Effluent Limitations Guidelines and Pretreatment Standards for the Industrial Laundries Point Source Category

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 441

[FRL-5922-2]

RIN 2040-AB97

Effluent Limitations Guidelines and Pretreatment Standards for

the Industrial Laundries Point Source Category

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: This proposed rule would limit the discharge of pollutants

into waters of the United States and publicly owned treatment works

(POTWs) from existing and new industrial laundries by establishing

pretreatment standards for existing and new sources (PSES and PSNS,

respectively). These standards are based on a determination of the

degree to which pollutants pass through or interfere with POTWs; the

best available technology economically achievable for PSES; and best

available demonstrated control technology for PSNS. EPA estimates the

proposed rule would cost approximately $139.4 million ($1997 pretax

total social cost) annually (posttax compliance costs to affected

facilities would be $93.9 million annually) while it reduces the

discharge of toxic and nonconventional pollutants to POTWs by

approximately 13 million pounds resulting in reduced discharges of 5

million pounds per year of such pollutants as well as significant

amounts of other conventional pollutants per year to waters of the U.S.

This proposed rule would also reduce the impacts of these discharges to

aquatic life and human health and reduce potential interference with

POTW operations. EPA is reserving effluent limitations guidelines for

direct dischargers since EPA has identified no direct dischargers and

has no means to evaluate performance to determine the appropriate level

of control. If any such discharges were to occur, they would be subject

to limitations set on a best professional judgement basis.

DATES: EPA must receive comments on the proposal by February 17, 1998.

EPA will conduct a public hearing on pretreatment standards on

January 15, 1998 from 9am EST to 12 noon.

ADDRESSES: Submit comments in writing to W-97-14, Ms. Marta Jordan,

Engineering and Analysis Division (4303), U.S. EPA, 401 M. St. SW,

Washington, DC 20460. Please submit any references cited in your

comments. EPA requests an original and three copies of your comments

and enclosures (including references). Commenters who want EPA to

acknowledge receipt of their comments should enclose a self-addressed,

stamped envelope. No facsimiles (faxes) will be accepted. For

additional information on how to submit electronic comments see

SUPPLEMENTARY INFORMATION ``How to Submit Comments''.

The public record for this proposed rulemaking has been established

under docket number W-97-14 and is located in the Water Docket, Room

M2616, 401 M. St. SW, Washington, DC 20460. The record is available for

inspection from 9:00 a.m. to 4:00 p.m., Monday through Friday,

excluding legal holidays. For access to the docket materials call (202)

260-3027 to schedule an appointment. You may have to pay a reasonable

fee for copying.

EPA will conduct a public hearing on pretreatment standards in

EPA's Auditorium, Waterside Mall, 401 M. St. SW, Washington, DC.

Persons wishing to present formal comments at the public hearing should

have a written copy for submittal.

FOR FURTHER INFORMATION CONTACT: For technical information contact Ms.

Marta E. Jordan at (202) 260-0817. For economic information contact Mr.

George Denning at (202) 260-7374.

SUPPLEMENTARY INFORMATION:

Regulated Entities

This proposed rule would apply to industrial laundries. An

industrial laundry is any facility that launders industrial textile

items from off-site as a business activity (i.e., launders industrial

textile items for other business entities for a fee or through a

cooperative arrangement). Either the industrial laundry facility or the

off-site customer may own the industrial laundered textile items. This

definition includes textile rental companies that perform laundering

operations. For this proposed rule, laundering means washing with

water, including water washing following dry cleaning. This proposed

rule would not apply to laundering exclusively through dry cleaning.

Industrial textile items include, but are not limited to, industrial:

shop towels, printer towels/rags, furniture towels, rags, mops, mats,

rugs, tool covers, fender covers, dust-control items, gloves, buffing

pads, absorbents, uniforms, filters and clean room items. If any of

these items otherwise considered to be industrial textile items are

used only by hotels, hospitals, or restaurants, they are not industrial

items and would not be covered by this rule.

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Examples of regulated

Category entities

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Industry.................................. Facilities that launder

industrial textile items

from off-site as a business

activity.

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This table is not intended to be exhaustive, but rather provides a

guide for readers regarding entities likely to be regulated by this

action. This table lists the types of entities that EPA is now aware

could potentially be regulated by this action. Other types of entities

not listed in the table could also be regulated by this proposed

action. To determine whether your facility is regulated by this

proposed action, you should carefully examine the Industrial Laundries

Definition section of the proposed rule. If you have any questions

regarding the applicability of this proposed action to a particular

entity, consult the person(s) listed in the ``For Further Information

Contact'' section of this proposed rule.

The proposed rule would not apply to discharges from: on-site

laundering at industrial facilities, laundering of industrial textile

items originating from the same business entity, and facilities that

exclusively launder linen items, denim prewash items, new items (i.e.,

items directly from textile manufacturers, not yet used for intended

purpose), any other laundering of hospital, hotel, or restaurant items

or any combination of these items. This proposed rule would apply to

hotel, hospital, or restaurant laundering of industrial textile items

from off-site industrial users, (e.g., shop towels). In addition, this

proposed rule would not apply to the discharges from oil-only treatment

of mops.

By linen items, EPA means: sheets, pillow cases, blankets, bath

towels and washcloths, hospital gowns and robes, tablecloths, napkins,

tableskirts, kitchen textile items, continuous roll towels, laboratory

coats, household laundry (such as clothes, but not industrial

uniforms), executive wear, mattress pads, incontinence pads, and

diapers. This list is meant to be all inclusive. By linen items, EPA

does not mean to specify a particular type of fabric, but instead the

types of items listed above.

For facilities covered under the Industrial Laundry definition,

wastewater from all water washing operations would be covered,

including the washing of linen items as long as these items do not

constitute 100 percent of the items washed.

[[Page 66183]]

Exclusions

Under Pretreatment Standards for Existing Sources (PSES), EPA is

proposing to exclude existing facilities that launder less than one

million pounds of incoming laundry per calendar year and less than

255,000 pounds of shop and/or printer towels/rags per calendar year.

EPA proposes this exclusion in order to eliminate unacceptable

disproportionate adverse economic impacts on these smaller facilities.

The excluded facilities would be disproportionately adversely affected

relative to all facilities covered by this proposed rule, as discussed

further below. If any excluded facility launders one million pounds or

more of incoming laundry per calendar year or 255,000 pounds or more of

shop and/or printer towels/rags per calendar year, it will no longer be

excluded from the standards. All of the excluded facilities are small

entities under the Small Business Administration (SBA) definition of

small entity. The excluded facilities account for less than three

percent of the pollutant removals from the waters of the U.S. than

would occur if the proposed rule were implemented without the

exclusion.

Under Pretreatment Standards for New Sources (PSNS), EPA is

proposing no exclusion since the economic projections indicate that

there would be no barrier to entry as a result of the proposed new

source standards.

Supporting Documentation

The basis for this proposed rule is detailed in five documents,

each of which is supported in turn by additional information and

analyses in the rulemaking record. EPA's technical foundation for the

regulation is presented in the Technical Development Document for

Proposed Pretreatment Standards for Existing and New Sources for the

Industrial Laundries Point Source Category. (Hereafter, ``Development

Document''; EPA Report No. EPA-821-R-97-007). EPA's economic analysis

is presented in the Economic Assessment for Proposed Pretreatment

Standards for Existing and New Sources for the Industrial Laundries

Point Source Category. (Hereafter, ``Economic Assessment''; EPA Report

No. EPA-821-R-97-008) and the Cost-Effectiveness Analysis for Proposed

Pretreatment Standards for Existing and New Sources for the Industrial

Laundries Point Source Category (Hereafter, ``Cost-Effectiveness

Analysis''; EPA Report No. EPA-821-R-97-005). EPA's statistical

analysis is presented in the Statistical Support Document for Proposed

Pretreatment Standards for Existing and New Sources for the Industrial

Laundries Point Source Category. (Hereinafter, ``Statistical Support

Document''; EPA Report No. EPA-821-R-97-006). EPA's environmental

benefits analysis is presented in the Water Quality Benefits Analysis

for Proposed Pretreatment Standards for Existing and New Sources for

the Industrial Laundries Point Source Category. (Hereinafter, ``WQBA'';

EPA Report No. EPA-821-R-97-009). These background documents are

available from the Office of Water Resource Center, RC-4100, at the

U.S. EPA, Washington, DC address shown above; telephone (202) 260-7786

for the voice mail publication request line.

How to Submit Comments

Comments may be filed electronically to

Jordan.M[email protected]. Electronic comments must be submitted as

an ASCII or WordPerfect 6.1 file avoiding the use of special characters

and any form of encryption. Electronic comments must be identified by

the docket number W-97-14 and must be received by midnight of February

17, 1998. Electronic comments on this notice may be filed online at

many Federal Depository Libraries. No confidential business information

(CBI) should be sent via e-mail.

Protection of Confidential Business Information

EPA notes that many documents in the record supporting the proposed

rule have been claimed as confidential business information (CBI) and

therefore, are not included in the record that is available to the

public in the Water Docket. To support the rulemaking, EPA is

presenting certain information in aggregated form or is masking

facility identities to preserve confidentiality claims. Further, the

Agency has withheld from disclosure some data not claimed as CBI

because release of this information could indirectly reveal information

claimed to be confidential.

Some facility-specific data, claimed as CBI, are available to the

company that submitted the information. To ensure that all CBI is

protected in accordance with EPA regulations, any requests for company-

specific data should be submitted to EPA on company letterhead and

signed by a responsible official authorized to receive such data. The

request must list the specific data requested and include the following

statement, ``I certify that EPA is authorized to transfer confidential

business information submitted by my company, and that I am authorized

to receive it.''

Organization of this Document

I. Legal Authority

II. Summary of Proposed Pretreatment Standards

III. Background

A. Clean Water Act Statutory Requirements

B. Pollution Prevention Act

C. Industrial Laundries Definition

D. Summary of Public Participation

IV. Description of the Industry

V. Summary of Data Gathering Efforts

VI. Development of the Pretreatment Standards

A. Wastewater Characteristics

B. Selection of Pollutant Parameters to be Regulated

C. Available Treatment Technologies

D. Technology and Regulatory Options Considered

E. Costs

F. Rationale for Selection of PSES and PSNS

G. Determination of Long-Term Averages (LTAs), Variability

Factors, and Limitations for PSES and PSNS

VII. Economic Analysis

A. Introduction

B. Economic Impact Methodology

C. Summary of Costs and Economic Impacts

D. Cost-Benefit Analysis

E. Cost-Effectiveness Analysis

VIII. Non-Water Quality Environmental Impacts

IX. Environmental Benefits Analysis

A. Introduction

B. Overview of the Industrial Laundry Industry's Effluent

Discharges

C. Benefits of the Proposed Rule

D. Human Health Benefits

E. Ecological Benefits Valued on the Basis of Enhanced

Recreational Fishing Opportunities

F. Benefits From Reduced Cost of Sewage Sludge Disposal and

Reduced Incidence of Inhibition

G. Discussions With POTW Operators and Pre-Treatment

Coordinators

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

Initiatives

A. Regulatory Flexibility Act (RFA) as Amended by the Small

Business Regulatory Enforcement Fairness Act (SBREFA)

B. Executive Order 12866

C. Unfunded Mandates Reform Act (UMRA)

D. Paperwork Reduction Act

E. National Technology Transfer and Advancement Act

XI. Related Rulemakings

A. Office of Solid Waste (OSW) Activities Related to This

Effort

XII. Regulatory Implementation

A. Upset and Bypass Provisions

B. Variances and Modifications

Appendix A--Abbreviations, Acronyms, and Other Terms Used in This

Notice

I. Legal Authority

This regulation is being proposed under the authority of sections

301, 304, 306, 307, 308, and 501 of the Clean

[[Page 66184]]

Water Act (CWA), 33 U.S.C. sections 1311, 1314, 1316, 1317, 1318, and

1361.

II. Summary of Proposed Pretreatment Standards

EPA proposes to establish ``Pretreatment Standards for Existing

Sources'' (PSES), and ``Pretreatment Standards for New Sources''

(PSNS). Under PSES, EPA is proposing pretreatment standards for the

entire facility wastestream based on Chemical Precipitation treatment

of the portion of facility wastewater generated by laundering the

industrial items only (CP-IL). EPA's data shows that these standards

can be met by treating only this portion of wastewater. EPA finds this

option to be the best available technology economically achievable

based on the data collected during development of the proposed rule.

CP-IL also provides effective treatment to minimize/prevent pass

through and interference at POTWs. Under PSNS, EPA is also proposing

standards based on Chemical Precipitation treatment of the portion of

facility wastewater generated only by laundering of the industrial

items since it is the best available demonstrated technology for

pretreatment and the costs are not projected to be a barrier to entry.

EPA is not developing effluent limitations guidelines and New

Source Performance Standards for direct dischargers because EPA has

identified no direct dischargers and there is no available information

with which to accurately determine ``Best Available Technology

Economically Achievable'' (BAT) or ``Best Available Demonstrated

Control Technology'' (BADCT) performance for direct dischargers.

Proposed limitations based on pretreatment control technologies would

not likely represent best available technology or best available

demonstrated technology for direct dischargers because the treatment

technologies at existing industrial laundries that EPA evaluated were

not designed for treatment prior to discharging directly to surface

waters. The type or design (i.e., size) of treatment would not

represent BAT because in all cases facilities rely on additional

treatment at POTWs. For the pollutants evaluated in this proposed rule,

the POTW's biological treatment removes from 4%-99% depending on the

pollutant. Because EPA has not identified any POTWs receiving a very

large proportion of their load (70-100%) from an industrial laundry, a

determination of direct discharge effluent limitations cannot be

performed. Thus, EPA is reserving effluent limitations guidelines and

standards for direct dischargers in this rulemaking.

This proposed rule would not apply to discharges from: on-site

laundering at industrial facilities, laundering of industrial textile

items originating from the same business entity, and facilities that

exclusively launder linen items, denim prewash items, new items (i.e.,

items directly from textile manufacturers, not yet used for intended

purpose), any other laundering of hotel, hospital, or restaurant items

or any combination of these items. This proposed rule would apply to

hotel, hospital, or restaurant laundering of industrial textile items.

In addition, this proposed rule would not apply to laundering

exclusively through dry cleaning and the oil-only treatment of mops.

The rule also would not apply to certain small industrial

laundries; see ``Regulated Entities'' discussion above, industrial

laundries definition, and rule text below.

Pursuant to CWA section 307(b)(1), indirect dischargers are

required to comply with pretreatment standards for existing sources by

three years of the effective date of the final rule. For purposes of

this rule, indirect dischargers must comply with this rule by three

years after the date of publication of the final rule.

III. Background

A. Clean Water Act Statutory Requirements

The objective of the Clean Water Act (CWA) is to ``restore and

maintain the chemical, physical, and biological integrity of the

Nation's waters.'' CWA section 101(a). To assist in achieving this

objective, EPA issues effluent limitation guidelines, pretreatment

standards, and new source performance standards for industrial

dischargers. These standards relevant to this rulemaking are summarized

here:

1. Best Available Technology Economically Achievable (BAT)--Section

304(b)(2) of the CWA

BAT effluent limitations guidelines apply to direct dischargers of

toxic and nonconventional pollutants. In general, they represent the

best existing economically achievable performance of plants in the

industrial subcategory or category. The factors considered in assessing

BAT include the age of equipment and facilities involved, the process

employed, potential process changes, non-water quality environmental

impacts, including energy requirements, and such factors as the

Administrator deems appropriate. EPA retains considerable discretion in

assigning the weight to be accorded these factors. An additional

statutory factor considered in setting BAT is economic achievability.

Generally, the achievability is determined on the basis of total costs

to the industrial subcategory and the rule's effect on the overall

industry financial health. Where existing performance is uniformly

inadequate, BAT may be transferred from a different subcategory or

category. BAT may be based upon process changes or internal controls,

even when these technologies are not common industry practice.

2. New Source Performance Standards (NSPS)--Section 306 of the CWA

NSPS are based on the best available demonstrated control

technology (BADCT) and apply to all pollutants (conventional,

nonconventional, and toxic). New facilities have the opportunity to

install the best and most efficient production processes and wastewater

treatment technologies. Under NSPS, EPA is to consider the best

demonstrated process changes, in-plant controls, and end-of-process

control and treatment technologies that reduce pollution to the maximum

extent feasible. In establishing NSPS, EPA is directed to take into

consideration the cost of achieving the effluent reduction and any non-

water quality environmental impacts and energy requirements.

3. Pretreatment Standards for Existing Sources (PSES)--Section 307(b)

of the CWA

PSES are designed to prevent the discharge of pollutants that pass

through, interfere with, or are otherwise incompatible with the

operation of publicly owned treatment works (POTWs). The CWA authorizes

EPA to establish pretreatment standards for pollutants that pass

through POTWs or interfere with treatment processes or sludge disposal

methods at POTWs. Pretreatment standards are technology-based and

analogous to BAT effluent limitations guidelines.

The General Pretreatment Regulations, which set forth the framework

for the implementation of categorical pretreatment standards, are found

at 40 CFR part 403. Those regulations contain a definition of pass

through that addresses localized rather than national instances of pass

through and establish pretreatment standards that apply to all non-

domestic dischargers. See 52 FR 1586 January 14, 1987.

[[Page 66185]]

4. Pretreatment Standards for New Sources (PSNS)--Section 307(b) of the

CWA

Like PSES, PSNS are designed to prevent the discharges of

pollutants that pass through, interfere with, or are incompatible with

the operations of POTWs. New indirect dischargers have the opportunity

to incorporate into their plants the best available demonstrated

technologies. The Agency considers the same factors in promulgating

PSNS as it considers in promulgating NSPS.

5. Best Management Practices (BMPs)

Section 304(e) of the CWA gives the Administrator the authority to

publish regulations, in addition to the effluent limitations guidelines

and standards listed above, to control plant site runoff, spillage or

leaks, sludge or waste disposal, and drainage from raw material storage

that the Administrator determines may contribute significant amounts of

pollutants. Some industrial laundry facilities have BMPs in place and

these BMPs are further discussed in Sections III.B. and VI.C.1. below

and in more detail in the Development Document.

6. CWA Section 304(m) Requirements

Section 304(m) of the CWA requires EPA to establish schedules for

(I) reviewing and revising existing effluent limitations guidelines and

standards and (ii) promulgating new effluent limitations. On January 2,

1990, EPA published an Effluent Guidelines Plan (55 FR 80), in which

schedules were established for developing new and revised guidelines

for several industry categories, including the industrial laundries

point source category. Natural Resources Defense Council, Inc.,

challenged the Effluent Guidelines Plan in a suit filed in the U.S.

District Court for the District of Columbia, (NRDC et al v. Reilly,

Civ. No. 89-2980). On January 31, 1992 the Court entered a consent

decree (the ``304(m) Decree''), which establishes schedules for, among

other things, EPA's proposal and promulgation of effluent guidelines

for a number of point source categories, including the industrial

laundries point source category. The most recent Effluent Guidelines

Plan Update was published in the Federal Register on February 26, 1997

(62 FR 8726). This plan requires, among other things, that EPA propose

the Industrial Laundries Effluent Limitations Guidelines and

Pretreatment Standards by September 1997 and take final action on the

Guidelines and Standards by June 1999.

B. Pollution Prevention Act

The Pollution Prevention Act of 1990 (PPA) (42 U.S.C. 13101 et

seq., Pub. L. 101-508, November 5, 1990) ``declares it to be the

national policy of the United States that pollution should be prevented

or reduced whenever feasible; pollution that cannot be prevented should

be recycled in an environmentally safe manner, whenever feasible;

pollution that cannot be prevented or recycled should be treated in an

environmentally safe manner whenever feasible; and disposal or release

into the environment should be employed only as a last resort * * *''

(Sec. 6602; 42 U.S.C. 13101(b)). In short, preventing pollution before

it is created is preferable to trying to manage, treat or dispose of it

after it is created. The PPA directs the Agency to, among other things,

``review regulations of the Agency prior and subsequent to their

proposal to determine their effect on source reduction'' (Sec. 6604; 42

U.S.C. 13103(b)(2)). This effluent guideline was reviewed for its

incorporation of pollution prevention.

According to the PPA, source reduction reduces the generation and

release of hazardous substances, pollutants, wastes, contaminants or

residuals at the source, usually within a process. The term source

reduction ``include[s] equipment or technology modifications, process

or procedure modifications, reformulation or redesign of products,

substitution of raw materials, and improvements in housekeeping,

maintenance, training or inventory control. The term ``source

reduction'' does not include any practice which alters the physical,

chemical, or biological characteristics or the volume of a hazardous

substance, pollutant, or contaminant through a process or activity

which itself is not integral to or necessary for the production of a

product or the providing of a service.'' 42 U.S.C. 13102(5). In effect,

source reduction means reducing the amount of a pollutant that enters a

waste stream or that is otherwise released into the environment prior

to out-of-process recycling, treatment, or disposal.

EPA has undertaken several pollution prevention related activities

involving the industrial laundries industry. Part of the efforts were

Agency wide, including the Office of Research and Development (ORD) and

EPA's Region 9, while other efforts were included as part of the

engineering studies in the development of the proposed rule.

The Agency-wide efforts, called the Industrial Pollution Prevention

Project (IP3), were multi-media and examined how industrial pollution

prevention can be incorporated into EPA's regulatory framework and how

the pollution prevention ethic can be promoted throughout industry, the

public and government. A report summarizing the results of these

efforts, entitled ``Summary Report of the Industrial Pollution

Prevention Project (IP3),'' EPA-820-R-95-007, July 1995, included the

results of two case studies involving industrial laundries. More

detailed discussions of the two studies are contained in the individual

reports, ``Pollution Prevention at Industrial Laundries: Assessment

Observations and Waste Reduction Options,'' EPA-820-R-95-010, July

1995, and ``Pollution Prevention at Industrial Laundries: A

Collaborative Approach in Southern California,'' EPA-820-R-95-012.

These studies identified a number of ``best management practices''

(BMP's) and water and energy savings technologies as potential

pollution prevention practices at industrial laundries.

Similarly, during the engineering study phase of the development of

the proposed rule, a number of potential pollution prevention practices

and technology applications were identified. Discussion of the

pollution prevention technologies and practices and their uses with

respect to this proposed rule are contained later in Section VI of this

preamble and in the Development Document.

C. Industrial Laundries Definition

An industrial laundry is any facility that launders industrial

textile items from off-site as a business activity (i.e., launders

industrial textile items for other business entities for a fee or

through a cooperative arrangement). Either the industrial laundry

facility or the off-site customer may own the industrial laundered

textile items. This definition includes textile rental companies that

perform laundering operations. For this proposed rule, laundering means

washing with water, including water washing following dry cleaning.

This proposed rule would not apply to laundering exclusively through

dry cleaning. Industrial textile items include, but are not limited to

industrial: shop towels, printer towels/rags, furniture towels, rags,

mops, mats, rugs, tool covers, fender covers, dust-control items,

gloves, buffing pads, absorbents, uniforms, filters and clean room

garments. If any of these items are used by hotels, hospitals, or

restaurants, they are not industrial items.

The proposed rule would not apply to discharges from: on-site

laundering at industrial facilities, laundering of

[[Page 66186]]

industrial textile items originating from the same business entity, and

facilities that exclusively launder linen items, denim prewash, new

items (i.e. items directly from textile manufacturers, not yet used for

intended purpose), any other laundering of hotel, hospital, or

restaurant items or any combination of these items. This proposed rule

would apply to hotel, hospital, or restaurant laundering of industrial

textile items. In addition, this rule would not apply to discharges

from the oil-only treatment of mops.

The focus of this rule is on industrial laundries that function

independently of other industrial activities that generate wastewater.

The reason EPA is excluding from applicability on-site laundries is

that EPA believes it is more appropriate to address on-site laundry

discharges at industrial facilities as part of the effluent from the

facility as a whole, for several reasons. First, many such facilities

commingle laundry wastewater with wastewater from other processes.

Second, EPA anticipates that contaminants removed from laundered items

can best be treated with process wastewater containing similar

contaminants. EPA has already established effluent limitations

guidelines and standards for 51 industries (see Development Document).

These regulations generally apply to wastewater generated from these

industries, including on-site laundering. For example, the OCPSF

effluent guidelines control discharges from garment laundering at OCPSF

facilities. For industries not yet covered by effluent limitations

guidelines and standards, it makes sense to examine these industries

and the wastewater treatment processes at these industrial facilities

in the context of the entire industrial facility, not just the

laundering portion of the facility. Addressing on-site laundering

discharges along with other industrial discharges in an industry allows

EPA to examine all of the production and processing equipment used by

the industry, all of the discharges in an industry, all the potential

wastewater treatment applicable to the industry, and all of the

economic impacts of any such national regulation for the industrial

subcategory as a whole. This is consistent with EPA's efforts to make

common-sense regulatory decisions.

EPA has also considered concerns expressed by industrial launderers

that by excluding on-site laundering of industrial items, EPA has

created an incentive for businesses to switch from using industrial

launderers covered by the rule to on-site laundering. EPA does not

believe this will happen because the average increased price per pound

of laundering as a result of the proposed rule ($0.003 per pound) is so

small that the cost of buying the equipment and operating the equipment

on-site (capital, operation and maintenance including labor, chemicals,

water) to do on-site laundering rather than using industrial launderers

would not be justified. Furthermore, an increase in pollutant loads at

the facility may necessitate additional changes in the facility's NPDES

permit if it is a direct discharger or its pretreatment permit issued

by the local POTW if it is an indirect discharger. See Section 8 of the

EA and Chapter 6 of the Development Document.

EPA also looked at the types of items that were water washed to

determine if any specific items should be excluded from regulation. EPA

reviewed the available data to determine differences in types of items

laundered, and determined that wastewater characteristics of denim

prewash items and linen items are significantly different from the

wastewater characteristics of industrial items, based on a statistical

comparison of untreated wastewater pollutant concentrations. The

pollutant concentrations in wastewater from laundering denim prewash

items and linen items are lower on average than industrial item

wastewater concentrations. The available data indicate that the

pollutant concentrations are lower for denim prewash items and linen

items, and POTWs can adequately treat wastewater streams generated from

these types of items. Therefore, EPA is excluding facilities

discharging 100 percent denim prewash items and linen item wastewater

from the scope of this proposed rule.

EPA is excluding new items from regulation since these items are

laundered prior to being used for their intended purpose and therefore

may not contain pollutants at concentrations that are incompatible with

or interfere with POTWs.

The rule also would not apply to certain small facilities; see

``Regulated Entities'' discussion above and rule text below.

D. Summary of Public Participation

EPA encouraged full public participation in developing the proposed

rule. During the data gathering activities that preceded development of

the proposed rule, EPA met with industry trade associations, state and

local governments, and industrial laundry and linen facilities. EPA has

also participated in numerous industry talks and meetings. To further

public participation on this rule, on March 4, 1997, EPA held a public

meeting about the content and status of the proposed regulation. The

meeting was announced in the Federal Register (62 FR 3849; January 27,

1997) and information packages were distributed at the meeting. The

public meeting also gave interested parties an opportunity to provide

information, data, and ideas or comments on key issues.

During the development of the proposed rule, EPA sent a screener

questionnaire to assess the number of facilities that could potentially

be considered industrial laundries, and followed this with a detailed

questionnaire to a stratified random sample of the industry under

authority of section 308 of the CWA. During the design of the detailed

questionnaire, EPA met with industry trade associations to discuss

EPA's plans to issue a questionnaire; and distributed several drafts of

the questionnaire to both the industry trade associations and the

Natural Resources Defense Council, Inc., for review and comment. The

detailed questionnaire was subsequently completed, reviewed and

approved by the Office of Management and Budget (OMB) and sent to

industrial laundry facilities. Two trade associations, the Textile

Rental Services Association of America (TRSA) and Uniform and Textile

Service Association (UTSA) sent letters to OMB supporting EPA's data

collection efforts, particularly the detailed questionnaire. EPA held

workshops for the public on how to complete the detailed questionnaire.

EPA also sent a screener questionnaire to hotels, hospitals, and

prisons to assess whether these facilities should be included in the

scope of the industrial laundries regulation. Also, following receipt

of the detailed questionnaire responses and as part of the technology

performance data gathering effort, EPA requested detailed monitoring

data from 37 facilities that had already received the detailed

questionnaire so that data specific to these facilities could be

evaluated as part of EPA's analyses.

IV. Description of the Industry

Industrial laundry facilities are located in all 50 states and all

10 EPA regions. By State, the largest number of industrial laundries

are in California. By EPA Region, the largest concentration of

industrial laundries is in Region V. Most of the industrial laundering

facilities are in large urban areas. EPA estimates that there are 1,747

facilities nationwide.

Industrial laundries vary in size from one- or two-person

facilities to large corporations that operate many facilities

[[Page 66187]]

with hundreds of employees nationwide. Annual laundry production per

facility ranges from 44,100 to 32,620,000 pounds.

Facilities launder most items using water washing. Water washing

involves washing items in water. Some facilities launder items using

dry cleaning, which involves washing items in an organic solvent.

Facilities that only dry clean (with solvent washing) are not covered

by this proposed rule. Dry cleaning is not a water washing process and

generates little, if any, wastewater, therefore EPA excluded this

process from this proposed rule. The pollutants generated in the dry

cleaning operation are recovered from the solvent through distillation

and then disposed of off-site as a hazardous waste. Air emissions from

dry cleaning may be controlled by EPA in Maximum Achievable Control

Technology (MACT) standards issued under the Clean Air Act. In some

cases, facilities combine the two processes to wash items that have

large amounts of both water soluble and organic-solvent soluble soils.

When water washing and dry cleaning are performed in series without

drying the items between the solvent and water phases, the process is

called dual-phase washing. The order in which these processes are

performed depends on the solvent used, type of soil, and drying energy

requirements. Typically, in dual-phase washing, the solvent wash occurs

prior to the water wash; none of the facilities responding to the

detailed questionnaire reported performing water washing followed by

solvent wash. Facilities performing dual-phase washing of industrial

items are covered by this proposed rule if they process industrial

textile items.

At some facilities, dust mops are not water washed, but are cleaned

and treated with heated oil instead of water. After cleaning, the oil

is extracted from the mops, leaving them coated with the desired

quantity of oil. Since the oil treatment of mops is not a water washing

process and generates no wastewater, EPA excluded this process from

this proposed regulation.

A more detailed description of the industry is included in the

Industrial Laundries Development Document contained in the record for

this proposed rule.

V. Summary of Data Gathering Efforts

EPA has collected data from various sources. EPA has collected

industry-supplied data from industrial laundries through the screener

questionnaires, detailed questionnaires and the detailed monitoring

data requests. EPA has also collected data through site visits and

sampling activities. EPA distributed a screener questionnaire in 1993

and a supplemental screener questionnaire in 1994 to develop the scope

of the rule, identify the population of the industry, and select

facilities to receive the more-detailed questionnaire. Also, in

response to comments from industrial laundry and linen trade

associations, EPA mailed 100 screener questionnaires in January 1995 to

hospitals, hotels, and prisons, which potentially operate on-site

laundries.

The industrial laundries industry detailed questionnaires were sent

to a stratified random sample of facilities that were identified from

two sources: Trade association mailing lists and information obtained

from Dun & Bradstreet. These sources produced a list of 3,726 possible

facilities generating industrial laundry wastewater. Based on responses

to the screener questionnaires, EPA estimated there were 1,960

facilities generating industrial laundry wastewater.

To minimize the burden on the respondents to the trade association

screener questionnaire, EPA chose to send detailed questionnaires to

only a selected sample group of facilities. EPA grouped facilities by

the type of items they laundered, their 1992 revenues, and the type of

wastewater treatment they had in place. The Dun & Bradstreet detailed

questionnaire (which was identical to the trade association detailed

questionnaire in content) was based on groupings of Standard Industrial

Classification codes of 7218 (industrial laundering) and 7213 (linen

supply servicing). This technique is known as stratification of the

population. Depending on the number of facilities within the strata,

EPA either censused or chose a random sample of facilities within each

strata. The chosen facilities were given survey weights based on a

facility's probability of selection. If the stratum was censused, those

facilities represent themselves only. Otherwise, the facility is given

a survey weight that allows them to represent themselves and other

facilities, within that stratum, that were not selected to receive a

detailed questionnaire.

Of the 1,960 facilities generating industrial laundry wastewater,

255 received detailed questionnaires and were used to develop survey

weights. After analyzing responses to the questionnaires, EPA chose to

exclude facilities that launder 100% linen items. EPA was left with 193

complete responses representing 1,747 industrial laundry facilities

nationwide. After examining economic impacts, EPA then decided to

exclude existing facilities that launder less than one million pounds

of incoming laundry per calendar year and less than 255,000 pounds of

shop and/or printer towels/rags per calendar year. Therefore, EPA

estimates the total number of facilities that currently would be

subject to the standards in this proposed rule to be 1,606 facilities.

All analyses of impacts of the rule are based on 193 questionnaire

respondent facilities and then the survey weight is applied to develop

national estimates for all facilities. See the Statistical Support

Document for the Industrial Laundries Pretreatment Standards for

additional information on the development of survey weights.

The responses to the detailed questionnaires provided EPA with

detailed technical, economic, and financial information from industrial

laundry and linen supply facilities. EPA used the information reported

to develop an industry profile, characterize industry production and

water use, develop pollutant loadings and reductions estimates, and

develop compliance cost estimates.

In 1995, EPA mailed out 37 requests for detailed monitoring data to

a selected group of industrial laundries. EPA identified this selected

group of facilities because they indicated in their initial responses

in the detailed questionnaires that they had available monitoring data

that EPA determined might be useful in characterizing performance of

certain treatment technologies. EPA has also collected data through

site visits and sampling activities. EPA conducted more than 30 site

visits between 1992 and 1997 to collect information about industrial

laundry processes, water use practices, pollution prevention practices,

wastewater treatment technologies, and waste disposal methods. EPA

conducted eight sampling episodes to characterize industrial laundry

wastewaters and to assess treatment technology effectiveness. A more

detailed description of these data collection efforts can be found in

Chapter 3 of the Industrial Laundries Development Document.

VI. Development of the Pretreatment Standards

A. Wastewater Characteristics

Industrial laundry facilities generate wastewater discharges from

water washing industrial textile items. All of the facilities

identified in the data gathering phase of this rulemaking were found to

be indirect dischargers and discharge all laundry process wastewater to

publicly owned treatment works.

[[Page 66188]]

The detailed questionnaires requested information on the types of

analytes tested during wastewater sampling activities performed at the

facilities in 1993. The facilities reported analytes in the following

categories: oil and grease/total petroleum hydrocarbons (O&G/TPH),

conventional pollutants, metals, organics, and pesticides.

Based on data collected through the detailed questionnaires and

sampling and analysis of industry wastewater, EPA has determined that

67% of the total industry raw wastewater toxic pollutant loading is

generated from laundering of shop and printer towels. Shop and printer

towels represent 80% of the raw wastewater toxic pollutant loading from

industrial laundry items.

B. Selection of Pollutant Parameters To Be Regulated

1. Pollutants Regulated

EPA collected data to determine the conventional, toxic/priority,

and nonconventional pollutants present in industrial laundries

wastewaters. EPA analyzed industrial laundries wastewater for 315

pollutants consisting of four conventional, 98 toxic or priority, and

213 nonconventional organic and metal pollutants, during the 1993-1996

industrial laundries sampling program. This section of the preamble

discusses how EPA determined the pollutants to be regulated under the

selected option. Other options have the same list of regulated

pollutants, although EPA's rationale for regulating these pollutants

varies depending on the option. This is discussed in Chapter 7 of the

Development Document.

EPA reduced the list of 315 pollutants to 72 pollutants for further

consideration for control using the following criteria: eliminating

pollutants never detected in laundry wastewater, pollutants detected

only a small percentage of the time in laundry wastewater (less than

10% of the time), pollutants detected in source water at concentrations

similar to concentrations in laundry wastewater, pollutants analyzed

for screening purposes, but not analyzed in a quantitative manner due

to a lack of acceptable analytical methods, and pollutants likely to be

adequately regulated on a case-by-case basis by POTWs using the current

regulations on controlling pass through and interference. (See

Development Document, Chapter 7).

For the selected option (CP-IL), the 72 pollutants were

subsequently reduced to 59 pollutants by eliminating n-alkanes (11

separate pollutants), which make up part of TPH as measured by SGT-HEM,

as well as two pollutants used as treatment chemicals (Aluminum and

Iron). EPA also eliminated 31 pollutants from regulation because these

pollutants are not removed by the treatment technology for the selected

option or because these pollutants were present below treatable

concentrations in wastewaters influent to the treatment system and

therefore would not be substantially removed by the treatment

technology. For purposes of this rule, EPA considers treatable

concentrations to be greater than 10 times the method detection level.

Based on these analyses, this left EPA with 28 pollutants under

consideration for regulation.

Before proposing pretreatment standards, EPA examines whether the

pollutants discharged by the industry pass through a POTW to waters of

the U.S. or interfere with the POTW operation or sludge disposal

practices. Generally, in determining whether pollutants pass through a

POTW, EPA compares the percentage of the pollutant removed by well-

operated POTWs achieving secondary treatment with the percentage of the

pollutant removed by facilities meeting BAT effluent limitations. In

this case, where only pretreatment standards are being considered, EPA

compared the POTW removals with removals achieved by indirect

dischargers using the candidate technology that satisfies the BAT

factors. For specific pollutants, such as volatile organic compounds or

highly biodegradable compounds, EPA may use other means to determine

pass through. For volatile compounds, a volatile override test based on

the Henry's Law Constant is used to determine pass through. If a

pollutant has a Henry's Law Constant greater than 2.4 x 10-5 atm-m \3\/

mole, it is generally determined to pass through because it is assumed

to be sufficiently volatile such that a significant portion of the

compound would not be treated by the POTW. For highly biodegradable

compounds, the pass through determination may be conducted using

engineering modeling.

The primary source of POTW data was the Fate of Priority Pollutants

in Publicly Owned Treatment Works (also known as the 50 POTW Study).

Since the 50 POTW Study did not cover all the pollutants detected in

industrial laundry wastewater, EPA used additional data from the Risk

Reduction Engineering Laboratory (RREL) database. The RREL database EPA

used included data relating to activated sludge and aerated lagoons

reflecting POTW secondary treatment from domestic and industrial

wastewater sources.

EPA eliminated three conventional pollutants (O&G, BOD, and TSS)

from regulation without conducting the percent removal comparison

because EPA believes POTWs adequately treat these parameters in the

concentrations found in IL wastewaters. Thus, these parameters are

deemed to not pass through. EPA conducted the pass through analysis on

the remaining 25 pollutants.

For this proposed rule, the percent removal comparison between

indirect dischargers using the candidate PSES-BAT technology and POTWs

and the volatile override test were used to determine pass through.

Since EPA has not identified any direct dischargers, EPA used PSES

percent removals for evaluating pass through. EPA finds that a

pollutant passes through when the average percentage removed nationwide

by well-operated POTWs (those meeting secondary treatment requirements)

is less than the percentage removed by facilities meeting candidate

PSES standards for that pollutant.

EPA eliminated POTW and PSES data from the analysis where the

influent levels for the pollutant were less than 10 times the method

detection level because EPA reasoned that low removals may simply

reflect low influent rather than ineffective treatment. For pollutants

for which none of the POTW influent concentrations exceeded 10 times

the method detection level, in order to conduct the analysis using the

50 POTW Study, EPA modified its editing criteria to eliminate data

where the influent values were less than 20 g/L or the method

detection level. EPA selected 20 g/L or the method detection

level because for pollutants with low influent concentrations, i.e.,

less than 20 g/L or the method detection level, the effluent

concentrations were consistently below the detection level and could

not be precisely quantified.

EPA then averaged the remaining influent data and the remaining

effluent data. The percent removals achieved for each pollutant were

determined from these averaged influent and effluent levels. This

percent removal was then compared to each of the PSES treatment

technology options.

Of the 25 pollutants that were evaluated, 23 were found to pass

through. A more detailed description of the results of the pass through

analysis is provided in Chapter 7 of the Development Document.

The remaining 23 pollutants were reviewed in an attempt to

streamline the control and compliance process. To do this, EPA

determined whether certain pollutants could serve as ``indicator''

[[Page 66189]]

pollutants for others. Because many of the pollutants originate from

similar sources and have similar treatability properties, setting

standards for some ``indicator'' pollutants would effectively control a

broader set of pollutants. Based on this analysis, EPA determined that

setting limits for 11 pollutants would control the remaining 23

pollutants. The list of 11 pollutants is as follows: SGT-HEM, Copper,

Lead, Zinc, Bis(2-Ethylhexyl) Phthalate, Ethylbenzene, Naphthalene,

Tetrachloroethene, Toluene, m-Xylene and o&p-Xylene. The limitations

for the Xylenes parameters contained in the proposed rule are based on

data obtained from EPA sampling episodes using EPA Method 1624 and

detailed monitoring questionnaires which reported EPA Method 624 which

are contained in Part 136 but not identified for use in measuring

Xylenes. A more detailed description of the selection of the regulated

pollutants and the pollutants controlled by regulation of these

pollutants is in Chapter 7 of the Development Document.

EPA is proposing to establish PSES and PSNS that would regulate

SGT-HEM as an indicator pollutant controlling the discharge of toxic

and nonconventional pollutants. Chemical precipitation technology has

shown that the SGT-HEM limitation is a good indicator reflecting the

correct operation of the control technology that results in removals of

both organic and metal compounds. EPA is regulating SGT-HEM rather than

total recoverable oil and grease since SGT-HEM more closely corresponds

to the toxic portion of oil and grease in industrial laundry

wastewaters, while POTWs can generally treat the other portions of oil

and grease consisting of vegetable oils, animal fats, soaps, etc. Also,

since petroleum-based oils degrade slowly at the POTWs, if sufficient

quantities exist in the influent, it can pass through the treatment

plant as discussed in Pretreatment of Industrial Wastes prepared by the

Water Environment Federation, 1994. The SGT-HEM measurement used to

develop the limitations is based on the proposed analytical method 1664

(Silica Gel Treated N-Hexane Extractable Material; ``SGT-HEM'') (61 FR

1730; January 23, 1996) and not on the current method contained in 40

CFR Part 136, which uses freon extraction. The data collected from the

detailed monitoring questionnaires are based on the current Part 136

method of measuring TPH, while the EPA sampling data are based on the

proposed Method 1664, which measures SGT-HEM. EPA proposes to regulate

SGT-HEM based on calculating limitations with EPA sampling data only.

EPA is soliciting comment or information on any additional data

regarding the use of this analytical method.

EPA is also regulating SGT-HEM based on interference. Petroleum-

based oils have a low rate of biodegradation at the POTWs. These oils

tend to coat the biological organisms, preventing or reducing oxygen

transfer and degradation of other organics as discussed in Pretreatment

of Industrial Wastes prepared by the Water Environment Federation,

1994. Pretreatment coordinators have indicated that interference can be

a problem at POTWs as discussed further in Section IX.G.

2. Pollutants Not Regulated

Tables 7-3,7-4, and 7-5 in Chapter 7 of the Development Document

list the pollutants EPA proposes not to regulate and the bases for

these decisions.

C. Available Treatment Technologies

1. Current Practice

Facilities in the detailed questionnaire reported having a range of

wastewater treatment equipment from no treatment to well-operated

Chemical Precipitation (CP) or Dissolved Air Flotation (DAF) systems.

Many industrial laundry facilities currently have no treatment (approx.

87%). Although many facilities have no treatment, some facilities have

reported that they have best management practices in place to limit

pollution. Many laundries have adopted the practice of requiring

incoming laundry to have no free liquids. Liquids may be removed

through various mechanisms at the laundry or by the customer (e.g.,

hand wringing, mechanical wringing, or centrifuging).

EPA, based on responses to the detailed questionnaire, considered

several technologies to develop standards for this industry. The major

wastewater treatment technologies reported included: Chemical Emulsion

Breaking (CEB), DAF, and CP. Other technologies reported included:

screening, equalization, gravity settling, sludge dewatering, pH

adjustment, ultrafiltration, centrifugation, filtration, oil/water

separation, carbon adsorption, air stripping and vacuum degassing. In

addition, facilities reported dry cleaning and steam tumbling as in-

process treatment technologies to remove pollutants from items prior to

water washing.

During the site visit and field sampling phase of the proposed rule

development and as follow up to responses in the detailed

questionnaires, EPA identified three major technologies for further

evaluation. These major technologies, CEB, DAF and CP are described

below.

CEB is used primarily to remove oil and grease, as well as other

related pollutants, from process wastewater streams. CEB is effective

in treating wastewater streams having stable oil-in-water emulsions.

The treatment consists of lowering the pH of the wastewater to break

the emulsions, and skimming the surface of the water to remove the

floating substances.

DAF is used to remove suspended solids, oil, and some dissolved

pollutants from process wastewater. DAF treatment involves coagulating

and flocculating the solids and oil and grease and then floating the

resulting floc to the surface using pressurized air injected into the

unit and removing the floating material. Some DAF systems also have the

means to remove material that settles to the bottom of the tank on a

continuous basis.

CP is used to remove dissolved pollutants from process wastewater.

Precipitation aids, such as lime, work by reacting with the cations

(e.g., metals) and some anions to convert them into an insoluble form

(e.g., metal hydroxides). The pH of the wastewater also affects how

much pollutant mass is precipitated, as pollutants precipitate more

efficiently at different pH ranges. Coagulation and flocculation aids

are usually added to facilitate the formation of large agglomerated

particles that settle more readily and can be removed from the bottom

of the clarifiers.

In addition to these major technologies identified and described

above, a number of controls that are common to or make up part of the

treatment systems at many facilities include: screening, equalization,

gravity settling and pH adjustment or neutralization.

Screening is often performed prior to subsequent treatment to

remove grit and suspended solids that may potentially damage or clog

process equipment located downstream.

Equalization controls fluctuations in flow and pollutant loadings

in process wastewater prior to treatment to overcome operational

problems that may result from the fluctuations, reduce the size and

cost of the downstream treatment units, and improve the overall

performance of these units.

Gravity settling is primarily used to remove suspended solids,

including pollutants that are in insoluble particulate form such as

metals from industrial laundry process wastewater.

[[Page 66190]]

Most facilities currently have gravity settling alone without chemical

addition. The wastewater is typically collected in a catch basin where

the water is detained for a period of time, allowing solids with a

higher specific gravity to settle to the bottom of the tank and solids

with a lower specific gravity to float to the surface. The

effectiveness of the solids settling depends on the characteristics of

the laundry wastewater, the length of time the wastewater is held in

the catch basin and the regular maintenance of the basin, especially

regular removal of the solids.

pH adjustment is used to increase treatment effectiveness--since

many treatment technologies used in this industry are sensitive to pH

fluctuations--and to meet discharge requirements.

Other wastewater treatment technologies identified as being used in

this industry are carbon adsorption, air stripping with and without

carbon adsorption, ultrafiltration, centrifugation, sludge dewatering,

filtration, oil/water separation without chemical addition, and vacuum

degassing.

Carbon adsorption uses activated carbon to remove

dissolved VOCs from process wastewater.

Air stripping is normally performed in a countercurrent,

packed tower, or tray tower column. The wastewater is introduced at the

top of the column and allowed to flow downward through the packing

material or trays. Air is simultaneously introduced at the bottom of

the column and blows upward through the water stream. Volatile organics

are stripped from the water stream, transferred to the air stream, and

carried out of the top of the column with the air, preferably through

activated carbon. The treated water is discharged out of the bottom of

the column.

Ultrafiltration uses semipermeable polymeric membranes to

separate emulsified or colloidal materials suspended in the process

wastewater stream by pressurizing the liquid so that it permeates the

membrane.

Centrifugation applies centrifugal forces to settle and

separate higher density solids from process wastewater. Some facilities

use centrifugation as a method to separate solids from wastewater; and

centrifugation can be chemically enhanced to remove additional

pollutants.

Sludge dewatering processes remove water from sludge

generated from the wastewater treatment process. Many industrial

laundry facilities (31%), including some of those with only screening

or gravity settling but no additional treatment, reported dewatering

their sludge prior to disposal. The types of dewatering devices used in

the industrial laundries industry include: plate and frame filters,

rotary vacuum filters, and sludge dryers.

Industrial laundries use bag and sand filters to remove

solids from wastewater. Among the facilities visited or responding to

the detailed questionnaire, filtration most common to this industry

included bag filters and sand filters.

Oil/water separation without chemical addition technology

removes a separated oil layer. The oil layer can be removed by a

skimming device or decanted from the wastewater.

EPA sampled one facility using vacuum degassing. At this

facility the vacuum degasser was intended to remove organic compounds.

EPA identified the following in-process treatment technologies that

remove pollutants from industrial laundry items prior to water washing:

Dry cleaning involves cleaning soiled items with an

organic-based solvent that removes VOCs as well as organic pollutants

(e.g., oil and grease). The pollutants generated in the dry cleaning

operation are recovered from the solvent through distillation and then

disposed of off-site as a hazardous waste.

Steam tumbling involves agitating soiled items within a

modified washer/extractor while steam is injected into the chamber. The

tumbling items contact the steam, which removes the VOCs. The steam is

condensed, and the pollutants are recovered through a phase separation

and are then disposed of as a hazardous waste.

2. Technologies Rejected From Further Consideration

The technologies described above were those reported in the

detailed questionnaire. EPA then determined that certain major

technologies should be considered as best available in the industry and

chose to sample these candidate technologies.

Based on the data EPA gathered and evaluated, EPA rejected the

following technologies from further consideration: bag filtration, sand

filtration, ultrafiltration, oil/water separation and vacuum degassing.

EPA removed sand and bag filtration from the list of technology

options because data for both sand filtration and bag filtration showed

poor removals of most pollutants.

EPA sampled one facility using ultrafiltration. Based on

conversations with industrial laundries and corporate contacts, many

laundry facilities that have tried ultrafiltration as wastewater

treatment have reported problems with fouling, and solids building up

in the unit requiring constant maintenance and/or inhibiting the

performance of the unit. Some facilities have replaced ultrafiltration

units with dissolved air flotation or chemical precipitation units.

Therefore, EPA did not further consider ultrafiltration as a regulatory

option.

EPA investigated oil/water separation as part of the data analysis.

After some assessment, EPA determined that oil/water separation without

chemical addition to lower the pH is not nearly as effective as CEB.

EPA sampled one facility using CEB.

Vacuum degassing, which was sampled for the removal of organics,

did not remove organic pollutants effectively. Therefore, EPA did not

continue evaluating this technology as an option. See Chapter 9 of the

Development Document.

D. Technology and Regulatory Options Considered

1. Initial Regulatory Options for PSES and PSNS

For the proposed rule, EPA initially developed the following

regulatory options based on evaluating screener and detailed

questionnaire data submitted by industry. In addition to using the

major technologies described above (CEB, DAF, and CP), EPA considered

regulatory options using stream splitting, a common practice at some

facilities. Stream splitting provides a means of treating a portion of

the total wastewater generated at industrial laundries. Stream

splitting may be used to isolate and treat a stream with a higher

pollutant load, while a stream with a lower load is either recycled and

reused or discharged to the POTW without treatment. A divided trench

and sump system is used to split process wastewater streams. Washer

modification (dual valves) is also part of stream splitting.

The initial regulatory options included standards based on:

Chemical Emulsion Breaking of wastewater from the washing of heavy

industrial items only (CEB-heavy), Dissolved Air Flotation of

wastewater from the washing of heavy industrial items only (DAF-heavy),

Chemical Precipitation of wastewater from the washing of heavy

industrial items only (CP-heavy), Dissolved Air Flotation of all

wastewater (DAF-all), Chemical Precipitation of all wastewater (CP-all)

and a Combined Option establishing limits based on using either DAF or

CP of all wastewater (Combo-all). For the

[[Page 66191]]

``heavy'' options in this proposed rule, heavy is defined as wastewater

from the laundering of shop towels, printer towels, fender covers,

filters and mops. As part of the options listed above EPA also included

gravity settling, screening, equalization, pH adjustment, sludge

dewatering (for CP and DAF only), and the use of common pollution

prevention practices (or best management practices).

Based on evaluation of the effluent concentration data from these

site visits and sampling, some of the initial options were no longer

pursued, or were further modified. The DAF-heavy and CP-heavy options

were determined not to be appropriate because at some facilities the

untreated waste streams for those items not considered to be heavy by

the facility had higher concentrations of pollutants than the average

treated effluent concentrations for the same pollutants. This problem,

in part, was caused by the different mix of ``heavy'' items being

laundered at the different facilities from which wastewater data were

obtained. If sufficient treated effluent data could be obtained related

to the laundering of the same set of ``heavy'' items, the heavy option

may be a feasible alternative for the final rule. However, any option

that would regulate only the wastewater from washing heavy industrial

items would require an in-plant compliance monitoring location or a

separate discharge point to the sewer after the treatment system which

could increase the compliance burden on the control authority. In some

cases where the end-of-pipe monitoring for some parameters was still

required based on local limits, the costs of this option would increase

due to the in-plant plus end-of-pipe monitoring. At the same time, EPA

recognizes that targeting the rule to heavy items only could reduce

costs to the regulated community by removing some facilities from the

scope of the rule. Some facilities could also save money by segregating

heavy items from other items and treating only the heavy items. The

CEB-heavy option was determined not to be feasible due to less

pollutant removals at higher costs than the DAF-heavy and CP-heavy

options. See Chapters 9 and 10 of the Development Document. EPA

solicits comments and data on the feasibility of either the DAF or CP

heavy only options where the definition of heavy includes only the

laundering of printer rags, shop towels, mops, fender covers and

filters.

2. Modified Regulatory Options

EPA evaluated proposing pretreatment standards for the entire

facility wastestream based on only a portion being treated,

specifically only the portion of facility wastewater generated by

laundering industrial items was costed for treatment by DAF and CP. The

basis for costing partial treatment is that EPA's data shows these

standards can be met by treating only the portion of wastewater from

laundering industrial items. EPA called these options DAF-IL, CP-IL,

Combo-IL and Combo-IL2Lim.

EPA evaluated the combo option in two scenarios. Under the first

scenario (Combo-IL) either DAF or CP would form the basis of the

standards by establishing one set of standards based on the less

stringent of the two standards for each regulated pollutant for the two

technologies. Having one set of such standards would allow some

flexibility for facilities with either technology to meet the

limitations. This option would base the standard for each parameter on

the lesser performance between DAF and CP, and based on current data,

remove less total pollutants.

Under the second combo scenario (Combo-IL2Lim), facilities with DAF

in place as of the publication date of the proposal would have to

comply with the standards based on DAF and all other facilities would

have to comply with standards based on CP.

EPA additionally considered an organics control option, which

involves the use of steam tumbling for treatment of shop and printer

towels and mops for removal of organic pollutants.

EPA also considered proposing a no regulation option, but rejected

it because the available discharge loadings data identified a number of

pollutants that were estimated to pass through or have the potential to

interfere with POTW operations.

Under Section 307(b) of the CWA, EPA is directed to establish

pretreatment standards that prevent the discharge of pollutants to

POTWs that interfere with, pass-through, or are otherwise incompatible

with the operation of POTWs. EPA has interpreted the pass-through

provision to mean that a pollutant ``passes through'' the POTW if the

removal efficiency of an available pretreatment option is greater than

the removal efficiency of the POTW. Based on available data, EPA

believes that pretreatment technology is available to the industrial

laundries industry that removes some pollutants with greater efficiency

than is achieved by most POTWs.

Nonetheless, both the Small Business Regulatory Enforcement

Fairness Act (SBREFA) panel, which is comprised of representatives from

three federal agencies (EPA, the Small Business Administration, and the

Office of Management and Budget), and small entity representatives

recommended that EPA solicit comments on a no regulation option. EPA

has the discretion under the CWA to decline to regulate an industrial

subcategory based on lack of pollutant loadings, the small number of

affected facilities, or other relevant factors, one of which could be a

determination that there is no pass through or interference due to the

pollutant discharges of the industry. The SBREFA Panel noted, among

other things, that ``the total pollutant loadings (pre-regulation) are

not as high for this industry as they were for most industries with

effluent guidelines in place and that the regulatory options are not as

cost-effective as those selected for most other effluent guidelines.''

In addition, EPA notes that if we did not use a toxic weighting factor

for TPH (see Section VII.E below), the cost per pound equivalent

removed of this rule relative to previous rules would be still higher.

As indirect dischargers, industrial laundries are subject to the

general prohibitions in the pretreatment requirements and any

additional pretreatment requirements set by local POTWs. Any pass-

through or interference problems potentially caused by a laundry can be

directly addressed by the POTW through the establishment of appropriate

local limits. Some POTWs support the no regulation option because it

provides them with the flexibility to design less stringent local

pretreatment requirements that are appropriate to local conditions.

Other POTWs prefer to have EPA establish uniform pretreatment standards

because of the resources required to determine and enforce local limits

on a case-by-case basis.

EPA solicits comments on the no regulation option and encourages

commenters to support such arguments with information and data,

particularly data on the loadings and the degree of pass through at

POTWs. Further, EPA encourages commenters to explain how the no

regulation option would be consistent with those requirements of

sections 301, 304 and 307 of the CWA that require the control of

pollutants discharged to POTWs that pass through or interfere with POTW

operations.

Based on the above evaluations, EPA decided to evaluate the

following options: organics control(OC), combo-IL, combo-IL2Lim, DAF-

IL, and CP-IL.

E. Costs

EPA estimated the cost for industrial laundries to implement each

of the

[[Page 66192]]

model technologies considered for the proposed standards. These

estimated costs are summarized in this section and discussed in more

detail in the Development Document. All cost estimates in this preamble

are expressed in 1997 dollars. The cost components reported in this

section represent estimates of the investment cost of purchasing and

installing equipment, and the annual operating and maintenance costs

associated with that equipment. In section VII, costs are expressed in

terms of a different cost component, total annualized costs, which are

used to estimate economic impacts. Annualized costs better describe the

actual compliance costs that a facility/company would incur, allowing

for interest, depreciation, and taxes. A summary of the economic impact

analysis for the proposed regulation is contained in section VII of

today's notice. See also the Economic Assessment.

EPA estimated the cost for implementing the candidate PSES by

calculating the engineering costs of meeting the required effluent

reductions for each industrial laundry facility. EPA used information

from the 193 in-scope facilities responding to the questionnaire as the

basis for the cost estimates calculated by the cost model for these

facilities. Using statistically calculated facility weighting factors,

EPA then extrapolated the results to the entire industrial laundries

industry. The facility-specific engineering cost assessment for PSES

began with a review of present wastewater treatment technologies at

each facility. For facilities without treatment-in-place equivalent to

the candidate PSES technology options, EPA estimated the cost to

upgrade the facility's existing treatment technology or if none was in

place install treatment to achieve the proposed discharge standards.

EPA based these estimates on vendor quotes and engineering judgment.

Facilities that had treatment in place equivalent to that option were

costed for monitoring only. EPA believes that this approach

overestimates the costs to achieve the candidate PSES standards because

many facilities can achieve the standards without using all of the

components of the technology basis or by treating wastewater from

certain items only. For the current options, EPA assumed treating all

wastewater except for wastewater from linen items, denim prewash items,

and new items. EPA solicits comments on these costing assumptions. See

Development Document for more details. The following table summarizes

by option, the capital expenditures, the annual operating and

maintenance costs, and the annual pretax cost for implementing PSES.

Note that pretax costs are presented here, but are not used in

determining economic achievability of the proposed rule on the

industrial laundries industry. Rather, the posttax costs, the costs

industry actually bears, are used to determine economic achievability

(see Table VII.C.3.1). The annual costs in this table below also

account for the ability of some facilities to haul wastewater at a

lower cost than the cost of installing and operating the pollution

control technology.

Table VI.E.1. Costs of Implementing PSES Regulations

[In millions of 1997 dollars]

------------------------------------------------------------------------

Annual

operating

Options Capital and Annual

costs maintenance pretax cost

costs

------------------------------------------------------------------------

OC................................. 290 35.0 65.7

CP-IL.............................. 470 86.6 136.4

DAF-IL............................. 364 138.2 176.8

Combo-IL........................... 440 98.5 145.1

Combo-IL2Lim....................... 364-470 86.6-138.2 136.4-176.8

------------------------------------------------------------------------

In addition to costs, EPA estimated the removals for industrial

laundry facilities for the following technology options.

Table VI.E.2. Removals for PSES Options

------------------------------------------------------------------------

Option Removals (lb-eq)

------------------------------------------------------------------------

OC................................................... 5,278

CP-IL................................................ 407,358

DAF-IL............................................... 402,921

Combo-IL............................................. 402,253

Combo-IL2Lim......................................... 402,921-407,358

------------------------------------------------------------------------

The estimated removals summarized in the table are discussed in

more detail in the Development Document. The removals are based on the

difference between each facility's current discharge load and each

facility's discharge load after implementation of the proposed rule.

F. Rationale for Selection of PSES and PSNS

1. Existing Sources

After considering all of the technology options described above,

and in light of the factors specified in section 304(b)(2)(B) of the

CWA, EPA has tentatively selected Chemical Precipitation-IL (CP-IL) as

the technology basis for the pretreatment standards for existing

sources in the proposed rule. As discussed in more detail below, the

proposed rule would exclude existing facilities laundering less than

one million pounds of incoming laundry per calendar year and less than

255,000 pounds of shop and/or printer towels/rags per calendar year.

However, these excluded facilities would still be subject to local

pretreatment standards where appropriate. If any excluded facility

launders one million pounds or more of incoming laundry or 255,000

pounds of shop and/or printer towels/rags per year, it will no longer

be excluded from the standards. Further, once a facility is subject to

the standards, even if the facility becomes ``small'' as defined by the

rule's exclusion, it would still be subject to the rule. This is

because once a facility has installed wastewater treatment to meet the

requirements of the rule, it is technologically available and

economically achievable for the facility to continue to comply with the

standards.

The record establishes that this option is technically available.

As discussed in more detail below, EPA also tentatively concludes that

this option is economically achievable and represents the best

performance that is economically achievable. Further, this option has

acceptable non-water quality environmental impacts.

The specific standards proposed in this rule were derived based on

a statistical analysis of the performance of

[[Page 66193]]

chemical precipitation in industrial laundries that are sufficiently

similar to all facilities that are subject to the standards, as

discussed below and in the Development Document. Although chemical

precipitation is currently only used at 3 percent of industrial laundry

facilities, chemical precipitation is a widely used technology in other

industries such as the metal products and machinery industry, chemicals

and allied products industry and centralized waste treatment industry.

Thus, although CP is only used at three percent of industrial

laundry facilities, EPA is well within its authority to select it as

BAT. BAT means not that the technology be in routine use, but rather

that the technology must be available at a cost and at a time that the

Administrator determines to be reasonable, and that the technology has

been adequately demonstrated if not routinely applied. See American

Frozen Food Institute v. Train, 539 F.2d 107, 132 (D.C. Cir. 1976),

citing ``A Legislative History of the Water Pollution Control Act

Amendments of 1972'' (Comm. Print 1973), at 1469-1470. See also

Kennecott v. United States EPA, 780 F.2d 445, 448 (4th Cir. 1985). (The

BAT standard reflects the intention of Congress to use the latest

scientific research and technology in setting effluent limits, pushing

industries toward the goal of zero discharge as quickly as possible. In

setting BAT, EPA uses not the average plant, but the optimally

operating plant--the pilot plant that acts as a beacon to show what is

possible.); Association of Pacific Fisheries v. EPA, 615 F.2d 794, 816

(9th Cir. 1980) (BAT can be based on statistics from a single plant).

EPA has determined that the selected option for the industrial

laundries category is economically achievable for the following

reasons. EPA estimates that the proposed standards would cause 33

industrial laundry facility closures and a direct loss of 2,872 jobs

from facility closure (although longer term, net direct losses are

estimated to total only 470 as the market equilibrates). The number of

incremental closures (33) is about 1.9 percent of in-scope industrial

laundry facilities (1,747) and 2.1 percent of the (1600) facilities in

the facility level analysis. The loss of jobs associated with these

closures is about two percent (short-term) or 0.4 percent (longer term)

of the category employment. EPA's bankruptcy analysis shows that 65

firms (of 681 total firms in the firm level analysis, or 9.5 percent)

move into the bankruptcy likely category under the proposed standards

(i.e., they would have trouble obtaining the financing necessary to

install the required pollution control equipment). In all cases, these

are single-facility firms where EPA's closure analysis shows that the

facility would still be financially viable (making money) after

complying with the rule if financing could be obtained. In this

industry in particular, where demand is relatively inelastic and

facilities are geographically tied to their service areas, production

is not easily shifted to another geographic area. Therefore, EPA

predicts that these bankruptcies do not mean that the facilities will

close down, but rather that they may be a target for acquisition by

another entity that has better access to financing for pollution

control equipment and continue to operate with all or nearly all

employees. Based on this analysis, EPA finds the standards to be

economically achievable as that term is used in the CWA.

EPA has concluded that application of the selected option is not

economically achievable for the smallest industrial laundries that

launder less than one million pounds of incoming laundry per calendar

year and less than 255,000 pounds of shop and/or printer towels/rags

per calendar year. If EPA were to require standards based on chemical

precipitation, the closure rate among facilities with annual revenues

less than $1 million, would be 28.9 percent, as compared to 4.4 percent

for the category as a whole without the size exclusion. This economic

impact is clearly disproportionate and EPA is exercising its discretion

under sections 301 and 304 of the CWA to determine what is economically

achievable to establish this exclusion.

Further, EPA believes that it is appropriate to establish this

exclusion because it alleviates the harshest economic impact, facility

closure, without excluding from the national standards a significant

pollutant load. A chart illustrating what EPA found follows:

Table VI.F.1.1--Closures and Removals With and Without Exclusion

----------------------------------------------------------------------------------------------------------------

Closures Pollutant Removals (lb-eq)

-------------------------------- taking POTW removals into

account

Option Without -------------------------------

exclusion With exclusion Without

exclusion With exclusion

----------------------------------------------------------------------------------------------------------------

CP-IL........................................... 70 33 416,920 407,358

----------------------------------------------------------------------------------------------------------------

As the chart demonstrates, the exclusion would alleviate closures

for the smallest facilities. EPA also notes that the excluded

facilities account for less than three percent of the pollutant

removals from the waters of the U.S. that would occur if the rule were

implemented without the exclusion. Thus, the exclusion represents a

reasonable approach to addressing the disproportionate adverse economic

impacts of the rule consistent with the objectives and requirements of

the CWA.

The Agency also evaluated higher thresholds reflecting up to 3 to 5

million pounds of total production and from 255,000 to 500,000 pounds

of shop and/or printer towels. See Section X.A. for more discussion of

the SBREFA panel findings. The Agency solicits comments on these

alternative exclusions as well as the exclusion proposed today.

Finally, EPA has determined that the selected option has acceptable

non-water quality environmental impacts discussed further in section

IX, below and in chapter 14 of the Development Document.

EPA evaluated the organics control option as a low cost

alternative, however, this technology was not effective in terms of

pollutant removals and was rejected.

EPA, based on the data gathered to date, did not select DAF-IL

because EPA's current data show that CP technology achieves slightly

higher toxic pollutant removals. While, DAF is currently more prevalent

in the industry than CP (EPA estimates that approximately eight percent

of the industry are currently using DAF compared to approximately four

percent using CP) EPA estimates that DAF is more costly to operate than

CP on an annualized basis. DAF requires a smaller initial capital

investment and

[[Page 66194]]

may be attractive to many facilities for this reason, however, EPA

estimates that its lower capital costs are more than offset by higher

operating and maintenance costs associated with the need to chemically

condition the flotation residual sludges, making it more expensive than

CP overall.

The Combo-IL option would base the standard for each parameter on

the lesser performance between DAF and CP, and current data indicate

that it would remove slightly fewer pounds of pollutants than if all

facilities were required to meet standards based on CP only.

EPA also rejected the Combo-IL2Lim option because current data

indicate that overall this option did not remove as many pollutants as

the CP option and would cost more than the selected CP-IL option. See

Chapters 9 and 12 of the Development Document. EPA solicits additional

information and data on the costs and performance of both CP and DAF

technologies used to treat wastewaters from laundering industrial

textile items. Although EPA rejected the options based on DAF, the

pollutant removals were similar enough for further consideration of the

DAF and Combo options. If additional data and information provides

support that DAF is generally comparable to CP in removing pollutants,

EPA would consider for the final rule basing standards on either the

less stringent of CP or DAF standards or on DAF for those facilities

that already have it in place and on CP for all other facilities.

If the standards for the final rule are based on the Combo-IL2Lim

option, the standards based on DAF technology would apply to those

facilities with DAF in place as of the publication date of this

proposal. Although EPA estimates that CP is cheaper to operate on an

annualized basis than DAF (even for facilities that already have DAF

installed), EPA's costing analysis for the Combo-IL and Combo-IL2Lim

options assumed that some facilities that already have DAF installed

would continue to operate it if given the choice because of constraints

on financing. This is the explanation for the results in Table VI.E.1

that a less stringent regulatory option would apparently have higher

compliance costs. EPA recognizes that while its cost estimates are

based on simplifying assumptions that it believes to be correct on

average, actual costs will vary from facility to facility, so that DAF

may in fact be the cheaper technology for some facilities. This is

particularly likely for facilities that already have DAF installed. In

this case, the Combo-IL and Combo-IL2Lim options would be expected to

entail lower national compliance costs than either the DAF-IL or the

CP-IL options. EPA is soliciting information that may help it refine

its estimates of the relative costs on a facility-by-facility basis of

DAF and CP. Given that EPA's estimates that CP's removals are only

slightly better than DAF, this could also be a factor in determining

whether CP only, or both CP and DAF represent BAT and/or BADCT in

addition to the other factors specified in Section III of this

preamble.

2. New Sources

After considering all of the technology options described above,

and in light of the factors specified in sections 306 and 307 of the

CWA, EPA has selected CP-IL as the technology basis for the

pretreatment standards for new sources in the proposed rule. As stated

in Section III.A. of the preamble, PSNS are analogous to NSPS, which in

turn are based on best available demonstrated control technology. New

facilities have the opportunity to install the most efficient treatment

technologies and under NSPS, EPA is to consider standards that will

eliminate pollution to the maximum extent feasible. These PSNS are

based on the performance of CP at one or more facilities using CP

depending on the pollutant. Although CP is currently only used at three

percent of industrial laundry facilities, CP is a widely used

technology in other industries such as the metals products and

machinery, chemicals and allied products, and centralized waste

treatment industries. See, e.g., American Iron and Steel Institute v.

EPA, 526 F.2d 1027, 1058 (3rd Cir. 1975) (By demonstration, it will be

sufficient that there be one operating facility which demonstrates that

the level can be achieved or that there is sufficient information and

data from a relevant pilot plant or semi-work plant to provide the

needed economic and technical justification for such new source).

EPA has determined that the proposed PSNS are economically

achievable and present no barrier to entry. EPA has found that overall

impacts from the proposed IL standards on new sources would not be any

more severe than those on existing sources, since the costs faced by

new sources generally will be the same as or less than those faced by

existing sources. It is typically easier to incorporate pollution

prevention technologies such as those identified in the Development

Document in Chapter 8 & 10, and it is less expensive to incorporate

pollution control equipment into the design at a new plant than it is

to retrofit the same pollution control equipment in an existing plant

because no demolition is required, and space constraints, which can add

to costs if specifically designed equipment must be ordered, are not an

issue in new construction. Because most new sources face either less or

similar costs than existing sources, EPA has determined that PSNS

requirements should not pose a barrier to entry on the basis of

competitiveness for new facilities based on available data. EPA also

has shown CP to be an economically achievable option for existing

sources. Therefore, the same requirements for PSNS also should have an

acceptable level of impact on new facilities.

EPA also examined whether there would be a barrier to entry for

small new sources. EPA's analysis showed no closures of new sources at

single-facility firms. See section VII.C.2.b of this preamble or the EA

for more details. Thus, EPA proposes not to exclude these new sources

based on a finding that it is economically achievable for these new

sources to comply with the CP standards contained in the proposed rule.

EPA solicits comments on its proposed finding that the proposed CP

option is economically achievable and does not constitute a barrier to

entry for new small sources and on its proposal not to include a small

facility exclusion for PSNS. See also section VII.B. below.

G. Determination of Long-Term Averages (LTAs), Variability Factors, and

Limitations for PSES and PSNS

Although chemical precipitation (CP) is widely used in other

industries, CP only exists at an estimated three percent of industrial

laundry facilities. EPA based the proposed standards on sampling data

EPA gathered at one industrial laundry facility using CP and from data

submitted by as many as four CP facilities (depending on the pollutant)

in response to EPA's detailed monitoring questionnaire. Because

effluent from even the best performers in an industry can reasonably be

expected to vary both above and below the long-term average (LTA)

concentration for a given pollutant, even when treatment systems are

operating optimally, EPA calculates limitations and standards by

multiplying LTAs by variability factors to insure that reasonable

excursions from the LTAs do not result in violation of the CWA.

The proposed limitations, as presented in today's notice, are

provided as daily maximums and monthly averages for SGT-HEM and daily

maximums for all other regulated pollutants. Monitoring was assumed to

occur four times per month for SGT-

[[Page 66195]]

HEM and one day per month for all other pollutants. Monitoring

requirements are determined by the pretreatment control authority, but

EPA has assumed a schedule that might be appropriate. However, EPA

notes the high costs to facilities ($20,000-$23,000 annually) of

monitoring at this frequency and requests comment on whether it should

recommend a less frequent schedule to pretreatment control authorities.

The limitations for a pollutant are the product of the pollutant

long-term average and the pollutant variability factor. The procedures

used to estimate the pollutant LTAs and variability factors are briefly

described below. A more detailed explanation is provided in the

Statistical Support Document.

The LTA of a pollutant for each facility was calculated based on

either an arithmetic average or the expected value of the distribution

of the samples, depending on the number of total samples and the number

of detected samples for that pollutant at that facility. The pollutant

long-term average for a treatment technology was the median of the

long-term averages from the facilities using CP.

EPA calculated variability factors by fitting a statistical

distribution to the data. The distribution was based on an assumption

that the furthest excursion from the LTA that a well operated plant

using chemical precipitation could be expected to make on a daily basis

was a point below which 99% of the data for that facility falls, under

the assumed distribution. The daily variability factor for each

pollutant at each facility is the ratio of the estimated 99th

percentile of the distribution of the daily pollutant concentration

values divided by the expected value of the distribution of the daily

values. The pollutant variability factor for a treatment technology was

the median of the pollutant variability factors from the facilities

with that technology. The daily maximum limitation is a product of the

pollutant long-term average and the pollutant variability factor.

The monthly maximum limitation is also calculated as the product of

the pollutant long-term average and the pollutant variability factor,

but the pollutant variability factor is based on the 95th percentile of

the distribution of daily pollutant concentrations.

By accounting for these reasonable excursions above the LTA, EPA's

use of variability factors results in standards that are generally well

above the actual LTAs. Thus, if a facility operates its treatment

system to meet the relevant LTA, EPA expects the plant to be able to

meet the standards. Variability factors ensure that normal fluctuations

in a facility's treatment are accounted for in the limitations.

As stated above, EPA rejected an option that would be based on one

set of standards for facilities with DAF currently in place and another

set of standards based on CP for all other facilities. Although EPA has

rejected this option for the reasons stated in section VI.D above, EPA

has also provided standards based on sampling data EPA gathered at two

facilities using DAF and from data submitted in response to EPA's

detailed monitoring questionnaire by as many as four facilities

(depending on the pollutant) that were using DAF. These DAF standards

are shown for comparative purposes below. EPA solicits comments on both

the proposed CP and DAF standards and encourages commenters to

substantiate their comments by submitting data.

Table VI.G.1--Pretreatment Standards

----------------------------------------------------------------------------------------------------------------

DAF CP

---------------------------------------------------------------

Pollutant parameter Daily Monthly Daily Maximum Monthly

Maximum(mg/L) Average (mg/L) (mg/L) Average (mg/L)

----------------------------------------------------------------------------------------------------------------

Bis (2-Ethylhexyl) Phthalate.................... 0.44 .............. 0.13 ..............

Ethylbenzene.................................... 0.73 .............. 1.64 ..............

Naphthalene..................................... 0.24 .............. 0.23 ..............

Tetrachloroethene............................... 1.35 .............. 1.71 ..............

Toluene......................................... 5.63 .............. 2.76 ..............

m-Xylene........................................ 2.11 .............. 1.33 ..............

o&p-Xylene...................................... 0.98 .............. 0.95 ..............

Copper.......................................... 1.83 .............. 0.24 ..............

Lead............................................ 0.52 .............. 0.27 ..............

Zinc............................................ 3.47 .............. 0.61 ..............

TPH (as measured by SGT-HEM).................... 42.9 21.3 27.5 15.4

----------------------------------------------------------------------------------------------------------------

EPA is proposing concentration-based limits. An alternative is

mass-based limits calculated by multiplying the concentrations in the

table above by the 75th percentile production normalized flow of 3.13

gallons per pound laundered. However, EPA found no relationship between

gallons per pound laundered and items washed, total production or the

amount of recycle/reuse. Because of this, even if operators were

employing the appropriate level of control, it would be difficult to

develop achievable mass limits.

Some stakeholders have advocated mass-based standards while others

prefer concentration-based standards. POTWs generally prefer

concentration-based standards because it is much easier for them to

implement. Mass-based standards require information about flow and/or

production both to set the standards and to enforce them, but have the

added advantage of encouraging flow reduction. EPA solicits comments on

this issue.

VII. Economic Analysis

A. Introduction

This section describes the capital investment and annualized costs

of compliance with the proposed industrial laundries pretreatment

standards and the potential impacts of these compliance costs on

current and future facilities and firms in the industrial laundries

industry. EPA's economic assessment is presented in detail in the

Economic Assessment (EA) included in the rulemaking record. The EA

estimates the economic effect of compliance costs on facilities, firms,

employment, domestic and international markets, inflation,

distribution, environmental justice and industrial laundries customers.

EPA also has conducted an Initial Regulatory Flexibility Analysis

(IRFA) under the Regulatory Flexibility Act (RFA) as amended by the

Small Business Regulatory Enforcement Fairness Act (),

[[Page 66196]]

which estimates effects on small entities, and a cost-effectiveness

analysis of all evaluated options. Except where otherwise noted, only

the results for the option used as the basis for the proposed rule are

presented here. Impacts for other options are presented in Section C.3

below and in the EA.

B. Economic Impact Methodology

1. Introduction

This section (and, in more detail, the EA and record for the

proposed rule) evaluates several measures of economic impacts that

result from compliance costs. The analysis in the EA consists of eight

major components: (1) an assessment of the number of facilities that

could be affected by this rule; (2) an estimate of the annual aggregate

cost for these facilities to comply with the rule using facility-level

capital and operating and maintenance (O&M) costs; (3) an evaluation,

using a financial model, of compliance cost impacts on facilities' cash

flow (closure analysis); (4) an evaluation, using a financial model, of

compliance cost impacts on the financial health of firms in the

industry (firm failure analysis); (5) an evaluation of secondary

impacts such as those on employment, markets, inflation, distribution,

environmental justice and industrial laundry customers; (6) an

assessment of the potential for impact on new sources (barrier to

entry); (7) an analysis of the effects of compliance costs on small

entities pursuant to the RFA as amended by; and (8) a cost-benefit

analysis pursuant to E.O. 12866.

All costs are reported in this preamble in 1997 dollars, with the

exception of cost-effectiveness results, which, by convention, are

reported in 1981 dollars. The EA report presents all costs in 1993

dollars. In the EA, any costs not originally in the base year (1993)

dollars have been inflated or deflated to 1993 dollars using the

Engineering News Record Construction Cost Index, unless otherwise noted

in that report (see the EA for details). This same cost index is used

to further inflate costs to 1997 dollars for this preamble. Generally,

other indices are used to inflate benefits to 1997 dollars, as cited in

the EA. The primary source of data for the economic analysis is the

1994 Industrial Laundries Industry Detailed Questionnaire (Section 308

Survey). Other sources include government data from the Bureau of the

Census, industry trade journals, and several preliminary surveys of the

industry, including the 1989 Preliminary Data Summary for Industrial

Laundries, the 1993 Industrial Laundries Industry Screener

Questionnaire, the 1994 Industrial Laundries Supplemental Screener

Questionnaire, and EPA's Development Document for this rulemaking.

2. Methodology Overview

Central to the EA is the cost annualization model, which uses

facility-specific cost data and other inputs (discussed in Chapter 12

of the Development Document) to determine the annualized capital and

operating and maintenance (O&M) costs of improved wastewater treatment.

This model uses these costs along with an annual compliance monitoring

cost with the industry-specific real cost of capital (discount rate)

over a 16-year analytic time frame to generate the annual cost of

compliance for the selected option, as well as the other options

considered during the course of the proposal effort. EPA chose the 16-

year time frame for analysis based on the depreciable life for

equipment of this type, 15 years according to Internal Revenue Service

(IRS) rules, plus approximately one year for purchasing and installing

the equipment. As an alternative to installing wastewater treatment,

facilities may choose, within many of the technology options

considered, to have wastewater hauled offsite (a decision handled

within the model, as discussed below). The model generates the

annualized cost for each option (including the annual cost of hauling

wastewater) for each facility in the survey, which is then used in the

facility and firm analyses, discussed below.

In the facility analysis, EPA models the economic impacts of

regulatory costs on individual industrial laundry facilities,

irrespective of ownership. In this part of the analysis, the model uses

the annualized costs of each option, compares them to the alternative

annual wastewater hauling costs (where this alternative is available),

and selects the lowest of the two.

EPA then reduces this resulting cost to take into account that

portion of compliance costs that can be passed through to customers.

Compliance costs are adjusted downward by a factor (the cost pass-

through factor) that is calculated using EPA's model of the industrial

laundries market. This model, which quantifies the price and quantity

changes in the industrial laundries market due to the proposed rule,

shows that the industry will be able to pass some portion of the

compliance costs of the proposed rule through to their customers and

calculates the percentage that can be passed through. The market model

is a simultaneous equation for determining price and quantity using

supply and demand curves for the industry that EPA developed based on

data in the Section 308 Survey and U.S. Census Bureau economic data.

EPA estimates, for this industry, that 32 percent of compliance costs

can be passed through to customers. Although EPA believes that its cost

pass-through projection is reasonable, an analysis in the EA shows that

a zero-cost pass through assumption produces nearly identical closure

analysis results.

EPA then converts the adjusted annual cost for each facility into a

present value change in cash flow, which is subtracted from the

estimated baseline present value of facility cash flow. Estimated

baseline present value of facility cash flow is based on the average of

three years of financial data from each facility in the Section 308

survey under an assumed no-growth scenario (i.e., the annual cash flow,

calculated as the 3-year average, is expected to remain the same over

the 16-year period of analysis). If the change in present value of cash

flow (which is derived from the adjusted annualized costs of

compliance) causes a facility's estimated cash flow to change from

positive in the baseline to zero or negative after implementing the

requirements of the proposed rule over the 16-year period of analysis,

EPA considers the facility likely to close (i.e., liquidate) as a

result of the regulation. This approach is somewhat different from

methodologies used in other EAs and economic impact analysis for

manufacturing industries, since salvage value is not considered in the

closure analysis here. For a number of reasons, outlined in the EA (see

Section 5 and Appendix C), EPA found that using salvage value in a

closure analysis for this industry is not the best way for determining

whether a facility would be liquidated. EPA found that baseline

closures calculated using salvage value accounted for a large

percentage (nearly 30 percent) of existing facilities. Furthermore, EPA

found that many of these closures using salvage value were driven by

current assets. EPA believes that firms would not be likely to

liquidate on the basis of high current assets (cash on hand) relative

to cash flow. EPA also believes that costs of liquidation could easily

equal or exceed salvage value in low-asset service industries such as

this one, unlike in the more highly capital-intensive manufacturing

industries.

Note that facilities that reported negative cash flow over the 3-

year period of the survey are considered baseline closures and are not

considered affected by the rule for several reasons:

(1) Many of these facilities (50 non-excluded facilities) are

nonindependent

[[Page 66197]]

facilities owned by multifacility firms. These facilities may be

transferring production (laundering services at or near cost) from

other facilities owned by the same parent company, or otherwise not

expected to be self-supporting by the parent. EPA analyzes the parent

firms of these facilities in the firm-level analysis and as long as the

parent firm can afford to install and operate compliance equipment in

these facilities, EPA assumes these facilities will close neither in

the baseline nor postcompliance. (2) OMB guidance suggests that

agencies develop a baseline that is ``the best assessment of the way

the world would look absent from the proposed regulation. That

assessment may consider a wide range of factors, including the likely

evolution of the market * * *'' EPA's best assessment is that some

facilities currently operating may not remain in business to install

and operate the pollution control equipment. EPA cannot say for certain

which facilities these may be, but can assert that those facilities

that are currently considered not financially viable because their cash

flow is zero or negative (among those not owned by multifacility

firms--57 non-excluded facilities) are the likeliest facilities to

close without ever installing and operating pollution control

equipment. It is possible that a facility estimated to be a baseline

closure may remain open, but the converse is also true--a facility

projected to remain open until it is subject to the rule may actually

close independently of the effects of the rule (both results might be

equally possible). Thus, consistent with OMB guidance, EPA estimated

postcompliance closures by counting closures that are projected to

close solely due to the effect of the proposed rule.

In the firm failure analysis, EPA uses the adjusted annualized

costs to compute a change in earnings, assets, liabilities, and working

capital at the firm level (accounting for costs for multiple

facilities, where applicable). These postcompliance financial figures

are used in a computerized model of financial health on a firm-by-firm

basis. The model uses an equation known as ``Altman's Z'', which was

developed based on empirical data to characterize the financial health

of firms. This equation calculates one number, based on the financial

data, that can be compared to index numbers that define ``good''

financial health, ``indeterminate'' financial health, and ``poor''

financial health. All firms whose ``Altman's Z'' number changes such

that the firm goes from a ``good'' or ``indeterminate'' baseline

category to a ``poor'' postcompliance category are classified as likely

to have significant difficulties raising the capital needed to comply

with the proposed rule, which can indicate the likelihood of firm

bankruptcy, or loss of financial independence.

As the panel noted, there is uncertainty associated with both the

methodology for predicting facility and firm closures, and the figures

used to make those projections, such as interest rate, assumption of

the life of the pollution control equipment and compliance costs. One

of the small entity representatives consulted during the outreach

process specifically questioned several of EPA's costing assumptions,

relating to interest rate, use life of equipment, and labor

requirements to operate a treatment system. EPA recognizes the

uncertainties associated with its analyses, and has performed

sensitivity analyses in the EA that addresses some of these issues. EPA

believes that its choice of methodology and input data is appropriate

and results in a conservative calculation of costs and facility and

firm closures, but solicits comments and data that would support more

refined analyses for the final rule.

EPA also notes that a methodological concern has been raised

regarding its facility closure analysis that relates to its use of cash

flow as the appropriate measure of funds available to cover the

compliance costs of the proposed rule. Cash flow is defined as income

plus depreciation. It has been suggested that calculating a facility's

costs without including depreciation fails to account for the future

cost of replacing existing capital as it wears out, and thus

underestimates long-term costs and overstates funds available for

compliance. EPA, however, believes it is appropriate to include

depreciation in the funds available for compliance because, while under

standard accounting practices depreciation is deducted from gross

revenue during the calculation of income, it does not represent an

expenditure actually incurred in the current period but rather an

amortization of costs incurred in a previous period. EPA requests

comments on its use of cash flow as an appropriate measure of funds

available for compliance.

In the employment analysis, EPA undertakes several types of

analyses, all based in part on a type of analysis known as input-output

analysis. These employment analyses include: (1) a national-level

analysis for estimating employment gains and losses throughout the U.S.

economy in all industry sectors using both compliance costs and

employment losses driven by facility closures to determine a range of

possible gross and net (losses minus gains) impacts at the national

level; (2) a regional impact analysis using employment losses driven by

facility closures (closure losses) to determine whether impacts on

individual communities might be experienced; and (3) an analysis using

EPA's estimate of market-determined production losses to derive an

estimate of direct, net employment losses in the industrial laundries

industry alone. This last analysis is undertaken to determine losses

within the industrial laundries industry alone because while closure

losses can be considered the immediate impact of the proposed rule on

the industry, production-driven losses might be greater or less than

closure losses over time, as equilibrium in the market is attained.

Furthermore, closure losses do not account for the fact that some

portion of production workers might transfer wholly or in part to

operating pollution control equipment, thus some accounting for

employment gains within the industry is necessary.

National-level analysis. EPA uses input-output analyses to

determine the effects of the regulation using national-level employment

and output multipliers. Input-output multipliers allow EPA to estimate

the effect of a loss in output in the industrial laundries industry on

the U.S. economy as a whole. Every loss in output in the industrial

laundries industry results in employment losses in that industry.

Additionally, these losses have repercussions throughout the rest of

the economy, and the output and employment multipliers allow EPA to

calculate the total losses in output and employment nationally using

the output loss estimated for the industrial laundries industry alone.

See Section Seven of the EA for more details.

Regional-level analysis. EPA also determines the impacts on

regional-level employment, which is estimated using facility closures

and employment at those closing facilities. These analyses are based on

the use of Bureau of Economic Analysis RIMS II input-output regional

(not national-level) multipliers, which allow EPA to determine

employment impacts on other sectors of the regionally economy that

depend on the industrial laundries industry. EPA uses the regional-loss

estimates using the facility closure-driven estimates of employment

losses to perform a community impact analysis, which investigates the

potential for impacts on community unemployment rates based on the

[[Page 66198]]

immediate dislocation effects of facility closures. Firm failures are

not considered in the job loss or community impact analyses because in

all cases, these firms are single-facility firms whose facility is

shown to be financially viable after complying with the rule. The

impact of the proposed rule on these facilities thus might be the loss

of their financial independence, as they would likely be purchased by a

larger firm and continue to operate with all or nearly all employees.

This is not always the case in all industries, but in this industry,

facilities are geographically tied to their service areas and thus

their production is not easily shifted to another geographic area.

Furthermore, they are generally not asset-rich and are thus not

suitable for acquisition for the purpose of selling off assets rather

than for operation.

EPA conducts a regional analysis because even if net employment

effects (losses minus gains) are relatively small on a national level,

an employment loss might still have a substantial negative effect on an

individual community (see the EA for more details).

Industry level analysis. Facility closure losses could overstate or

understate employment losses strictly within the industrial laundries

industry on a longer-term basis, since total longer-term employment

losses are driven by production losses and employment losses from

closures are driven by costs of compliance, and these two losses may

not be equal. Therefore, EPA uses its market model to predict any

reductions in production and the subsequent employment effects

(production-driven effects) within the industrial laundries industry

alone. This analysis also accounts for some gains within the industrial

laundries industry due to a need for operators of pollution control

equipment. This analysis also uses the national-level input-output

multipliers to compute a direct loss of employment on the basis of

output effects. EPA considers this employment loss the longer-term

impact of the rule on the industrial laundries industry.

EPA investigates additional secondary impacts qualitatively and

quantitatively. These impacts include impacts on domestic and

international markets, impacts on substitutes for industrial laundry

services, impacts on inflation, distributional impacts, and impacts on

environmental justice. EPA also investigates the impact of the rule on

domestic markets. The rule will affect domestic markets to the extent

that excluded facilities can affect market share. EPA makes an

assessment of the potential for effect on domestic market on the basis

of pounds of laundry processed by excluded facilities to the total

pounds processed by the industry.

EPA also looks at impacts on customers. The agency obtained IRS

data on the major customer groups and summed total operating costs for

their major customers. Under the worst-case assumption that all

compliance costs would be borne by only 10 percent of these major

customers, EPA conservatively determined a percentage by which total

operating costs might increase due to the proposed rule. Additionally,

EPA investigates the potential for any impacts on hotels, hospitals,

prisons and other such establishments should they be accepting

industrial items from off-site sources.

Another key analysis EPA performs is an analysis to determine

impacts on new sources, which is primarily a ``barriers-to-entry

analysis'' to determine whether the costs of the PSES would prevent a

new source from entering the market. This analysis looks at whether new

industrial laundries would be at a competitive disadvantage compared

with existing sources. Market effects and barriers to entry associated

with the small source exclusion also are qualitatively investigated.

Also, pursuant to E.O. 12866, EPA performs a cost-benefit analysis.

This analysis looks at the social cost of the regulation measured as

the pretax costs of compliance plus government administrative costs

plus the costs of administering unemployment benefits. See Section IX

of this preamble for more details of the benefits analysis.

C. Summary of Costs and Economic Impacts

1. Overview of the Economic Assessment Analyses

The EA focuses first on the costs and economic impacts of the

proposed rule, using the best data and information available--that

reported by industry in the Section 308 Survey data--as representative

of the regulatory baseline. The analysis addresses costs and economic

impacts of the pretreatment (PSES and PSNS) requirements for industrial

laundries wastewater. As noted earlier, EPA has elected to reserve Best

Practicable Control Technology Currently Available (BPT), Best

Conventional Pollutant Control Technology (BCT), BAT, and NSPS

requirements. Direct discharger requirements will be determined on a

case-by-case basis under CWA section 402(a)(1).

2. Total Costs and Impacts of the Proposed Rule

This section presents the total costs and impacts of the standards

in this proposed rule. EPA estimates that there are 1,747 industrial

laundries facilities (given the items processed, the definition of an

industrial laundry item in the proposed rule, and Section 308 Survey

statistical weights). Of these, 141 facilities meet the definition of

``small'' under EPA's proposed designation of the small industrial

laundries exclusion. This exclusion is defined as all facilities

laundering less than one million pounds of incoming laundry per

calendar year and less than 255,000 pounds of shop and/or printer

towels/rags per calendar year. Of these excluded facilities, all meet

the definition of ``small'' under Small Business Administration (SBA)

Guidelines. There are 903 firms owning the 1,747 facilities. A total of

837 out of the 903 firms or 93 percent are ``small businesses''

according to SBA Guidelines (revenues less than $10.5 million per

year). The analysis looks separately at single-facility firms (those

firms where the firm and the facility are a single entity) and

multifacility firms (firms that own more than one facility; generally,

these firms are larger than single facility firms). There are a total

of 830 single-facility firms out of 903 total firms in the industry (92

percent), the vast majority of which meet the SBA definition of small.

The total cost of the proposed rule is based on engineering cost

estimates. To develop these estimates, EPA identified candidate end-of-

pipe treatment technologies and grouped appropriate technologies into

regulatory options. EPA then developed cost equations for capital and

O&M costs for each of the technologies.

For each wastewater treatment technology, EPA developed a cost

module. The following cost modules make up the selected CP option:

screen, stream splitting, equalization, chemical precipitation, pH

adjustment, sludge dewatering, building and monitoring. For further

detail, see Chapter 12 of the Development Document.

Total costs of the proposed regulation are estimated to be $93.9

million (see Table VII.C.2.1).

Table VII.C.2.1.--Costs of Proposed PSES Option ($1997)

------------------------------------------------------------------------

Posttax

Annual

Option Costs ($

million)

------------------------------------------------------------------------

PSES: CP-IL................................................ $93.9

------------------------------------------------------------------------

[[Page 66199]]

a. Impacts From Pretreatment Standards for Existing Sources (PSES)

EPA estimates that the proposed rule would result in 33 facilities

(2.1 percent of all facilities in the facility-level analysis and 1.9

percent of all in-scope facilities) closing as a result of compliance

costs. All are single-facility firms. EPA estimates total direct job

loss of 2,872 full-time equivalents (1 FTE = 2,080 hours of labor) as a

result of the facility closures projected under the proposed rule. The

employment losses associated with closures overstate actual net losses

to the industry, because some employment gains in the industry will

occur (although the gains may not occur in the same geographic location

or at the same time as the losses). These gains include operators of

pollution control systems that might be hired by facilities and

additional workers hired to expand some production at facilities

located in market areas with facility closures (lost production from

closures is estimated to exceed the amount of reductions required to

meet market equilibrium conditions). EPA estimates the actual net

direct losses in the industrial laundries industry would be 470 FTEs

(0.36 percent of total industry employment), considerably less than the

number of direct losses predicted solely on the basis of closures.

Additional to these closures, EPA predicts that the proposed

regulatory option would affect the ability of 65 firms (all of which

are single-facility firms) to raise the capital needed to purchase and

install the pollution control equipment. This impact may result in the

loss of financial freedom for these firms, up to and including the sale

of the firms to larger multifacility firms. This impact does not mean

that these firms will close; all these firms are viable at the facility

level and are thus considered likely to be of interest to other firms

for acquisition and operation.

EPA predicts employment impacts to the national-level economy on

the basis of input-output analysis described above. Based on this

analysis, which estimates both national employment losses stemming from

increased output in the industrial laundries industry and offsetting

gains stemming from increased output of pollution control equipment,

the proposed option would result in a net loss of employment at the

national level in all industry sectors of 582 to 5,534 FTEs, which is

about 0.0005 to 0.005 percent of the U.S. labor force in 1997. Net

output loss would be thus $100.7 million at most, which is about 0.001

percent of Gross Domestic Product in 1997. Thus EPA expects, at the

national level, that the IL Standards would have negligible impact on

U.S. employment and output.

EPA also investigated employment impacts in the industrial

laundries industry alone. EPA determined that within the industrial

laundries industry, many nonclosing facilities might actually

experience gains in production (and thus gains in output and

employment). This is because when facilities close, other nonclosing

facilities in the local market area might expand production to take

over a portion of the closing facility's production. Thus, while the

proposed rule is estimated to produce a long-term net employment loss

to the industrial laundries industry of 470 FTEs, this is less than the

short-term direct employment and output losses that would be calculated

on the basis of closures alone.

For the community-level analysis, under the conservative approach

for estimating community employment impacts described above, EPA

determined that most closures will result in a maximum change in a

community's unemployment rate of 0.32 percent or less and EPA estimates

no single community will sustain impact on its unemployment rate of

greater than one percent.

EPA expects the proposed rule to have a minimal impact on

international markets. Domestic markets might initially be slightly

affected by the exclusion for very small facilities, since these

facilities may not be subject to the same requirements; however, the

number of these facilities, the small volume of their production

relative to total industry production (0.7 percent), and the likelihood

that they are not concentrated in any one market area, are expected to

limit the effects of any competitive advantages they may have. EPA's

economic analysis shows that there is a very slight increase in price

($0.003 per pound) and that customers are not very sensitive to price

changes; therefore, dischargers subject to the proposed rule would be

able to compete with those dischargers excluded from the proposed rule.

Further, if any excluded facility annually launders more than one

million pounds of laundry or more than 255,000 pounds of shop and/or

printer towels/rags per calendar year, it will no longer be excluded

from the standards. The small excluded facilities are also the most

likely of any size group to exit the market regardless of the rule.

Given these observations, it is likely that this group of existing

sources would shrink in size over time, and any small market effects

would be reduced. As discussed below in the Regulatory Flexibility

Analysis section, EPA believes that the small impacts of the exclusion

on markets are far outweighed by the benefits of reducing adverse

economic impacts on the most vulnerable firms in the industry.

EPA also expects the proposed rule to have minimal impacts on

inflation, insignificant distributional effects, and no major impacts

on environmental justice. The rule also would have minimal impacts on

industrial laundries customers. The price increase expected as a result

of the proposed option is an average of $0.003 per pound, or 0.4

percent of current average price. Because this percentage increase is

so small compared to even the modest rates of inflation currently

experienced, it is unlikely that most customers would be able to

distinguish this effect from the effect of inflation. If EPA assumes

that only 10 percent of the customers in the major groups of customers

absorb 100 percent of the cost of the rule, total compliance costs

would increase customers' operating costs by an average of less than

0.02 percent. Therefore, EPA does not expect price increases to have a

major impact on customers.

EPA also investigated the likelihood that customers might

substitute disposable items for laundered items or begin operating on-

site laundries. Both the substitution of disposable items for laundered

items and the installation and operation of on-site laundries are

associated with potential negative impacts on customers that might

deter them from choosing these potential substitutes. Disposable items

can be more expensive to use than laundered items, may not meet quality

requirements (e.g., disposable printer towels tend to be linty) and

are, in certain circumstances, regulated under other environmental

statutes. Meanwhile because of the high initial costs to install

equipment on-site and the small increase in price of industrial laundry

services discussed earlier, on-site laundries could require years

before any cost savings might be realized. Also, EPA's market model

provides a means for estimating price increase and reduction in

quantity demanded for industrial laundering services at the higher

price. This analysis shows a very small decrease in production as a

result the proposed rule, 0.3 percent of baseline production. Given the

disincentives towards those substitutes indicated above, EPA does not

expect the proposed rule to cause customers to substitute disposable

items for laundered items or commence industrial laundering on-site for

industrial laundries services in any major way.

[[Page 66200]]

The small reduction in production of 0.3 percent is more likely to

occur from customers delaying cleaning (rather than weekly pickups of

mats, for example, some might substitute biweekly pickups) or dropping

certain rental items, such as uniforms used only for image purposes.

This decline in production is negligible compared to the approximate 4

percent per year growth in revenues seen for the industry between 1990

and 1993, according to Section 308 data.

EPA also determined that impacts on hotels, hospitals, and prisons,

which could be processing industrial laundry from offsite sources are

likely to be negligible. First, EPA's survey of a subset of hotels,

hospitals, and prisons turned up no facilities that were currently

accepting industrial items from offsite sources. Second, EPA's survey

shows that some of these sources could meet the definition of the small

industrial laundry exclusion. Several process considerably less than 1

million pounds of laundry per year, thus it is possible that if any of

these types of establishments do accept industrial items from offsite

sources, some might be excluded from coverage on the basis of pounds

laundered. Finally, if there were facilities large enough not to

qualify for an exclusion, their major source of revenues are from their

primary business, not from operating a laundry. Therefore, EPA expects

that these facilities can afford to comply with the proposed

limitations by offsite shipping of industrial laundry wastewater.

Because EPA's data on these types of establishments is not exhaustive,

however, the Agency solicits comment and additional data on this issue.

b. Impacts From Pretreatment Standards for New Sources (PSNS)

EPA investigated all options considered under PSES as potential

PSNS options. EPA has tentatively selected the CP-IL option for both

sets of proposed standards. This section presents EPA's assessment of

impacts on new sources. EPA assesses impacts on new sources by

determining whether the proposed rule would result in a barrier to

entry into the market.

EPA has found that overall impacts from the proposed IL Standards

on new sources would not be any more severe than those on existing

sources, since the costs faced by new sources generally will be the

same as or less than those faced by existing sources. It is typically

less expensive to incorporate pollution control equipment into the

design at a new plant than it is to retrofit the same pollution control

equipment in an existing plant because no demolition is required, and

space constraints, which can add to costs if specifically designed

equipment must be ordered, are not an issue in new construction.

Because most new sources and existing sources face similar costs, EPA

has determined that PSNS requirements should not pose a barrier to

entry on the basis of competitiveness for most new facilities. EPA also

has shown CP-IL to be an economically achievable option, having an

acceptable level of impact on existing sources. Therefore, the same

requirements for PSNS also should have an acceptable level of impact on

most new facilities.

EPA also examined whether there would be a barrier to entry for

small new sources. EPA proposes not to exclude these new sources

because it has found it to be economically achievable for these new

sources to comply with the CP-IL standards contained in the proposed

rule. Based on the Section 308 Survey data, EPA expects that new

sources generally exceed the threshold size cutoff that EPA proposed

for existing sources. EPA investigated facilities in the Section 308

Survey that indicated they were new or relatively new at the time of

the survey. The number of new source facilities coming on line each

year is extremely small. Over a three year period (1991, 1992, and

1993), according to Section 308 Survey data, laundry operations began

only at about 80 facilities (and it is not absolutely clear from the

data whether these facilities were actually new dischargers or were

existing dischargers acquired in that year by a different firm). Over

the 3-year period, this amounts to 27 new sources a year at most, or

only 1.5 percent of existing facilities. Given the small level of

growth in the industrial laundries industry, EPA believes that new

sources are primarily replacing production from closing facilities that

exit the market.

Of these facilities identified as new or relatively new facilities,

EPA determined that the average revenues of this group exceeded $4

million per year, and the amount of laundry processed averaged over 5

million pounds per year. Only 24 facilities out of 80 total newer

facilities (weighted), or 30 percent, would meet the size threshold for

the exclusion applicable to existing sources. On a yearly basis (given

that 24 facilities started up over the 3 years of the survey) EPA

estimates that up to 8 facilities of the size that would meet an

exclusion similar to that for existing sources might be started up each

year. Overall, in the group of 80 facilities, only 6 facilities

(weighted) were identified as postcompliance closures (based on a

closure by one surveyed nonindependent facility). No single-facility

firm would close postcompliance. EPA is less concerned about a closure

of a nonindependent facility, since nonindependent facilities often can

fall back on their parent firm during the financially shaky first few

start up years. Furthermore, these 6 facilities are represented by a

survey facility that might, on the basis of the types of laundry

processed, be able to meet the requirements of the rule possibly

without having to install any pollution control whatsoever (that is,

their current effluent might not exceed the CP-IL based standards). EPA

has conservatively assigned this facility compliance costs because the

Agency has no sampling data from this facility to support this

assertion. Given the above results, EPA finds that not excluding new

sources laundering less than one million pounds of incoming laundry per

calendar year and less than 255,000 pounds of shop and/or printer

towels/rags per calendar year from PSNS will be economically achievable

and will present no barriers to entry.

EPA also investigated whether there might be a barrier to entry due

to competitive disadvantages for all new sources in markets where

excluded facilities are located. According to the Section 308 Survey,

excluded facilities process only 0.7 percent of the laundry processed

by all facilities represented in the survey. EPA thus concludes that

the market share of excluded facilities is so small that excluded

facilities are unlikely to have a measurable impact in the market for

industrial laundry services. Furthermore, EPA has shown that even if no

compliance costs are passed through to customers, the impacts are

similar to the results assuming cost pass-through does occur, and thus

new sources should be able to compete with excluded facilities on price

(by not raising prices) even if they perceive the need. EPA thus

concludes that competition with excluded facilities will not pose a

barrier to entry.

3. Economic Impacts of Rejected Options

The economic impacts from rejected options are as follows.

The OC option is associated with the lowest level of economic

impacts of all options considered. This option is associated with 3

facility closures, and only 22 firms are projected to be likely to fail

(but not close) and are thus likely to lose their financial

independence. A net direct total of 275 FTEs would be lost in the

industrial laundries industry (direct, production-driven losses) had

EPA chosen this option, and other

[[Page 66201]]

secondary impacts (effects on trade, inflation, and customers) would be

negligible. The option basing limits on the lesser performance between

DAF-IL and CP-IL is associated with nearly identical impacts as EPA's

preferred CP-IL option. Facility closures are estimated to be 33, and

65 firms are estimated to be likely to fail (but not close) and thus

are likely to lose their financial independence. A net total of 456

FTEs would be lost in the industrial laundries industry (direct,

production-driven losses), and, as for the CP-IL option, this option

would most likely have minimal additional secondary impacts.

EPA investigated a variant to the Combo option based on both CP-IL

and DAF-IL. In this option, rather than setting limits based on the

lesser performance, EPA would set limits based on DAF limits for all

those currently operating DAF systems, with CP limits for all others.

Costs would be very slightly less than the other CP/DAF option, with

impacts being approximately the same (in no case would costs or impacts

be less than CP-IL).

Under the DAF-IL option facility closures are estimated to total

34. A total of 66 firms are expected to be likely to fail (but not

close) and are thus likely to lose their financial independence. A net

421 FTEs would be lost in the industrial laundries industry (direct,

production-driven losses), if EPA had chosen this option. Other

secondary impacts would be greater than those for the proposed option,

but still minimal. Table VII.C.3.1 compares the economic impacts of the

rejected option with those of the preferred option.

Table VII.C.3.1.--Impacts of the Preferred Option vs. Rejected Options

----------------------------------------------------------------------------------------------------------------

Net direct

employment

Annualized Facility Firm losses (FTEs)

Option posttax costs closures failures as a result of

($ MM 1997) production

losses

----------------------------------------------------------------------------------------------------------------

OC................................................... $46.0 3 22 275

CP-IL................................................ 93.9 33 65 470

Combo-IL2Lim*........................................ 99 33 65 450

Combo-IL............................................. 99.5 33 65 456

DAF-IL............................................... 118.6 34 66 421

----------------------------------------------------------------------------------------------------------------

*DAF-IL limits for existing DAF systems; CP-IL limits for all others.

D. Cost-Benefit Analysis

The proposed option is expected to have a total annual social cost

of $139.4 million ($1997), which includes $136.4 million in pretax

compliance costs, $2.9 million in administrative costs, and $0.1

million in unemployment benefits administration costs. Annual monetized

benefits are expected to range from $2.9 million to $10.6 million,

which includes $0.09 million to $0.5 million for human health benefits,

$1.9 million to $6.7 million for recreational benefits, $0.9 million to

$3.4 million from nonuse benefits, and $0.006 million to $0.01 million

for POTW sewage sludge benefits. Table VII.D.1 summarizes the results

of the cost-benefit analysis.

Table VII.D.1.--Results of the Cost-Benefit Analysis

------------------------------------------------------------------------

Dollar value

Category (millions

$1997)

------------------------------------------------------------------------

Costs:

Pretax Costs of Compliance.......................... $136.4

Administrative Costs of Permitting.................. 2.9

Administrative Costs of Unemployment Benefits....... 0.1

---------------

Total Social Costs.............................. 139.4

Monetized Benefits:

Human Health Benefits............................... $0.09-0.5

Recreational Benefits............................... 1.9-6.7

Nonuse Benefits..................................... 0.9-3.4

Benefits to POTWs................................... 0.006-0.01

---------------

Total Monetized Benefits........................ 2.9-10.6

------------------------------------------------------------------------

There are a number of additional benefits associated with the

proposed IL Standards that could not be monetized. Examples include:

reduced noncancer health effects, reduced POTW operating and

maintenance costs, reduced administrative costs at the local level to

develop and defend individually derived local limits for industrial

laundries, improved aesthetic quality of near discharge outfalls,

enhanced water-dependent recreation other than fishing, benefits to

wildlife and to threatened or endangered species, tourism benefits, and

biodiversity benefits.

E. Cost-Effectiveness Analysis

In addition to the foregoing analyses, EPA has conducted cost-

effectiveness analyses for all options it considered. Results of these

analyses are presented in the Cost-Effectiveness Analysis (C-E), which

is included in the rulemaking record. C-E analysis evaluates the

relative efficiency of options in removing toxic and nonconventional

pollutants. Costs evaluated include the pretax direct compliance costs,

such as capital expenditures and O&M costs, including compliance

monitoring.

Cost-effectiveness results are expressed in terms of the

incremental and average costs per ``pound equivalent'' (PE) removed. PE

is a measure that addresses differences in the toxicity of pollutants

removed. Total PEs are derived by taking the number of pounds of a

pollutant removed and multiplying this number by a toxic weighting

factor (TWF). EPA calculates TWFs for priority pollutants and some

additional nonconventional pollutants using ambient water quality

criteria and toxicity values. The TWFs are then standardized by

relating them to a particular pollutant, in this case, copper. As of

1985 the water quality criterion for copper was revised, thus the TWF

for copper also has been revised. PEs are calculated only for

pollutants for which TWFs have been estimated, thus they do not reflect

potential toxicity of some nonconventional and, to date, any

conventional pollutants though the newly added TWF for TPH does capture

a large portion of the more toxic components of the conventional

pollutant, oil and grease. EPA's standard procedure is to rank the

options considered for each waste stream in order of increasing PE

removed. EPA then calculates incremental cost-

[[Page 66202]]

effectiveness as the ratio of the incremental annual costs to the

incremental PE removed under each option, compared to the previous

(less effective) option. Average cost-effectiveness is calculated for

each option as a ratio of total costs to total PE removed. In the case

of pretreatment standards, EPA does not include pollutant removals if

those pollutants could be removed at the POTW, but only includes the

removal of pollutants that would pass through the POTW in its cost-

effectiveness determination. (Note that EPA assumes for this analysis

that POTW removal efficiency is the same for treated influent as for

untreated influent. To the extent that the removal efficiency is lower

for influent that has already been pretreated this methodology could

overestimated removals resulting from the pretreatment standards. EPA

reports annual costs for all cost-effectiveness analyses in 1981

dollars, to enable limited comparisons of the cost-effectiveness among

regulated industries. Incremental cost-effectiveness is the appropriate

measure for comparing one regulatory option to an alternative, less

stringent regulatory option for the same rule. Some believe that it may

also be used to compare cost-effectiveness across rules when

considering how the last increment of stringency in one rule compares

to the last increment of stringency in another. For comparing the

overall cost-effectiveness of one rule to another, average cost-

effectiveness may be a more appropriate measure, but must be considered

in context with caution. (Average cost-effectiveness can be thought of

as the ``increment'' between no regulation and the selected option, for

any given rule).

As part of the cost-effectiveness analysis for this proposed rule,

the nonconventional pollutant parameter TPH (SGT-HEM) was included and

individual components of TPH, such as the alkanes, were removed from

the cost-effectiveness calculations to avoid double counting removals.

Although TPH has not been included in cost-effectiveness calculations

for past rules, EPA believes that it is appropriate to include it here

because, for this industry, a large portion of the toxic constituents

of TPH are compounds not specifically included in the database of toxic

substances and associated toxic weighting factors that past cost-

effectiveness calculation have relied upon. In fact, TPH constitutes

over 90 percent of the pounds equivalent removals that EPA has

estimated for this proposed rule.

The inclusion of TPH were based on alkanes data to estimate POTW

removal and soluble hydrocarbon data to represent toxicity of TPH to

calculate the toxic weighting factor (TWF). The POTW removal of 65

percent was estimated using the U.S. EPA Risk Reduction Engineering

Laboratory (RREL) Treatability Data Base's average percent removal for

the three N-alkanes with available percent removal data. EPA recognizes

that this approach may not adequately characterize removals of the

soluble hydrocarbons on which its TWF is based and requests comment on

how the estimate might be improved. The TWF was calculated using an

aquatic life toxicity value of 560 g/L for soluble

hydrocarbons (EPA's Water Quality Criteria, 1976) multiplied by an

application factor of 0.01 (EPA's 1986 Quality Criteria for Water) and

divided into the criteria for copper (5.6 g/L) to give a value

of 0.1. EPA solicits additional information and data related to these

results and the methodology used to calculate both the POTW removal

rate and the TWF. EPA also solicits comments on the appropriateness of

its inclusion of TPH in the cost-effectiveness calculation for this

proposed rule.

Table VII.E.1. presents the cost-effectiveness of the OC and CP-IL

options using TPH data in lieu of the alkanes data. The other options

considered for industrial laundries wastewater treatment, DAF-IL, and

Combo-IL (including Combo-IL2Lim), are not presented in this table

because they remove fewer pollutants at a greater cost. EPA's cost-

effectiveness methodology requires non cost-effective options to be

removed before incremental cost-effectiveness is calculated, since the

incremental cost per pound equivalent removed would be negative for the

next higher option. See the C-E for more details. As the table shows,

the incremental cost-effectiveness of the proposed option is $108 per

PE, and the average cost effectiveness of the proposed option is $206

per PE.

Table VII.E.1.--Cost-Effectiveness Analysis Results

----------------------------------------------------------------------------------------------------------------

Total annual Incremental

---------------------------------------------------- Incremental Average C-E

Option Cost ($Mil. Cost ($Mil. C-E $1981) ($1981) ($/

PE removed 1981) PE removed 1981) ($/lb. eq.) lb. eq.)

----------------------------------------------------------------------------------------------------------------

OC................................ 5,278 $40.3 5,278 $40.3 $7,640 $7,640

CP-IL............................. 407,358 83.7 402,080 43.4 108 206

----------------------------------------------------------------------------------------------------------------

Table 4-1 in the Cost-Effectiveness Analysis compares the

incremental cost-effectiveness of this proposed rule with the

incremental cost-effectiveness of 21 other pretreatment standards that

EPA has promulgated previously. The table shows that 18 of these were

more cost-effective on an incremental basis than this proposed rule.

However, as noted earlier, average (rather than incremental) cost-

effectiveness is generally a more appropriate measure to use in

comparing the overall cost-effectiveness of one rule to another. Unlike

incremental cost-effectiveness, average cost-effectiveness is not

affected by the particular choice of alternative options that were

considered and rejected. In this proposed rule, the incremental or

marginal cost-effectiveness is lower than average cost-effectiveness

because the proposed option (CP) is being compared to the (OC) option

that costs about half as much as CP but removes only slightly more than

one percent of the pound equivalents that are removed by the CP option.

Due to data limitations and time constraints, EPA has not included in

the Cost-Effectiveness Analysis a comparison of the average cost

effectiveness of this proposed rule to that of previously promulgated

rules. Such a comparison may show this rule to be even less cost-

effective relative to other rules than appears from Table 4-1. Care

should be used in interpreting this comparison, however. Because the

initial focus of regulatory efforts was on highly polluting

manufacturing industries, it is not surprising that over time, fewer

and fewer toxic removals should come at higher and higher costs, as the

initial less treated, higher pollutant concentration wastewaters are

addressed and the focus of regulation move increasingly to less

polluting

[[Page 66203]]

service industries and those which are already regulated.

EPA also analyzed the cost effectiveness of these same options

using the alkanes data and not using the TPH toxic weighting factor and

POTW removal. Under this assumption, the incremental cost effectiveness

of the proposed option is $1,660 per PE, and its average cost

effectiveness is $2,664 per PE.

EPA recognizes that the proposed rule is not very cost-effective.

However, cost-effectiveness analysis only considers pollutants for

which a toxic weighting factor has been estimated. Although this

proposed rule would eliminate over 13 million pounds of toxic and

nonconventional pollutants to POTWs (See Table IX.C.1), only 1.3

million pounds of these pollutants are considered in the cost-

effectiveness analysis.

Furthermore, cost-effectiveness is not a factor to be directly

considered under the CWA in setting such standards. Elsewhere in this

preamble, EPA has requested comment on the option of not regulating

this industry and on whether such a decision would be consistent with

the CWA.

VIII. Non-Water Quality Environmental Impacts

As required by sections 304(b) and 306 of the Clean Water Act, EPA

has considered the non-water quality environmental impacts associated

with the treatment technology options for the industrial laundries

industry. Non-water quality impacts are impacts of the proposed rule on

the environment that are not directly associated with wastewater. Non-

water quality impacts include changes in energy consumption, air

emissions, and solid waste generation of oil and sludge. In addition to

these non-water quality impacts, EPA examined the impacts of the

proposed rule on noise pollution, and water and chemical use. Based on

these analyses, EPA finds the relatively small increase in non-water

quality impacts resulting from the proposed rule to be acceptable.

1. Air Pollution

Industrial laundry facilities generate wastewater that contains

significant concentrations of organic compounds, some of which are on

the list of Hazardous Air Pollutants (HAPs) in Title 3 of the Clean Air

Act Amendments (CAAA) of 1990. Atmospheric exposure of the organic-

containing wastewater may result in volatilization of both volatile

organic compounds (VOCs) and HAPs from the wastewater. VOCs and HAPs

are emitted from the wastewater beginning at the point where the

wastewater first contacts ambient air. Thus, VOCs and HAPs may be of

concern immediately as the wastewater is discharged from the process

unit. Emissions occur from wastewater collection units such as process

drains, manholes, trenches, and sumps, and from wastewater treatment

units such as screens, equalization basins, DAF and CP units, and any

other units where the wastewater is in contact with the air.

EPA believes that air emissions from industrial laundry wastewater

would be similar before and after implementation of the proposed rule

because the wastewater from all industrial laundries currently has

contact with ambient air as it flows to the POTW. At facilities that do

not currently have treatment on site, the wastewater typically flows

from the washers to an open or partially open catch basin, then to the

sewer and on to the POTW, where the wastewater is typically treated in

open aerated basins or lagoons. Air emissions from the wastewater occur

as the wastewater flows from the facility to the POTW. At a facility

with treatment the wastewater would have more contact with air while

still at the facility as it is treated in open units such as

equalization basins and CP units prior to flowing through the sewer to

the POTW. Air emissions from the treated wastewater occur at the

treatment units at the facility, as well as while the wastewater flows

to the POTW. Thus, EPA expects that the location of a portion of air

emissions from industrial laundry wastewater would shift from the POTW

collection and treatment system to the facility treatment system, but

EPA believes that the overall amount of air emissions from industrial

laundries wastewater would not change.

EPA examined the total air emissions from one industrial laundry's

untreated wastewater stream assuming all volatile pollutants volatilize

from that stream. EPA considered whether this total amount of air

emissions would be acceptable assuming it represented incremental air

emissions due to the proposed rule. (EPA does not believe that the

total amount of air emissions, as calculated below, represents

incremental air emissions because the air emissions would be simila

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