable performance standards or site-specific requirements are not 
being met. In determining whether to approve a Technology Installation 
and Operation Plan or Restoration Plan, you must evaluate whether the 
design and construction technologies, operational measures, and/or 
restoration measures the facility has installed, or proposes to 
install, can reasonably be expected to meet the applicable performance 
standards in Sec.  125.103(b), restoration requirements in Sec.  
125.103(c)(2), and/or alternative site-specific requirements 
established pursuant to Sec.  125.103(a)(5), and whether the Technology 
Installation and Operation Plan and/or Restoration Plan complies with 
the applicable requirements of Sec.  125.104(b). In reviewing the 
Technology Installation and Operation Plan, you must approve any 
reasonable scheduling provisions that are designed to ensure that 
impacts to energy reliability and supply are minimized, in accordance 
with Sec.  125.104(b)(3)(ii)(A). If the facility does not request that 
compliance with the requirements in Sec.  125.103 be measured employing 
a Technology Installation and Operation Plan and/or Restoration Plan, 
or the facility has not been in compliance with the terms of its 
current Technology Installation and Operation Plan and/or Restoration 
Plan during the preceding permit term, you must require

[[Page 68559]]

the facility to comply with the applicable performance standards in 
Sec.  125.103(b), restoration requirement in Sec.  125.103(c)(2), and/
or alternative site-specific requirements developed pursuant to Sec.  
125.103(a)(5). In considering a permit application, you must review the 
performance of the design and construction technologies, operational 
measures, and/or restoration measures implemented and require 
additional or different design and construction technologies, 
operational measures, and/or restoration measures, and/or improved 
operation and maintenance of existing technologies and measures, if 
needed to meet the applicable performance standards, restoration 
requirements, and/or alternative site-specific requirements.
    (v) You must review and approve the proposed Verification 
Monitoring Plan submitted under Sec.  125.104(b)(6) (for design and 
construction technologies) and/or monitoring provisions of the 
Restoration Plan submitted under Sec.  125.104(b)(4)(v) and require 
that the monitoring continue for a sufficient period of time to 
demonstrate whether the design and construction technology, operational 
measures, and/or restoration measures meet the applicable performance 
standards in Sec.  125.103(b), restoration requirements in Sec.  
125.103(c)(2) and/or site-specific requirements established pursuant to 
Sec.  125.103(a)(5).
    (vi) If a facility requests requirements based on a site-specific 
determination of best technology available for minimizing adverse 
environmental impact, you must review the application materials 
submitted under Sec.  125.104(b)(5) and any other information you may 
have, including quantitative and qualitative benefits, that would be 
relevant to a determination of whether alternative requirements are 
appropriate for the facility. If a facility submits a study to support 
entrainment survival at the facility, you must review and approve the 
results of that study. If you determine that alternative requirements 
are appropriate, you must make a site-specific determination of best 
technology available for minimizing adverse environmental impact in 
accordance with Sec.  125.103(a)(5). You, as the Director, may request 
revisions to the information submitted by the facility in accordance 
with Sec.  125.104(b)(5) if it does not provide an adequate basis for 
you to make this determination. Any alternative site-specific 
requirements established based on new and/or existing design and 
construction technologies, operational measures, and/or restoration 
measures, must achieve an efficacy that is, in your judgment, as close 
as practicable to the applicable performance standards of Sec.  
125.103(b) without resulting in costs that are significantly greater 
than the costs considered by the Administrator for a like facility in 
establishing the applicable performance standards in Sec.  125.103(b), 
determined in accordance with Sec.  125.103(a)(5)(i)(A) through (F), or 
the benefits of complying with the applicable performance standards at 
the facility. A ``like facility'' is one that is subject to the same 
requirements as those that would otherwise be applicable to the 
facility seeking a site-specific determination. In other words, ``like 
facilities'' for Phase III existing facilities include only other Phase 
III existing facilities; and
    (vii) You must review the proposed methods for assessing success in 
meeting applicable performance standards and/or restoration 
requirements submitted by the facility under Sec.  125.104(b)(3)(ii)(D) 
and/or (b)(4)(v)(A), evaluate those and other available methods, and 
specify how assessment of success in meeting the performance standards 
and/or restoration requirements must be determined including the 
averaging period for determining the percent reduction in impingement 
mortality and entrainment and/or the production of fish and shellfish. 
Compliance for facilities who request that compliance be measured 
employing a Technology Installation and Operation Plan and/or 
Restoration Plan must be determined in accordance with Sec.  
125.107(b)(1)(iv).
    (2) Monitoring Conditions. You must require the facility to perform 
monitoring in accordance with the Technology Installation and Operation 
Plan in Sec.  125.104(b)(3)(ii), the Restoration Plan required by Sec.  
125.104(b)(4), if applicable, and the Verification Monitoring Plan 
required by Sec.  125.104(b)(6). In determining any additional 
applicable monitoring requirements in accordance with Sec.  125.105, 
you must consider the monitoring facility's Verification Monitoring, 
Technology Installation and Operation, and/or Restoration Plans, as 
appropriate. You may modify the monitoring program based on changes in 
physical or biological conditions in the vicinity of the cooling water 
intake structure.
    (3) Record Keeping and Reporting. At a minimum, the permit must 
require the facility to report and keep records specified in Sec.  
125.106.
    (4) Design and Construction Technology Approval. (i) For a facility 
that chooses to demonstrate that it has installed and properly operate 
and maintain a design and construction technology approved in 
accordance with Sec.  125.108, the Director must review and approve the 
information submitted in the Technology Installation and Operation Plan 
in Sec.  125.104(b)(3)(ii) and determine if it meets the criteria in 
Sec.  125.108.
    (ii) If a person requests approval of a technology under Sec.  
125.108(b), the Director must review and approve the information 
submitted and determine its suitability for widespread use at 
facilities with similar site conditions in its jurisdiction with 
minimal study. As the Director, you must evaluate the adequacy of the 
technology when installed in accordance with the required design 
criteria and site conditions to consistently meet the performance 
standards in Sec.  125.103. You, as the Director, may only approve a 
technology following public notice and consideration of comment 
regarding such approval.
    (5) Biennial Status Report. You must specify monitoring data and 
other information to be included in a status report every two years. 
The other information may include operation and maintenance records, 
summaries of adaptive management activities, or any other information 
that is relevant to determining compliance with the terms of the 
facility's Technology Operation and Installation Plan and/or 
Restoration Plan.


Sec.  125.108  What are Approved Design and Construction Technologies?

OPTION A FOR PARAGRAPH (a)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 50 MGD or more, located on any waterbody type or the 
regulatory option that defines a Phase III existing facility as one 
with design intake flows 200 MGD or more, located on any waterbody 
type]:

    (a) The following technologies constitute approved design and 
construction technologies for purposes of Sec.  125.103(a)(4):
    (1) Submerged cylindrical wedgewire screen technology, if you meet 
the following conditions:
    (i) Your cooling water intake structure is located in a freshwater 
river or stream;
    (ii) Your cooling water intake structure is situated such that 
sufficient ambient counter currents exist to promote cleaning of the 
screen face;
    (iii) Your maximum through-screen design intake velocity is 0.5 ft/
s or less;
    (iv) The slot size is appropriate for the size of eggs, larvae, and 
juveniles of all

[[Page 68560]]

fish and shellfish to be protected at the site; and
    (v) Your entire main cooling water intake flow is directed through 
the technology. Small flows totaling less than 2 MGD for auxiliary 
cooling uses are excluded from this provision.
    (2) A technology that has been approved in accordance with the 
process described in paragraph (b) of this section.

OPTION B FOR PARAGRAPH (a)--[This language reflects the regulatory 
option that defines a Phase III existing facility as one with design 
intake flows of 100 MGD or more, located on oceans, estuaries, tidal 
rivers, or one of the Great Lakes]:

    (a) A design and construction technology may be approved for use in 
accordance with the compliance alternative in Sec.  125.103(a)(4). The 
technology must be approved in accordance with the process described in 
paragraph (b) of this section.
    (b) You or any other interested person may submit a request to the 
Director that a technology be approved in accordance with the 
compliance alternative in Sec.  125.103(a)(4) after providing the 
public with notice and an opportunity to comment on the request for 
approval of the technology. If the Director approves the technology, it 
may be used by all facilities with similar site conditions under the 
Director's jurisdiction. Requests for approval of a technology must be 
submitted to the Director and include the following information:
    (1) A detailed description of the technology;
    (2) A list of design criteria for the technology and site 
characteristics and conditions that each facility must have in order to 
ensure that the technology can consistently meet the appropriate 
impingement mortality and entrainment performance standards in Sec.  
125.103(b); and
    (3) Information and data sufficient to demonstrate that facilities 
under the jurisdiction of the Director can meet the applicable 
impingement mortality and entrainment performance standards in Sec.  
125.103(b) if the applicable design criteria and site characteristics 
and conditions are present at the facility.
    3. Add subpart N to part 125 to read as follows:
Subpart N--Requirements Applicable to Cooling Water Intake Structures 
for New Offshore Oil and Gas Extraction Facilities Under Section 316(b) 
of the Act
Sec.
125.130 What are the purpose and scope of this subpart?
125.131 Who is subject to this subpart?
125.132 When must I comply with this subpart?
125.133 What special definitions apply to this subpart?
125.134 As an owner or operator of a new offshore oil and gas 
extraction facility, what must I do to comply with this subpart?
125.135 May alternative requirements be authorized?
125.136 As an owner or operator of a new offshore oil and gas 
extraction facility, what must I collect and submit when I apply for 
my new or reissued NPDES permit?
125.137 As an owner or operator of a new offshore oil and gas 
extraction facility, must I perform monitoring?
125.138 As an owner or operator of a new offshore oil and gas 
extraction facility, must I keep records and report?
125.139 As the Director, what must I do to comply with the 
requirements of this subpart?

Subpart N--Requirements Applicable to Cooling Water Intake 
Structures for New Offshore Oil and Gas Extraction Facilities Under 
Section 316(b) of the Act


Sec.  125.130  What are the purpose and scope of this subpart?

    (a) This subpart establishes requirements that apply to the 
location, design, construction, and capacity of cooling water intake 
structures at new offshore oil and gas extraction facilities. The 
purpose of these requirements is to establish the best technology 
available for minimizing adverse environmental impact associated with 
the use of cooling water intake structures at these facilities. These 
requirements are implemented through National Pollutant Discharge 
Elimination System (NPDES) permits issued under section 402 of the 
Clean Water Act (CWA).
    (b) This subpart implements section 316(b) of the CWA for new 
offshore oil and gas extraction facilities. Section 316(b) of the CWA 
provides that any standard established pursuant to sections 301 or 306 
of the CWA and applicable to a point source shall require that the 
location, design, construction, and capacity of cooling water intake 
structures reflect the best technology available for minimizing adverse 
environmental impact.
    (c) New offshore oil and gas extraction facilities that do not meet 
the threshold requirements regarding amount of water withdrawn or 
percentage of water withdrawn for cooling water purposes in Sec.  
125.131(a) must meet requirements determined by the Director on a case-
by-case, best professional judgement (BPJ) basis.
    (d) Nothing in this subpart shall be construed to preclude or deny 
the right of any State or political subdivision of a State or any 
interstate agency under section 510 of the CWA to adopt or enforce any 
requirement with respect to control or abatement of pollution that is 
more stringent than those required by Federal law.


Sec.  125.131  Who is subject to this subpart?

    (a) This subpart applies to a new offshore oil and gas extraction 
facility if it meets all of the following criteria:
    (1) It is a point source that uses or proposes to use a cooling 
water intake structure;
    (2) It has at least one cooling water intake structure that uses at 
least 25 percent of the water it withdraws for cooling purposes as 
specified in paragraph (c) of this section; and
    (3) It has a design intake flow greater than two (2) million 
gallons per day (MGD).
    (b) Use of a cooling water intake structure includes obtaining 
cooling water by any sort of contract or arrangement with an 
independent supplier (or multiple suppliers) of cooling water if the 
supplier or suppliers withdraw(s) water from waters of the United 
States. Use of cooling water does not include obtaining cooling water 
from a public water system or the use of treated effluent that 
otherwise would be discharged to a water of the U.S. This provision is 
intended to prevent circumvention of these requirements by creating 
arrangements to receive cooling water from an entity that is not itself 
a point source.
    (c) The threshold requirement that at least 25 percent of water 
withdrawn be used for cooling purposes must be measured on an average 
monthly basis. A new offshore oil and gas extraction facility meets the 
25 percent cooling water threshold if, based on the new facility's 
design, any monthly average over a year for the percentage of cooling 
water withdrawn is expected to equal or exceed 25 percent of the total 
water withdrawn.
    (d) Neither this subpart nor Subpart I applies to seafood 
processing vessels and offshore liquefied natural gas import terminals 
that are new facilities as defined in 40 CFR 125.83. Seafood processing 
vessels and offshore liquefied natural gas import terminals must meet 
requirements established by the Director on a case-by-case, best 
professional judgment (BPJ) basis.


Sec.  125.132  When must I comply with this subpart?

    You must comply with this subpart when an NPDES permit containing 
requirements consistent with this subpart is issued to you.

[[Page 68561]]

Sec.  125.133  What special definitions apply to this subpart?

    The following special definitions apply to this subpart:
    Annual mean flow means the average of daily flows over a calendar 
year. Historical data (up to 10 years) must be used where available.
    Cooling water means water used for contact or noncontact cooling, 
including water used for equipment cooling, evaporative cooling tower 
makeup, and dilution of effluent heat content. The intended use of the 
cooling water is to absorb waste heat rejected from the process or 
processes used, or from auxiliary operations on the facility's 
premises. Cooling water that is used in another industrial process 
either before or after it is used for cooling is considered process 
water for the purposes of calculating the percentage of a new offshore 
oil and gas extraction facility's intake flow that is used for cooling 
purposes in Sec.  125.131(c).
    Cooling water intake structure means the total physical structure 
and any associated constructed waterways used to withdraw cooling water 
from waters of the U.S. The cooling water intake structure extends from 
the point at which water is withdrawn from the surface water source up 
to, and including, the intake pumps.
    Design intake flow means the value assigned (during the facility's 
design) to the total volume of water withdrawn from a source water body 
over a specific time period.
    Design intake velocity means the value assigned (during the design 
of a cooling water intake structure) to the average speed at which 
intake water passes through the open area of the intake screen (or 
other device) against which organisms might be impinged or through 
which they might be entrained.
    Entrainment means the incorporation of all life stages of fish and 
shellfish with intake water flow entering and passing through a cooling 
water intake structure and into a cooling water system.
    Estuary means a semi-enclosed body of water that has a free 
connection with open seas and within which the seawater is measurably 
diluted with fresh water derived from land drainage. The salinity of an 
estuary exceeds 0.5 parts per thousand (by mass) but is typically less 
than 30 parts per thousand (by mass).
    Fixed facility means a bottom founded offshore oil and gas 
extraction facility permanently attached to the seabed or subsoil of 
the outer continental shelf (e.g., platforms, guyed towers, articulated 
gravity platforms) or a buoyant facility securely and substantially 
moored so that it cannot be moved without a special effort (e.g., 
tension leg platforms, permanently moored semi-submersibles) and which 
is not intended to be moved during the production life of the well. 
This definition does not include mobile offshore drilling units (MODUs) 
(e.g., drill ships, temporarily moored semi-submersibles, jack-ups, 
submersibles, tender-assisted rigs, and drill barges).
    Hydraulic zone of influence means that portion of the source 
waterbody hydraulically affected by the cooling water intake structure 
withdrawal of water.
    Impingement means the entrapment of all life stages of fish and 
shellfish on the outer part of an intake structure or against a 
screening device during periods of intake water withdrawal.
    Maximize means to increase to the greatest amount, extent, or 
degree reasonably possible.
    Minimize means to reduce to the smallest amount, extent, or degree 
reasonably possible.
    Minimum ambient source water surface elevation means the mean low 
tidal water level for estuaries or oceans. The mean low tidal water 
level is the average height of the low water over at least 19 years.
    New offshore oil and gas extraction facility means any building, 
structure, facility, or installation that:
    (1) Meets the definition of a ``new source'' or ``new discharger'' 
in 40 CFR 122.2 and 122.29(b)(1) and (4);
    (2) Is regulated by the Offshore and Coastal Subcategories of the 
Oil and Gas Extraction Point Source Category Effluent Guidelines in 40 
CFR 435.10 or 40 CFR 435.40; and
    (3) Commenced construction after [60 days from publication of the 
final rule].
    Ocean means marine open coastal waters with a salinity greater than 
or equal to 30 parts per thousand (by mass).
    Offshore liquefied natural gas (LNG) import terminal means any 
facility located in waters defined in 40 CFR 435.10 or 40 CFR 435.40 
that liquefies, re-gasifies, transfers, or stores liquefied natural 
gas.
    Sea chest means the underwater compartment or cavity within the 
facility or vessel hull or pontoon through which sea water is drawn in 
(for cooling and other purposes) or discharged.
    Seafood processing vessel means any offshore or nearshore, 
floating, mobile, facility engaged in the processing of fresh, frozen, 
canned, smoked, salted or pickled seafood, seafood paste, mince, or 
meal.
    Source water means the water body (waters of the U.S.) from which 
the cooling water is withdrawn.
    Tidal excursion means the horizontal distance along the estuary or 
tidal river that a particle moves during one tidal cycle of ebb and 
flow.
    Tidal river means the most seaward reach of a river or stream where 
the salinity is typically less than or equal to 0.5 parts per thousand 
(by mass) at a time of annual low flow and whose surface elevation 
responds to the effects of coastal lunar tides.


Sec.  125.134  As an owner or operator of a new offshore oil and gas 
extraction facility, what must I do to comply with this subpart?

    (a)(1) The owner or operator of a new offshore oil and gas 
extraction facility must comply with:
    (i) Track I in paragraph (b) or Track II in paragraph (c) of this 
section, if it is a fixed facility; or
    (ii) Track I in paragraph (b) of this section, if it is not a fixed 
facility.
    (2) In addition to meeting the requirements in paragraph (b) or (c) 
of this section, the owner or operator of a new offshore oil and gas 
extraction facility may be required to comply with paragraph (d) of 
this section.
    (b) Track I requirements for new offshore oil and gas extraction 
facilities. (1)(i) New offshore oil and gas extraction facilities that 
withdraw greater than 2 MGD, do not employ sea chests as cooling water 
intake structures, and are fixed facilities must comply with all of the 
requirements in paragraphs (b)(2) through (8) of this section.
    (ii) New offshore oil and gas extraction facilities that withdraw 
greater than 2 MGD, employ sea chests as cooling water intake 
structures, and are fixed facilities must comply with the requirements 
in paragraphs (b)(2), (3), (4), (6), (7), and (8) of this section.
    (iii) New offshore oil and gas extraction facilities that withdraw 
greater than 2 MGD and are not fixed facilities must comply with the 
requirements in paragraphs (b)(2), (4), (6), (7), and (8) of this 
section.
    (2) You must design and construct each cooling water intake 
structure at your facility to a maximum through-screen design intake 
velocity of 0.5 ft/s;
    (3) For cooling water intake structures located in an estuary or 
tidal river, the total design intake flow over one tidal cycle of ebb 
and flow must be no greater than one (1) percent of the volume of the 
water column within the area centered about the opening of the intake 
with a diameter defined by the distance of one tidal excursion at the 
mean low water level;

[[Page 68562]]

    (4) You must select and implement design and construction 
technologies or operational measures for minimizing impingement 
mortality of fish and shellfish if the Director determines that:
    (i) There are threatened or endangered or otherwise protected 
federal, state, or tribal species, or critical habitat for these 
species, within the hydraulic zone of influence of the cooling water 
intake structure; or
    (ii) Based on information submitted by any fishery management 
agency(ies) or other relevant information, there are migratory and/or 
sport or commercial species of impingement concern to the Director that 
pass through the hydraulic zone of influence of the cooling water 
intake structure; or
    (iii) Based on information submitted by any fishery management 
agency(ies) or other relevant information, that the proposed facility, 
after meeting the technology-based performance requirements in 
paragraphs (b)(2) and (5) of this section, would still contribute 
unacceptable stress to the protected species, critical habitat of those 
species, or species of concern;
    (5) You must select and implement design and construction 
technologies or operational measures for minimizing entrainment of 
entrainable life stages of fish and shellfish;
    (6) You must submit the applicable application information required 
in 40 CFR 122.21(r) and Sec.  125.136(b). If you are a fixed facility 
you must submit the information required in 40 CFR 122.21(r)(2) (except 
(r)(2)(iv)), (3), and (4) and Sec.  125.136(b) of this subpart as part 
of your application. If you are a not a fixed facility, you must only 
submit the information required in 40 CFR 122.21(r)(2)(iv), (r)(3) 
(except r(3)(ii)) and Sec.  125.136(b) as part of your application.
    (7) You must implement the monitoring requirements specified in 
Sec.  125.137;
    (8) You must implement the recordkeeping requirements specified in 
Sec.  125.138.
    (c) Track II requirements for new offshore oil and gas extraction 
facilities. The owner or operator of a new offshore oil and gas 
extraction facility that is a fixed facility and chooses to comply 
under Track II must comply with the following requirements:
    (1) You must demonstrate to the Director that the technologies 
employed will reduce the level of adverse environmental impact from 
your cooling water intake structures to a comparable level to that 
which you would achieve were you to implement the applicable 
requirements of paragraph (b)(2) and for fixed facilities without sea 
chests, paragraph (b)(5) of this section. This demonstration must 
include a showing that the impacts to fish and shellfish, including 
important forage and predator species will be comparable to those which 
would result if you were to implement the requirements of paragraph 
(b)(2) and for fixed facilities without sea chests, paragraph (b)(5) of 
this section. In identifying such species, the Director may consider 
information provided by any fishery management agency(ies) along with 
data and information from other sources.
    (2) For cooling water intake structures located in an estuary or 
tidal river, the total design intake flow over one tidal cycle of ebb 
and flow must be no greater than one (1) percent of the volume of the 
water column within the area centered about the opening of the intake 
with a diameter defined by the distance of one tidal excursion at the 
mean low water level.
    (3) You must submit the application information required in 40 CFR 
122.21(r) and Sec.  125.136(c).
    (4) You must implement the monitoring requirements specified in 
Sec.  125.137.
    (5) You must implement the record-keeping requirements specified in 
Sec.  125.138.
    (d) You must comply with any more stringent requirements relating 
to the location, design, construction, and capacity of a cooling water 
intake structure or monitoring requirements at a new offshore oil and 
gas extraction facility that the Director deems are reasonably 
necessary to comply with any provision of Federal or State law, 
including compliance with applicable state water quality standards 
(including designated uses, criteria, and antidegradation 
requirements).


Sec.  125.135  May alternative requirements be authorized?

    (a) Any interested person may request that alternative requirements 
less stringent than those specified in Sec.  125.134(a) through (d) be 
imposed in the permit. The Director may establish alternative 
requirements less stringent than the requirements of Sec.  125.134(a) 
through (d) only if:
    (1) There is an applicable requirement under Sec.  125.134(a) 
through (d);
    (2) The Director determines that data specific to the facility 
indicate that compliance with the requirement at issue would result in 
compliance costs wholly out of proportion to the costs EPA considered 
in establishing the requirement at issue or would result in significant 
adverse impacts on local water resources other than impingement or 
entrainment, or significant adverse impacts on energy markets;
    (3) The alternative requirement requested is no less stringent than 
justified by the wholly out of proportion cost or the significant 
adverse impacts on local water resources other than impingement or 
entrainment, or significant adverse impacts on energy markets; and
    (4) The alternative requirement will ensure compliance with other 
applicable provisions of the Clean Water Act and any applicable 
requirement of Federal or State law.
    (b) The burden is on the person requesting the alternative 
requirement to demonstrate that alternative requirements should be 
authorized.


Sec.  125.136  As an owner or operator of a new offshore oil and gas 
extraction facility, what must I collect and submit when I apply for my 
new or reissued NPDES permit?

    (a)(1) As an owner or operator of a new offshore oil and gas 
extraction facility, you must submit to the Director a statement that 
you intend to comply with either:
    (i) The Track I requirements for new offshore oil and gas 
extraction facilities in Sec.  125.134(b); or
    (ii) If you are a fixed facility, the Track II requirements in 
Sec.  125.134(c).
    (2) You must also submit the application information required by 40 
CFR 122.21(r) and the information required in either paragraph (b) of 
this section for Track I or, if you are a fixed facility that chooses 
to comply under Track II, paragraph (c) of this section for Track II 
when you apply for a new or reissued NPDES permit in accordance with 40 
CFR 122.21.
    (b) Track I application requirements. To demonstrate compliance 
with Track I requirements in Sec.  125.134(b), you must collect and 
submit to the Director the information in paragraphs (b)(1) through (3) 
of this section.
    (1) Velocity information. You must submit the following information 
to the Director to demonstrate that you are complying with the 
requirement to meet a maximum through-screen design intake velocity of 
no more than 0.5 ft/s at each cooling water intake structure as 
required in Sec.  125.134(b)(2):
    (i) A narrative description of the design, structure, equipment, 
and operation used to meet the velocity requirement; and
    (ii) Design calculations showing that the velocity requirement will 
be met at minimum ambient source water surface elevations (based on 
best professional judgment using available hydrological data) and 
maximum head loss across the screens or other device.

[[Page 68563]]

    (2) Source waterbody flow information. If you are a fixed facility 
and your cooling water intake structure is located in an estuary or 
tidal river, you must provide the mean low water tidal excursion 
distance and any supporting documentation and engineering calculations 
to show that your cooling water intake structure facility meets the 
flow requirements in Sec.  125.134(b)(3).
    (3) Design and Construction Technology Plan. To comply with Sec.  
125.134(b)(4) and/or (5), if applicable, you must submit to the 
Director the following information in a Design and Construction 
Technology Plan:
    (i) If the Director determines that additional impingement 
requirements should be included in your permit:
    (A) Information to demonstrate whether or not you meet the criteria 
in Sec.  125.134(b)(4);
    (B) Delineation of the hydraulic zone of influence for your cooling 
water intake structure;
    (ii) New offshore oil and gas extraction facilities required to 
install design and construction technologies and/or operational 
measures must develop a plan explaining the technologies and measures 
you have selected. (Examples of appropriate technologies include, but 
are not limited to, increased opening to cooling water intake structure 
to decrease design intake velocity, wedgewire screens, fixed screens, 
velocity caps, location of cooling water intake opening in waterbody, 
etc. Examples of appropriate operational measures include, but are not 
limited to, seasonal shutdowns or reductions in flow, continuous 
operations of screens, etc.) The plan must contain the following 
information, if applicable:
    (A) A narrative description of the design and operation of the 
design and construction technologies, including fish-handling and 
return systems, that you will use to maximize the survival of those 
species expected to be most susceptible to impingement. Provide 
species-specific information that demonstrates the efficacy of the 
technology;
    (B) To demonstrate compliance with 125.134(b)(5), if applicable, a 
narrative description of the design and operation of the design and 
construction technologies that you will use to minimize entrainment of 
those species expected to be the most susceptible to entrainment. 
Provide species-specific information that demonstrates the efficacy of 
the technology; and
    (C) Design calculations, drawings, and estimates to support the 
descriptions provided in paragraphs (b)(3)(iii)(A) and (B) of this 
section.
    (c) Application requirements for Track II. If you are a fixed 
facility and have chosen to comply with the requirements of Track II in 
Sec.  125.134(c) you must collect and submit the following information:
    (1) Source waterbody flow information. If your cooling water intake 
structure is located in an estuary or tidal river, you must provide the 
mean low water tidal excursion distance and any supporting 
documentation and engineering calculations to show that your cooling 
water intake structure facility meets the flow requirements in Sec.  
125.134(c)(2);
    (2) Track II Comprehensive Demonstration Study. You must perform 
and submit the results of a Comprehensive Demonstration Study (Study). 
This information is required to characterize the source water baseline 
in the vicinity of the cooling water intake structure(s), characterize 
operation of the cooling water intake(s), and to confirm that the 
technology(ies) proposed and/or implemented at your cooling water 
intake structure reduce the impacts to fish and shellfish to levels 
comparable to those you would achieve were you to implement the 
applicable requirements in Sec.  125.134(b)
    (i) To meet the ``comparable level'' requirement, you must 
demonstrate that:
    (A) You have reduced impingement mortality of all life stages of 
fish and shellfish to 90 percent or greater of the reduction that would 
be achieved through the applicable requirements in Sec.  125.134(b)(2); 
and
    (B) If you are a facility without sea chests, you have minimized 
entrainment of entrainable life stages of fish and shellfish in 
accordance with Sec.  125.134(b)(5);
    (ii) You must develop and submit a plan to the Director containing 
a proposal for how information will be collected to support the study. 
The plan must include:
    (A) A description of the proposed and/or implemented 
technology(ies) to be evaluated in the Study;
    (B) A list and description of any historical studies characterizing 
the physical and biological conditions in the vicinity of the proposed 
or actual intakes and their relevancy to the proposed Study. If you 
propose to rely on existing source water body data, it must be no more 
than 5 years old, you must demonstrate that the existing data are 
sufficient to develop a scientifically valid estimate of potential 
impingement mortality and (if applicable) entrainment impacts, and 
provide documentation showing that the data were collected using 
appropriate quality assurance/quality control procedures;
    (C) Any public participation or consultation with Federal or State 
agencies undertaken in developing the plan; and
    (D) A sampling plan for data that will be collected using actual 
field studies in the source water body. The sampling plan must document 
all methods and quality assurance procedures for sampling, and data 
analysis. The sampling and data analysis methods you propose must be 
appropriate for a quantitative survey and based on consideration of 
methods used in other studies performed in the source water body. The 
sampling plan must include a description of the study area (including 
the area of influence of the cooling water intake structure and at 
least 100 meters beyond); taxonomic identification of the sampled or 
evaluated biological assemblages (including all life stages of fish and 
shellfish); and sampling and data analysis methods; and
    (iii) You must submit documentation of the results of the Study to 
the Director. Documentation of the results of the Study must include:
    (A) Source Water Biological Study. The Source Water Biological 
Study must include:
    (1) A taxonomic identification and characterization of aquatic 
biological resources including: a summary of historical and 
contemporary aquatic biological resources; determination and 
description of the target populations of concern (those species of fish 
and shellfish and all life stages that are most susceptible to 
impingement and entrainment); and a description of the abundance and 
temporal/spatial characterization of the target populations based on 
the collection of multiple years of data to capture the seasonal and 
daily activities (e.g., spawning, feeding and water column migration) 
of all life stages of fish and shellfish found in the vicinity of the 
cooling water intake structure;
    (2) An identification of all threatened or endangered species that 
might be susceptible to impingement and entrainment by the proposed 
cooling water intake structure(s); and
    (3) A description of additional chemical, water quality, and other 
anthropogenic stresses on the source waterbody.
    (B) Evaluation of potential cooling water intake structure effects. 
This evaluation will include:
    (1) Calculations of the reduction in impingement mortality and, if 
applicable, entrainment of all life stages

[[Page 68564]]

of fish and shellfish that would need to be achieved by the 
technologies you have selected to implement to meet requirements under 
Track II. To do this, you must determine the reduction in impingement 
mortality and entrainment that would be achieved by implementing the 
requirements of Sec.  125.134(b)(2) and, for facilities without sea 
chests, Sec.  125.134(b)(5) of Track I at your site.
    (2) An engineering estimate of efficacy for the proposed and/or 
implemented technologies used to minimize impingement mortality and (if 
applicable) entrainment of all life stages of fish and shellfish and 
maximize survival of impinged life stages of fish and shellfish. You 
must demonstrate that the technologies reduce impingement mortality and 
(if applicable) entrainment of all life stages of fish and shellfish to 
a comparable level to that which you would achieve were you to 
implement the requirements in Sec.  125.134(b)(2) and, for facilities 
without sea chests, Sec.  125.134(b)(5) of Track I. The efficacy 
projection must include a site-specific evaluation of technology(ies) 
suitability for reducing impingement mortality and (if applicable) 
entrainment based on the results of the Source Water Biological Study 
in paragraph (c)(2)(iv)(A) of this section. Efficacy estimates may be 
determined based on case studies that have been conducted in the 
vicinity of the cooling water intake structure and/or site-specific 
technology prototype studies.
    (C) Verification monitoring plan. You must include in the Study a 
plan to conduct, at a minimum, two years of monitoring to verify the 
full-scale performance of the proposed or implemented technologies, 
operational measures. The verification study must begin at the start of 
operations of the cooling water intake structure and continue for a 
sufficient period of time to demonstrate that the facility is reducing 
the level of impingement mortality and (if applicable) entrainment to 
the level documented in paragraph (c)(2)(iii)(B) of this section. The 
plan must describe the frequency of monitoring and the parameters to be 
monitored. The Director will use the verification monitoring to confirm 
that you are meeting the level of impingement mortality and entrainment 
reduction required in Sec.  125.134(c), and that the operation of the 
technology has been optimized.


Sec.  125.137  As an owner or operator of a new offshore oil and gas 
extraction facility, must I perform monitoring?

    As an owner or operator of a new offshore oil and gas extraction 
facility, you will be required to perform monitoring to demonstrate 
your compliance with the requirements specified in Sec.  125.134 or 
alternative requirements under Sec.  125.135.
    (a) Biological monitoring. (1)(i) Fixed facilities without sea 
chests that choose to comply with the Track I requirements in Sec.  
125.134(b)(1)(i) must monitor for entrainment. These facilities are not 
required to monitor for impingement, unless the Director determines 
that the information would be necessary to evaluate the need for or 
compliance with additional requirements in accordance with Sec.  
125.134(b)(4) or more stringent requirements in accordance with Sec.  
125.134(d).
    (ii) Fixed facilities with sea chests that choose to comply with 
Track I requirements are not required to perform biological monitoring 
unless the Director determines that the information would be necessary 
to evaluate the need for or compliance with additional requirements in 
accordance with Sec.  125.134(b)(4) or more stringent requirements in 
accordance with Sec.  125.134(d).
    (iii) Facilities that are not fixed facilities are not required to 
perform biological monitoring unless the Director determines that the 
information would be necessary to evaluate the need for or compliance 
with additional requirements in accordance with Sec.  125.134(b)(4) or 
more stringent requirements in accordance with Sec.  125.134(d).
    (iv) Fixed facilities with sea chests that choose to comply with 
Track II requirements in accordance with Sec.  125.134(c), must monitor 
for impingement only. Fixed facilities without sea chests, must monitor 
for both impingement and entrainment.
    (2) Monitoring must characterize the impingement rates and (if 
applicable) entrainment rates of commercial, recreational, and forage 
base fish and shellfish species identified in the Source Water Baseline 
Biological Characterization data required by 40 CFR 122.21(r)(4), 
identified in the Comprehensive Demonstration Study required by Sec.  
125.136(c)(2), or as specified by the Director.
    (3) The monitoring methods used must be consistent with those used 
for the Source Water Baseline Biological Characterization data required 
in 40 CFR 122.21(r)(4), those used by the Comprehensive Demonstration 
Study required by Sec.  125.136(c)(2), or as specified by the Director. 
You must follow the monitoring frequencies identified below for at 
least two (2) years after the initial permit issuance. After that time, 
the Director may approve a request for less frequent sampling in the 
remaining years of the permit term and when the permit is reissued, if 
supporting data show that less frequent monitoring would still allow 
for the detection of any seasonal and daily variations in the species 
and numbers of individuals that are impinged or entrained.
    (4) Impingement sampling. You must collect samples to monitor 
impingement rates (simple enumeration) for each species over a 24-hour 
period and no less than once per month when the cooling water intake 
structure is in operation.
    (5) Entrainment sampling. If your facility is subject to the 
requirements of Sec.  125.134(b)(1)(i) or (c), you must collect samples 
to monitor entrainment rates (simple enumeration) for each species over 
a 24-hour period and no less than biweekly during the primary period of 
reproduction, larval recruitment, and peak abundance identified during 
the Source Water Baseline Biological Characterization required by 40 
CFR 122.21(r)(4) or the Comprehensive Demonstration Study required in 
Sec.  125.136(c)(2). You must collect samples only when the cooling 
water intake structure is in operation.
    (b) Velocity monitoring. If your facility uses a surface intake 
screen systems, you must monitor head loss across the screens and 
correlate the measured value with the design intake velocity. The head 
loss across the intake screen must be measured at the minimum ambient 
source water surface elevation (best professional judgment based on 
available hydrological data). The maximum head loss across the screen 
for each cooling water intake structure must be used to determine 
compliance with the velocity requirement in Sec.  125.134(b)(2). If 
your facility uses devices other than surface intake screens, you must 
monitor velocity at the point of entry through the device. You must 
monitor head loss or velocity during initial facility startup, and 
thereafter, at the frequency specified in your NPDES permit, but no 
less than once per quarter.
    (c) Visual or remote inspections. You must either conduct visual 
inspections or employ remote monitoring devices during the period the 
cooling water intake structure is in operation. You must conduct visual 
inspections at least weekly to ensure that any design and construction 
technologies required in Sec.  125.134(b)(4), (b)(5), (c), and/or (d) 
are

[[Page 68565]]

maintained and operated to ensure that they will continue to function 
as designed. Alternatively, you must inspect via remote monitoring 
devices to ensure that the impingement and entrainment technologies are 
functioning as designed.


Sec.  125.138  As an owner or operator of a new offshore oil and gas 
extraction facility, must I keep records and report?

    As an owner or operator of a new offshore oil and gas extraction 
facility you are required to keep records and report information and 
data to the Director as follows:
    (a) You must keep records of all the data used to complete the 
permit application and show compliance with the requirements, any 
supplemental information developed under Sec.  125.136, and any 
compliance monitoring data submitted under Sec.  125.137, for a period 
of at least three (3) years from the date of permit issuance. The 
Director may require that these records be kept for a longer period.
    (b) You must provide the following to the Director in a yearly 
status report:
    (1) For fixed facilities, biological monitoring records for each 
cooling water intake structure as required by Sec.  125.137(a);
    (2) Velocity and head loss monitoring records for each cooling 
water intake structure as required by Sec.  125.137(b); and
    (3) Records of visual or remote inspections as required in Sec.  
125.137(c).


Sec.  125.139  As the Director, what must I do to comply with the 
requirements of this subpart?

    (a) Permit application. As the Director, you must review materials 
submitted by the applicant under 40 CFR 122.21(r), Sec.  125.135, and 
Sec.  125.136 at the time of the initial permit application and before 
each permit renewal or reissuance.
    (1) After receiving the initial permit application from the owner 
or operator of a new offshore oil and gas extraction facility, the 
Director must determine applicable standards in Sec.  125.134 or Sec.  
125.135 to apply to the new offshore oil and gas extraction facility. 
In addition, the Director must review materials to determine compliance 
with the applicable standards.
    (2) For each subsequent permit renewal, the Director must review 
the application materials and monitoring data to determine whether 
requirements, or additional requirements, for design and construction 
technologies or operational measures should be included in the permit.
    (3) For Track II facilities, the Director may review the 
information collection proposal plan required by Sec.  
125.136(c)(2)(ii). The facility may initiate sampling and data 
collection activities prior to receiving comment from the Director.
    (b) Permitting requirements. Section 316(b) requirements are 
implemented for a facility through an NPDES permit. As the Director, 
you must determine, based on the information submitted by the new 
offshore oil and gas extraction facility in its permit application, the 
appropriate requirements and conditions to include in the permit based 
on the track (Track I or Track II), or alternative requirements in 
accordance with Sec.  125.135, the new offshore oil and gas extraction 
facility has chosen to comply with. The following requirements must be 
included in each permit:
    (1) Cooling water intake structure requirements. At a minimum, the 
permit conditions must include the performance standards that implement 
the applicable requirements of Sec.  125.134(b)(2), (3), (4) and (5); 
Sec.  125.134(c)(1) and (2); or Sec.  125.135.
    (i) For a facility that chooses Track I, you must review the Design 
and Construction Technology Plan required in Sec.  125.136(b)(3) to 
evaluate the suitability and feasibility of the technology proposed to 
minimize impingement mortality and (if applicable) entrainment of all 
life stages of fish and shellfish. In the first permit issued, you must 
include a condition requiring the facility to reduce impingement 
mortality and/or entrainment commensurate with the implementation of 
the technologies in the permit. Under subsequent permits, the Director 
must review the performance of the technologies implemented and require 
additional or different design and construction technologies, if needed 
to minimize impingement mortality and/or entrainment of all life stages 
of fish and shellfish. In addition, you must consider whether more 
stringent conditions are reasonably necessary in accordance with Sec.  
125.134(d).
    (ii) For a fixed facility that chooses Track II, you must review 
the information submitted with the Comprehensive Demonstration Study 
information required in Sec.  125.136(c)(2), evaluate the suitability 
of the proposed design and construction technology and/or operational 
measures to determine whether they will reduce both impingement 
mortality and/or entrainment of all life stages of fish and shellfish 
to 90 percent or greater of the reduction that could be achieved 
through Track I. In addition, you must review the Verification 
Monitoring Plan in Sec.  125.136(c)(2)(iii)(C) and require that the 
proposed monitoring begin at the start of operations of the cooling 
water intake structure and continue for a sufficient period of time to 
demonstrate that the technologies and operational measures meet the 
requirements in Sec.  125.134(c)(1). Under subsequent permits, the 
Director must review the performance of the additional and/or different 
technologies or measures used and determine that they reduce the level 
of adverse environmental impact from the cooling water intake 
structures to a comparable level that the facility would achieve were 
it to implement the requirements of Sec.  125.134(b)(2) and, if 
applicable, Sec.  125.134(b)(5).
    (iii) If a facility requests alternative requirements in accordance 
with Sec.  125.135, you must determine if data specific to the facility 
meet the requirements in Sec.  125.135(a) and include in the permit 
requirements that are no less stringent than justified by the wholly 
out of proportion cost or the significant adverse impacts on local 
water resources other than impingement or entrainment, or significant 
adverse impacts on energy markets.
    (2) Monitoring conditions. At a minimum, the permit must require 
the permittee to perform the monitoring required in Sec.  125.137. You 
may modify the monitoring program when the permit is reissued and 
during the term of the permit based on changes in physical or 
biological conditions in the vicinity of the cooling water intake 
structure. The Director may require continued monitoring based on the 
results of the Verification Monitoring Plan in Sec.  
125.136(c)(2)(iii)(C).
    (3) Record keeping and reporting. At a minimum, the permit must 
require the permittee to report and keep records as required by Sec.  
125.138.

[FR Doc. 04-24913 Filed 11-23-04; 8:45 am]
BILLING CODE 6560-50-P