National Pollutant Discharge Elimination System-Cooling Water Intake Structures at Existing Facilities and Phase I Facilities

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 122 and 125

[EPA-HQ-OW-2008-0667, FRL-9289-2]

RIN 2040-AE95

National Pollutant Discharge Elimination System—Cooling Water Intake Structures at Existing Facilities and Phase I Facilities

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would establish requirements under section 316(b) of the Clean Water Act (CWA) for all existing power generating facilities and existing manufacturing and industrial facilities that withdraw more than 2 million gallons per day (MGD) of water from waters of the U.S. and use at least twenty-five (25) percent of the water they withdraw exclusively for cooling purposes. The proposed national requirements, which would be implemented through National Pollutant Discharge Elimination System (NPDES) permits, would establish national requirements applicable to the location, design, construction, and capacity of cooling water intake structures at these facilities by setting requirements that reflect the best technology available (BTA) for minimizing adverse environmental impact. The proposed rule constitutes EPA's response to the remand of the Phase II existing facility rule and the remand of the existing facilities portion of the Phase III rule. In addition, EPA is also responding to the decision in

Riverkeeper

I and proposing to remove from the Phase I new facility rule the restoration-based compliance alternative and the associated monitoring and demonstration requirements. EPA expects this proposed regulation would minimize adverse environmental impacts, including substantially reducing the harmful effects of impingement and entrainment. As a result, the Agency anticipates this proposed rule would help protect ecosystems affected by cooling water intake structures and preserve aquatic organisms and the ecosystems they inhabit in waters used by cooling water intake structures at existing facilities.

DATES:

Comments must be received on or before July 19, 2011.

ADDRESSES:

Submit your comments, identified by Docket No. EPA-HQ-OW-2008-0667 by one of the following methods:

•

http:www.regulations.gov:

Follow the on-line instructions for submitting comments.

•

E-mail: OW-Docket@epa.gov,

Attention Docket ID No. EPA-HQ-OW-2008-0667.

•

Mail:

Water Docket, U.S. Environmental Protection Agency, Mail Code: 4203M, 1200 Pennsylvania Ave., NW., Washington, DC 20460. Attention Docket ID No. EPA-HQ-OW-2008-0667. Please include a total of 3 copies. In addition, please mail a copy of your comments on 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.

•

Hand Delivery:

Water Docket, EPA Docket Center, EPA West Building Room 3334, 1301 Constitution Ave., NW., Washington, DC, Attention Docket ID No. EPA-HQ-OW-2008-0667. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information by calling 202-566-2426.

Instructions:

Direct your comments to Docket No. EPA-HQ-OW-2008-0667. 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.regulations.gov,

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

http://www.regulations.gov

or e-mail. The

http://www.regulations.gov

Web site is an “anonymous access” system, 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

http://www.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.

Docket:

All documents in the docket are listed in the

http://www.regulations.gov

index. Although listed in the index, some information is not publicly available,

e.g.,

CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, will be publicly available only in hard copy. Publicly available docket materials are available either electronically in

http://www.regulations.gov

or in hard copy at the Water Docket in the EPA Docket Center, EPA/DC, EPA West, Room 3334, 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 Paul Shriner at 202-566-1076; e-mail:

shriner.paul@epa.gov.

For additional economic information, contact Erik Helm at 202-566-1049; e-mail:

helm.erik@epa.gov.

For additional biological information, contact Tom Born at 202-566-1001; e-mail:

born.tom@epa.gov.

SUPPLEMENTARY INFORMATION:

What Entities Are Regulated By This Action?

This proposed rule would apply to existing facilities that use cooling water intake structures to withdraw water from waters of the U.S. and have or require a National Pollutant Discharge Elimination System (NPDES) permit issued under Section 402 of the CWA. Existing facilities subject to this regulation would include those with a design intake flow greater than 2 MGD. If a facility meets these conditions, it is subject to today's proposed regulations. If a facility has or requires a NPDES permit but does not meet the 2 MGD intake flow threshold, it would be subject to permit conditions implementing section 316(b), developed by the NPDES permit director, on a case-by-case basis, using best professional judgment. This proposal defines the term “cooling water intake structure” to mean the total physical structure and any associated waterways used to withdraw water from waters of the U.S., provided that at least twenty-five percent of the water withdrawn is used for cooling purposes. 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. Generally,

facilities that meet these criteria fall into two major groups: steam electric generating facilities and manufacturing facilities.

The following table lists the types of entities that are potentially subject to this proposed rule. This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. Other types of entities not listed in the table could also be regulated.

Category

Examples of regulated entities

Standard Industrial Classification Codes

North American Industry Codes (NAIC)

Federal, State and Local Government

Operators of steam electric generating point source dischargers that employ cooling water intake structures.

4911 and 493

221111, 221112, 221113, 221119, 221121, 221122, 221111, 221112, 221113, 221119, 221121, 221122.

Industry

Operators of industrial point source dischargers that employ cooling water intake structures.

See below

See below.

Steam electric generating

4911 and 493

221111, 221112, 221113, 221119, 221121, 221122, 221111, 221112, 221113, 221119, 221121, 221122.

Agricultural production

0133

111991, 11193.

Metal mining

1011

21221.

Oil and gas extraction (Excluding offshore and coastal subcategories)

1311, 1321

211111, 211112.

Mining and quarrying of nonmetallic minerals

1474

212391.

Food and kindred products

2046, 2061, 2062, 2063, 2075, 2085

311221, 311311, 311312, 311313, 311222, 311225, 31214.

Tobacco products

2141

312229, 31221.

Textile mill products

2211

31321.

Lumber and wood products, except furniture

2415, 2421, 2436, 2493

321912, 321113, 321918, 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, 2851, and 2879)

325 (except 325182, 32591, 32551, 32532).

Petroleum refining and related industries

2911, 2999

32411, 324199.

Rubber and miscellaneous plastics products

3011, 3069

326211, 31332, 326192, 326299.

Stone, clay, glass, and concrete products

3241

32731.

Primary metal industries

3312, 3313, 3315, 3316, 3317, 3334, 3339, 3353, 3363, 3365, 3366

324199, 331111, 331112, 331492, 331222, 332618, 331221, 22121, 331312, 331419, 331315, 331521, 331524, 331525.

Fabricated metal products, except machinery and transportation equipment

3421, 3499

332211, 337215, 332117, 332439, 33251, 332919, 339914, 332999.

Industrial and commercial machinery and computer equipment

3523, 3531

333111, 332323, 332212, 333922, 22651, 333923, 33312.

Transportation equipment

3724, 3743, 3764

336412, 333911, 33651, 336416.

Measuring, analyzing, and controlling instruments; photographic, medical, and optical goods; watches and clocks

3861

333315, 325992.

Electric, gas, and sanitary services

4911, 4931, 4939, 4961

221111, 221112, 221113, 221119, 221121, 221122, 22121, 22133.

Educational services

8221

61131.

Engineering, accounting, research, management and related services

8731

54171.

To determine whether your facility could be regulated by this action, you should carefully examine the applicability criteria in § 125.91 of the proposed rule. If you have questions regarding the applicability of this action to a particular entity, consult the person listed for technical information in the preceding

FOR FURTHER INFORMATION CONTACT

section.

Supporting Documentation

1. Docket

EPA has established an official public docket for this action under Docket ID No. EPA-HQ-OW-2008-0667. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include information claimed as Confidential Business Information (CBI) or other information the disclosure of which is restricted by statute. For information on how to access materials in the docket, refer to the preceding

ADDRESSES

section. To view docket materials, please call ahead to schedule

an appointment. Every user is entitled to copy 266 pages per day before incurring a charge. The Docket may charge 15 cents for each page over the 266-page limit plus an administrative fee of $25.00.

2. Electronic Access

You may access this

Federal Register

document and the docket electronically, as well as submit public comments, through the Web site

http://www.regulations.gov

by searching for Docket ID No. EPA-HQ-OW-2008-0667. For additional information about the public docket, visit the EPA Docket Center homepage at

http://www.epa.gov/epahome/dockets.htm.

3. Technical Support Documents

The proposed regulation is supported by three major documents:

1. Economic and Benefits Analysis for the Proposed Section 316(b) Existing Facilities Rule (EPA-821-R-11-003), hereafter referred to as the Economic and Benefits Analysis (EBA or more simply EA). This document presents the analysis of compliance costs, closures, energy supply effects, and a summary of benefits associated with the proposed rule.

2. Environmental and Economic Benefits Analysis for the Proposed Section 316(b) Existing Facilities Rule (EPA-821-R-11-002), hereafter referred to as the Environmental and Economic Benefits Analysis (EEBA). 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) Existing Facilities Rule (EPA-821-R-11-001), hereafter referred to as the Technical Development Document (TDD). 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 proposed rule requirements.

Table of Contents

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

A. Legal Authority

B. Purpose of Today's Proposed Regulation

C. Background

II. Proposed Amendments Related to the Phase I Rule

A. Restoration Provisions Not Authorized

B. Corrections to Subpart I

III. What new information has EPA obtained or developed in support of this proposed rule?

A. Additional Data

B. Implementation Experience

C. New or Revised Analyses

IV. Revised Industry Description

A. Water Use in Power Production and Manufacturing

B. Overview of Electric Generators

C. Overview of Manufacturers

D. Other Existing Facilities

V. Scope and Applicability of the Proposed Section 316(b) Existing Facility Rule

A. General Applicability

B. What is an “existing facility” for purposes of the section 316(b) Phase II rule?

C. What is “cooling water” and what is a “cooling water intake structure?”

D. Would my facility be covered if it is a point source discharger?

E. Would my facility be covered if it withdraws water from waters of the U.S.? What if my facility obtains cooling water from an independent supplier?

F. What intake flow thresholds result in an existing facility being subject to this proposed rule?

G. Offshore Oil and Gas Facilities, Seafood Processing Vessels or LNG Import Terminals BTA Requirements Under This Proposed Rule

H. What is a “new unit” and how are new units addressed under this proposed rule?

VI. BTA Consideration

A. EPA's Approach to BTA

B. Technologies Considered To Minimize Impingement and Entrainment

C. Technology Basis for Today's Proposed Regulation

D. Options Considered for Today's Proposed Regulation

E. Option Selection

F. Four Factors Support EPA's Decision To Establish Site-Specific BTA Entrainment Controls for Existing Facilities

G. The Process for Establishing Site-Specific BTA Entrainment Controls

H. Implementation

I. EPA's Costing of the Preferred Option

J. Consideration of Cost/Benefit on a Site-Specific Basis

VII. Economic Impact of the Proposed Rule

A. Overview of Costs to Complying Facilities and Federal and State Governments

B. Development of Compliance Costs

C. Social Cost of the Regulatory Options

D. Economic Impact

VIII. Benefits Analysis

A. Introduction

B. Regional Study Design

C. Physical Impacts of I&E Mortality

D. National Benefits of Today's Considered Options

E. Uncertainty and Limitations

IX. Implementation

A. How would the proposed requirements be applied?

B. When would affected facilities be required to comply?

C. What are my requirements?

D. What information must I submit in my permit application?

E. When are application studies due?

F. What are the monitoring requirements in today's proposal for existing facilities?

G. What reports would I be required to submit?

H. What records would I be required to keep?

I. Are there other federal statutes that could be incorporated into a facility's permit?

J. What is the director's role under today's proposal?

X. Related Acts of Congress, Executive Orders, and Agency Initiatives

A. Executive Order 12866: Regulatory Planning and Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act (RFA)

D. Unfunded Mandates Reform Act (UMRA)

E. Executive Order 13132: Federalism

F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

G. Executive Order 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. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

K. Executive Order 13158: Marine Protected Areas

XI. Solicitation of Data and Comments

A. General Solicitation of Comment

B. Specific Solicitation of Comments and Data

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

A. Legal Authority

Today's proposal is issued under the authority of sections 101, 301, 304, 308, 316, 401, 402, 501, and 510 of the Clean Water Act (CWA), 33 U.S.C. 1251, 1311, 1314, 1318, 1326, 1341, 1342, 1361, and 1370.

B. Purpose of Today's Proposed Regulation

The purpose of today's proposed rule is to propose national requirements for cooling water intake structures at existing facilities that implement section 316(b) of the CWA. Section 316(b) of the CWA provides that any standard established pursuant to section 301 or 306 of the CWA 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 (BTA) for minimizing adverse environmental impact.

EPA first promulgated regulations to implement section 316(b) in 1976. The U.S. Court of Appeals for the Fourth Circuit remanded these regulations to EPA which withdrew them, leaving in place a provision not remanded that directed permitting authorities to determine BTA for each facility on a case-by-case basis. In 1995, EPA entered into a consent decree establishing a schedule for taking final action on regulations to implement section 316(b).

Pursuant to a schedule in the amended decree providing for final action on regulations in three phases, in 2001, EPA published a Phase I rule governing new facilities. The U.S. Court of Appeals for the Second Circuit, while generally upholding the rule, rejected the provisions allowing restoration to be used to meet the requirements of the rule.

Riverkeeper, Inc.

v.

U.S. EPA,

358 F. 3d 174, 181 (2d Cir.2004) (“

Riverkeeper

I”). Today's proposed rule proposes to delete these restoration provisions.

In 2004, EPA published the Phase II rule applicable to existing power plants with a design intake flow greater than or equal to 50 MGD. Following challenge, the Second Circuit remanded numerous aspects of the rule to the Agency, including the Agency's decision to reject closed-cycle cooling as BTA. The Agency made this determination, in part, based on a consideration of costs and benefits. The Second Circuit concluded that a comparison of the costs and benefits of closed-cycle cooling was not a proper factor to consider in determining BTA.

Riverkeeper, Inc.

v.

U.S.EPA,

475 F. 3d 83 (2d Cir. 2007) (“

Riverkeeper

II”). In 2008, the U.S, Supreme Court agreed to review the

Riverkeeper

II decision limited to a single issue: whether section 316(b) authorizes EPA to balance costs and benefits in 316(b) rulemaking. In April 2009, in

Entergy Corp.

v.

Riverkeeper Inc.,

129 S. Ct. 1498, 68 ERC 1001 (2009) (40 ER 770, 4/3/09), the Supreme Court ruled that it is permissible under section 316(b) to consider costs and benefits in determining the best technology available to minimize adverse environmental impacts. The court left it to EPA's discretion to decide whether and how to consider costs and benefits in 316(b) actions, including rulemaking and BPJ determinations. The Supreme Court remanded the rule to the Second Circuit. Subsequently, EPA asked the Second Circuit to return the rule to the Agency for further review of the rule.

In 2006, EPA published the Phase III rule. The Phase III rule establishes 316(b) requirements for certain new offshore oil and gas extraction facilities. In addition, EPA determined that, in the case of electric generators with a design intake flow of less than 50 MGD and existing manufacturing facilities, 316(b) requirements should be established by NPDES permit directors on a case-by-case basis using their best professional judgment. In July 2010, the U. S. Court of Appeals for the Fifth Circuit issued a decision upholding EPA's rule for new offshore oil and gas extraction facilities. Further, the court granted the request of EPA and environmental petitioners in the case to remand the existing facility portion of the rule back to the Agency for further rulemaking. See section C.2 below for a more detailed discussion of the history of EPA's actions to address standards for cooling water intake structures.

In response to the remand in Phase II, the remand of the existing facility portion of the Phase III rule, and the associated Supreme Court decision, EPA is today proposing a number of requirements. Most significantly, EPA is proposing requirements reflecting the best technology available for minimizing adverse environmental impact, applicable to the location, design, construction, and capacity of cooling water intake structures for existing facilities. EPA is treating existing power generating facilities and existing manufacturing and industrial facilities in one proceeding. Today's proposal applies to all existing power generating facilities and existing manufacturing and industrial facilities that have a design intake flow of at least two million gallons from waters of the United States and use at least twenty-five (25) percent of the water they withdraw exclusively for cooling purposes. In addition, EPA is today also responding to the decision in

Riverkeeper

I and proposing minor changes to the Phase I rule for new facilities. Specifically, EPA proposes to remove from the Phase I rule the restoration-based compliance alternative and the associated monitoring and demonstration requirements.

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). Among the goals of the Act is that wherever attainable, an interim goal of water quality which provides for the protection and propagation of fish, shellfish, and wildlife and provides for recreation in and on the water. 33 U.S.C. 1251(a)(2).

In furtherance of these objectives, the CWA 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 in compliance with the statute; (2) authority for EPA or authorized States or Tribes to issue National Pollutant Discharge Elimination System (NPDES) permits that authorize and regulate the discharge of pollutants; and (3) requirements for effluent limitations and other conditions in NPDES permits to implement applicable technology-based effluent limitations guidelines and standards and applicable State water quality standards.

Section 402 of the CWA authorizes 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-seven States and one U.S. territory are 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 by requiring dischargers to meet technology-based effluent limitations guidelines (ELGs) or new source performance standards (NSPS) established pursuant to section 301 or section 306. Where such nationally applicable ELGs or NSPS exist, permit authorities must incorporate them into permit requirements. Where they do not exist, permit authorities establish effluent limitations and conditions, reflecting the appropriate level of control (depending on the type of pollutant) based on the best professional judgment (BPJ) of the permit writer. Limitations based on these guidelines, standards, or on best professional judgment are known as technology-based effluent limits. Where technology-based effluent limits are inadequate to meet applicable State water quality standards, section 301(b)(1)(C) of the Clean Water Act requires permits to include more stringent limits to meet applicable water quality standards. NPDES permits also routinely include standard conditions applicable to all permits, special conditions, and monitoring and reporting requirements. In addition to these requirements, NPDES permits must contain conditions to implement the requirements of section 316(b).

Section 510 of the Clean Water Act provides that, except as provided in the Clean Water Act, nothing 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 may not adopt 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

v.

Washington Dep't of Ecology,

511 U.S. 700, 705 (1994).

Sections 301, 304, and 306 of the CWA require that EPA develop technology-based effluent limitations guidelines and new source performance standards that are used as the basis for discharge requirements in wastewater discharge permits. EPA develops 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 various economic tests appropriate to each level of control, and other factors identified in sections 304 and 306 of the CWA (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 CWA for more than 56 industries. See 40 CFR parts 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, paper and allied products, petroleum refining, iron and steel manufacturing, and chemicals and allied products).

Section 316(b) states that 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.

Section 316(b) addresses the adverse environmental impact caused specifically by the intake of cooling water, rather than discharges of pollutants, including thermal discharges, into waters of the United States. Despite this special focus, the requirements of section 316(b) remain closely linked to several of the core elements of the NPDES permit program established under section 402 of the CWA to control discharges of pollutants into navigable waters. Thus, 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 also withdraw water from a water of the United States for cooling and that use a cooling water intake structure to do so.

The CWA does not describe the factors to be considered in establishing section 316(b) substantive performance requirements that reflect the “best technology available for minimizing adverse environmental impact” nor does it require that EPA develop nationally applicable performance requirements through rule making. The most recent guidance in interpreting 316(b) comes from the U.S. Supreme Court's decision in

Entergy Corp.

v.

Riverkeeper, Inc.

As noted, the decision

was limited to the single question of whether Section 316(b) of the Clean Water Act authorizes EPA to compare costs and benefits of various technologies when setting national performance standards for cooling water intake structures under Section 316(b) of the Clean Water Act. In

Riverkeeper

II, the Second Circuit rejected EPA's determination that closed-cycle cooling was not BTA because it could not determine whether EPA had improperly considered costs and benefits in its 316(b) rulemaking. The Supreme Court reversed and remanded the Second Circuit ruling in a 6-3 opinion authored by Justice Scalia. The Court held that it is reasonable for EPA to conduct a cost-benefit analysis in setting national performance standards for cooling water intake structures under Section 316(b). The Court held that EPA has the discretion to consider costs and benefits under Section 316(b) but is not required to consider costs and benefits. The Court's discussion of the language of section 316(b)—section 316(b) is “unencumbered by specified statutory factors”—and its critique of the Second Circuit's decision affirms EPA's broad discretion to consider a number of factors in standard setting under section 316(b). While the Supreme Court's decision is limited to whether or not EPA may consider one factor (cost/benefit analysis) under section 316(b), the language also suggests that EPA has wide discretion in considering other factors that it deems relevant to 316(b) standard setting. (“It is eminently reasonable to conclude that § 1326b's silence is meant to convey nothing more than a refusal to tie the agency's hands as to whether cost-benefit analysis should be used, and if so to what degree.” 129 S.Ct. 1498, 1508 (2009).

Regarding the other factors EPA may consider, section 316(b) cross references sections 301 and 306 of the CWA by requiring that any standards established pursuant to those sections also must require that the location, design, construction and capacity of intake structures reflect BTA. EPA has interpreted the cross reference as authorizing consideration of the same factors considered under those provisions Thus, for example, section 306 directs EPA to establish performance standards for

new

sources based on the “best available demonstrated control technology” (BADT). 33 U.S.C. 1316(a)(1). In establishing BADT, EPA “shall take into consideration the cost of achieving such effluent reduction, and any non-water quality environmental impact and energy requirements.” 33 U.S.C. 1316(b)(2)(B). The specific cross-reference in CWA section 316(b) to CWA section 306 “is an invitation to look to section 306 for guidance in discerning what factors Congress intended the EPA to consider in determining the `best technology available' ” for new sources. See

Riverkeeper

v.

EPA,

358 F. 2d 174, 186 (2nd Cir. 2004).

Similarly, Section 301 of the CWA requires EPA to establish standards known as “effluent limitations” for existing point source discharges in two phases. In the first phase, applicable to all pollutants, EPA must establish effluent limitations based on the “best practicable control technology currently available” (BPT). 33 U.S.C. 1311(b)(1)(A). In establishing BPT, the CWA 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 to 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).

In the second phase, EPA must establish effluent limitations for conventional pollutants based on the “best conventional pollution control technology” (BCT), and for toxic pollutants based on the “best available technology economically achievable” (BAT). 33 U.S.C. 1311(b)(2)(A), (E).

In determining BCT, EPA must consider, among other factors, the relationship between the costs of attaining a reduction in effluents and the effluent reduction benefits derived, and the comparison of the cost and level of reduction of such pollutants from the discharge from publicly owned treatment works to the cost and level of reduction of such pollutants from a class or category of industry source * * * and 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)(4)(B).

In determining BAT, the CWA 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 the phrases “best available technology economically achievable” and “best practicable control technology currently available” in that section. Thus, section 316(b), section 301(b)(1)(A)—the BPT provision—and section 301(b)(1)(B)—the BAT provision—all include the terms “best,” “technology,” and “available,” but neither BPT nor BAT goes on to consider minimizing adverse environmental impacts, as BTA does. See 33 U.S.C. 1311(b)(1)(A) and (2)(A). These facts, coupled with the brevity of section 316(b) itself, prompt EPA to look to section 301 and, ultimately, section 304 for further guidance in determining the “best technology available to minimize adverse environmental impact” of cooling water intake structures for existing 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

(2nd Cir. Feb. 3, 2004) (“not every statutory directive contained [in sections 301 and 306] is applicable” to a section 316(b) rulemaking). Moreover, as the Supreme Court recognized, while the provisions governing the discharge of toxic pollutants must require the elimination of discharges if technically and economically achievable, section 316(b) has the less ambitious goal of “minimizing adverse environmental impact.” 129 S.Ct. 1498, 1506. 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). EPA has established BAT effluent limitations guidelines and NSPS based on the efficacy of one or more technologies to reduce pollutants in wastewater in relation to their costs without necessarily considering the impact on the receiving waters. This contrasts to 316(b) requirements, where EPA has previously considered the costs of technologies in relation to the benefits of minimizing adverse environmental impact in establishing 316(b) limits, which historically has been done on a case-by case basis. In

Re Public Service Co. of New Hampshire,

10 ERC 1257 (June 17, 1977);

In Re Public Service Co. of New Hampshire,

1 EBAD 455 (Aug. 4, 1978);

Seacoast Anti-Pollution League

v.

Costle,

597 F. 2d 306 (1st Cir. 1979). EPA concluded that, because both section 301 and 306 are expressly cross-referenced in section 316(b), EPA reasonably interpreted section 316(b) as authorizing consideration of the same factors, including costs, as in those sections. EPA interpreted “best technology available” to mean the best technology available at an “economically practicable” cost. This approach squared with the limited legislative history of section 316(b) which suggested the BTA was to be based on technology whose costs were “economically practicable.” In debate on section 316(b), one legislator explained that “[t]he reference here to `best technology available' is intended to be interpreted to mean the best technology available commercially

at an economically practicable cost.”

118 Cong. Rec. 33,762 (1972) (statement of Rep. Clausen) (emphasis added).

For EPA's initial Phase II rulemaking, as it had during 30 years of BPJ section 316(b) permitting, EPA therefore interpreted CWA section 316(b) as authorizing EPA to consider not only the costs of technologies but also their effects on the water from which the cooling water is withdrawn.

2. History of Actions To Address Cooling Water Intake Structures Under the NPDES Program

a. 1976 Rulemaking

In April 1976, EPA promulgated regulations 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 § 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) § 402.11 (Specialized definitions), and (3) § 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 U.S. 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 § 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, “[t]he 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 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. 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.

b. Phase I—New Facility Rule

On November 9, 2001, EPA took final action on regulations governing cooling water intake structures at new facilities. See 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 part 125, subpart I) establishes requirements applicable to the location, design, construction, and capacity of cooling water intake structures at new facilities that have a design capacity to withdraw at least two million gallons per day (MGD) and use at least twenty-five 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 that withdraw equal to or greater 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 that withdraw 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 a level necessary 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 that withdraws equal to or greater than 10 MGD must select and implement appropriate design and construction technologies for further minimizing impingement mortality and entrainment. Applicants with greater than 2 MGD but less than 10 MGD flows are not required to reduce intake flow to a level commensurate with a closed-cycle, recirculating cooling system, but must still meet specific operational criteria.

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. In making this demonstration, the regulations allow an applicant to rely on a combination of measures in additional to technology controls for reducing impingement and entrainment to achieve results equivalent to the Track I intake flow and velocity requirements. These include measures to restore the affected water body such as restocking fish and improvement of the surrounding habitat to offset the adverse effects that would otherwise be caused by the operation of the intake structures. These restoration measures would result in increases in fish and shellfish which, in combination with any technologies employed, would result in a level of fish and shellfish in the water body comparable to that which would result from the reductions in impingement mortality and entrainment that would be achieved under Track I. Note that restoration provisions are no longer authorized (and EPA is proposing to delete them from the CFR in this rule making), but they are included in this description of the Phase I rule for completeness. See Chapter II of this preamble for more information.

In addition, under the Phase I rule, the Director (

i.e.,

the permitting authority) 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 Phase I requirements or would result in significant adverse impacts on local air quality, water resources, or local energy markets.

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).

c. Phase II—Large Flow Existing Power Plants

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 applied 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. In addition, power producers fitting the description above were also subject to the final Phase II rule even if they obtain their cooling water from one or more independent suppliers of cooling water. Such facilities were subject to the rule if their supplier withdraws water from waters of the U.S. even if the supplier was not itself a Phase II existing facility. EPA included this provision to prevent circumvention of the Phase II rule requirements by a facility purchasing cooling water from entities not otherwise subject to Section 316(b).

The final Phase II rule and preamble also clarified the definition of an “existing” power producing facility. The Phase II rule defined an “existing facility” as “any facility that commenced construction as described in § 122.29(b)(4) on or before January 17, 2002; and any modification of, or addition of a unit at such a facility that does not meet the definition of a new facility at § 125.83.” Given that the definition of the term “existing facility” was based in part on the Phase I definition of the term “new facility,” the preamble to the final Phase II rule also clarified and provided some examples of how the definition of “existing facility” might apply to certain changes at power producing facilities.

Under the Phase II rule, EPA established BTA performance standards for the reduction of impingement mortality and, under certain circumstances, entrainment (see 69 FR 41590-41593). The performance standards consisted 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) relative to a “calculation baseline” that reflected the level of impingement mortality and entrainment that would occur absent specific controls. These performance standards

were not based on a single technology but, rather, on consideration of a combination of technologies that EPA determined were commercially available and economically achievable for the industries affected as a whole. (69 FR 41598-41610). EPA based the impingement mortality and entrainment (I&E) performance standards on a combination of technologies because it found no single technology to be most effective at all affected facilities. For impingement standards, these technologies included: (1) Fine and wide-mesh wedgewire screens, (2) barrier nets, (3) modified screens and fish return systems, (4) fish diversion systems, and (5) fine mesh traveling screens and fish return systems. With regard to entrainment reduction, these technologies include: (1) Aquatic filter barrier systems, (2) fine mesh wedgewire screens, and (3) fine mesh traveling screens with fish return systems. Because EPA based the performance standards on a combination of technologies and because of the uncertainty inherent in predicting the efficacy of one or more of these technologies as applied to different Phase II facilities, EPA promulgated these standards as ranges. Furthermore, because the site-specific performance was based on a comparison to a once-through system without any specific controls on the shoreline near the source waterbody (

i.e.

, calculation baseline, see section III.A.2 for more details), the rule also allowed facilities to receive credit towards meeting the performance standards for I&E reduction associated with alternate locations of their intakes (eg, deep water where fish and shellfish were less abundant).

The types of performance standard applicable to a particular facility (

i.e.

, reductions in impingement mortality only or impingement mortality and entrainment) were 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.

The Phase II rule identified five compliance alternatives to meet the performance standards. A facility could demonstrate to the Director one of the following: (1) That it has already reduced its flow commensurate with a closed-cycle recirculating system (to meet both impingement mortality and entrainment), or that it has already reduced its maximum through-screen 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 approved State-specified design and construction technology (

i.e.,

submerged cylindrical wedgewire screens) in accordance with § 125.99(a) or an alternative technology that meets the appropriate performance standards and is approved by the Director in accordance with § 125.99(b); or (5) that its costs of compliance would be significantly greater either 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. Under the cost-cost comparison alternative, a Director could determine that the cost of compliance for a particular facility would be significantly greater than the costs considered by EPA in establishing the applicable impingement mortality and entrainment reduction performance standards. Similarly, under the cost-benefit comparison alternative, a Director could determine that the cost of compliance for a particular facility would be significantly greater than the benefits of complying with the applicable performance standards. In the event of either of these determinations, the Director would have to make a site-specific determination of BTA for minimizing adverse environmental impact that came as close as possible to meeting the applicable performance standards at a cost that did not significantly exceed either the costs EPA considered in establishing these standards or the site-specific benefits of meeting these standards.

The final Phase II rule also provided that a facility that chooses specified compliance alternatives might request that compliance with the requirements of the rule be determined based on the implementation of a Technology Installation and Operation Plan (TIOP) that would indicate how the facility would install and ensure the efficacy, to the extent practicable, of design and construction technologies, and/or operational measures, and/or a Restoration Plan. The rule also established requirements for the development and submittal of a TIOP (§ 125.95(b)(4)(ii)) as well as provisions that specified how compliance could be determined based on implementation of a TIOP (§ 125.94(d)). Under these provisions, a TIOP could be requested in the first permit term and continued use of a TIOP could be requested where a facility was in compliance with such plan and/or its Restoration Plan.

d. Phase III Rulemaking—Low Flow Existing Power Plants, Existing Manufacturing Facilities, and New Offshore Oil and Gas Facilities

On June 16, 2006, EPA published a final Phase III rule that established categorical regulations for new offshore oil and gas extraction facilities that have a design intake flow threshold of greater than 2 MGD and that withdraw at least 25 percent of the water exclusively for cooling purposes. For most such facilities, the rule establishes requirements virtually identical to the requirements applicable to new facilities in the Phase I rule. In the Phase III rule, EPA declined to establish national standards for Phase III existing facilities. Instead it concluded that CWA section 316(b) requirements for electric generators with a design intake flow of less than 50 MGD and all existing manufacturing facilities would continue to be established on a case-by-case basis under the NPDES permit program using best professional judgment. (71 FR 35006).

3. Rulings by the U.S. Court of Appeals for the Second Circuit

Both the Phase I and Phase II 316(b) rules were challenged in the U.S. Court of Appeals for the Second Circuit. Key aspects of each of these decisions are discussed below.

a. Phase I Rule

Various environmental and industry groups challenged the Phase I 316(b) rule. In February 2004, the Second Circuit sustained the entire rule except for the restoration provision, ruling that restoration was not a technology as provided for in 316(b). With respect to the other provisions of the rule, the Court concluded the Phase I rule was based on a reasonable interpretation of the applicable statute and sufficiently supported by the record. Restoration provisions of the rule were remanded to EPA for further rulemaking consistent with the Court's decision.

Riverkeeper, Inc.

v.

EPA,

358 F.3d 174, 191 (2nd Cir., 2004). Today's proposal rule would remove the restoration provisions from the Phase I rule.

See

Chapter II of this preamble for more details.

b. Phase II Rule

Industry, environmental stakeholders, and some States

1

challenged many aspects of the Phase II regulations. On January 25, 2007, the Second Circuit (

Riverkeeper, Inc.

v.

EPA,

475 F.3d 83, (2d Cir., 2007)) upheld several provisions of the Phase II rule and decision and remanded others to EPA for further rulemaking.

1

Rhode Island, Connecticut, Delaware, Massachusetts, New Jersey, and New York.

As noted above, for the final rule EPA rejected closed-cycle cooling as BTA. Instead, EPA selected a suite of technologies to reflect BTA, including

e.g.,

screens, aquatic filter barriers, and barrier nets. Based on the chosen technologies, EPA established national performance standards for reducing impingement mortality and entrainment of fish and fish organisms but did not require the use of any specific technology. Among the aspects of the rule the Second Circuit remanded for further clarification was EPA's decision to reject closed-cycle cooling as BTA and EPA's determination of performance ranges as BTA. In addition, the Second Circuit found that, consistent with its Phase I decision, restoration was not a technology for BTA, and that EPA's cost-benefit site-specific compliance alternative was not in accord with the Clean Water Act. There are also several issues for which the court requested additional clarification, and some instances where the court determined that EPA had failed to provide adequate notice and opportunity to comment on certain provisions of the rule.

4. EPA Suspension of the Phase II Rule

As a result of the decision of the Second Circuit Court of Appeals in

Riverkeeper, Inc.

v.

EPA,

475 F.3d 83, (2d Cir., 2007), EPA, on July 9, 2007 (72 FR 37107) suspended the requirements for cooling water intake structures at Phase II existing facilities, pending further rulemaking. Specifically, EPA suspended the provisions in § 122.21(r)(1)(ii) and (5), and part 125 Subpart J, with the exception of Sec. 125.90(b). EPA explained that suspending the Phase II requirements was an appropriate response to the Second Circuit's decision, and that such action would allow it to consider how to respond to the remand. In addition, suspending the Phase II rule was responsive to the concerns of the regulated community and permitting agencies, both of whom sought guidance regarding how to proceed in light of the approaching deadline of the remanded rule. EPA's suspension clarified that pending further rulemaking, permit requirements for cooling water intake structures at Phase II facilities should be established on a case-by-case, best professional judgment (BPJ) basis (

see

125.90(b)).

5. Ruling by the U.S. Supreme Court

Following the Phase II decision in the Second Circuit, several industry group litigants petitioned the U.S. Supreme Court to hear an appeal regarding several issues in the case.

Entergy Corp. et al.

v.

EPA, S. Ct. No. 07-588, et al.

On April 14, 2008, the Supreme Court granted the petitions for writs of certiorari submitted by these Phase II litigants, but limited its review to the issue of whether section 316(b) authorizes EPA to compare costs with benefits in determining BTA for cooling water intake structures. The Supreme Court held oral arguments in this case on December 2, 2008, and issued a decision on April 1, 2009. The Supreme Court held that it is permissible for EPA to rely on cost-benefit analysis in decision making for setting the Phase II national performance standards, and in providing for cost-benefit variances from those standards as part of the Phase II regulations. The Court indicated that the phrase “best technology available for minimizing adverse environmental impact” does not unambiguously preclude use of cost-benefit analysis in decision making. The ruling supports EPA's discretion to consider costs and benefits, but imposes no obligation on the agency to do so.

6. Ruling by the U.S. Court of Appeals for the Fifth Circuit

In 2009, EPA petitioned the Fifth Circuit to remand the existing facility portion of the Phase III rule. Specifically, EPA requested remand of those provisions in the Phase III rule that establish 316(b) requirements at electric generators with a design intake flow of less than 50 MGD, and at existing manufacturing facilities, on a case-by-case basis using best professional judgment. This request did not affect the Phase III rule requirements that establish categorical regulations for new offshore oil and gas extraction facilities that have a design intake flow threshold of greater than 2 MGD and that withdraw at least 25 percent of the water exclusively for cooling purposes.

On July 23, 2010, the U. S. Court of Appeals for the Fifth Circuit issued a decision regarding the Phase III rule. The Court granted EPA's motion to remand the rule with respect to existing facilities. In addition, the Fifth Circuit affirmed the portion of the rule that regulated cooling water intake structures for new offshore oil and gas facilities. In sustaining these requirements, the Fifth Circuit upheld EPA's decision not to use cost benefit balancing in determining the requirements for these new facilities. This was in accord with the discretion afforded by 316(b) and affirmed by the Supreme Court, namely that EPA properly interpreted section 316(b) as authorizing, but not requiring, the Agency to consider costs and benefits in its decision making.

7. Settlement of Litigation in U.S. District Courts

On January 19, 1993, a group of individuals and environmental organizations

2

filed, under section 505(a)(2) of the CWA, 33 U.S.C. 1365(a)(2), a complaint in

Cronin, et. al.

v.

Reilly,

93 Civ. 314 (LTS)(S.D.N.Y.). The plaintiffs alleged that EPA had failed to perform a non-discretionary duty to issue regulations implementing section 316(b) of the CWA, 33 U.S.C. 1326(b). In 1995, EPA and the plaintiffs executed a consent decree in the case that provided for EPA to implement section 316(b) of the CWA by prescribed dates in the three separate rulemaking proceedings described above. In late 2002, the district court entered an amended consent decree that modified the schedule for the Phase II and Phase III rulemakings for existing facilities.

2

There are the following plaintiffs currently: Riverkeeper, Inc.; Alex Matthiessen, a/k/a The Hudson Riverkeeper; Maya K. Van Rossum, a/k/a The Delaware Riverkeeper; Terrance E. Backer, a/k/a The Soundkeeper; John Torgan, a/k/a The Narragansett BayKeeper; Joseph E. Payne, a/k/a The Casco BayKeeper; Leo O'Brien, a/k/a the San Francisco BayKeeper; Sue Joerger, a/k/a The Puget Soundkeeper; Steven E. Fleischli, a/k/a The Santa Monica BayKeeper; Andrew Willner, a/k/a The New York/New Jersey Baykeeper; The Long Island Soundkeeper Fund, Inc.; The New York Coastal Fishermen's Association, Inc.; and The American Littoral Society, Inc.

On November 17, 2006, some of the same environmental organizations in the

Cronin

case filed a second complaint, amended on January 19, 2007, in

Riverkeeper, et al.

v.

EPA,

06 Civ. 12987 (S.D.N.Y.). Here, the plaintiffs alleged that EPA failed to perform a non-discretionary duty under section 316(b) of the CWA in its final regulation covering the Phase III facilities, and also had violated sections 706(2)(A) and 706(2)(C) of the Administrative Procedure Act (APA) in the manner in which it had made that decision.

Earlier, the same plaintiffs had also petitioned for review of the Phase III rule in the U.S. Court of Appeals for the Second Circuit. This and other petitions for review were consolidated for hearing

in the U.S. Court of Appeals for the Fifth Circuit.

Conoco Phillips

v.

EPA

(5th Cir. No. 06-60662). Following the Supreme Court decision in

Entergy,

EPA, Riverkeeper and others requested remand of the regulation to allow EPA to reconsider its decisions regarding Phase III facilities in light of more recent technical information and recent court decisions. As noted above, on July 23, 2010, the Fifth Circuit granted the joint motion of EPA and environmental petitioners for a voluntary remand. On September 3, 2010, one of the industry petitioners filed a petition asking the Fifth Circuit panel to rehear its grant of the motion to remand.

On August 14, 2008, EPA filed a motion to terminate the

Cronin

proceeding because it had discharged its obligations (“to take final action”) under the decree with respect to the Phase II and III rulemakings. The plaintiffs in

Cronin

asserted that EPA had not discharged its obligations under the second amended decree because the Second Circuit remanded core provisions of the 316(b) rule for existing power plants to EPA, and EPA had suspended the Phase II rule. In the

Riverkeeper

proceeding, on February 7, 2007, EPA moved to dismiss arguing that the district court lacked jurisdiction to hear the challenge to the Phase III rule.

EPA entered into a settlement with the plaintiffs in both lawsuits. Under the settlement agreement, EPA agreed to sign a notice of a proposed rulemaking implementing section 316(b) of the CWA at existing facilities no later than March 14, 2011 and to sign a notice taking final action on the proposed rule no later than July 27, 2012. Plaintiffs agreed to seek dismissal of both their suits, subject to a request to reopen the

Cronin

proceeding in the event EPA failed to meet the agreed deadlines. The district courts have now entered orders of dismissal. On March 11, 2011, the parties agreed to an amendment to the settlement agreement to extend the date for proposal to March 28, 2011.

II. Proposed Amendments Related to the Phase I Rule

EPA is proposing several limited changes to the Phase I rule at 40 CFR subpart I. The changes fall into two categories. The first is deletion of the provision in the rule that would allow a facility to demonstrate compliance with the Phase I BTA requirements in whole or in part through restoration measures. The proposed change responds to the decision of the U.S. Court of Appeals for the Second Circuit which remanded these provisions to EPA because it concluded the statute did not authorize restoration measures to comply with section 316(b) requirements. The second category of changes reflects technical corrections or errors that do not change the substance of the current Phase I rule. EPA is not reopening any other aspects of the Phase I rule other than the provisions specifically noted here.

A. Restoration Provisions Not Authorized

As discussed above in Section I.C.2, the Phase I final rule established two compliance tracks. Track I requires facilities to restrict intake flow and velocity. Track II gives a facility the option of demonstrating to the Director that the control measures it employs will reduce the level of adverse environmental impact to a comparable level to what would be achieved by meeting the Track I requirements. As part of this demonstration, Track II allows a facility to make use of restoration measures. The Comprehensive Demonstration Study allowed a quantitative or qualitative demonstration that restoration measures would meet, in whole or in part, the performance levels of Track I. Similarly, the Verification Monitoring Plan could be tailored to verify that the restoration measures would maintain the fish and shellfish in the waterbody at a substantially similar level to that which would be achieved under Track I.

See

65 FR 65280-65281.

As discussed in Section I.C.3, the Second Circuit concluded that EPA exceeded its authority by allowing new facilities to comply with section 316(b) through restoration measures, and remanded that aspect of the rule to EPA. The Supreme Court did not grant the petitions for writs of certiorari concerning restoration provisions. Thus in EPA's view the Agency is bound by the Second Circuit decision. Today's proposed rule proposes to amend Phase I to remove those provisions in § 125.84(d) and 125.89(b)(1)(ii) authorizing restoration measures. This proposed rule also specifically proposes deletion of application requirements contained in the Comprehensive Demonstration Study at § 125.86(c)(2)(ii); evaluation of proposed restoration measures at 125.86(c)(2)(iv)(C); and verification monitoring requirements at 125.86(c)(2)(iv)(D)(

2

)) that are specific to restoration. EPA acknowledges these changes may reduce the alternatives available to some Phase I facilities. However, EPA notes that the deletion of restoration measures does not otherwise alter the availability of Track II. In any event, EPA's determination of BTA for Phase I did not presume reliance on the restoration provisions, and the deletion of restoration measures in no way alters the Agency's BTA determination for Phase I facilities.

B. Corrections to Subpart I

Today's proposed rule proposes to change the applicability statement at 125.81(a)(3) to match the applicability of the technical requirements at 125.84 and application requirements at 125.86. The applicability in all three instances should specify design intake flow or withdrawals “greater” than the specified value of 2 MGD. See Basis for the Final Regulation at 66 FR 65270.

Today's proposed rule also proposes a correction to the source waterbody flow information submission requirements. Track I requirements at 125.84(b)(3) apply to new facilities that withdraw equal to or greater than 10 MGD. Track I requirements at 125.84(c)(2) apply to facilities that withdraw less than 10 MGD. The source waterbody flow information under 125.86(b)(3) requires a facility to demonstrate it has met the flow requirements of both 125.84(b)(3) “and” 125.84(c)(2). However, a facility cannot be subject to both 125.84(b)(3) and 125.84(c)(2) at the same time. Accordingly, the word “and” should read as “or” in 125.86(b)(3).

In addition, today's proposed rule proposes corrections to the application requirement for the Source Water Biological Characterization at 122.21(r)(4). Accordingly, references to the Source Water Biological Characterization should read as (r)(4). However, the references to the Source Water Biological Characterization at 125.86(b)(4)(iii), at 125.87(a), and at 125.87(a)(2) incorrectly refer to 122.21(r)(3) and are thus being corrected.

III. What New Information Has EPA Obtained or Developed in Support of This Proposed Rule?

In developing the Phase I, Phase II, and Phase III rules, EPA collected and analyzed a substantial amount of information regarding cooling water intake structures, their biological impacts, available technologies to reduce those impacts, and other relevant subjects. EPA considered a sizable volume of material submitted during previous public comment periods, as well as additional data from stakeholders, industry groups, technology vendors, and environmental organizations since those comment periods. Many of the materials are summarized or discussed in the preambles to these regulations or in the administrative record for these rules

(see,

e.g.,

docket numbers W-00-03, OW-2002-0049, and EPA-OW-2004-0002). Today's proposal is based on data and information contained in the records supporting the Phase I, Phase II, and Phase III rulemakings, as well as new information. This section summarizes new data collected since the promulgation of the Phase III rule in June 2006; it will not review or summarize previous data collection efforts except to frame discussions about the new data. For information on EPA's historic data collection efforts, refer to the preambles and records for the three rules (see,

e.g.,

65 FR 49070, 66 FR 28854, 68 FR 17131, 68 FR 13524, 69 FR 41593, 69 FR 68457, and 70 FR 71059).

A. Additional Data

EPA has supplemented the existing documents with additional information as summarized below.

1. Site Visits

As documented in the suspended 2004 Phase II rule, EPA conducted site visits to 22 power plants in developing the 2004 rule. See 67 FR 17134. Since 2007, EPA has conducted over 50 site visits to power plants and manufacturing sites. The purpose of these additional visits was to: Gather information on the intake technologies and cooling water systems in place at a wide variety of existing facilities; better understand how the site-specific characteristics of each facility affect the selection and performance of these systems; gather performance data for technologies and affected biological resources; and solicit perspectives from industry representatives. EPA used a number of criteria in selecting the sites to visit, including those sites representing a variety of geographical locations and different types of intakes, and sites that already had an impingement or entrainment technology in place for which the facility had collected performance data. EPA also asked trade associations to recommend sites facing unique circumstances that may affect the adoption of certain control technologies. EPA also collected information on 7 additional facilities that staff did not physically visit; usually, these were other facilities owned by the parent company of a site visited by EPA. EPA also held conference calls or met with representatives of other sites at EPA's Washington, DC location.

Copies of the site visit reports (which provide an overall facility description as well as detailed information such as electricity generation, the facility's cooling water intake structure and associated fish protection and/or flow reduction technologies, impingement and/or entrainment sampling and associated data, and a discussion of the possible application of cooling towers) for each site are provided in the docket for the proposed rule. In addition, in response to stakeholder inquiries, EPA made these site reports publicly available well before publication of the proposed rule. A list of the facilities visited by EPA is provided in the TDD.

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

EPA has continued to exchange information with various stakeholders in the development of today's proposal. EPA met several times with Electric Power Research Institute (EPRI), Edison Electric Institute, Nuclear Energy Institute, and Utility Water Act Group, along with other representatives from facilities and affected industries on topics including the latest advancements in fish protection technologies, permit experience, and the feasibility and cost of installing technologies at certain types of facilities.

In 2010, the North American Electric Reliability Corporation (NERC) issued a reliability study and found potentially substantial reliability effects under a 316(b) rule scenario that would require closed-cycle cooling of all large power plants. See

Potential Resource Adequacy Impacts of U.S. Environmental Regulations. October 2010.

The scenario assumes all existing steam units with a capacity utilization factor of less than 35% would close,

3

and assumes all in-scope electric generators would be required to install cooling towers within a 5-year window. While the report's focus was on energy reliability and reflects a regulatory scenario that is not directly comparable to any of the options explored for today's proposed rule, the report nevertheless serves as a useful upper bound estimate of (1) the potential for premature generating unit retirements to avoid the costs of retrofitting existing cooling water intake systems and (2) increased power needs as a result of a capacity derating (

i.e.,

the energy penalty

4

).

3

IPM analyses do not predict all units with capacity utilization rates of less than 35% would close as a result of a closed-cycle cooling retrofit. Thus the total loss in capacity under EPA's Option 2 would be 14,418 MW or 1.3% of existing capacity.

4

The report assumes the total energy penalty of 4 percent is a constant; EPA believes the energy penalty is reduced over time as units replace, repower, or make other modifications such as condenser replacement that would eliminate the turbine backpressure.

The Edison Electric Institute published a study of the combined impact of EPA's upcoming air, water (316(b)), and solid waste rulemakings on the coal fired fleet of power plants. See

Potential Impacts of Environmental Regulation on the U.S. Generation Fleet Final Report. January 2011.

As with the NERC study, conservative assumptions were made about EPA rules yet to be proposed or promulgated. The report summarizes reductions in capacity, but does not distinguish how much of that capacity was unused in the baseline scenario. Conservative costing assumptions such as 21 percent higher average costs,

5

and application of full retrofit costs to new capacity (instead of incremental costs for installing required technology at new construction) gives results that are not comparable to any of the options explored for today's proposed rule. While this study analyzed multiple scenarios, each scenario combines the effects of multiple rules so that the impact of the section 316(b) rule alone could not be determined. Even so, the report provides useful insight on the potential impact of multiple rulemakings if each EPA rule was promulgated at the level of stringency assumed in the study.

5

EPRI's site-specific evaluation of 82 facilities provides an average capital cost of $275 per GPM, but the EEI report uses $319 per GPM.

EPA met with Riverkeeper and other environmental groups to discuss the progress of the revisions to the rule, advances in fish protection technologies, state programs, environmental issues associated with cooling water withdrawals, and the feasibility of closed-cycle cooling. Through these interactions, EPA has received additional data and information including, but not limited to: Efficacy data, operating information, cost information, feasibility studies, environmental impacts, and non-water quality related impact information for various candidate BTA technologies.

3. Other Resources

EPA also collected information on cooling water intake structure-related topics from a variety of other sources, such as state and international policies. For example, the California Office of Administrative Law approved the “Policy on the Use of Coastal and Estuarine Waters for Power Plant Cooling” on September 27, 2010, which requires that all coastal power plants reduce their intake flow to a level commensurate with closed-cycle cooling. The Delaware state legislature passed a resolution that urges the Delaware Department of Natural

Resources and Environmental Control (DNREC) to consider closed-cycle cooling as BTA and to require closed-cycle cooling at all facilities. The New York Department of Environmental Conservation (DEC) released a draft policy in March 2010 that would require flow reduction equivalent to closed-cycle cooling at all existing facilities that withdraw more than 20 MGD as part of the state's plan to restore the Hudson River. Additional examples of state programs are discussed further in the TDD.

In addition to state-wide cooling water policies, some recent individual NPDES permits have incorporated requirements for significant reductions in cooling water flow. For example, EPA Region I (which develops NPDES permits for several non-delegated New England states) issued a final NPDES permit in October 2003 that required Brayton Point in Somerset, Massachusetts to reduce cooling water intake flow and thermal discharges approximately 95 percent.

6

Brayton is currently constructing two natural draft cooling towers at the facility. New Jersey, as part of its policy for protecting marine life from the adverse impacts created by power plants, issued a draft permit for Oyster Creek that would require closed-cycle cooling, and is studying closed-cycle cooling for two units at Salem Generating Station. Other examples are documented in site visit reports found in the record for today's proposed action.

6

See

http://www.epa.gov/ne/braytonpoint/index.html.

Electric generators are the subject of several rulemaking efforts that either are or will soon be underway. In addition to this rulemaking proposal, this includes regulation under section 110(a)(2)(D) of the Clean Air Act (CAA) addressing the interstate transport of emissions contributing to ozone and PM air quality problems, coal combustion wastes, hazardous air pollutants under CAA section 112, and criteria pollutant NSPS standards under CAA section 111. They will also soon be the subject of a rulemaking under CAA section 111 concerning emissions of greenhouse gases. EPA recognizes that it is important that each and all of these efforts achieve their intended environmental objectives in a common-sense manner that allows the industry to comply with its obligations under these rules as efficiently as possible and to do so by making coordinated investment decisions and, to the greatest extent possible, by adopting integrated compliance strategies. In addition, EO 13563 states that “[i]n developing regulatory actions and identifying appropriate approaches, each agency shall attempt to promote such coordination, simplification, and harmonization. Each agency shall also seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation.” Thus, EPA recognizes that it needs to approach these rulemakings, to the extent that its legal obligations permit, in ways that allow the industry to make practical investment decisions that minimize costs in complying with all of the final rules, while still achieving the fundamentally important environmental and public health benefits that the rulemakings must achieve. The Agency expects to have ample latitude to set requirements and guidelines in ways that can support the states' and industry's efforts in pursuing practical, cost-effective and coordinated compliance strategies encompassing a broad suite of its pollution-control obligations.

B. Implementation Experience

Following promulgation of the 2004 Phase II rule, states and EPA Regions began to implement the rule. During that time, EPA worked to assist states in understanding the rule requirements, develop guidance materials, and support review of the documentation of the new requirements. As a result, EPA became aware of certain elements of the 2004 rule that were particularly challenging or time-consuming to implement. In developing today's proposed rule, EPA has considered these challenges and crafted a revised regulatory framework that the Agency believes is easier for all stakeholders to understand and implement. Some of the key changes are described below.

1. Calculation Baseline

The 2004 Phase II rule required that facilities reduce impingement mortality and entrainment from the calculation baseline. The calculation baseline was intended to represent a “typical” Phase II facility and outlined a configuration for a typical CWIS. (See 69 FR 41590.) EPA defined the calculation baseline as follows:

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 [a] 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 or reducing impingement mortality and entrainment.

Under this approach, a facility that had undertaken efforts to reduce impingement and entrainment impacts (

e.g.,

by installing a fine mesh screen or reducing intake flow) would be able to “take credit” for its past efforts and only be required to incrementally reduce impingement mortality or entrainment to meet the performance standards.

In practice, both permittees and regulatory agencies encountered difficulty with the calculation baseline, specifically how a facility should determine what the baseline represented and how a particular facility's site-specific configuration or operations compared to the calculation baseline. For facilities whose site configuration conforms to the calculation baseline, it was relatively easy to determine impingement mortality and entrainment at the conditions representing the calculation baseline. However, for facilities that have a different configuration, estimating a hypothetical calculation baseline could be difficult. For example, facilities with intake configuration that differed significantly from the calculation baseline (

e.g.,

a submerged offshore intake) were unsure as to how to translate their biological and technological data to represent the calculation baseline (a shoreline CWIS). Oftentimes facilities encountered difficulty in determining the appropriate location for monitoring to take place. Other facilities were unsure as to how to take credit for retired generating units and other flow reductions practices. In site visits, EPA learned that facilities with little or no historical biological data encountered a particularly difficult and time-intensive task of collecting appropriate data and developing the calculation baseline. For example, EPA found that for some sites impingement was very difficult to convert into a baseline, as facilities needed to predict which fish would be impinged and then further estimate which of those impinged organisms survived. As a result, EPA has developed a new approach to the technology-based requirements proposed today that does not use a calculation baseline.

2. Entrainment Exclusion Versus Entrainment Survival

As EPA worked towards revising the existing facility rules, EPA discovered a nuance to the performance based requirements of the 2004 Phase II rule: Entrainment exclusion versus entrainment survival. As discussed in section III.C below, EPA re-reviewed the

data on the performance of intake technologies and conducted statistical analysis of the data. From this analysis, it became apparent that the 2004 Phase II rule did not fully consider the true performance of intake technologies in affecting “entrainable” organisms.

By definition, entrainment is the incorporation of aquatic organisms into the intake flow, which passes through the facility and is then discharged. In order to pass through the technologies located at the CWIS (

e.g.,

intake screens, nets, etc.), the organisms must be smaller than the smallest mesh size.

7

For coarse mesh screens (3/8″ mesh size), most “entrainables” simply pass through the mesh (and through the facility) with only some contact with the screen.

8

In this situation the mortality of organisms passing through the facility was assumed to be 100 percent. However, as mesh sizes are reduced,

9

more and more entrainables will actually become impinged on the screens (

i.e.,

“converted” from entrainable to impingeable) and would then be subjected to spray washes and returned along with larger impinged organisms as well as debris from the screens. Under the 2004 Phase II rule, these “converts” would be classified as a reduction in entrainment, since the entrainment performance standard simply required a reduction in the number (or mass) of entrained organisms entering the cooling system. However, for some facilities the low survival rate of converts resulted in the facility having difficulty complying with the impingement mortality limitations. By comparison, the performance standard for impingement was measured as impingement mortality. Organisms that were impinged (

i.e.,

excluded) from the CWIS were typically washed into a return system and sent back to the source water. In this case, impingement mortality is an appropriate measure of the biological performance of the technology.

7

In the case of many soft-bodied organisms such as eggs and larvae, the force of the intake flow can be sufficient to bend organisms that are actually larger than the screen mesh and pull them into the cooling system.

8

Eggs are generally smaller than 2 millimeters in diameter, while larvae head capsids are much more variable in size, increasing as they mature to the juvenile stage.

9

Fine mesh screens were considered to be one technology that could be used to meet the entrainment performance standards under the 2004 Phase II rule. EPA also reviewed performance data for screens with mesh sizes as small as 0.5 mm, as described in section III.C.

Through EPA's review of control technologies, the Agency found that the survival of “converts” on fine mesh screens was very poor, and in some extreme cases comparable to the extremely low survival of entrained organisms that are allowed to pass entirely through the facility.

10

More specifically, EPA found that nearly 100 percent of eggs were entrained unless the mesh slot size was less than 2 mm, and mortality of eggs “converted” to impingement ranged from 20 to 30 percent. Further, the mortality of larvae collected from a fine mesh screen was usually greater than 80 percent. As a result, a facility with entrainment exclusion technologies such as fine mesh screens could approach 90 percent performance, but the subsequent survival of eggs and larvae combined ranged from 0 to 52 percent (mean value of 12 percent survival) depending on life stage and species, and the facility's impingement mortality rates increased. In other words, a facility that simply excluded entrainable organisms (with no attention being paid to whether they survive or not) could be deemed to have met its entrainment requirements under the 2004 Phase II rule, when in fact it may be causing the same level of mortality as a facility with no entrainment controls at all. EPA's current review of entrainment and entrainment mortality shows the same trends identified in the research reviews by EPRI (2003), namely that entrainment decreases with increasing larval length, increased sweeping flow, decreasing slot (intake) velocity, and decreasing slot width. In other words, by using screens with finer mesh, entrainment mortality can be converted to impingement mortality without necessarily protecting any more aquatic organisms.

10

Through-plant entrainment survival has been studied extensively, with EPRI's Review of Entrainment Survival Studies being amongst the most comprehensive. See DCN 2-017A-R7 from the Phase I docket.

3. Cost-Cost Test

In the 2004 Phase II rule, EPA developed facility-specific cost estimates, and published those costs in Appendix A (69 FR 41669). The 2004 Phase II rule also included a cost-cost test (see 69 FR 41644) where a facility could demonstrate that its costs to comply with the 2004 rule were significantly greater than those that EPA had considered. Since initial implementation of the July 9, 2004 316(b) Phase II rule, EPA has identified several concerns with the facility-specific costs listed in Appendix A and their use in the cost-cost test. First, EPA has identified numerous inconsistencies between facility permit applications, responses in the facility's 316(b) survey, and overall plant capacity as reported in the most recent EIA database. These inconsistencies resulted in Appendix A costs that were different from the facility's own compliance cost estimates due to inconsistencies in the underlying parameters used to estimate these costs. In addition, as described more fully in Chapter 2 of this proposal's Technical Development Document, EPA does not have available technical data for all existing facilities. EPA obtained the technical data for facilities through industry questionnaires. In order to decrease burden associated with these questionnaires, EPA requested detailed information from a sample, rather than a census, of facilities. EPA has thus concluded that the costs provided in Appendix A are not appropriate for use in a facility-level cost-cost test. Moreover, for most of the national requirements EPA is proposing here, a cost-cost variance is not necessary for the reasons described below. As a result, EPA is not providing a framework similar to Appendix A in today's proposed rule.

11

(See section III.C below and VII for more information about how EPA developed compliance costs.)

11

There is a form of “cost-cost variance” for new units at existing facilities, comparable to the provision in Phase I for new facilities. See further discussion below.

First, the impingement mortality requirements of today's proposed rule are economically achievable,

12

and the low variability in the costs of impingement mortality controls at a facility makes such a provision unnecessary. Second, a cost-cost variance is not necessary for entrainment mortality requirements because the costs of various requirements are a factor considered in each site-specific determination. Under the national rule, entrainment requirements would be established on a facility specific basis, except in the case of new units at an existing facility, which are subject to standards based on closed-cycle cooling or its equivalent. In the facility-specific process proposed today for entrainment mortality, a facility would be required to submit facility-specific compliance cost estimates. The determination of whether the cost of specific entrainment mortality technologies is too high is made by the Director on a case-by-case basis and accordingly a cost-cost provision is unnecessary for these facilities. However, consistent with the Phase I rule, EPA has included a

provision for new units at existing facilities that the Director 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 Phase I requirements or would result in significant adverse impacts on local air quality, water resources other than impingement or entrainment, or local energy markets.

12

The Phase II rule found impingement mortality (plus entrainment exclusion on certain waterbodies) was economically achievable; EPA has not identified any reason for revising this conclusion. See 69 FR 41603.

C. New or Revised Analyses

In addition to collecting new information, EPA has re-evaluated some existing data and analyses that underlay its earlier decisions. The standards of the 2004 Phase II regulation required impingement mortality reduction for all life stages of fish and shellfish of 80 to 95 percent from the calculation baseline (for all Phase II facilities) and entrainment reduction requirements of 60 to 90 percent (for certain Phase II facilities). EPA based these performance requirements on a suite of technologies and compliance alternatives. For today's proposal, EPA has reanalyzed various candidate technologies as the basis for EPA's BTA decision. This reanalysis includes, but is not limited to, a reanalysis of candidate BTA technologies, their effectiveness, their costs, and their application. This section highlights some of the results from this reanalysis. See Section VI for a thorough discussion of EPA's updated BTA analysis and determination. Based on this reanalysis, EPA has reached several conclusions. The first is that closed-cycle cooling reduces impingement and entrainment mortality to the greatest extent. The second is that screen technologies are significantly less effective, particularly in comparison with closed-cycle cooling, in reducing entrainment mortality than EPA had concluded in 2004. Finally, EPA determined that while none of the reviewed technologies cause unacceptable energy reliability concerns, particulate emission increases, or adverse economic impacts at the national level, the performance and availability of some technologies varies widely depending on local factors, and these issues could be a significant concern at individual sites.

1. Revised Performance Database

In its Section 316(b) rule development efforts to date, EPA has gathered industry documents and research publications with information from studies which evaluated the performance of a range of technologies for minimizing impingement or entrainment. As explained in 68 FR 13538-13539, EPA previously developed a Technology Efficacy Database in an effort to document and assess the performance of various technologies and operational measures designed to minimize the impacts of cooling water withdrawals (

see

DCN 6-5000 in the docket for the 2004 Phase II rule). In support of today's proposal, EPA has updated that performance database. In updating the database, EPA's objective was to review the methods used to generate data in these studies and to combine relevant data across studies in order to produce statistical estimates of the overall performance of each of the technologies.

In developing the updated database, EPA considered data from over 150 documents. This includes documents previously contained in all three phases of EPA's 316(b) rulemaking records as well as new documents obtained during development of today's proposal. These documents contain information on the operation and/or performance of various forms and applications of these technologies, typically at a specific facility or in a controlled setting such as a research laboratory. The studies presented in these documents were performed by owners of facilities with cooling water intake structures, organizations that represent utilities and the electric power industry, and other research organizations. EPA established two general criteria for using data from the documents: (1) The data must be associated with technologies for minimizing impingement mortality or entrainment

13

that are currently viable (as recognized by EPA) for use by industries with cooling water intake structures that are (or will be) subject to Section 316(b) regulation; and (2) the data must represent a quantitative measure (

e.g.,

counts, densities, or percentages) that is related to the impingement mortality or entrainment of some life form of aquatic organisms within cooling water intake structures under the given technology.

13

There were insufficient numbers of studies specifically looking at entrainment mortality or entrainment survival, therefore EPA broadened the review to include any measure of entrainment.

For studies meeting the above criteria, EPA populated a new database. This performance study database consisted of two primary data tables. The first table contains specific information on a particular study, such as the document and study IDs, facility name, water body, data classification (

e.g.,

impingement mortality, entrainment), technology category, and other test conditions when specified (

e.g.,

mesh size, intake velocity, flow rate, water temperature, conditions when the technology is in place, control conditions). The second table contains the reported performance data for a given study. Each row of this table contains one or more performance measures for a particular species along with other factors when they were specified (

e.g.,

age category, dates or seasons of data collection, water temperature, velocity, elapsed time to mortality). For one option considered for today's proposed rule, EPA used this database in an attempt to revise the impingement mortality and entrainment limits developed for the Phase II rule. However, as described in section VI, the performance data for screens and other intake technologies indicates that those technologies were not very effective at minimizing entrainment mortality in comparison to closed-cycle cooling. As a result, EPA has not included this option in today's proposed rule package.

2. Impingement Mortality and Entrainment Technology Performance Estimates

To evaluate the effectiveness of different control technologies and the extent to which the various regulatory options considered for today's proposal minimize adverse environmental impacts associated with cooling water intake structures, EPA used the data collected in the revised performance database to develop impingement mortality and entrainment reduction estimates associated with each technology. For some technologies, this proposal reflects updated information or a different methodology for estimating effectiveness. For impingement mortality, EPA focused on 14 studies of 31 species for traveling screens with post-Fletcher modifications and with a 48 hour

14

or less holding time, and found the monthly impingement mortality corresponding to the 95th percentile was 31 percent mortality. EPA's full analysis of impingement mortality limitations may be found in Chapter XI of the TDD. EPA found the best performance of entrainment exclusion for fine mesh screens was 73 to 82 percent for eggs and 46 to 52 percent for larvae at 0.5 mm slot sizes. The best performance of fine mesh screens for entrainment survival (and not just exclusion) was 29 to 34 percent, with zero survival of eggs and larvae under certain conditions. The next section further discusses the distinction

between entrainment exclusion and entrainment survival.

14

Holding times beyond 48 hours often result in mortality due to holding conditions rather than mortality due to impingement.

3. Exclusion Technologies

As discussed in section III.B above, screens and other technologies operate using a principle of excluding organisms from entering the cooling system. For technologies other than cooling towers, EPA generally calculated their efficacy as the mean percent efficacy of the available data. Because EPA has sufficient data to evaluate impingement mortality, its impingement mortality technology efficacy calculation accounts for mortality. However, because EPA has data on entrainment exclusion but lacks sufficient entrainment mortality data to calculate exclusion technology entrainment mortality efficacy, EPA's calculated mean entrainment percent efficacy does not account for mortality. Available data on today's proposed technology basis demonstrate that entrainment reductions associated with fine mesh technologies vary depending on life stage and mesh size. See Section VIII and the TDD for additional information on EPA's estimate of entrainment reductions for today's proposal.

In reality, excluding an organism from the cooling water intake does not minimize entrainment-related adverse environmental impacts unless the excluded organisms survive and ultimately return back to the waterbody. In the 2004 Phase II rule, EPA made the assumption that any entrainable organism which was entrained died (

i.e.,

100 percent mortality for organisms passing through the facility) and any organism not entrained survived. In other words, if a technology reduced entrainment by 60 percent, then EPA estimated 40 percent of the organisms present in the intake water would die in comparison to 100 percent in the absence of any entrainment reduction. As explained in Section VI, while it has been conjectured that certain species of eggs have been shown to survive entrainment under certain conditions, EPA has not received any new data for either the most common species or the most frequently identified species of concern described in available studies and, as such, has not altered its decision that for purposes of national rulemaking, entrainment should be presumed to lead to 100 percent mortality. Today's proposed rule would allow facilities to demonstrate, on a site-specific basis, that entrainment mortality of one or more species of concern is not 100 percent.

For today's proposal, EPA analyzed the limited data on the survivability of organisms that are “converted” from entrained to impinged on fine mesh screens. These data show that under most operational conditions, many larvae die as a result of the impact and impingement on fine mesh screens. In the case of eggs, the data indicate that some species may die, but some do survive. The data also demonstrate that if the organisms can withstand the initial impingement on the fine mesh screen, the majority of entrainable organisms survive after passing through a fish return and returning to the source water. Finally, the data indicate that survival increases as the body length and age of the larvae increases.

15

EPA seeks additional data on the survivability (or mortality) of organisms that are converted from entrained to impinged on fine mesh screens.

15

EPA found this is a very important distinction when reviewing technology efficacy, as some studies do not include the smaller, more fragile, and often non-motile stages of larvae. Older stages of larvae have started to develop avoidance responses, and generally have already started developing scales and skeletal structures.

4. Application of Requirements Based on Capacity Utilization Rate (CUR) and Waterbody Type

In the 2004 Phase II rule, the type of performance standard applicable to a particular facility (

i.e.,

reductions in impingement mortality only or impingement mortality and entrainment) depended on several factors, including the facility's location (

i.e.,

source waterbody), capacity utilization rate (CUR) (as an indicator of the rate of use), and the proportion of the source waterbody withdrawn. EPA's reanalysis of impingement and entrainment data does not support the premise that the difference in the density of organisms between marine and fresh waters justifies different standards. More specifically, the average density of organisms in fresh waters may be less than that found in marine waters, but the actual density of aquatic organisms in some specific fresh water systems exceeds that found in some marine waters. In other words, there is considerable overlap in the range of densities found in marine waters and in fresh waters. EPA also believes the different reproduction strategies of freshwater versus marine species makes broad characterizations regarding the density less valid a rationale for establishing different standards for minimizing adverse environmental impact.

In re-considering the applicability of requirements based on CUR, EPA found that even infrequently used facilities may still withdraw significant volumes of water when not generating electricity. EPA also found that load-following and peaking plants operate at or near 100 percent capacity (and therefore 100 percent design intake flow) when they are operating, and these operations occur frequently during peak summer electricity demand, coinciding with some of the most biologically sensitive portions of the year.

16

Accordingly, today's proposed requirements are not based on waterbody type or CUR. See further discussion in Section VI.

16

Some facilities continue to withdraw cooling water even when not generating for a variety of reasons: to discourage biofouling or mechanical seizures, to promote continued water flow, or to maintain a state of readiness. Peaking facilities (those with a CUR of less than 15percent, as defined in the 2004 Phase II rule) may withdraw relatively small volumes on an annual basis, but if they operate during biologically important periods such as spawning seasons or migrations, then they may have nearly the same adverse impact as a facility that operates year round.

IV. Revised Industry Description

Today's proposed rule applies to all existing electric generating and manufacturing facilities, except for certain water going vessels as described in section V. EPA has earlier fully described the electricity industry in the 2002 Phase II proposed rule (

see,

for example, 67 FR 17135) and the manufacturing industries in the 2004 Phase III proposed rule (

see,

for example, 69 FR 68459).

17

While these general descriptions continue to broadly reflect the current state of these industries, EPA has revised some of its estimates of numbers of facilities, intakes, flows, and other pertinent information. In particular, this section describes those facilities with a cooling water intake structure having a DIF of greater than 2 MGD, related cooling water use in power production and manufacturing activities, and an overview of the industry sectors in scope for today's proposed rule. See the TDD and EA for today's proposed rule for more detailed information including industry profiles.

17

EPA also addressed both electric generators and manufacturers in the 2000 Phase I proposed rule (see, for example, 65 FR 49070). The support documents for all three rule phases also provide information characterizing the affected industry sectors.

A. Water Use in Power Production and Manufacturing

Water is used for a wide variety of application in the United States. The U.S. Geologic Survey (USGS) publishes a comprehensive review of water use across industry sectors every 5 years. The 2005 report indicated that 410 billion gallons per day (BGD) of water are withdrawn for various uses. (See

DCN 10-6872.) Of that amount, approximately 201 BGD is withdrawn by electric generators, primarily for non-contact cooling,

18

plus water withdrawals by other industrial sites of 18.2 BGD for a total of 219 BGD. This total flow represents the universe of flow potentially subject to regulation under 316(b), therefore today's proposed rule may address over half of the water withdrawals in the entire nation.

19

18

Irrigation was the next highest user of water at 31% of the total withdrawn.

19

In the Phase I rule, EPA also presented data indicating that the combined 316(b) rules for electric generators and the largest manufacturing sectors would address approximately 99% of all cooling water withdrawals in the U.S. See 65 FR 49071 and the Phase I Economic and Engineering Analyses of the Proposed § 316(b) New Facility Rule.

Industrial water use (broadly defined as water used by power plants and manufacturers) falls generally into one of four categories: non-contact cooling water, contact cooling water, process water, and other water uses. A more detailed description of each category and how it relates to 316(b) is provided below.

1. Non-Contact Cooling Water

Power plants and manufacturers frequently generate large amounts of heat in their industrial processes. Non-contact cooling systems are one of the most common techniques used to dissipate this heat. In a non-contact cooling system, water is pumped through a heat exchanger or other equipment where it comes into indirect contact with heated materials in the industrial process. The water absorbs heat and is subsequently discharged (in a once-through cooling system) or recirculated (in a closed-cycle system). In these systems, the cooling water does not come into contact with any industrial materials, equipment or processes; the cooling water is contained within the cooling system for heat absorption and generally requires very little treatment (except heat removal) before discharge.

At power generators, non-contact cooling is by far the largest water use. Approximately three quarters of the total annual electricity output in the United States results from steam powered turbines. Power plants heat water inside a boiler. The water is turned to steam, at which point the temperature of the steam can be increased with further heating, allowing additional energy to be stored in the steam. The steam is then used to spin a turbine, producing electricity. The steam must then be condensed and returned to the boiler.

20

Non-contact cooling water is used to extract heat and return the steam to water in a condenser. The water can then be pumped back to the boiler for heating to repeat the cycle. Consistent with engineering theory, there are limits to the maximum efficiency of a thermal plant. Thermal power plants are actually not very efficient at converting fuel to electricity; only 30 to 60 percent of the fuel is captured as electricity, with the higher efficiency units relying on further use of the steam for further heating (usually referred to as cogeneration) or energy purposes (such as combined cycle power generators or other process warming). Depending on the type of generating unit, roughly one-third to two-thirds of the total energy generated is lost in the form of heat that must be subsequently dissipated.

20

The thermodynamic laws governing the Rankine cycle in power plants requires a heat source and a heat sink. The difference in temperature and pressure is a major factor in maintaining efficiency of the thermal engine. Additional reasons for condensing the steam include: handling pressure drops in the system, the need to remove non-condensable gases before they damage equipment, to allow make-up water to be added to the system, and to safely allow pumping of the water back to the boiler.

At manufacturers, non-contact cooling is also a significant component of water use. Some manufacturers have electric generating units which generally operate in the same manner as summarized above. In some cases, virtually all of the manufacturing facility's cooling water withdraws are for power production. In contrast to power generators, some manufacturing facilities also need a reliable source of high pressure steam for manufacturing processes. Other manufacturers may need to condense steam generated from other processes, or may need to extract heat from a raw or processed material (

e.g.,

to reduce the temperature of an intermediate petroleum or chemical product before it enters a subsequent processing stream). Some facilities engage in testing or research, and have cooling needs for these activities.

2. Contact Cooling Water

Contact cooling water differs from non-contact cooling in that contact cooling systems use cooling water in direct contact with the hot equipment or heated materials. As a result, contact cooling water may intermingle with industrial products or equipment and often will take up pollutants other than heat, such as oil and grease or metals. Contact cooling water often requires treatment for these pollutants before it may be discharged.

In power plants, cooling water may be used for contact cooling of pumping equipment, such as the cooling water pump bearings. Contact cooling water is more frequently needed by manufacturing processes, such as quench water (

e.g.,

water into which bars of hot metal are dipped for rapid cooling or control of the formed metal temperature), mechanical pulping, forming and molding processes, food and agricultural products, and petrochemical gas quenching.

3. Process Water

Process water is water that is used directly in an industrial process. While steam electric plants do have some process water, process water is more typically associated with manufacturers, as the primary industrial process at power plants (electricity generation) is usually cooled with non-contact cooling water. Examples of process water include water used to break down wood pulp in a paper mill, water that is used in creating consumer products such as beverages or personal care products, water added to facilitate transportation of materials within a manufacturing process, water needed as a raw material, and water used in numerous chemical separations processes. Process water may be used as an ingredient in the intermediate products, consumed by the products, lost to evaporation, extracted later in the process line for treatment and discharge, or further reused.

EPA has found through site visits, extensive experience with manufacturing water use in the development of previous effluent guidelines, and a general review of water uses by manufacturing processes that a significant amount of reduction, reuse, and recycling has already occurred in most manufacturing processes, in part due to pretreatment standards and NPDES permit conditions. Beyond these reductions, today's proposed rule recognizes that many industrial facilities have worked to reduce the volume of process water usage at their sites and to increase the reuse of process water for other purposes within the facility. A leading facility or an entire industry may have evolved to use less process water in its industrial process. For example, EPA has found some facilities have undergone plant wide energy audits to reduce their energy needs by up to 25 percent, providing a roughly 25 percent reduction in cooling water needs. One analysis of paper mills estimates that over 39 billion gallons daily of water is recycled and not used solely for cooling purposes by a typical mill. Further, there has been a 69 percent reduction in

the average volume of treated effluent at pulp and paper mills (see DCN 10-6902). In response to effluent guidelines discharge limitations, some facilities have reduced their compliance costs by reducing the volume of wastewater they must treat. Some effluent limitation guidelines have also established explicit requirements for flow reduction. In the case of iron and steel facilities, effluent limitations require no discharge of process wastewater pollutants (for example, see 40 CFR part 420 subpart D Steelmaking). As another observed example of the recycling of process water, a facility might use non-contact cooling water for condensing steam, but then reuse the heated water for washing raw materials instead of discharging the water.

See section V for more information on how water reuse and conservation efforts are considered in compliance alternatives for today's proposed rule.

4. Other Uses

Given the diversity of industrial processes across the U.S., there are many other industrial uses of water not intended to be addressed by today's proposed rule. Emergency water withdrawals, such as fire control systems and nuclear safety systems, are not considered as part of a facility's design intake flow. Warming water at liquefied natural gas terminals, and hydro-electric plant withdrawals for electricity generation are not cooling water uses and are not addressed by today's proposal. Other water uses might include service water and dilution water. Service water is a generic term that often refers to uses other than non-contact cooling (

i.e.,

it may include contact cooling), but can also include specialty water uses such as makeup water for radiation waste systems at nuclear power plants. Examples of dilution water are using water to reduce the concentration of a pollutant for biological treatment purposes, or to reduce the temperature of an effluent.

B. Overview of Electric Generators

In the Phase I proposal, EPA described its rationale for setting the threshold for section 316(b) national requirements at 2 MGD. As described in that proposed rule, EPA selected 2 MGD to ensure that almost all cooling water withdrawn from waters of the U.S. is covered by a national regulation. The Agency recognized that there was relatively little information currently available regarding the lower bound of withdrawals at which significant levels of impingement and entrainment and, therefore, adverse environmental impact, was likely to occur. At the time, most case studies available to the agency documenting impingement and entrainment from cooling water withdrawals focused on facilities withdrawing very large amounts of water (in most cases greater than 100 MGD). After soliciting comment and data on several different thresholds, the Agency adopted 2 MGD in the final rule. 66 FR 65288.

While the overview of the electric generating facilities in the previous Phase II and III proposed and final rules has not changed substantially, this section combines those multiple industry profiles into one overview. The information below is generally based on data from the U.S. Department of Energy's (DOE) “Annual Electric Generator Report” (Form EIA-860) and “Annual Electric Power Industry Report” (Form EIA-861), and EPA's Section 316(b) Industry Surveys. According to the 2007 EIA database, 38 of the 671 facilities have ceased operation since the Survey and 15 facilities will likely do so by the time today's proposed rule is promulgated (

i.e.,

2012). EPA also excluded 20 electric generators that are already required by state policy to comply with standards based on closed-cycle cooling, and thus for regulatory analysis purposes are not expected to be affected by the proposed rule. In addition, 39 facilities are projected to be baseline closures according to Integrated Planning Model analyses (see Section VII of this preamble and Chapter 6 of the EA for discussion of IPM analysis).

21

Based on (1) data collected from these Surveys; (2) the compliance requirements in today's proposed rule, and (3) the in-scope threshold of 2 MGD DIF (see section V for further explanation of the 2 MGD threshold), EPA has therefore identified 559 Electric Generators that are in scope of today's 316(b) Existing Facilities Proposed Rule.

22 23

21

For the purpose of this analysis, a facility is considered no longer in operation and retired if it no longer has any steam operations.

22

EPA developed the estimates of the number and characteristics of facilities expected to be within the scope of today's proposed rule, based on the facility sample weights that were developed for the suspended 2004 Phase II Final Regulation analysis. These weights provide comprehensive estimates for the total of expected in-scope facilities based on the full set of facilities sampled in the Section 316(b) Industry Surveys. See Appendix 3.A: Weighting Concepts of the Economic and Benefits Analysis report for further discussion of the sample weights used in this analysis.

23

EPA estimates of the characteristics of facilities expected to be within the scope of today's proposed rule are also based on the facility sample weights that were developed for the suspended 2004 Phase II Final Regulation analysis.

EPA estimates that the 559 steam electric generators represent 3 percent of all parent-entities, approximately 11 percent of all facilities, and over 45 percent of the electric power sector capacity. Based on the 2007 EIA database, EPA estimates that 388 of these in-scope facilities are owned by utilities and 171 in-scope facilities are owned by non-utilities.

24

The majority of electric generating facilities expected to be subject to today's proposed Existing Facilities rule, or 285 facilities, are investor-owned utilities, while nonutilities make up the second largest category. For a detailed discussion of parent-entities, see Chapter 5 and 7 of the EA (DCN 10-0002).

24

Electric utilities engage in the generation, transmission, and the distribution of electricity for sale generally in a regulated market. Utilities include investor-owned, publicly-owned, and cooperative entities.

As reported in Exhibit IV-1, approximately half of the in-scope electric generators draw water from a freshwater river (306 facilities or 55 percent), followed by lakes or reservoirs (117 facilities or 21 percent) and estuaries or tidal rivers (83 facilities or 15 percent). The exhibit also shows that most of the in-scope facilities (355 facilities or 63 percent) employ a once-through cooling system.

Exhibit IV-1—Number of In-Scope Electric Generators by Waterbody and Cooling-System Type

a

Waterbody type

Recirculating

Number

Once-through

Number

Combination

Number

Other

Number

Total

b

Number

Estuary/Tidal River

5

69

8

1

83

Ocean

0

9

0

0

9

Lake/Reservoir

36

73

7

1

117

Freshwater Stream/River

102

166

32

5

306

Great Lake

4

37

2

0

43

Total

148

355

49

7

559

a

The numbers of facilities are calculated on a sample-weighted basis.

b

Individual values may not sum to totals due to independent rounding.

C. Overview of Manufacturers

EPA obtained information on in-scope Manufacturers presented in the tables below from the EPA's Section 316(b) Industry Surveys (the Industry Screener Questionnaire (SQ) and the Industry Detailed Questionnaire (DQ)). Based on the Survey data and the compliance requirements in today's proposed rule, EPA estimates 592 industry facilities with greater than 2 MGD DIF would be subject to today's proposal; 575 of these facilities are in the 6 primary manufacturing industries.

25

25

The remaining 17 facilities have NAICS codes that do not fall into any of these six primary manufacturing industries.

Exhibit IV-2 below presents in-scope and industry-wide facility and parent entity counts by industry. The largest share of manufacturers, or 225 facilities, is in the Pulp and Paper industry, while facilities in the Chemicals and Allied Products make up the second largest category at 179 facilities.

Exhibit IV-2—Existing Manufacturers by Industry

Sector

Number of facilities

Sector total

Number in-scope

b

c

Aluminum

333

26

Chemicals

4,433

179

Food

28,938

37

Paper

597

225

Petroleum

352

39

Steel

1,525

68

Total

36,178

a

575

a

In-scope facility counts include baseline closures and exclude an estimated additional 17 facilities with NAICS codes that do not fall into any of these six primary manufacturing industries.

b

Number of in-scope facilities are weighted estimates; see Appendix 3.A of the EA for information on weights development. Individual values may not sum to totals due to independent rounding of sample-weighted (non integer) estimates.

c

These facility count estimates are based on sample weights that are applicable for estimating the number of facilities that would be within the scope of today's proposed rule. However, because of missing financial data on certain facilities, these weights were not used in assessing the economic impact of the rule. Alternative weights, which yield modestly different total in-scope facility estimates (

e.g.,

569 in-scope facilities in the Primary Manufacturing Industries instead of the 575 reported in this table), were used for developing facility count estimates in the economic impact analysis.

Exhibit IV-3 provides the distribution of manufacturing intakes by source water body and cooling system type. In total, EPA estimates that 593 intakes will be within the scope of today's rule. The vast majority (453 facilities or 77 percent) withdraw cooling water from freshwater streams or rivers, followed by Great Lakes (47 facilities). Two hundred eighty-seven (48 percent) manufacturers employ once-through cooling systems, 119 (20 percent) use closed-cycle cooling systems, and 124 (21 percent) use “combination” systems. An estimated 192 (32 percent) manufacturers have installed one or more cooling towers. In the total of 593 facility/intake combinations, EPA does not have information on the cooling water system type for 4 facilities/intakes. Note that not all manufacturers that have installed a cooling tower are classified as using closed-cycle cooling systems, as facilities with multiple cooling water systems may be “combination” systems that employ both closed-cycle and once-through cooling. Manufacturers may also list “helper” cooling towers in their survey responses, which are generally used to mitigate discharge temperatures and do not necessarily affect intake flows.

Exhibit IV-3—Number of In-Scope Manufacturers by Waterbody and Cooling-System Type

Waterbody type

Recirculating

b

Number

Once-through

Number

Combination

Number

Other

Number

Type unknown

Number

Total

a

Number

Estuary/Tidal River

1

23

16

0

0

40

Ocean

0

11

0

0

0

11

Lake/Reservoir

7

13

12

11

0

42

Freshwater Stream/River

111

215

82

41

4

453

Great Lake

0

25

14

7

0

47

Total

119

287

124

59

4

593

a

Facility counts include baseline closures and exclude 17 facilities with NAICS codes that do not fall into the six primary manufacturing industries (see Chapter 3 of EA for more detail). Individual facilities may be reported more than once in this table if they have multiple intakes while a single intake that serves both recirculating and once-through systems is counted once as a combination. Individual values may not sum to totals due to independent rounding of sample-weighted (non integer) estimates.

b

Four facilities have an unknown CWS type.

D. Other Existing Facilities

EPA's data collection efforts largely focused on five industrial sectors: Chemicals and allied products (SIC Major Group 28); primary metals industries (SIC Major Group 33); paper and allied products (SIC Major Group 26); petroleum and coal products (SIC Major Group 29); and food and kindred products (SIC Major Group 20).

26

The first four sectors use a significant portion of the cooling water withdrawn among all manufacturing industries and were more heavily targeted in EPA's industry questionnaire effort, but data were also 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 primary industry sectors discussed above account for the vast majority of non-power plant cooling water use. The data collected for these other industries suggests that the intake structure design and construction at these industries were substantially similar to the industries for which EPA did collect data, and EPA did not receive any data during the Phase III proposed rule comment period that suggests otherwise. EPA's analysis of costs and impacts includes these additional existing facilities.

26

EPA also identified many other industry sectors that use cooling water; 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.

V. Scope and Applicability of the Proposed Section 316(b) Existing Facility Rule

The proposed rule includes all existing facilities with a design intake flow of more than 2 MGD. The proposed rule also clarifies the definition and requirements for new units at existing facilities. The applicable requirements are summarized in Exhibits V-1 and V-2.

Exhibit V-1—Applicability by Phase of the 316(

b

) Rules

Facility characteristic

Applicable rule

New power generating or manufacturing facility

Phase I rule.

New offshore oil and gas facility

Phase III rule.

New unit at an existing power generating or manufacturing facility

This proposed rule.

Existing power generating or manufacturing facility

This proposed rule.

Existing offshore oil and gas facility and seafood processing facilities

This proposed rule (Case-by-case, best professional judgment).

Exhibit V-2—Applicable Requirements of Today's Proposed Rule for Existing Facilities

Facility characteristic

Applicable requirements

Existing facility with a AIF >125 MGD

Impingement mortality requirements at 125.94(b) and Entrainment Characterization Study requirements at 125.94(c) (categorical rule).

Existing facility with a DIF >2 MGD but AIF not greater than 125 MGD

Impingement mortality requirements at 125.94(b) (categorical rule).

New unit with a DIF >2 MGD at an existing facility

Impingement and entrainment mortality requirements at 125.94(d) (categorical standard).

Other existing facility with a DIF of 2 MGD or smaller or that has an intake structure that withdraws less than 25 percent of the water for cooling purposes

Case-by-case, best professional judgment.

Initially, EPA divided the 316(b) rulemaking into three phases in response to litigation and to make the best use of its resources (see Section I). However, as EPA's analysis progressed, it became clear that cooling water intake structures are operated similarly at most industrial facilities (

i.e.,

both power producing and manufacturing facilities). From a biological perspective, the effect of intake structures on impingement and entrainment does not differ depending on whether an intake structure is associated with a power plant or a manufacturer. Instead the impingement and entrainment impacts associated with intakes of the same type are generally comparable, and today's proposed rule addresses these impacts without discriminating which facilities are behind the intake structure. Thus, EPA is consolidating the universe of potentially regulated facilities from the 2004 Phase II rule with the existing facilities in the 2006 Phase III rule for purposes of today's proposed rule. This consolidation also provides a “one-stop shop” for information related to today's proposed rulemaking, as all existing facilities would be addressed in an equitable manner by the same set of technology-based requirements.

A. General Applicability

This rule would apply to owners and operators of existing facilities that meet all of the following criteria:

• The facility is a point source that uses or proposes to use cooling water from one or more cooling water intake structures, including a cooling water intake structure operated by an independent supplier not otherwise subject to 316(b) requirements that withdraws water from waters of the United States and provides cooling water to the facility by any sort of contract or other arrangement;

• The total design intake flow of the cooling water intake structure(s) is greater than 2 MGD; and

• The cooling water intake structure(s) withdraw(s) cooling water from waters of the United States and at least twenty-five (25) percent of the water withdrawn is used exclusively for cooling purposes measured on an average annual basis for each calendar year.

EPA is proposing to continue to adopt provisions to ensure that the rule does not discourage the reuse of cooling water for other uses such as process water. The definition of cooling water at 125.93 provides that cooling water 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. Therefore, water used for both cooling and non-cooling purposes does not count towards the 25

percent threshold. EPA notes this definition is the same definition used for new facilities in the Phase I rule at 125.83. Examples of water withdrawn for non-cooling purposes includes water withdrawn for warming by liquefied natural gas facilities and water withdrawn for public water systems by desalinization facilities. Further, the proposed rule at 125.91(c) specifies that obtaining cooling water from a public water system or using treated effluent (such as wastewater treatment plant “gray” water) as cooling water does not constitute use of a cooling water intake structure for purposes of this rule.

Today's proposed rule focuses on those facilities that are significant users of cooling water; only those facilities that use more than 25% of the water withdrawn for cooling purposes are subject to the proposed rule. EPA previously considered a number of approaches for clarifying applicability of the rule (66 FR 28854 and 66 FR 65288). EPA adopted the 25% threshold in each of the Phase I, II, and III rules, and EPA has not received any new data or identified new approaches that would provide further clarity to the applicability of the rule. EPA is proposing to continue to adopt 25% as the threshold for the percent of flow used for cooling purposes to ensure that a large majority of cooling water withdrawn from waters of the U.S. is addressed by requirements for minimizing adverse environmental impact. Because power generating facilities typically use far more than 25 percent of the water they withdraw exclusively for cooling purposes, the 25 percent threshold will ensure that intake structures accounting for nearly all cooling water used by the power sector are addressed by today's proposed requirements. While manufacturing facilities often withdraw water for more than cooling purposes, the majority of the water is withdrawn from a single intake structure.

27

Once water passes through the intake, water can be apportioned to any desired use, including uses that are not related to cooling. However, as long as at least 25% of the water is used exclusively for cooling purposes, the intake will be subject to the requirements of today's rule. EPA estimates that approximately 68% of manufacturers and 93% of power-generating facilities that meet the other proposed thresholds for the rule use more than 25% of intake water for cooling and thus will be addressed by today's rule.

27

Facilities may also use groundwater wells or municipal water for various uses, but the volume of these withdrawals is usually much smaller than the volume withdrawn from surface waters.

EPA decided to propose requiring the Director, exercising BPJ, to establish BTA impingement and entrainment mortality standards for an existing offshore oil and gas facility, a seafood processing vessel, or an offshore liquefied natural gas import terminal. Such a facility would be subject to permit conditions implementing CWA section 316(b) where the facility is a point source that uses a cooling water intake structure and has, or is required to have, an NPDES permit. At their discretion, permit writers may further determine that an intake structure that withdraws less than 25% of the intake flow for cooling purposes should be subject to section 316(b) requirements, and set appropriate requirements on a case-by-case basis, using best professional judgment. Today's proposed rule is not intended to constrain permit writers at the Federal, State, or Tribal level, from addressing such cooling water intake structures.

B. What is an “existing facility” for purposes of the Section 316(b) Phase II rule?

In today's proposed rule, EPA is defining the term “existing facility” to include any facility that commenced construction before January 18, 2002, as provided for in § 122.29(b)(4).

28

EPA is proposing to establish January 17, 2002 as the date for distinguishing existing facilities from new facilities because that is the effective date of the Phase I new facility rule. Thus, existing facilities include all facilities the construction of which commenced on or before this date. In addition, EPA is defining the term “existing facility” in this proposed rule to include modifications and additions to such facilities, the construction of which commences after January 17, 2002, that do not meet the definition of a new facility at § 125.83, which is the definition used to define the scope of the Phase I rule.

29

28

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 (§ 122.29(b)(4)).

29

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.

The preamble to the final Phase I rule discusses this definition at 66 FR 65256; 65258-65259; 65285-65287, December 18, 2001. EPA's definition of an “existing facility” in today's proposed regulation is intended to ensure that all sources excluded from the definition of new facility in the Phase I rule are captured by the definition of existing facility in this proposed rule.

A point source would be subject to Phase I or today's proposed rule even if the cooling water intake structure it uses is not located at the facility.

30

In addition, 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 (

e.g.,

to comply with today's proposed rule or to increase capacity). Rather, the determination as to whether a facility is new or existing focuses on whether it is a green field or stand-alone facility and whether there are changes to the cooling water intake to accommodate it.

30

For example, a facility might purchase its cooling water from a nearby facility that owns and operates a cooling water intake structure.

C. What is “cooling water” and what is a “cooling water intake structure?”

EPA has not revised the definition of cooling water intake structure for today's proposed rule. A cooling water intake structure is defined as the total physical structure and any associated constructed waterways used to withdraw cooling water from waters of the United States. Under the definition in today's proposed rule, 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 proposes for existing facilities the same definition of a “cooling water intake structure” that applies to new facilities under Phase I. Today's proposal also adopts the new facility rule's definition of “cooling water” as 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 25 percent or more of the flow is cooling water. This clarification is necessary because cooling water intake structures typically bring water into a facility for numerous purposes, including industrial processes; use as circulating

water, service water, or evaporative cooling tower makeup water; dilution of effluent heat content; equipment cooling; and air conditioning. Note however, that all intake water (including cooling and process) is included in the determination as to whether the 2 MGD DIF threshold for covered intake structures is met.

D. Would my facility be covered only 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). This is the same requirement EPA included in the Phase I new facility rule at § 125.81(a)(1). Requirements for complying with section 316(b) will continue to be applied through NPDES permits.

Based on the Agency's review of potential existing facilities that employ cooling water intake structures, the Agency anticipates that most existing facilities subject to this proposed rule will control the intake structure that supplies them with cooling water, and discharge some combination of their cooling water, wastewater, or storm water to a water of the United States through a point source regulated by an NPDES permit. Under these circumstances, the facility's NPDES permit will include the requirements for the cooling water intake structure. In the event that an existing facility's only NPDES permit is a general permit for storm water discharges, the Agency anticipates that the Director would 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 requirements set out at 40 CFR 122.28.

As EPA stated in the preamble to the final Phase I rule (66 FR 65256 (December 18, 2001)), the Agency encourages 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, the Director will necessarily apply other legal requirements, where applicable, 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.

E. Would my facility be covered if it withdraws water from waters of the U.S.? What if my facility obtains cooling water from an independent supplier?

The requirements in today's proposed rule apply to cooling water intake structures that have the design capacity to withdraw amounts of water equal to or greater than 2 MGD 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 and entrainment.

Some facilities discharge heated water to manmade cooling ponds, and then withdraw water from the ponds for cooling purposes. EPA recognizes that cooling ponds may, in certain circumstances, constitute a closed-cycle cooling system and therefore may already comply with some or all of the technology-based requirements in today's proposed rule. However, facilities that withdraw cooling water from cooling ponds that are waters of the United States and that meet the other 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. In some cases water is withdrawn from a water of the United States to provide make-up water for a cooling pond. In many cases, EPA expects such make-up water withdrawals are commensurate with the flows of a closed-cycle cooling tower, and again the facility may already comply with requirements to reduce its intake flow under the proposed rule. In those cases where the withdrawals of make-up water come from a water of the United States, and the facility otherwise meets today's criteria for coverage (including a design intake flow of 2 million gallons per day), the facility would be subject to today's proposed rule requirements.

EPA does not intend this rule to 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. The determination whether a particular cooling pond is, or is not, a water of the United States is to be made by the permitting authority on a case-by-case basis. 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/pdf/ANPRM-FR.pdf

). The agencies additionally published guidance in 2008 regarding the term “waters of the United States” in light of both the

SWANCC

and subsequent

Rapanos

case (

Rapanos

v.

United States,

547 U.S. 715 (2006)).

The Agency recognizes that some facilities that have or are required to have an NPDES permit might not own and operate the intake structure that supplies their facility with cooling water. In addressing facilities that have or are required to have an NPDES permit that do not directly control the intake structure that supplies their facility with cooling water, revised § 125.91 provides (similar to the new facility rule) 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. However, obtaining water from another entity that is withdrawing water from a water of the US would be counted as using a cooling water intake structure for purposes of determining whether an entity meets the threshold requirements of the rule. For example, 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. Section 125.91(b) specifies 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 or suppliers withdraw water from waters of the United States but that is not itself a new or existing facility subject to section 316(b), except if it is a public water system.

As a practical matter, existing facilities are the largest users of cooling water, and typically require enough cooling water to warrant owning the cooling water intake structures. In some cases, such as at nuclear power plants or critical baseload facilities, the need for cooling water includes safety and reliability reasons that would likely preclude any independent supplier arrangements. Therefore, EPA does not expect much application of this

provision. EPA is nevertheless retaining the provision in order 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 today's proposed rule, and is not explicitly exempt from today's rule (such as drinking water or treatment plant discharges reused as cooling water).

F.

What intake flow thresholds result in an existing facility being subject to this proposed rule?

There are two ways in which EPA determines the cooling water flow at a facility. The first way is based on the design intake flow (DIF), which reflects the maximum intake flow the facility is capable of withdrawing. While this normally is limited by the capacity of the cooling water intake pumps, other parts of the cooling water intake system could impose physical limitations on the maximum intake flow the facility is capable of withdrawing. The second way is based on the actual intake flow (AIF), which reflects the actual volume of water withdrawn by the facility. EPA has defined AIF to be the average water withdrawn each year over the preceding 3 years. Both of these definitions are used in today's proposed rule.

In this proposed rule EPA considered requirements based on the intake flow at the existing facility. EPA is proposing the rule to apply to facilities that have a total design intake capacity of at least 2 MGD (see § 125.91).

31

Above 2 MGD, 99.7% of the total water withdrawals by utilities and other industrial sources would potentially be covered (if the other criteria for coverage are met) while 58% of the manufacturers, 70% of the non-utilities, and 100% of the utilities would be covered. EPA also chose the greater than 2 MGD threshold to be consistent with the applicability criteria in the Phase I rule.

32

EPA continues to believe that this threshold ensures that the largest users of cooling water will be subject to the proposed rule.

31

The 2004 Phase II rule applied to existing power-generating facilities with a design intake flow of 50 mgd or greater. Facilities potentially in scope of the Phase III rule had a DIF of greater than 2 MGD.

32

See 65 FR 49067/3 for more information.

EPA proposes to continue to use a threshold based on design intake flow as opposed to actual intake flow for several reasons. In contrast to actual intake flow, design intake flow is a fixed value based on the design of the facility's operating system and the capacity of the circulating and other water intake pumps. This provides clarity, as the design intake flow does not change, except in limited circumstances, such as when a facility undergoes major modifications. On the other hand, actual flows can vary significantly over sometimes short periods of time. For example, a peaking power plant may have an actual intake flow close to the design intake flow during times of full energy production, but an AIF of zero during periods of standby. Use of design intake flow provides clarity as to regulatory status, is indicative of the possible magnitude of environmental impact, and would avoid the need for monitoring to confirm a facility's status. Also see 69 FR 41611 for more information about these thresholds.

Under current NPDES permitting regulations at § 122.21, all existing facilities greater than 2 MGD DIF must submit basic information describing the facility, source water physical data, source water biological characterization data, and cooling water intake system data. Under this proposed rule, all facilities greater than 2 MGD DIF must submit additional facility-specific information including the proposed impingement mortality reduction plan, relevant biological survival studies, and operational status of each of the facility's units.

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Certain facilities withdrawing the largest volumes of water for cooling purposes have additional information and study requirements such as the Entrainment Characterization Study as described below.

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The proposed rule contains streamlined information submission requirements for facilities that already employ closed cycle cooling.

EPA is proposing to use actual intake flow (AIF) rather than design intake flow (DIF) for purposes of determining which facilities must conduct an Entrainment Characterization Study. Environmental impacts, particularly entrainment and entrainment mortality, result from actual water withdrawals, and not the maximum designed withdrawals. Further, using actual flow may encourage some facilities to reduce their flows in order to avoid collecting supplemental data and submitting the additional entrainment characterization study. Furthermore, any facility that has DIF greater than 2 MGD is required to submit basic information that will allow the permitting authority to verify its determination of whether or not it meets the 125 MGD AIF threshold.

EPA has selected a threshold of 125 MGD AIF because a threshold of 125 MGD would capture 90 percent of the actual flows but would only establish the Entrainment Characterization Study requirements for 30 percent of existing facilities. This would significantly reduce facility burden by more than two-thirds of the potentially in-scope facilities, and would focus permit authorities on the majority of cooling water withdrawals by addressing approximately 200 billion gallons of daily cooling water withdrawals.

In today's proposal, EPA seeks to clarify that for some facilities, the design intake flow is not necessarily the maximum flow associated with the intake pumps. For example, a power plant may have redundant circulating pumps, or may have pumps with a name plate rating that exceeds the maximum water throughput of the associated piping. EPA intends for the design intake flow to reflect the maximum volume of water that a plant can physically withdraw from a source waterbody over a specific time period. This also means that a plant that has permanently taken a pump out of service or has flow limited by piping or other physical limitations should be able to consider such constraints when reporting its DIF. EPA solicits comment on whether the definition of DIF should be revised to make this clarification more apparent.

G.

Offshore Oil and Gas Facilities, Seafood Processing Vessels or LNG Import Terminals BTA Requirements Under This Proposed Rule

Under today's proposal, existing offshore oil and gas facilities, seafood processing facilities and LNG import terminals would be subject to 316(b) requirements on a best professional judgment basis. In the Phase III rule, EPA studied offshore oil and gas facilities and seafood processing facilities

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and could not identify any technologies (beyond the protective screens already in use) that are technically feasible for reducing impingement or entrainment in such existing facilities.

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As discussed in the Phase III rule, known technologies that could further reduce impingement or entrainment would result in unacceptable changes in the envelope of existing platforms, drilling rigs, mobile offshore drilling units (MODUs), seafood processing vessels (SPVs), and similar facilities as the technologies would project out from the hull, potentially decrease the seaworthiness, and potentially interfere with structural

components of the hull. EPA also believes that for many of these facilities, the cooling water withdrawals are most substantial when the facilities are operating far out at sea—and therefore not withdrawing from a water of the U.S. The EPA is aware that LNG facilities may withdraw hundreds of MGD of seawater for warming (re-gasification). However, some existing LNG facilities may still withdraw water where 25 percent or more of the water is used for cooling purposes. As discussed in section V, EPA has not identified a uniformly applicable and available technology for minimizing impingement and entrainment (I&E) mortality at these facilities. However, technologies may be available for some existing LNG facilities. LNG facilities that withdraw any volume of water for cooling purposes would be subject to case-by-case, best professional judgment BTA determinations.

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EPA studied naval vessels and cruise ships as part of its development of a general NPDES permit for discharges from ocean-going vessels. (See

http://cfpub.epa.gov/npdes/home.cfm?program_id=350

for more information.) EPA studied seafood processing vessels and oil and gas exploration facilities in the 316(b) Phase III rule.

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As discussed in today's preamble, requirements for new offshore facilities set forth in the Phase III rule remain in effect.

EPA has not identified any new data or approaches that would result in a different determination. Therefore, today's rule would continue to require that the BTA for existing offshore oil and gas extraction facilities and seafood processing facilities is established by NPDES permit directors on a case-by-case basis using best professional judgment. EPA solicits comment and data on the appropriateness of national categorical standards for these facilities.

H. What is a “new unit” and how are new units addressed under this proposed rule?

The Phase I rule did not distinguish between new stand-alone facilities and new units where the units are built on a site where a source is already located and does not totally replace the existing source. Because EPA is not changing the new facility rule definitions, an

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