Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 136 and 439

[FRL-6135-7]

RIN 2040-AA13

Pharmaceutical Manufacturing Category Effluent Limitations

Guidelines, Pretreatment Standards, and New Source Performance

Standards; Final Rule

AGENCY: Environmental Protection Agency.

ACTION: Final rule.

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SUMMARY: This final regulation limits the discharge of pollutants into

navigable waters of the United States and into publicly owned treatment

works (POTWs) by existing and new pharmaceutical manufacturing

facilities. This regulation revises limitations and standards for four

subcategories of the pharmaceutical manufacturing Point Source

Category: Subcategory A (Fermentation), Subcategory B (Extraction),

Subcategory C (Chemical Synthesis): and Subcategory D (Mixing,

Compounding, and Formulating); and reformats and clarifies language

without revision to certain specified provisions of these four

subcategories and a fifth subcategory: Subcategory E (Research). This

regulation establishes effluent limitations guidelines and standards

under the Clean Water Act including ``best conventional pollutant

control technology (BCT) and ``best available technology economically

achievable (BAT)'' for existing direct dischargers, ``new source

performance standards (NSPS)'' for new direct dischargers and

pretreatment standards for existing and new indirect dischargers (PSES

and PSNS). This regulation also amends and clarifies some of the

limitations based on ``best practicable control technology (BPT)'' for

pharmaceutical manufacturing facilities and establishes analytical

methods for certain organic pollutants contained in this regulation.

EPA is today also publishing final Maximum Available Control Technology

(MACT) standards under the Clean Air Act (CAA) for the pharmaceutical

manufacturing industry elsewhere in today's Federal Register. The MACT

standards final rule will control emissions of hazardous air pollutants

(HAPs) from pharmaceutical manufacturing emission sources including

wastewater collection and treatment systems. The Offices of Water and

Air and Radiation have coordinated the development of these regulations

and have used a common technology basis in developing limitations and

standards for the volatile organic compounds (VOCs).

The final MACT standards and effluent limitations guidelines and

standards rules will benefit the environment by removing a total of

85.4 million pounds per year of conventional, nonconventional and toxic

(priority) pollutants from water discharges. The effluent limitations

guidelines and standards portion of those removals is 13.9 million

pounds per year of nonconventional and 16.0 million pounds per year of

organic pollutants including VOCs.

DATES: This regulation shall become effective November 20, 1998. The

incorportion by reference of certain publications listed in Part 136 is

approved by the Director of the Federal Register as of November 20,

1998.

ADDRESSES: For additional technical information write to Dr. Frank H.

Hund, Engineering and Analysis Division (4303), U.S. EPA, East Tower,

401 M Street SW, Washington, D.C. 20460 or send E-mail to:

[email protected] or call at (202) 260-7182. For additional

economic information contact Mr. William Anderson at the address above

or by calling (202) 260-5131 or send E-mail to:

[email protected].

The complete record (excluding confidential business information)

for this Clean Water Act rulemaking is available for review at EPA's

Water Docket, Room EB57; 401 M Street, SW, Washington, DC 20460. For

access to Docket materials, call (202) 260-3027 between 9 a.m. and 3:30

p.m. for an appointment. The EPA public information regulation (40 CFR

part 2) provides that a reasonable fee may be charged for copying.

The Technical Development Document and Economic Impact Analysis

supporting today's final water rule may be obtained by writing to the

EPA Office of Water Resource Center (RC-4100), 401 M Street SW.,

Washington, DC 20460, or calling (202) 260-7786.

FOR FURTHER INFORMATION CONTACT: For additional technical information

call Dr. Frank H. Hund at (202) 260-7182. For additional information on

the economic impact analyses contact Mr. William Anderson at (202) 260-

5131.

SUPPLEMENTARY INFORMATION:

Judicial Review

In accordance with 40 CFR 23.2, the rule will be considered

promulgated for purposes of judicial review at 1:00 p.m. Eastern time

on October 5, 1998. Under section 509(b)(1) of the Act, judicial review

of this regulation can be obtained only by filing a petition for review

in the United States Court of Appeals within 120 days after the

regulation is considered promulgated for purposes of judicial review.

Under section 509 (b)(2) of the Act, the requirements in this

regulation may not be challenged later in civil or criminal proceedings

brought by EPA to enforce these requirements.

Regulated Entities

Entities potentially regulated by this action include:

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Category Examples of regulated entities

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Industry.......................... Facilities that generate process

wastewater from the manufacture of

pharmaceutical products and/or

pharmaceutical intermediates by

fermentation, extraction, chemical

synthesis and/or mixing,

compounding and formulating.

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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. To determine whether

your facility is regulated by this action, you should carefully examine

the applicability criteria in Secs. 439.1, 439.10, 439.20, 439.30,

439.40 and 439.50 of this final rule. If you have questions regarding

the applicability of this action to a particular entity, consult the

technical information person listed in the preceding FOR FURTHER

INFORMATION CONTACT section.

Compliance Dates

The compliance date for PSES is as soon as possible, but no later

than September 21, 2001. The compliance dates for NSPS and PSNS are the

dates the new source commences discharging.

[[Page 50389]]

Deadlines for compliance with BPT, BCT, and BAT are established in the

National Pollutant Discharge Elimination System (NPDES) permits.

Organization of This Document

I. Legal Authority

II. Background

A. Clean Water Act

1. Best Practicable Control Technology Currently Available (BPT)

2. Best Available Technology Economically Achievable (BAT)

(Section 304(b)(2) of the Act)

3. Best Conventional Pollutant Control Technology (BCT) (Section

304(b)(4) of the Act)

4. New Source Performance Standards (NSPS) (Section 306 of the

Act)

5. Pretreatment Standards for Existing Sources (PSES) (Section

307(b) of the Act)

6. Pretreatment Standards for New Sources (PSNS) (Section 307(b)

of the Act)

B. Section 304(m) Requirements and the Pollution Prevention Act

C. Updated Profile of the Industry

D. Existing and Proposed Rules

1. Clean Water Act Proposal

2. Clean Air Act Proposal

3. Clean Water Act Federal Register Notice of Availability

E. Discussion of Final Clean Air Act Rule Published Elsewhere in

Today's Federal Register

F. Relationship Between the MACT and CWA Rules

G. Final Clean Water Act Effluent Limitations Guidelines and

Standards Rule

III. Summary of Most Significant Changes to Water Rules From

Proposal

A. Limitations and Standards for Volatile Organic Compounds

B. Change in BAT Technology Basis for Organic Pollutants

C. BPT and BAT/BCT Limitation Changes

D. Pollutant Selection

IV. The Final Clean Water Act Regulation

A. Applicability and Scope of the Final Rule

B. Options Selection

C. Best Practicable Control Technology Currently Available (BPT)

D. Best Available Technology Economically Achievable

E. Pretreatment Standards for Existing Sources (PSES)

F. New Source Performance Standards (NSPS)

G. Pretreatment Standards for New Sources (PSNS)

H. Best Conventional Pollutant Control Technology (BCT)

V. Assessment of Costs and Impacts for the Final Pharmaceutical

Regulations

A. Introduction

B. Summary of Economic Analysis Methodology and Data

C. Changes to the Economic Analysis Since Proposal

D. Estimated Economic Impacts

1. Costs of Compliance

2. Economic Impacts on Facilities

3. Economic Impacts on Firms

4. Impacts on Output and Employment

5. Other Secondary Impacts

6. Impacts on New Sources

E. Regulatory Flexibility Analysis

F. Cost-Benefit Analysis

G Cost-Effectiveness Analysis

VI. Environmental Benefits

VII. Non-Water Quality Environmental Impacts

A. Air Pollution

B. Solid Waste

C. Energy Requirements

VIII. Regulatory Implementation

A. Implementation of the Limitations and Standards

B. Upset and Bypass Provisions

C. Variances and Modifications

1. Fundamentally Different Factors Variances

2. Removal Credits

D. Analytical Methods

IX. Regulatory Assessment Requirements

A. Executive Order 12866

B. Regulatory Flexibility Act and the Small Business Regulatory

Enforcement Fairness Act of 1996 (SBREFA)

C. Submission to Congress and the General Accounting Office

D. Paperwork Reduction Act

E. Unfunded Mandates Reform Act

F. Executive Order 12875 Enhancing Intergovernmental Partnership

G. National Technology Transfer and Advancement Act

H. Executive Order 13045 and Protecting Children's Health

X. Summary of Public Participation

A. Summary of Proposal Comments and Responses

B. Summary of Notice of Availability Comments and Responses

Appendix A to the Preamble--List of Abbreviations, Acronyms,

Definitions and Other Terms Used in This Document

I. Legal Authority

This final regulation establishes effluent limitations guidelines

and standards of performance and analytical methods for the

pharmaceutical manufacturing point source category under the

authorities of sections 301, 304, 306, 307, 308, 402 and 501 of the

Clean Water Act (``the Act''), 33 U.S.C. 1311, 1314, 1316, 1317, 1318,

1342 and 1361.

II. Background

A. Clean Water Act

The Federal Water Pollution Control Act Amendments of 1972

established a comprehensive program to ``restore and maintain the

chemical, physical, and biological integrity of the Nation's waters,''

(section 101(a)). To implement the Act, EPA is to issue effluent

limitations guidelines, pretreatment standards and new source

performance standards for industrial dischargers.

These guidelines and standards are summarized briefly below:

1. Best Practicable Control Technology Currently Available (BPT)

(Section 304(b)(1) of the Act)

BPT effluent limitations apply to all discharges from existing

direct dischargers. BPT effluent limitations guidelines are generally

based on the average of the best existing performance by plants of

various sizes, ages, and unit processes within the category or

subcategory for control of pollutants.

In establishing BPT effluent limitations guidelines, EPA considers

the total cost of achieving effluent reductions in relation to the

effluent reduction benefits, the age of equipment and facilities

involved, the processes employed, process changes required, engineering

aspects of the control technologies, non-water quality environmental

impacts (including energy requirements) and other factors as the EPA

Administrator deems appropriate (Section 304(b)(1)(B) of the Act). The

Agency considers the category or subcategory-wide cost of applying the

technology in relation to the effluent reduction benefits. Where

existing performance is uniformly inadequate within a category or

subcategory, BPT may be transferred from a different subcategory or

category.

2. Best Available Technology Economically Achievable (BAT) (Section

304(b)(2) of the Act)

In general, BAT effluent limitations represent the best existing

economically achievable performance of plants in the industrial

subcategory or category, based upon available technology. The Act

establishes BAT as the principal national means of controlling the

direct discharge of toxic and nonconventional pollutants to navigable

waters. The factors considered in assessing BAT include the age of

equipment and facilities involved, the process employed, potential

process changes, and non-water quality environmental impacts (including

energy requirements) (Section 304(b)(2)(B)). The Agency retains

considerable discretion in assigning the weight to be accorded these

factors. As with BPT, where existing performance is uniformly

inadequate within a category or subcategory, BAT may be transferred

from a different subcategory or category. BAT may include process

changes or internal controls, even when these technologies are not

common industry practice.

[[Page 50390]]

3. Best Conventional Pollutant Control Technology (BCT) (Section

304(b)(4) of the Act)

The 1977 Amendments to the Act established BCT for discharges of

conventional pollutants from existing industrial point sources. Section

304(a)(4) designated the following as conventional pollutants:

Biochemical oxygen demanding pollutants (BOD5), total

suspended solids (TSS), fecal coliform, pH, and any additional

pollutants defined by the Administrator as conventional. The

Administrator designated oil and grease as an additional conventional

pollutant on July 30, 1979 (44 FR 44501).

BCT is not an additional limitation, but replaces BAT for the

control of conventional pollutants. In addition to other factors

specified in Section 304(b)(4)(B), the Act requires that BCT

limitations be established in light of a two part ``cost-

reasonableness'' test. American Paper Institute v. EPA, 660 F.2d 954

(4th Cir. 1981). EPA's current methodology for the general development

of BCT limitations was issued in 1986 (51 FR 24974; July 9, 1986).

4. New Source Performance Standards (NSPS) (Section 306 of the Act)

NSPS are based on the best available demonstrated control

technology. New plants have the opportunity to install the best and

most efficient production processes and wastewater treatment

technologies. As a result, NSPS should represent the most stringent

numerical values attainable through the application of the best

available control technology for all pollutants (e.g., conventional,

nonconventional, and toxic pollutants). 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.

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

of the Act)

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 Act authorizes

EPA to establish pretreatment standards for pollutants that pass

through POTWs or interfere with POTWs' treatment processes or sludge

disposal methods. The legislative history of the 1977 Act indicates

that pretreatment standards are to be technology-based and analogous to

the BAT effluent limitations guidelines for removal of toxic

pollutants. For the purpose of determining whether to promulgate

national category-wide pretreatment standards, EPA generally determines

that there is pass through of a pollutant and thus a need for

categorical standards if the nation-wide average percent removal of a

pollutant removed by well-operated POTWs achieving secondary treatment

is less than the percent removed by the BAT model treatment system.

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 does not use the percent removal comparison test described

above. See 52 FR 1586, January 14, 1987.)

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

Act)

Like PSES, PSNS are designed to prevent the discharges of

pollutants that pass through, interfere with, or are otherwise

incompatible with the operation of POTWs. PSNS are to be issued at the

same time as NSPS. New indirect dischargers, like new direct

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.

B. Section 304(m) Requirements and the Pollution Prevention Act

Section 304(m) of the Clean Water Act (33 U.S.C. 1314(m)), added by

the Water Quality Act of 1987, requires EPA to establish schedules for

(i) reviewing and revising existing effluent limitations guidelines and

standards (``effluent guidelines''), and (ii) promulgating new effluent

guidelines. On January 2, 1990, EPA published an Effluent Guidelines

Plan (55 FR 80), in which schedules were established for developing new

and revised effluent guidelines for several industry categories. One of

the industries for which the Agency established a schedule was the

Pharmaceutical Manufacturing Point Source Category.

Natural Resources Defense Council, Inc. (NRDC) and Public Citizen,

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

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

No. 89-2980). The plaintiffs charged that EPA's plan did not meet the

requirements of sec. 304(m). A Consent Decree in this litigation was

entered by the Court on January 31, 1992. The terms of the Consent

Decree are reflected in the Effluent Guidelines Plan published on

September 8, 1992 (57 FR 41000). This plan, as modified, required,

among other things, that EPA propose effluent guidelines for the

pharmaceutical manufacturing category by February, 1995 and take final

action on these effluent guidelines by April, 1998. Recently EPA filed

an unopposed motion requesting an extension of time until July 30, 1998

for the Administrator to sign the final rule.

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. This effluent guideline was reviewed for its

incorporation of pollution prevention as part of this Agency effort.

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.

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

[[Page 50391]]

source reduction'' (Sec. 6604; 42 U.S.C. 13103(b)(2). This directive

led the Agency to implement a pilot project called the Source Reduction

Review Project that would facilitate the integration of source

reduction in the Agency's regulations, including the technology-based

effluent guidelines and standards.

In the preamble to the proposed regulations, EPA discussed the

possible pollution prevention alternatives available in pharmaceutical

manufacturing. At that time, EPA indicated that pollution prevention

opportunities were limited in the active ingredient manufacturing

subcategories (namely, fermentation, natural extraction and chemical

synthesis) but the use of water-based coatings in the formulation

subcategory operations was a viable pollution prevention approach which

eliminates the need for solvents in tablet coating operations. This

approach may only be applicable to some and not most tablet coating

operations, however. Since the proposal, EPA has received two

suggestions for incorporating pollution prevention into the final

regulations which were discussed in the August 8, 1997 Notice of

Availability at 62 FR 42720. One suggestion presented to the Agency was

that Subcategories B and D dischargers that incorporate best management

practices (BMPs), which reduce their discharge of any of the regulated

pollutants should not have to monitor for the specific regulated

pollutants, and possibly only monitor for the conventional pollutants

and COD. This pollution prevention approach is similar to the one

adopted in the Pesticide Formulators, Packagers and Repackagers (PFPR)

final regulation which was published in the Federal Register on

November 6, 1996 at 61 FR 57518. (It should be noted that PFPR

facilities that use the promulgated pollution prevention option have to

assess their wastewater and may be required to treat wastewater prior

to discharge.) EPA evaluated this suggestion and decided that since EPA

is not promulgating BAT limitations for specific organic pollutants,

this pollution prevention suggestion was not relevant to compliance by

subcategory B and D direct dischargers with final BAT limitations. For

PSES, EPA believes the suggestion may be workable for indirect

dischargers, since standards for specific organic pollutants are

contained in the final rule; however, no information was submitted to

identify the pollution prevention practices that would be incorporated

into the rule, and EPA has been unable to identify any.

Another pollution prevention approach suggested to EPA was that

Subcategories A and C facilities that can demonstrate a reduction in

the use of a regulated pollutant and resultant lowered air emissions or

water discharges should receive a higher effluent discharge limitation.

As suggested, the higher effluent discharge limitation would be

directly proportional to the amount of reduction achieved in the use of

the regulated pollutant. Along with this suggestion, the commenters

provided examples of how this pollution prevention suggestion could

work in individual instances.

In evaluating this suggestion including the examples provided, EPA

was concerned about the amount and type of process information that

would have to be obtained from facilities and the methodology for

estimating the pollutant reductions as the result of any pollution

prevention practices. Another concern of the Agency had to do with the

determination of when, in the new product development phase of work,

the practice represents a pollution prevention activity or is just part

of normal process development work in bringing a new product process to

full scale production. EPA was also concerned that pollutant discharge

or emission reductions achieved in the bench scale or pilot scale

product development activities may not be realized during full scale

production operations. In the period following publication of the NOA,

the Agency did not receive sufficient information relative to these

concerns to enable it to develop a viable pollution prevention

alternative based on this suggestion.

C. Updated Profile of the Industry

The pharmaceutical manufacturing industry covered by this

rulemaking is made up of 566 facilities located in 39 states, Puerto

Rico and the Virgin Islands. EPA estimates that 304 of these facilities

could be affected by today's final rule. The major concentrations of

manufacturing facilities are located in the Northeast, the Midwest and

Puerto Rico.

The pharmaceutical manufacturing industry is defined by four types

of manufacturing operations or processes. These activities result in

subcategorization for purposes of this rulemaking. The four

subcategories are referred to as:

Subcategory A: Fermentation

Subcategory B: Natural Extraction

Subcategory C: Chemical Synthesis

Subcategory D: Formulating, Mixing and Compounding

A complete discussion of each subcategory's manufacturing

operations and wastewater characteristics may be found in Sections 3

and 5 of the final Technical Development Document (TDD), ``Development

Document for Final Effluent Limitations Guidelines and Standards for

the Pharmaceutical Manufacturing Point Source Category'' (EPA 821-R-98-

005).

A fifth subcategory, Subcategory E: Research, was excluded from

regulation beyond the existing BPT regulation promulgated on October

27, 1983 at 48 FR 49808. The Research subcategory is defined by bench-

scale activities or operations related to the research on and

development of pharmaceutical products. BAT/BCT limitations for this

subcategory are determined on a case by case best professional judgment

(BPJ) basis. For indirect dischargers, the general prohibition in 40

CFR part 403 apply; in addition POTWs will establish local pretreatment

limits on a case by case basis as necessary.

D. Existing and Proposed Rules

EPA promulgated interim final BPT regulations for the

pharmaceutical manufacturing point source category on November 17, 1976

(41 FR 50676; 40 CFR Part 439, Subparts A through E). The five

subcategories of the pharmaceutical manufacturing industry (40 CFR part

439) were defined at that time as:

Subpart A--Fermentation Products Subcategory

Subpart B--Extraction Products Subcategory

Subpart C--Chemical Synthesis Subcategory

Subpart D--Mixing, Compounding, and Formulating

Subcategory

Subpart E--Research Subcategory

The 1976 BPT regulations set monthly limitations for biochemical

oxygen demand (BOD5) and chemical oxygen demand (COD) based

on percent removal for all subcategories. No daily maximum effluent

limitations were established for these parameters. The pH was set

within the range of 6.0 to 9.0 standard units. The regulations also set

maximum 30 day average concentration-based limitations for total

suspended solids (TSS) for subcategories B, D and E. No TSS limitations

were established for subcategories A and C. Subpart A was amended (42

FR 6813) on February 4, 1977, to improve the language referring to

separable mycelia and solvent recovery. The amendment also allowed the

inclusion of spent beers (broths) in the calculation of raw waste loads

for Subpart A in those instances where the spent beer is actually

treated in the wastewater treatment system.

[[Page 50392]]

On October 27, 1983, at 48 FR 49808, EPA revised the subcategory

names to those currently applicable and promulgated revised BPT, BAT,

PSES and PSNS for Subparts A thru D to cover the toxic pollutant

cyanide, conventional pollutants BOD5, TSS and pH, and the

nonconventional pollutant COD. The 1983 regulations kept intact the

percent reduction regulations for BOD5 and COD established in 1976 but

added floor concentration-based limitations for these parameters

applicable to subcategories B, D and E. The revisions for TSS consisted

of deriving the limitations by the use of a multiplication factor of

1.7 times each plant's BOD5 discharge. EPA also promulgated

BPT, BAT, PSES and PSNS for pH (6.0-9.0) and BAT concentration-based

limitations controlling the discharge of cyanide for subcategory A

through D. The Agency also proposed NSPS for BOD5, TSS and

pH in the October 1983 notice, but did not publish final NSPS for these

parameters.

On December 16, 1986, at 51 FR 45094, EPA promulgated BCT effluent

limitations guidelines for BOD5, TSS and pH for

subcategories A thru D. That final rule set BCT effluent limitations

equal to the existing BPT effluent limitations guidelines for

BOD5, TSS, and pH.

1. Clean Water Act Proposal

On May 2, 1995 at 60 FR 21592, EPA proposed revised BPT

concentration based limitations for BO5, COD and TSS based

on advanced biological treatment for all subcategories and cyanide

limitations based on hydrogen peroxide oxidation technology for the A

(Fermentation) and C (Chemical Synthesis) subcategories. For BAT, EPA

proposed end-of-pipe limitations for 53 organic pollutants plus

ammonia, cyanide and COD for subcategories A and C. For subcategories B

(Natural Extraction) and D (Formulating, Mixing and Compounding), EPA

proposed BAT limitations for 53 organic pollutants and COD. The

technology basis for the volatile organic compounds (VOCs) limitations

was steam stripping plus advanced biological treatment for

subcategories A and C and advanced biological treatment for

subcategories B and D. The technology basis for the non-volatile

organics was advanced biological treatment only, and the proposed

ammonia limitations were based on nitrification. The proposed BAT

cyanide limitations were equivalent to the BPT limitations, and the BCT

limitations were also proposed equal to BPT for all manufacturing

subcategories.

For NSPS, EPA proposed end-of-pipe standards for 53 organic

pollutants plus ammonia, BO5, TSS, cyanide and COD for

subcategories A and C and end-of-pipe standards for 53 organic

pollutants plus BO5, TSS, and COD for subcategories B and D.

The BO5, COD, and TSS standards were based on two sets of

performance data from the best performing plants in each of the A or C

and B or D subcategories. The end-of-pipe VOC limitations were based on

steam stripping with distillation and advanced biological treatment.

For PSES EPA detailed two coproposals (A and B) to control VOCs in

all subcategories. Coproposal A had pretreatment standards for 12

highly volatile organic compounds and 33 less volatile organic

compounds. To show compliance with the pretreatment standards,

monitoring for the 12 highly volatile compounds would have been

required in-plant. Coproposal B had only the pretreatment standards for

the 12 highly volatile compounds. In addition, EPA proposed cyanide

(identical to BPT) and ammonia standards (based on steam stripping) for

subcategories A and C. The proposed PSNS differed from PSES in that the

standards for all volatile organic compounds were based on steam

stripping plus distillation technologies.

Finally, EPA proposed that pilot plant wastewater would not be

regulated by Subcategory E (Research) limitations but under appropriate

manufacturing subcategory limitations.

2. Clean Air Act Proposal

On April 2, 1997 at 62 FR 15753, EPA proposed National Emission

Standards for Hazardous Air Pollutants (NESHAPs) for the

Pharmaceuticals Production Source Category. In that proposed rule, the

Agency proposed Maximum Available Control Technology (MACT) standards

for controlling emissions of hazardous air pollutants (HAPs) from

process vents, storage tanks, equipment leaks, wastewater collection

and treatment systems and heat exchange systems at pharmaceutical

manufacturing facilities that are determined to be major sources of

HAPs.

The proposed MACT standards for wastewater emission sources

contained two alternative formats for achieving compliance, a percent

removal and a reference control technology. Applicability

determination, definitions, and control requirements were similar to

the Hazardous Organic NESHAPs (HON) MACT standards for wastewater. The

proposed standard required facilities to control wastewater streams

that exceed the concentration cutoff where the process wastewater

stream exits the pharmaceutical process equipment identified as the

point of determination (POD). The proposed concentration cutoffs were

1,300 parts per million by weight (ppmw) for partially soluble HAPs and

5,200 ppmw for total HAPs at processes or PODs with annual HAP loads of

1 megagram per year or metric ton per year (Mg/yr).

Also, the proposed standard required all streams having a HAP

concentration of 10,000 ppmw to be controlled at facilities with annual

HAP loads of 1 Mg/yr or greater.

The proposed standards required that the control of wastewater

emissions be accomplished in one of the following manners: (1) Using a

design biotreatment system for soluble HAPs; (2) Demonstrating removals

achieving 99 percent by weight of partially soluble HAPs and 90 percent

by weight of soluble HAPs from treatment systems; or (3) Demonstrating

a removal of 95 percent by weight of total organic HAP from the

treatment system. The MACT standard proposal also discussed options for

CWA controls in light of the CAA MACT standard proposal for controlling

emissions from wastewater streams at pharmaceutical facilities being

covered by the proposed effluent limitations guidelines and standards.

EPA's intent was that the effluent limitations guidelines and standards

build on the MACT standards, and the discussion suggested several

options to accomplish this.

3. Clean Water Act Federal Register Notice of Availability

EPA published a Notice of Availability (NOA) in the Federal

Register on August 8, 1997 at 62 FR 42720. EPA published this Notice in

order to: allow public comment on the data received since the May 2,

1995 CWA proposal, further develop and revise options for the control

of the VOCs that were presented in the April 2, 1997 CAA MACT proposal,

and suggest responses to some comments on the 1995 CWA proposal.

In section II of the NOA, EPA provided the results of an EPA

sampling study designed to provide information concerning the pass

through analysis for water soluble organic pollutants such as methanol

and discussed the pass through analysis that EPA would be performing

with respect to these and other pollutants.

In section III, EPA presented revisions of the pretreatment options

which were earlier described in the MACT proposal, and presented

options for reducing the discharge loadings of VOCs not controlled by

the proposed MACT

[[Page 50393]]

standards. One option was compliance with the proposed MACT standards

together with additional PSES requirements for all VOCs except alcohols

and related compounds based on the performance database used in the

1995 proposal. A second option included coverage of additional

pollutants including alcohols and related compounds. EPA also presented

costs and loadings for two scenarios involving these two options. One

scenario would exclude facilities that discharged less than 10,000

pounds per year of pollutants of concern, while the other scenario

would not exclude them.

In section IV, EPA presented the results of analyses with respect

to the proposed data base for NSPS requirements for the conventional

pollutants, COD and ammonia, pollutant exclusions, use of surrogate

pollutants for compliance monitoring, small facility exclusion and

changes to engineering costs and loadings removal estimates. In

addition, EPA presented data editing criteria and methodologies for

deriving BPT and BAT effluent limitations and PSES. On pages 42722-

42724 of the NOA, EPA presented BPT, BAT limitations and PSES being

considered.

E. Discussion of Final Clean Air Act Rule Published Elsewhere in

Today's Federal Register

EPA received a number of comments on the proposed MACT standards

for wastewater streams. While certain changes were made (see the final

MACT rule published elsewhere in today's Federal Register) the controls

required by the proposed MACT standards have not changed. As proposed,

the final MACT incorporates the HON wastewater standards, thereby

clarifying the MACT requirements for off-site treatment of wastewater.

Under specified conditions, a source can transfer affected wastewater

streams containing soluble HAPs and less than 50 ppmw partially soluble

HAPs off-site for treatment. In addition, if the off-site treatment

facility is a POTW with uncovered headworks (grit chamber, primary

settling tanks, etc.) a demonstration that less than five percent of

the total soluble HAPs are emitted is required. For POTWs with

completely covered headworks, the final rule does not require a

demonstration that less than five percent of the total soluble HAPs are

emitted.

F. Relationship Between the MACT and CWA Rules

As noted above, the CAA MACT rule being promulgated today sets

emission standards for HAPs from wastewater collection and treatment

systems at major source pharmaceutical manufacturing facilities. The

CWA final effluent limitations guidelines and standards control the

discharge of toxic, conventional and nonconventional pollutants in

wastewater discharges from pharmaceutical manufacturing facilities.

Some of the water pollutants being controlled by today's effluent

guidelines and standards are also HAPs and thus these pollutants are

being controlled by both the MACT and CWA final rules. The extent of

the coverage of waterborne HAPs by the air and water rules will be

discussed in subsequent sections, as will the joint economic analysis

and environmental benefits assessment that were conducted for the two

rules.

G. Final Clean Water Act Effluent Guidelines Limitations and Standards

Rule

Today EPA is promulgating revised BPT limitations only for COD

based on advanced biological treatment for all four subcategories.

For subcategories A and C, EPA is promulgating BAT limitations for

COD equal to the revised BPT limitations and for 30 organic pollutants,

including 28 VOCs (of which 13 are HAPS) based on advanced biological

treatment identified as a basis for the revised COD limitations. In

addition, for subcategories A and C, EPA is promulgating BAT ammonia

limitations based on nitrification technology, and is modifying the BAT

compliance monitoring requirements for the existing cyanide

limitations.

For subcategories B and D, EPA is adding BAT limitations for COD

equal to the revised BPT requirements, and is withdrawing the existing

BPT and BAT cyanide limitations since the facilities in these

subcategories do not generate cyanide in their wastewaters.

The Agency is promulgating PSES for 23 VOCs (10 of which are HAPs)

plus ammonia for subcategories A and C, and is also clarifying the

compliance requirements for the existing cyanide pretreatment

standards. For subcategories B and D, EPA is promulgating PSES for the

5 VOCs (1 of which is a HAP) and, for the same reason given above, is

withdrawing the existing cyanide standards. Subcategories A and C

facilities must continue to comply with the cyanide standards, and

achieve compliance with the standards for ammonia and the 23 organic

pollutants within three years. Subcategories B and D facilities must

achieve compliance with the 5 organic pollutant standards within three

years. The compliance times of up to three years is being given because

of the design and installation of technologies used as a basis for the

standards, such as steam stripping and nitrification require sufficient

lead times for implementation.

EPA is promulgating NSPS for subcategories A and C equal to the BAT

limitations for COD, ammonia and the organic pollutants, including the

VOCs, and revised limitations for BOD5 and TSS based on

advanced biological treatment. EPA is also promulgating NSPS for

subcategories B and D equal to BAT for COD and revised limitations for

BOD5 and TSS based on advanced biological treatment, and is

withdrawing the existing cyanide NSPS for these two subcategories.

For PSNS EPA is promulgating standards equal to PSES for all

pollutants and subcategories and is withdrawing the existing cyanide

PSNS for subcategories B and D. Finally, EPA is promulgating BCT

limitations equal to the existing BPT limitations for BOD5,

TSS and pH.

In today's rule, EPA has republished many parts of the existing

guideline in Part 439 to make the changes made today easier to

understand, and also reformated the guideline to make it more clear and

easier to use. The republication or reformatting of existing

requirements is not intended to introduce substantive changes to these

regulatory provisions. For that reason, EPA believes prior notice and

comment on these provisions is unnecessary.

III. Summary of Most Significant Changes to Water Rules From

Proposal

This section describes the most significant changes to the rule

since proposal. Many of these changes have resulted from the comments

that are discussed below (see section X). This section will discuss the

major changes in the rule concerning revisions to the limitations and

standards for VOCs, changes in the BAT technology basis and changes in

the BPT and BAT limitations for pollutants other than the VOCs. More

detailed explanations for changes may be found in the comment response

document in the record of the final rule.

A. Limitations and Standards for Volatile Compounds

In today's final rule, EPA is not requiring that the limitations

for VOCs be measured in-plant as proposed. For all four subcategories,

BAT, NSPS, PSES, and PSNS limitations and standards, except for cyanide

limitations and standards in subcategories A and C, this rule does not

alter the generally applicable rule

[[Page 50394]]

(122.45(h) or 403.6(e)) that limitations generally are measured at the

end-of-pipe discharge point. This rule provides clarification of the

existing in-plant monitoring for cyanide as discussed in the

Implementation Section of this preamble (see section VIII A).

At proposal, EPA proposed PSES for 13 alcohols and related

pollutants (compounds) under coproposal B. These pollutants were

methanol, ethanol, n-propanol, isopropanol, n-butyl alcohol, tert-butyl

alcohol, amyl alcohol, formamide, N,N-dimethylaniline, pyridine, 1,4-

dioxane, aniline, and petroleum naphtha. No PSES/PSNS are being

promulgated for these pollutants today because EPA determined these

pollutants do not pass through POTWs or interfere with the treatment

works. (See section IV.E for a discussion of the passthrough analysis

for these pollutants).

B. Change in BAT Technology Basis for Organic Pollutants

In the August 8, 1997 NOA, EPA discussed changing the technology

basis for BAT organic pollutant limitations for subcategories A and C

facilities from in-plant steam stripping and advanced biological

treatment to advanced biological treatment only. EPA received comments

supporting this change in technology basis. The final MACT standards

being promulgated today will control most emissions of VOCs from

wastewaters at subcategories A and C direct discharging facilities

based on the use of steam stripping technology. Accordingly, EPA

believes that it is not necessary or appropriate to include this

technology in the BAT technology basis; the CWA limitations and

standards are calculated from a data base representing advanced

biological treatment only. Thus, EPA is promulgating BAT limitations

for all of the 30 organic pollutants for subcategories A and C

facilities based on advanced biological treatment only. EPA notes that

one facility not covered by the MACT standards would need to install

steam stripping technology in order to achieve the effluent limitations

following the biological treatment system.

C. BPT and BAT/BCT Limitation Changes

Based on the receipt of new data from commenters, proposed

limitations were revised for the nonconventional pollutants COD and

ammonia and a number of the organic pollutants. In addition, commenters

on the proposed limitations for the conventional pollutants BOD5 and

TSS, as well as COD, indicated that EPA should eliminate all non-

process wastewater in the calculation of limitations for these

parameters. In developing limitations for the proposal, EPA did not

back out the estimated non-process wastewater from the total wastewater

flow and adjust the concentration accordingly because the non-process

flow data provided by facilities in the data sets were only gross

estimates and were not based on daily measurements of non-process flow.

Despite requesting more precise information (such as daily non-process

flow data) from facilities that generated the data sets used to

calculate the proposed limitations for BOD5, TSS and COD, EPA did not

obtain this information. However, in the NOA, EPA presented revised

proposed limitations for BOD5 and TSS and COD that were calculated from

the existing plant data sets using the gross estimates of non-process

flow, as described below, to adjust the concentrations in addition to

several new data sets from plants other than those used for the

proposal.

In a previous EPA effluent limitations guidelines and standards

rulemaking for the Organic Chemicals, Plastics and Synthetic Fibers

(OCPSF) industry (52 FR 42522), only plant data sets that contained

less than 25 percent non-process wastewater through treatment were used

in calculating limitations. Thus, the 25 percent level of non-process

wastewater dilution was determined as a benchmark in order to evaluate

biological treatment performance. For the purposes of the NOA, in cases

where the non-process flow was estimated to be more than 25 percent of

the total flow, the non-process wastewater was backed out of the total

flow volume and the parameters corrected for the absence of this non-

process wastewater. However, for the final rule, limitations for COD

are developed from data sets in which the reported flow volume contains

less than 25 percent non-process wastewater and the limitations are

calculated without correcting the data sets for the non-process flow

dilution. This change is discussed further in section IV.D below. As

further discussed below, limitations for BOD5 and some of the remaining

TSS are not being revised at this time since the revised COD limits

requiring advanced biological treatment will incidentally remove a

large portion of the remaining BOD5 and TSS.

Another change to the proposal involved the limitations and

standards proposed for cyanide. EPA proposed BPT, BAT, NSPS, PSES and

PSNS limitations and standards for cyanide based on the performance of

hydrogen peroxide oxidation technology. Following the proposal, EPA

received comments indicating that the use of the hydrogen peroxide

technology to destroy cyanide could possibly result in equipment

explosions with certain types of wastewater. Other commenters indicated

that hydrogen peroxide technology may not be an appropriate cyanide

destruction technology for all treatment situations. Along with these

comments, EPA received additional data on the performance of alkaline

chlorination technology in destroying cyanide. Based on these comments

and the new performance data, EPA indicated in the NOA that it was

considering promulgating two sets of cyanide limitations, one based on

the performance of hydrogen peroxide technology and the other based on

the performance of alkaline chlorination technology. In the NOA, EPA

indicated that only those facilities that could demonstrate that a

potential safety hazard could result from their use of hydrogen

peroxide technology would be subject to the alkaline chlorination

limitations and standards. EPA also solicited information and comments

regarding wastestreams with high organic content as evidenced by high

COD or total organic carbon (TOC) levels, and at what levels these

pollutants would indicate that the wastestream(s) high organic content

would present a safety concern and would more appropriately be

controlled by limitations based on alkaline chlorination. After

consideration of the information provided in response to the

solicitation in the NOA, particularly new performance data representing

current (post 1990 base year) loadings, EPA has decided not to revise

the existing limitations and standards for cyanide based on the small

amount of cyanide discharge loadings that would be removed. However,

the final rule continues to require compliance with the cyanide

limitations be established in-plant, prior to commingling the cyanide

bearing wastestreams with non-cyanide wastestreams for those facilities

where the cyanide levels would be below the level of detection at the

end-of-pipe monitoring location.

Along with comments on its proposed numerical limitations and

standards for ammonia and organic pollutants, EPA received data

concerning the performance of steam strippers, advanced biological

treatment and nitrification in connection with these proposed

limitations. EPA evaluated these data, and provided revised numerical

limitations and standards in the NOA for ammonia, several organic

pollutants controlled by BAT technology (advanced biological treatment)

and several VOCs controlled

[[Page 50395]]

by steam stripping technology for PSES. As the result of the data

received and evaluated, along with comments on the NOA, EPA has changed

the numerical BAT limitations for ammonia. In response to comments in

the NOA indicating that indirect dischargers should be able to achieve

the PSES ammonia limitations using either two-step nitrification

technology or steam stripping, EPA has decided to set the PSES ammonia

limitations equal to the BAT ammonia limitations, and to provide that

indirect discharging subcategories A and C facilities discharging to

POTWs with nitrification capability need not comply with the

categorical limit for ammonia. EPA has also changed the numerical BAT

limitations and PSES for several organic pollutants based on its

analysis of data received in response to the proposal.

D. Pollutant Selection

EPA received several comments concerning the reasoning behind the

regulation of certain pollutants as well as the overall rationale for

selecting pollutants for regulation. In the NOA, EPA indicated that it

had reviewed the loadings bases of all the pollutants selected for

regulation and had determined that in the case of eight pollutants,

insufficient amounts of the pollutants are being discharged to justify

national regulation. These pollutants are diethyl ether, cyclohexane,

chloromethane, dimethylamine, methylamine, furfural, 2-methylpyridine

and trichlorofluoromethane. Since the NOA, EPA has reevaluated its

final loadings database and has determined that the exclusion of these

pollutants along with an additional 15 pollutants is appropriate. The

additional 15 pollutants are excluded from the BAT regulation based on

the lack of removals from current discharge or the control of

discharges of the pollutant by other regulated pollutant parameters.

These pollutants are butanone, formaldehyde, n-butanol, tertiary

butanol, n-propanol, ethylene glycol, polyethylene glycol 600, aniline,

petroleum naphtha, 1,4-dioxane, formamide and dimethyl formamide,

dimethylaniline, dimethylacetamide and pyridine.

EPA proposed PSES for 45 organic pollutants, 37 of which are VOCs,

under co-proposal A with compliance for the standards for 12 of the

VOCs to be monitored in-plant, and compliance for the standards for the

remaining 33 organics to be monitored at the end-of-pipe. In the NOA,

EPA presented two revised PSES options, under which EPA would

promulgate pretreatment standards for VOCs with end-of-pipe monitoring.

The pollutants not regulated under one of these PSES options include

water soluble alcohols such as methanol and related compounds. After

consideration of comments and evaluating the results of the

Barcelonetta POTW study and its implications on the final pass through

analysis (see further discussion of pass through analysis in section IV

E below) and further evaluation of incidental removals and the amount

of or discharge removals for the pollutants, EPA is promulgating PSES

and PSNS for 23 VOCs for subcategories A and C and 5 VOCs for

subcategories B and D. The PSES and PSNS do not include the alcohols

and related compounds, and are based on monitoring at the end-of-pipe

unless the POTW determines it to be impractical per 40 CFR 403.6(e).

IV. The Final Clean Water Act Regulation

This section discusses the applicability of the final rule,

regulatory options considered and the rationale for the selected

options for BPT, BCT, BAT, PSES, PSNS and NSPS.

A. Applicability and Scope of the Final Rule

Today's final effluent limitations guidelines and standards are

intended to cover pollutants in process wastewater discharges from

existing and new pharmaceutical manufacturing facilities. Based on

comments, EPA has revised the proposed scope of the rule. This final

rule contains revisions to the effluent limitations guidelines and

standards in four subcategories (A thru D) of the pharmaceutical

manufacturing point source category, EPA is not revising the scope of

the applicability for the fifth subcategory (Subcategory E-Research).

With regard to subcategory E facilities, EPA proposed to revise the

description of the research subcategory in the applicability section of

the existing subcategory E regulations to exclude pilot or full-scale

operations that generate wastewater using fermentation, extraction,

chemical synthesis or mixing, compounding and formulating from the

scope of subpart E, and these operations were proposed to be covered by

the appropriate subcategory A through D. After considering the comments

received concerning the regulation of wastewaters from pilot-scale

operations, EPA has decided not to change the existing description of

the research subcategory in the applicability section. EPA believes

that it does not have sufficient information concerning subcategory E

generated wastewaters to change the existing description. Subpart E

facilities remain subject to the BPT limitations in the existing

guidelines. If pilot scale operations occur at either stand alone

research facilities or during operations at manufacturing facilities,

then BAT and BCT limits for these wastewaters can be determined by

permit writers on a best professional judgment (BPJ) basis, or

similarly, such wastewater generated at indirect discharging facilities

may be addressed by the regulations found at 40 CFR 403.5 and by local

limits on a case-by-case basis.

Pharmaceutical manufacturers use many different raw materials and

manufacturing processes to create a wide range of products. These

products include medicinal and feed grades of all organic chemicals

having therapeutic value, whether obtained by chemical synthesis,

fermentation, extraction from naturally occurring plant or animal

substances, or by refining a technical grade product.

The pharmaceutical products, processes and activities covered by

the manufacturing subcategories in this final regulation include, but

are not limited to:

a. Biological products covered by the U.S. Department of Commerce,

Bureau of the Census Standard Industrial Classification (SIC) Code No.

2836, with the exception of diagnostic substances. (Products covered by

SIC Code No. 2836 were formerly covered under the 1977 SIC Code No.

2831.)

b. Medicinal chemicals and botanical products covered by SIC Code

No. 2833;

c. Pharmaceutical products covered by SIC Code No. 2834;

d. All fermentation, biological and natural extraction, chemical

synthesis and formulation products considered to be pharmaceutically

active ingredients by the Food and Drug Administration that are not

covered by SIC Code Nos. 2833, 2834, and 2836;

e. Multiple end-use products derived from pharmaceutical

manufacturing operations (e.g., components of formulations,

intermediates, or final products, provided that the primary use of the

product is intended for pharmaceutical purposes);

f. Products not covered by SIC Code Nos. 2833, 2834, and 2836 or

other categorical limitations and standards if they are manufactured by

a pharmaceutical manufacturer by processes that generate wastewaters

that in turn closely correspond to those of pharmaceutical products.

(An example of such a product is citric acid.)

g. Cosmetic preparations covered by SIC Code No. 2844 that contain

pharmaceutically active ingredients or

[[Page 50396]]

ingredients intended for treatment of some skin condition. (This group

of preparations does not include products such as lipsticks or perfumes

that serve to enhance appearance or to provide a pleasing odor, but do

not provide skin care. In general, this also excludes deodorants,

manicure preparations, shaving preparations and non-medicated shampoos

that do not function primarily as a skin treatment.)

A number of products and/or activities such as surgical and medical

manufacturing and medical laboratory activity are not part of the

pharmaceutical manufacturing category. A descriptive listing of the

products and activities that are specifically excluded from the

pharmaceutical manufacturing category are contained in the

applicability provision of the final rule and in sections 2 and 3 of

the final TDD.

In the NOA, EPA indicated that it was considering excluding from

the scope of the regulation organic chemical manufacturers covered by

the OCPSF regulation (40 CFR, Part 414) that manufacture pharmaceutical

intermediates and active ingredients provided that the pharmaceutical

portion of the process wastewater is less than 50 percent of the total

process wastewater. EPA received no adverse comments concerning this,

and has decided to promulgate this exclusion as described in the NOA.

Thus facilities will be covered by the existing OCPSF regulation for

both their OCPSF and pharmaceutical manufacturing process wastewaters

provided that the pharmaceutical portion of the process wastewater at

the facility is less than 50 percent of the total.

B. Options Selection

EPA evaluated final technology options for BPT, BAT, BCT, NSPS,

PSES and PSNS limitations and standards for all four subcategories A

thru D. The options considered for each level of control are discussed

below in sections IV.C thru H.

C. Best Practicable Control Technology Currently Available (BPT)

EPA proposed to revise BPT for the conventional pollutants

BOD5 and TSS, the nonconventional pollutant COD, and the

toxic pollutant cyanide for subcategories A and C, and for

subcategories B and D, proposed to revise BPT limitations for

BOD5, TSS, and COD and to withdraw the cyanide limitations.

In response to this proposal, EPA received comments claiming that EPA

lacks the legal authority to revise BPT for the conventional pollutants

since the proposed revised BPT limitations did not pass the BCT cost-

reasonableness test. EPA also received comments claiming that COD and

cyanide should not be regulated at BPT but only at the BAT level.

In today's rulemaking, EPA is revising BPT limitations only as to

COD. The current BPT limitations for BOD5, TSS and cyanide

will continue to apply (except for subcategories B and D where EPA is

withdrawing the BPT limitations for cyanide). Accordingly, issues

raised by commenters regarding EPA's legal authority to revise BPT for

BOD5, TSS, or cyanide do not need to be addressed in this

rulemaking. Nonetheless, EPA continues to believe that it has the legal

authority to revise BPT limitations as appropriate. EPA further

believes it can do so for conventional pollutants without having to

apply the BCT cost-reasonableness test. Because EPA's authority to

revise BPT limitations for conventional pollutants or cyanide is no

longer an issue in this rulemaking, EPA is providing only a general

statement of its statutory authority to revise BPT. For example,

section 304(b) of the CWA directs EPA to revise all effluent limitation

guidelines, including those based on BPT, at least annually if

appropriate. Similarly, section 304(m) directs EPA to establish a

schedule ``for the annual review and revision of promulgated effluent

guidelines, in accordance with subsection (b) of this section.'' EPA

does not believe that the addition of the BCT provisions to the CWA

supplanted the BPT provisions. When enacting the more recent BCT

provisions, Congress did not strip EPA of its explicit authority to

revise or update BPT as necessary and appropriate. Moreover, the

different purposes of BPT and BCT limitations would support an EPA

decision to promulgate best ``practicable'' control technology for

conventional pollutant control (represented by BPT), rather than the

higher ``best available'' standard (represented by BCT).

Similarly, it is the Agency's position that it is not required to

regulate COD or cyanide only at the BAT level. As noted above, section

304(b) of the CWA as well as section 304(m) directs EPA to revise all

effluent limitations guidelines, including those based on BPT, at least

annually if necessary and appropriate. It is EPA's view that the

addition of BAT provisions to the CWA did not supplant the BPT

provisions. When enacting the more recent BAT provisions, Congress did

not strip EPA of its authority to revise or update BPT as necessary and

appropriate. Further, the different purposes of BPT and BAT limitations

would support an EPA decision to promulgate revised effluent limitation

guidelines for nonconventional or toxic pollutants that reflect simply

the next generation of best ``practicable'' control technology

(represented by BPT), rather than the higher ``best available''

standard (represented by BAT).

Since EPA is not revising BPT limitations for cyanide (but rather

is modifying the compliance monitoring requirements for cyanide for

subcategories A and C, and withdrawing the limitations as to

subcategories B and D), the issue need not be addressed further in this

rulemaking.

EPA believes that the decision of whether or not to revise BPT for

nonconventional pollutants should be made based upon consideration of a

number of factors, including, but not necessarily limited to, cost, the

technology being considered and the relative performance being achieved

(best ``practicable'' versus best ``available''), the anticipated

pollutant reductions, and implementation burden on permit writers.

In this case, EPA has made a determination that the costs and

removals associated with the implementation of advanced biological

treatment at a best ``practicable'' level warrant revision of COD at

BPT. This is in part due to the relatively high concentrations of COD

in the effluent that are allowed under the existing percent removal BPT

limitations which are unique to this industry. In other cases, the

Agency has decided not to revise BPT (see, for example, Effluent

Limitation Guidelines for the Pulp, Paper, and Paperboard Category,

subparts B and E, 63 FR 18534, April 15, 1998).

As noted above, EPA proposed to revise BPT for the conventional

pollutants BOD5 and TSS, the nonconventional pollutant COD,

and the toxic pollutant cyanide for subcategories A and D, and for

subcategories B and D, to revise BPT limitations for BOD5,

TSS, and COD and to withdraw the existing cyanide limitations. The

technology basis of the proposed BPT limitations was advanced

biological treatment. EPA also determined that the level of performance

necessary for a plant to be considered as a best performer at the best

``practicable'' level was full compliance with the existing BPT

limitations. Of the plants considered as best performers at proposal,

EPA selected five A and C subcategory plants and two B and D

subcategory plants. The Agency then calculated long-term average

performance concentrations for regulated pollutants from the best

performing A and C and B and D plants.

In developing the final BPT limitations, EPA has essentially

[[Page 50397]]

followed the proposal methodology except that EPA used only data sets

representing less than 25 percent non-process wastewater through

treatment and included the additional data sets received since proposal

in its final limitations determinations. Except for one facility which

adds non-process wastewater after treatment but before the end-of-pipe

sample point, the BPT data sets were not corrected for non-process

wastewater and the final limitations were calculated using the plant

flow that included some non-process wastewater.

EPA did not back out the estimated non-process wastewater in

developing the proposed BPT concentration based limitations because

non-process flow data available at that time were only gross estimates

not identified in sufficient detail and were not based on daily

measurements of non-process flow. Regarding the proposed BPT

limitations, commenters indicated that EPA should eliminate all non-

process wastewater from the calculation of BPT limitations. EPA did not

have information such as daily non-process flow data from facilities

that generated the data sets used in the calculation of BPT and BAT

limitations for BOD5, TSS and COD to allow adjustment. In

the recent NOA, EPA presented BPT limitations for BOD5 and

TSS and BAT COD limitations that were calculated from plant data sets

which included the additional data submissions obtained since proposal

from which the non-process wastewater had been backed out. In cases

where the non-process flow was estimated by EPA to be more than 25

percent of the total flow using the available data, the fraction of the

non-process to process flow volume was used to calculate a correction

factor and the long-term average concentration values for each of the

BPT parameters were adjusted to reflect the parameters absence of this

non-process wastewater. No corrections were made to data sets where the

non-process flow was estimated to be less than 25 percent of the total

flow.

EPA received no adverse comments regarding these adjusted

limitations. However, based on further analysis, EPA believes that it

is more appropriate to follow the methodology used in developing the

final Organic Chemicals, Plastics, and Synthetic Fibers (OCPSF)

regulation (52 FR 52522) final BPT limitations. In that rule, only

plant data sets that contained less than 25 percent non-process

wastewater through treatment were used in the calculation of BPT

limits, and the effluent data were not adjusted to take into account

plant data sets that contained more than 25 percent non-process

wastewater through treatment. EPA selected this approach in calculating

the final BPT limitations in this rule for the same two reasons used

during development of the OCPSF rule. (See 52 FR 42522). First, using

data sets with greater than 25 percent non-process wastewater through

treatment introduces considerable uncertainty into the limitation

calculations because the flow data that would be used are only in part

based on daily flow measurements whereas the concentration-based

limitations are calculated from the long term average of daily

measurements over long periods of time (12-24 months). Second, the

final limitations should represent as much as possible the performance

of treatment technology on process wastewater. In determining permit

mass limits, permit writers and, where applicable, pretreatment control

authorities should identify the amount of non-process wastewater being

treated. The flow volume representing 25 percent or less of the total

flow should be included in the volume used to calculate allowable mass

discharges. Any additional volume would have to be evaluated on a case-

by-case basis to determine what, if any, mass allowances are

appropriate.

EPA considered four options for the final BPT limitations. Under

the first option, EPA would not revise the existing BPT limitations for

BOD5, TSS, COD and cyanide. No costs or removals are

associated with this option. Under the second option, EPA would revise

the BPT limitations based on advanced biological treatment only for

COD, and revise the monitoring requirements for the existing cyanide

limitations. Under option three, EPA would revise BPT limitations for

BOD5 and TSS based on advanced biological treatment and

revise the monitoring requirements for the existing cyanide

limitations. Under the fourth option, EPA would revise BPT limitations

for BOD5, TSS, and COD based on advanced biological

treatment, and revise the monitoring requirements for the existing

cyanide limitations. The options for all subcategories are the same,

except as to cyanide where the option for subcategories B and D

contains the option to withdraw the cyanide limitations rather than

just modify the monitoring requirements.

The pretax total annualized costs, pollutant removals, and costs

per pound removed associated with the options, except the ``no action''

option, are shown below in Table IV.C.1.

Table IV.C.1.--BPT Pretax Option Costs, Pollutant Removals and Cost per Pound Removed

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

Total

annualized Pollutant Cost per pound

Treatment option cost ($ removals ($1996/lb)

million 1997) (lbs)

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

A/C Subcategory

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

Clarify cyanide monitoring, revise COD only..................... $2.48 14,352,000 $0.17

Clarify cyanide monitoring, revise BOD5 & TSS................... 2.61 4,692,000 0.56

Clarify cyanide monitoring, revise BOD5, TSS, & COD............. 3.10 15,731,000 0.20

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

B/D Subcategory

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

Withdraw cyanide, revise COD only............................... $1.38 539,000 $2.56

Withdraw cyanide, revise BOD5 & TSS............................. 1.89 588,000 3.21

Withdraw cyanide, revise BOD5, TSS, & COD....................... 2.16 598,000 3.62

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

In selecting these treatment options, EPA considered the total cost

in relation to the effluent reduction benefits, the age of equipment

and facilities involved, the processes employed, process changes

required, engineering aspects of the control technologies, non-water

quality environmental impacts (including energy requirements) and

[[Page 50398]]

other factors in accordance with section 304(b)(1)(B) of the CWA.

EPA has determined to revise BPT effluent limitations only for COD.

EPA is also clarifying the compliance monitoring requirements for the

existing BPT limitations for cyanide for subcategories A and C, and

withdrawing the existing cyanide limitations for subcategories B and D.

As discussed above, EPA believes that it has the statutory authority to

revise BPT and that it has the discretion to determine whether to

revise BPT effluent limitations guidelines in particular circumstances.

The CWA requires EPA, when setting BPT, to examine the total cost of

treatment technologies in relation to the effluent reduction benefits

achieved. In addition, in determining whether to set BCT limitations,

the Agency needs to consider the reasonableness of the cost of reducing

conventional pollutants and compare the cost of removing those

pollutants by regulated plants and by POTWs. Accordingly, EPA examined

the use of advanced biological treatment as a basis for both BPT and

BCT limitations for BOD5 and TSS. The Agency found that the

reductions in these conventional contaminants achieved by this

technology were not commensurate with the costs, largely because of the

large operational costs associated with the removal of TSS. While it is

EPA's view that it can revise BPT limitations for conventional

pollutants without passing the BCT cost test (where the BPT effluent

reduction ratio is favorable), the Agency is not generally inclined to

do so unless the removals achieved by the existing BPT limitations are

significantly fewer than would be achieved through revision of BPT.

That was not the case here. Revising BPT (and BAT) for COD plants will

not only remove large amounts of COD, but also achieve significant

incidental removals of BOD5 and TSS. For this reason, EPA

has determined that it is not necessary to separately revise the BPT

limits for BOD5 and TSS in this case.

EPA has determined to revise BPT for COD because the biological

treatment technology used as a basis for the limitations really

represents BPT technology and is widely used in the industry.

The bulk parameter and nonconventional pollutant COD is an

indicator of organic matter in the wastestream that is susceptible to

strong oxidation, and as such would also measure organic material

susceptible to biochemical oxidation, as well as some that is more

difficult to oxidize biochemically. In addition, limited studies and

discharge monitoring data have identified toxicity associated with the

COD levels contained in effluents from pharmaceutical manufacturing

facilities. Further discussion of the toxicity levels measured in the

effluents from pharmaceutical manufacturing facilities is contained in

Section 6 of the TDD. The revised COD limitations are estimated to

remove approximately 14.9 million pounds annually, including incidental

removal of 2.7 million pounds of BOD at an annualized cost of $2.48

million ($1997).

The revised COD provisions require the use of either the new

effluent concentration limitations or the existing 74 percent reduction

requirement, depending upon which method determines the more stringent

plant permit limitation. This is being done in order to avoid back-

sliding issues for existing plants that because of low influent

concentration already meet lower effluent limits for COD.

With regard to cyanide, EPA is retaining the existing BPT

limitations for the A and C subcategories. Further revision of the BPT

cyanide limitations was not selected since the removals were estimated

to be less than 42 pounds per year, thus, determined not to be

beneficial in relation to the annualized costs of over $200,000

($1997).

However, EPA is modifying the requirements for compliance

monitoring (for subcategories A and C). The current limitations require

compliance monitoring after cyanide treatment and before dilution with

other wastestreams, or in the alternative, monitoring after mixing with

other wastestreams based on a standard dilution factor. Today's rule

does not change the prohibition on dilution to meet the effluent

limitations for cyanide. The rule continues to require monitoring for

compliance with the existing limitations in-plant, prior to the

commingling of cyanide-bearing wastestreams with non-cyanide bearing

wastestreams for those facilities where the cyanide levels would be

below the level of detection at the end-of-pipe monitoring location.

The only change in the monitoring requirements is to eliminate the

current dilution standard that applied industry-wide, and to allow

individual facilities to demonstrate that end-of-pipe monitoring for

cyanide is feasible (i.e., cyanide is detectable); those facilities may

continue to monitor at the end of pipe.

The ability of EPA to require in-plant monitoring has recently been

questioned in connection with the Great Lakes water quality guidance

program. American Iron and Steel Institute (AISI) v. EPA, 115 F.3d 979

(D.C. Cir. 1997). The Court held that although EPA has the authority to

require monitoring of internal wastestreams, see AISI, 115 F.3d at 995,

the CWA does not authorize EPA to require compliance with water quality

based effluent limitations at a point inside the facility and thereby

deprive a permittee of the ability to choose its own control system to

meet the limitations, see id. at 966. EPA does not believe that

decision controls here. The AISI court did not consider the question

whether EPA has authority to regulate internal wastestreams in the

context of technology-based controls such as BPT/BAT, PSES and NSPS/

PSNS. Unlike water quality-based effluent limitations, which are

calculated to ensure that water quality standards for the receiving

water are attained, technology-based limitations and standards are

derived to measure the performance of specific model technologies that

EPA is required by statute to identify. In identifying these

technologies, EPA is directed to consider precisely the type of

internal controls that are irrelevant to the development of water

quality-based effluent limitations, such as the processes employed,

process changes, and the engineering aspects of various types of

control techniques. EPA's technology-based effluent limitations are

intended to reflect, for each industrial category or subcategory, the

``base level'' of technology (including process changes) and to ensure

that ``in no case * * * should any plant be allowed to discharge more

pollutants per unit of production than is defined by that base level.''

E.I. du Pont de Nemours & Co. v. Train, 430 U.S. at 129 (1973).

EPA believes that it can require in-plant monitoring to demonstrate

compliance with technology-based effluent limitations in accordance

with the CWA and its regulations at 40 CFR 122.44(i), 122.45(h),

125.3(e) and 403.6(e). In today's rule, EPA is continuing to require

in-plant monitoring for cyanide except where cyanide can be detected in

the final effluent. Were EPA to require compliance monitoring of the

final effluent without adjustment for the amount of dilution in

cyanide-bearing waste streams, there would be no way to determine

whether the facility had adequately controlled for cyanide or whether

the effluent has simply been diluted below the analytical detection

level. Diluting pollutants in this manner rather than preventing their

discharge is inconsistent with achieving the removals represented by

the technology-based levels of control and hence with

[[Page 50399]]

the purposes of the limitations. It is also inconsistent with the goals

of the CWA in general.

D. Best Available Technology Economically Achievable

EPA proposed adding new end-of-pipe BAT limitations for 53 organic

pollutants plus ammonia, revising the existing cyanide limitations and

adding the BPT revised COD limitations for subcategories A and C. For

subcategories B and D, EPA proposed adding new end-of-pipe BAT

limitations for 53 organics, BPT revised COD limitations and

withdrawing the existing cyanide limitations. The technology basis for

the limitations for VOCs was steam stripping plus advanced biological

treatment for subcategories A and C and advanced biological treatment

for subcategories B and D. The technology basis for the ammonia

limitations was nitrification. The revised cyanide limitations for the

A and C subcategories were the same as the revised BPT proposed

limitations. For subcategories B and D cyanide limitations were

proposed to be withdrawn since facilities in these subcategories do not

use or generate cyanide in their wastewaters.

EPA received a number of comments indicating that steam stripping

technology was not appropriate for the treatment of VOCs and that

emissions of these pollutants from wastewater should be controlled by

CAA regulations. In the preamble to the proposed MACT standards, EPA

indicated that, in view of the MACT proposed wastewater standards, that

it was considering changing the BAT technology basis for subcategory A

and C VOCs limitations to end-of-pipe advanced biological treatment. In

the NOA, EPA reiterated this option and provided cost information which

compared the original proposal technology basis (steam stripping and

advanced biological treatment) to the advanced biological treatment

technology basis.

EPA also received comments on its proposed ammonia limitations.

Commenters indicated that the ammonia limitations were inadequately

supported by nitrification data. In the NOA, EPA indicated that after

reevaluating its nitrification data base, it intended to base the BAT

ammonia limitations on both one or two stage nitrification technology,

presented compliance costs estimates based on two stage nitrification

technology and revised limitations based on incorporating additional

data, including data representing two stage nitrification, into the

data base. In comments on the NOA, commenters indicated that some

plants employing the proposed technology basis did not believe that

they could achieve consistent compliance with the revised limitations.

In order to respond to these commenters, EPA evaluated additional

nitrification data received from facilities after the August 8, 1997

publication of the NOA. As a result of this evaluation, EPA has

recalculated the ammonia limitations that were presented in the NOA. In

doing so, EPA used only data that showed evidence that nitrification

was occurring and compared separate sets of limitations developed using

single-stage and two-stage nitrification data sets, respectively. The

results of this comparison gave final limitations less stringent than

those calculated for the NOA, but reflective of systems that nitrify

continuously whether they are one or two stage systems.

EPA considered three regulatory options as the basis for BAT

limitations for subcategory A and C facilities. All three options

modify the existing BAT regulations to parallel the BPT regulations and

to clarify the compliance monitoring point for the existing cyanide

limitations. The first option is a no cost revision which incorporates

the BPT clarification for cyanide and revised BPT limitations for COD.

The second option adds limitations for 30 organic pollutants based on

advanced biological treatment and revised limitations for COD equal to

the final BPT limitations and clarifies the compliance monitoring point

for cyanide. The third option adds limitations for 30 organic

pollutants based on advanced biological treatment, ammonia limitations

based on one or two stage biological nitrification technology,

incorporates the revised COD limitations and clarifies the compliance

monitoring point for cyanide. The pretax total annualized compliance

costs and pollutant removals associated with the second and third

options (only options incurring costs) are shown below in Table IV.D.1

for subcategories A and C:

Table IV.D.1--BAT Pretax Options Costs, and Pollutant Removals for

Subcategory A and C Direct Dischargers

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

Total Pollutant

annualized removals

Regulatory option cost ($ (million lbs

million 1997) per yr)

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

Add Organics and COD and clarify cyanide $2.3 1.4

Add Organics, Ammonia and COD and

clarify cyanide........................ 3.6 2.2

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

EPA evaluated the costs and economic impacts associated with each

option and determined that all the options were economically

achievable. After considering the pollutant load removals, the costs,

as well as the non-water quality environmental impacts associated with

the options, EPA selected the third option which adds effluent

limitations for 30 organic pollutants, ammonia and COD and modifies the

cyanide monitoring requirements. EPA believes that this option is

economically achievable and there are no significant adverse non-water

quality impacts associated with it. In addition, EPA believes the

discharge loadings of ammonia, COD and the organic pollutants are

significant from subcategory A and C facilities, and that limitations

on these discharges are appropriate. EPA has also evaluated the

technology bases of the final BAT limitations in the context of the BAT

statutory factors, i.e., the age of equipment and facilities involved,

the process(s) employed, potential process changes and non-water

quality impacts such as energy requirements. EPA believes the final BAT

limitations are appropriate based on its assessment of these factors in

relation to A and C subcategory facilities.

For facilities with subcategories B and D operations, EPA has

identified only the pollutant COD for control by BAT limitations based

on advanced biological treatment (the technology selected as the basis

for the BPT limitations). As discussed under BPT, cyanide is not a

pollutant of concern for subcategories B and D operations and EPA is

withdrawing the current BAT cyanide limitations for facilities with

subcategories B and D operations. EPA

[[Page 50400]]

also has determined that ammonia is not a pollutant of concern for

these subcategories since ammonia is not found in significant amounts

in wastewaters from these operations.

Thus, for subcategories B and D, EPA considered two final BAT

regulatory options. The first option is a no cost option consisting of

the withdrawal of the existing cyanide limitations, the same as the

final BPT withdrawal of cyanide control and the addition of the BPT

revised COD limitations. The second option includes the withdrawal of

the existing cyanide limitations and the addition of the BPT revised

COD limitations and limitations based only on advanced biological

treatment for 30 of the same organic pollutants selected for regulation

at the subcategories A and C facilities.

The total annualized cost and annual pollutant removal associated

with the second option are $0.410 million ($1997) and 22,300 pounds per

year.

EPA has evaluated the discharge loadings of organic pollutants from

subcategories B and D facilities and has determined that 95 percent of

the discharge of organic pollutants is from two facilities. Most direct

discharging subcategories B and D facilities do not discharge any

organic pollutants. EPA believes these organic pollutant discharges are

not sufficient to justify national regulations for these subcategories.

If permit writers determine the need to further control the organic

pollutants from the two facilities, the appropriate limits contained in

the subcategories A and C BAT regulations may be used. For this final

rule, EPA has selected the first option, which is to only add the BPT

revised COD limitations to BAT for subcategories B and D facilities,

and to withdraw the existing cyanide limitations.

E. Pretreatment Standards for Existing Sources (PSES)

EPA proposed pretreatment standards for 45 organic pollutants

(including 37 VOCs), with in-plant monitoring for 12 VOCs and end-of-

pipe monitoring for the remaining 33 organics (25 of which are VOCs)

under coproposal A; and in-plant monitoring only for the 12 VOCs under

coproposal B. EPA received considerable comment on its proposal pass

through analysis which indicated that the 45 organic pollutants passed

through POTW treatment works. Thirty-seven of the organic pollutants,

including 13 alcohols and related compounds had Henry's Law Constants

greater than 10 -6 atm m3/gmole, which was the

physical property used to consider a pollutant to be too volatile to be

treated properly at POTWs. The other eight organic pollutants were

determined to pass through based on the BAT technology percent removal

exceeding that of well operated activated sludge treatment represented

by EPA's 50 POTW data base.

Many commenters objected to the assumption that pollutants with

Henry's Law constants greater than 10-6 atm m3/

gmole would be considered to pass through based on their volatility.

The pollutants commenters identified as being insufficiently volatile

and highly biodegradable included: methanol, ethanol and other

pollutants with Henry's Law constants lower than 1 x 10-5

atm m3/gmole. Commenters indicated that many of the alcohols

and related compounds were easily biodegraded by POTWs and did not pass

through.

EPA also received a number of comments concerning the proposed in-

plant monitoring point for the 12 VOCs. Commenters indicated that CAA

MACT standards not CWA pretreatment standards should control in-plant

emissions of these pollutants from internal wastestreams.

In order to address these and other comments related to controlling

the alcohols and related compounds, EPA conducted a sampling study in

August 1996 at a POTW in Barceloneta, Puerto Rico. This POTW treats

pharmaceutical industry wastewaters containing measurable amounts of

the predominant alcohols and related compounds, such as methanol,

ethanol and isopropanol. The purpose of the sampling study was to

determine the extent to which methanol and other compounds with similar

Henry's Law Constants volatilize in the primary treatment works

(aerated grit chambers and primary clarifiers) prior to the

biodegradation unit process. Amounts volatilized prior to the

biodegradation unit are not considered to be treated.

In the NOA, EPA published the preliminary results of the study

along with those of a separate bench-scale study of anaerobic

degradation in the Barceloneta primary clarifiers conducted by

industry. EPA indicated in the NOA that it was considering a finding of

no pass through for 13 of the organic pollutants (methanol and other

alcohols and related compounds) based on the belief that the

volatization of these pollutants in the primary works of POTWs is

roughly equivalent to that observed in the primary works of direct

discharging BAT level facilities. Thus, the treatment of these

pollutants by a well operated POTW is roughly equivalent to that

achieved by industrial facilities meeting BAT. As noted earlier in

section III.D. EPA proposed PSES for 45 organic pollutants, and

subsequently removed eight pollutants based on no pass through at the

POTWs, thus making a total of 21 (with the alcohols and related

compounds) not passing through POTWs.

In addition to discussing results of its pass through analyses in

the NOA, EPA presented two revised pretreatment options for all four

subcategories, with end-of-pipe monitoring for all VOCs including the

12 volatile pollutants for which in-plant monitoring for PSES/PSNS had

been proposed. In the NOA, EPA indicated that PSES for these 12

pollutants were unnecessary because they would be controlled by the

MACT wastewater standards which require an in-plant compliance

demonstration for 10 of the 12 VOCs which are HAPs. The remaining 12

VOCs, in addition to the two non-HAPs that are part of the 12 VOCs

discussed above, are controlled by end-of-pipe limits based on steam

stripping, with removals incidental to controlling HAPs either directly

by the MACT standards or separately from the MACT standards at smaller

facilities not covered by the MACT rule but controlled by this CWA

final rule.

In finalizing the methodology for the pass through analysis

discussed above, EPA relied on three criteria that had to be met before

a pollutant was deemed to pass through. These criteria included

volatility, solubility in water, and the BAT and POTW technologies

percent removal comparison. With regard to volatility, EPA raised its

Henry's Law Constant threshold for volatility from 1 x 10-

\6\ atm/gmole/m \3\ to 1 x 10-

\5\ atm/gmole/m\3\ based on comments that the Henry's

Law Constant used at proposal was not consistent with what was used for

the OCPSF final rule. Pollutants with Henry Law Constants greater than

1 x 10-\5\ atm/gmole/m \3\ were believed to

volatilize significantly before reaching treatment at a POTW. In

connection with volatility, in order to be consistent with the MACT

standards approved for controlling water soluble HAPs, EPA also

considered whether a pollutant was water soluble because water soluble

compounds are less likely to volatilize than compounds that are

partially soluble. Finally, EPA considered differences in removal

percentages for organic pollutants obtained by comparing the BAT model

treatment system percentage removal to the average pollutant removal

percentage achieved by well-operated POTWs achieving secondary

treatment performance standards.

In developing BAT pollutant removal percentages, EPA only used

pollutant data pairs where the influent

[[Page 50401]]

concentrations were greater than ten times the pollutant method

detection limits which was the approach used in developing the

supporting information for the NOA. In developing the final POTW

pollutant removal percentages, EPA utilized the acclimated data from

the same sources used to develop these percentages for the NOA. These

removal percentages are the POTW removal percentages used in the final

comparison. Thus, in order for a pollutant to be deemed to pass

through, it had to have a Henry's Law Constant greater than

1 x 10-\5\ atm/gmole/m \3\, be less than totally

soluble in water, and have a BAT removal percentage greater than its

POTW removal percentage. Based on this analysis, EPA has determined

that 23 organic pollutants in subcategories A and C and 5 organic

pollutants in subcategories B and D, that pass through POTWs are

regulated by pretreatment standards in today's rule. A more detailed

description of this analysis may be found in section 17 of the final

TDD.

In addition to pretreatment standards for VOCs, EPA proposed

ammonia standards based on either steam stripping or two-stage

nitrification. In May 1995 EPA proposed ammonia pretreatment standards

based only on steam stripping technology. The Agency received a number

of comments concerning the proposed ammonia pretreatment standards.

Some commenters indicated that steam stripping may not be a reliable

treatment technology. Others questioned the need for national ammonia

standards because many POTWs have imposed local limits for ammonia and

others have nitrification capability. EPA discussed both of these

concerns in the NOA. EPA suggested in the NOA that ammonia does not

pass through POTWs with nitrification, and requested comments on the

preliminary discussion not to set pretreatment standards for industrial

users which discharge to POTWs with this technology. Comments from POTW

control authorities and industry supported this approach to developing

PSES ammonia standards. The final rule contains ammonia pretreatment

standards only for subcategories A and C, based on the BAT technology

of nitrification and is applicable to those facilities discharging to

POTWs without nitrification capability.

EPA determined that cyanide passes through POTWs based on the

percent removal comparison with the hydrogen peroxide (BAT) technology.

Thus, EPA proposed revised cyanide pretreatment standards based on

hydrogen peroxide technology but maintaining that the standards based

on in-plant monitoring for the requirements. EPA received comments

raising safety concerns using this technology for high organic strength

wastes. Based on these comments and additional data submitted by

facilities, in the NOA, EPA proposed establishing two sets of cyanide

standards. One standard would be identical to the proposed standards

based on hydrogen peroxide technology, while the other standard would

be based on alkaline chlorination technology and applicable only to

those facilities that could demonstrate, due to safety concerns, that

hydrogen peroxide technology was not an appropriate technology to use

with their wastewater. EPA estimated compliance costs and loadings

removals to be the same for both sets of standards because it was

assumed that the vast majority of facilities would meet these standards

based on the use of the more expensive and efficient hydrogen peroxide

technology.

In developing the final PSES for subcategories A and C, EPA

considered three options. The first option was not to develop

pretreatment standards for ammonia or any of the VOC pollutants, and to

modify the monitoring requirements for the existing cyanide standards.

The second option would build on compliance with the MACT standard with

additional pretreatment standards for 23 VOCS based on steam stripping

technology and ammonia based on steam stripping or nitrification and

modify the cyanide monitoring requirements. The third option would be

the same as the second option, with the addition of revised

pretreatment standards for cyanide.

The annualized compliance costs (1997 dollars) and pollutant

removals for the second and third options (the only ones incurring

costs) are shown below in Table IV.E.1. EPA did not consider additional

options involving small facility exclusions because results of the

economic analyses for the small facilities using the costs for both

options described above showed that both options are economically

achievable (see section V of this preamble for more discussion).

Table IV.E.1--PSES Pretax Options Costs and Pollutant Removals for

Subcategories A and C Indirect Dischargers

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

Total

annualized Pollutant

Treatment option cost ($ removals

million 1996) (million lbs)

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

Add organics and ammonia and modify

cyanide monitoring requirements........ $44.5 10.653

Add organics and ammonia and revise

cyanide limits......................... 44.8 10.654

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

Due to the low pollutant removals achievable by the revised cyanide

standards (approximately 1000 lbs per year with 97 percent of the

removals coming from one facility) in relation to the compliance costs,

EPA has decided not to revise the existing cyanide standards, and has

selected the option to add organics and ammonia only and modify the

current cyanide monitoring requirements. The selected option adds

standards for ammonia and the 23 organic pollutants determined to pass

through (see previous discussion in this section), and modifies the

monitoring point for the current cyanide pretreatment standards for

subcategories A and C.

EPA is setting pretreatment standards for ammonia for subcategories

A and C because of the high loads of ammonia currently being discharged

by a number of pharmaceutical facilities to POTWs that do not have

nitrification capability and receive wastewaters from subcategories A

and C facilities. However, EPA is aware that some POTWs treating

pharmaceutical wastewaters from these subcategories have nitrification

capability, and EPA has made a determination of no passthrough for

ammonia at these POTWS. Thus, PSES ammonia limitations will not apply

to subcategory A and C facilities discharging to POTWs with

nitrification capability. POTWs with nitrification capability oxidize

ammonium salts to nitrites (via Nitrosomonas bacteria) and the further

oxidize nitrites to nitrates via Nitrobacter bacteria and achieve

greater removals of ammonia than POTWs

[[Page 50402]]

without nitrification. Nitrification can be accomplished in either a

single or two-stage activated sludge system. In addition, POTWs that

have wetlands which are developed and maintained for the expressed

purpose of removing ammonia with a marsh/pond configuration are also

examples of having nitrification capability. Indicators of

nitrification capability are: (1) biological monitoring for ammonia

oxidizing bacteria (AOB) and nitrite oxidizing bacteria (NOB) to

determine if nitrification is occurring, and (2) analysis of the

nitrogen balance to determine if nitrifying bacteria reduce the amount

of ammonia and increase the amount of nitrite and nitrate.

For subcategories B and D, EPA considered two options. The first

option was not to add regulated pollutants to the existing PSES and,

since cyanide is not present in wastewaters for these subcategories

facilities, to withdraw the existing cyanide standards. Thus,

compliance with the MACT standard would be the only requirement for

controlling VOC pollutants. The second option was to add pretreatment

standards for 5 VOCs (not including the alcohols and related compounds

and 19 pollutants determined not to be present in subcategory B and D

wastewaters) based on steam stripping in addition to withdrawing the

existing cyanide standards. No ammonia standards were considered since

facilities in these subcategories do not generate significant levels of

ammonia in their wastewaters. The pretax annualized compliance cost for

this second option is $8.8 million ($1997) and annual pollutant

removals are 3.35 million pounds.

For PSES for subcategories B and D, EPA has selected the second

option. EPA is basing this selection on the fact that the 5 pollutants

(VOCs) have been determined to passthrough, and the pollutant removals

are relatively high with respect to the compliance costs. The costs are

economically achievable and the nonwater quality environmental impacts

are acceptable.

F. New Source Performance Standards (NSPS)

EPA proposed NSPS for 53 organic pollutants, BOD5, TSS

and COD based on steam stripping or distillation and advanced

biological treatment for subcategories A and C. EPA also proposed NSPS

for ammonia and cyanide based on nitrification and hydrogen peroxide

oxidation technologies, respectively for these two subcategories. EPA

received comments indicating that distillation technology was not a

demonstrated technology for removing soluble VOCs (such as methanol),

and therefore, should not be part of the technology basis of NSPS. EPA

has reevaluated its steam stripping and distillation database and has

concluded that distillation technology is sufficiently demonstrated to

be considered BADT (Best Available Demonstrated Technology). However,

after taking into account the high removal of these pollutants

achievable by steam stripping and advanced biological treatment, the

addition of distillation technology is unnecessary. Consequently EPA

did not consider distillation technology as part of final NSPS model

technology.

EPA evaluated technology options capable of achieving greater

pollutant removal of conventional pollutants (BOD5 and TSS),

COD, Organics, Cyanide and Ammonia than those selected as the basis for

existing source limitations (BPT, BCT and BAT). The only option

potentially capable of achieving additional removals involves the use

of granular activated carbon (GAC) adsorption technology. This

technology is capable of reducing the COD from some direct discharging

A and C subcategory facilities. However, there is only limited GAC

performance data available, from one pilot study.

For subcategories B and D, EPA proposed NSPS for 53 organic

pollutants, BOD5, TSS and COD based on in-plant steam

stripping with distillation and end-of-pipe advanced biological

treatment. As was the case with the proposed NSPS for subcategories A

and C, EPA received comments stating that use of distillation

technology as BADT for new sources is inappropriate because its ability

to remove methanol and other water soluble organic pollutants has not

been demonstrated with respect to representative wastestreams.

For subcategories A and C, EPA is promulgating NSPS equal to the

final BAT effluent limitations for 30 organic pollutants, cyanide and

ammonia. For subcategories B and D, EPA is promulgating NSPS equal to

BAT (including withdrawal of the existing cyanide standards). EPA is

also promulgating revised NSPS for BOD5, COD and TSS for all

four subcategories at a level equal to the discharge characteristics of

the best performing BPT plants which for COD is also the BAT/BPT level

of control. These final standards are based on the best available

demonstrated control technologies, which include advanced biological

treatment, cyanide destruct and nitrification. In developing these

final standards, the Agency considered factors including the cost of

achieving effluent reductions, non-water quality environmental impacts,

and energy requirements. EPA finds that the final standards represent

the best available demonstrated control technologies, are economically

achievable and do not present a barrier to entry and have acceptable

non-water quality environmental impacts.

G. Pretreatment Standards for New Sources (PSNS)

EPA proposed PSNS for 45 organic pollutants, cyanide and ammonia

for subcategories A and C, and the same 45 organic pollutants only, for

subcategories B and D. The technology basis for the proposed organic

pollutant standards was steam stripping with distillation, and the

technology bases for the proposed cyanide and ammonia standards were

hydrogen peroxide oxidation and steam stripping technologies,

respectively.

The proposed pretreatment standards for new sources were more

stringent than the proposed PSES. However, for the final rule, EPA was

unable to identify a technology that would achieve greater removal of

the pollutants to be controlled by the PSES being promulgated today and

is therefore promulgating PSNS equal to PSES for all four

subcategories.

H. Best Conventional Pollutant Control Technology (BCT)

EPA proposed BCT equal to BPT for the conventional pollutants

BOD5 and TSS for all four subcategories. The Agency

indicated that it had not identified technologies that achieve greater

removals of conventional pollutants other than those associated with

the proposed revision of BPT limits, and that these technologies did

not pass the two-part BCT cost reasonable test. EPA has not received

any comments concerning its proposal BCT cost test analysis. The Agency

has repeated the cost test with the postproposal data, with the same

results. Based on the failure to identify any incremental conventional

pollutant removal technology options that pass the BCT cost reasonable

test, EPA is promulgating BCT limitations equal to the existing BPT

limitations for BOD5 and TSS for all subcategories.

V. Assessment of Costs and Impacts for the Final Pharmaceutical

Regulations

A. Introduction

The economic analysis for the final pharmaceutical effluent

limitations guidelines and standards assesses the costs and impacts of

these guidelines. The results of this analysis are contained in the

record for this final

[[Page 50403]]

rule and are summarized in a document entitled Economic Analysis for

Final Effluent Guidelines and Standards for the Pharmaceutical Industry

(EPA-821-B-98-009). Included in the Economic Analysis (EA) and

summarized below are (1) the annualized costs of the rule by

subcategory, separately and together with the costs of the MACT

standards rule discussed previously; (2) the impacts of the rule both

separately and together with the MACT standards on pharmaceutical

facilities, both existing and new sources; (3) the impacts of these

rules on pharmaceutical firms; (4) the impacts of these rules on

employment and communities; and (5) other secondary impacts on trade,

inflation, POTWs, environmental justice, and distributional equity.

Also included in the EA are a Final Regulatory Flexibility Analysis as

required under the Regulatory Flexibility Act and a Cost-Benefit

Analysis, as required under the Unfunded Mandates Reform Act (UMRA) and

Executive Order 12866, which are summarized in Sections V.E and V.F of

this preamble. An additional document, Cost Effectiveness Analysis for

Effluent Limitations Guidelines and Standards for the Pharmaceutical

Industry (EPA-821-B-98-010), assesses the cost-effectiveness of the

rule. The results of this analysis are summarized below in Section V.G.

B. Summary of the Economic Analysis Methodology and Data

EPA determined the annualized costs of compliance in exactly the

same way as was done for proposal, with the exception of the choice of

discount rate (discussed in V.C). Costs are annualized at seven percent

over 16 years (a 1-year installation period a 15-year project life is

assumed). The cost annualization also accounts for tax shields on both

O&M and depreciation (calculated using the modified accelerated cost

recovery system allowed by IRS rules) to develop a posttax estimate of

annual costs (see Section 4 of the Economic Analysis for a detailed

discussion). For analytical consistency, MACT standards costs are also

annualized in the same way, both pretax and posttax. This is slightly

different from the way EPA annualized the MACT standards costs in the

preamble to the MACT standards rule, where costs are annualized at

seven percent over ten years (with no delay for installation) to create

a pretax annual cost (i.e., without accounting for tax shields).

Additionally, the MACT standards costs presented in the preamble to the

MACT standards rule include costs for new sources, which are not

included in this preamble. Despite the differences in annualization

method, the current cost annualization approach in no way conflicts

with the alternative analysis.

To assess impacts on firms and facilities, EPA has set up three

baselines in the analysis. Baseline 1 is the usual baseline analyzed in

all effluent guidelines. It is a scenario that reflects a baseline

condition without additional regulation, that is, no additional

effluent limitations guidelines and standards or MACT standards costs

are considered. This baseline is taken from the current (i.e., 1990

Survey) financial data. Baseline 2 incorporates certain MACT standards

costs pertaining only to wastewater emission controls, and does not

include costs for controlling emissions from process vents, equipment

leaks and storage tanks. This baseline is presented in the EA, but

results of this baseline (which are not appreciably different from

those for Baseline 1) are not discussed at length in this preamble.

Baseline 3 incorporates costs for all components associated with the

MACT standards rule. EPA estimated the capital and operating costs for

MACT standards cost components for emission controls on wastewater

streams (on which Baseline 2 is based), as well as the capital and

operating costs for all MACT components (on which Baseline 3 is based)

as a part of the Agency's MACT standards rulemaking process.

To model Baseline 2, EPA used the capital and operating costs

associated with the wastewater emission controls for all facilities in

the MACT analysis for which costs were developed and matched them to

the facilities that are also in the effluent guidelines analysis.

However, a number of facilities in the effluent guidelines analysis are

not covered by the MACT standards and were not assigned MACT costs.

EPA annualized the costs at seven percent over 16 years in the cost

annualization model and also developed a present value of posttax

compliance costs over this same time frame. EPA subtracted the present

value posttax compliance costs from the Baseline 1 present value

posttax facility earnings (derived from the Survey data) to determine

Baseline 2 posttax earnings for each facility in the effluent

guidelines analysis. EPA used this same approach to derive Baseline 3

posttax earnings (for those facilities without MACT standards costs,

earnings are the same in all three baselines).

A facility whose posttax earnings are zero or negative in Baseline

1 is counted as a Baseline 1 closure; a facility whose posttax earnings

are zero or negative in Baseline 2 is counted as a Baseline 2 closure;

and a facility whose posttax earnings are zero or negative in Baseline

3 is counted as a Baseline 3 closure.

EPA then incorporated the present value posttax costs of the

effluent guidelines into each of the baselines in the same way as MACT

standards costs were incorporated to calculate postcompliance, posttax

earnings. EPA then tallied the closure results (in terms of whether

postcompliance, posttax earnings are zero or negative) by counting

postcompliance closures incrementally from each baseline. In other

words, EPA considered any closures that occurred additional to those

occurring in each of the baselines as postcompliance closures under the

three baseline scenarios. Any facilities that certified that the

effluent guidelines would have no impact on them were assumed not to

close under any baseline or in postcompliance. Note that as in the

proposal Economic Impact Analysis (EIA), impacts on single-facility

firms were assessed at the firm level.

MACT standards costs were also incorporated into firm-level data

under the same three baseline scenarios. In the firm-level analysis,

however, the key data that could change were assets, liabilities, and

earnings before interest and taxes, which were used in an equation

called Altman's Z, a multi-discriminant ratio analysis approach to

identifying relative firm health. This equation is composed of several

common financial ratios that are weighted according to their relative

ability to predict bankruptcy based on empirical industry data. The

result of this equation is called the Altman's Z-score. Scores below a

certain value are considered indicative of poor financial health and a

high likelihood of bankruptcy.

For Baseline 1, EPA used the current survey data in the Altman's Z

model to determine a Baseline 1 Altman's Z-score. For Baseline 2, EPA

took the MACT standards capital costs aggregated at the firm level

(since firms often own more than one facility) and adjusted both assets

and liabilities to reflect the acquisition of capital equipment through

an increase in debt. EPA then adjusted earnings before interest and

taxes by subtracting the annualized amount of operating costs plus

depreciation computed by the cost annualization model, given the

Baseline 2 MACT standards capital and operating costs (also aggregated

at the firm level) and then computed a Baseline 2 Altman's Z-score.

EPA used the same approach using the Baseline 3 MACT standards

operating and capital costs to create the Baseline 3 Altman's Z-score.

If any of

[[Page 50404]]

these three baseline scores were below the cutoff point considered a

sign of poor financial health, EPA considered the firm a baseline

failure.

Compliance costs for the effluent guidelines were then used in the

same manner to further adjust the financial data used in the Altman's Z

model in each of the baselines. Where the Altman's Z-score changed from

one reflecting a healthy firm or one in indeterminate status in any of

the baselines to one of poor financial health, EPA considered the firm

to be a postcompliance firm failure relative to the baseline under

consideration.

EPA's methodology for computing output and employment effects is

discussed in detail in Section V.C. These effects are presented as net

effects in Section V.D.4. To compute net effects, EPA calculated both

losses and gains in output and employment and subtracted losses from

gains (or vice versa). Thus EPA calculated net national-level output

effects, net national-level employment effects, and net direct

employment effects (employment losses in the pharmaceutical industry

driven by output losses in the industry). EPA also estimated the

employment losses estimated to occur as a result of closures and

failures. These types of losses were used to determine whether any

community-level impacts are likely.

Trade impacts were assessed in the same way as in the EIA for the

proposal, except that a profit margin analysis has been added, as

described below in Section V.C. Impacts on inflation were assessed by

comparing the cost of the regulation to gross domestic product (GDP).

The potential for distributional impacts was assessed by identifying

facilities where compliance costs were greater than 10 percent of

operating costs and determining what types of products might be most

affected if costs are passed through to consumers. The users of these

products were then qualitatively identified to determine if these

potential users might be disproportionately represented by economically

disadvantaged groups. Impacts on environmental justice were also

qualitatively addressed.

C. Changes to the Economic Analysis Since Proposal

The most significant change in the EA since proposal is associated

with the change in costs. The costs of the effluent limitations

guidelines and standards for the pharmaceutical industry point source

category are now substantially lower than those estimated at proposal

because the costs of controlling air emissions are now a part of EPA's

MACT standards. Impacts from the final rule do not change measurably

from proposal, however, mostly because impacts both now and at proposal

were estimated to be very small.

Costs for control of air pollutants, previously assigned to the

effluent guidelines at proposal, are now assigned to the MACT standards

requirements. The economic analyses show the impacts of the effluent

guidelines against three separate regulatory baselines: no MACT

standards requirements in place, wastewater emissions control and

treatment system requirements in place, and all MACT standards

requirements in place (see Section II.E. of this preamble for a

description of MACT standards requirements). In this way, EPA can

present impacts from the effluent guidelines alone and in combination

with impacts from the MACT standards requirements. The methods EPA used

to assess the impact of MACT standards on the baselines against which

the effluent guidelines are measured were discussed in Section V.B.

EPA is now using a seven percent discount rate in all of its

analyses. Previously, the Agency used the seven percent rate only in

determining the pretax cost of the regulation. EPA has chosen to use a

seven percent social discount rate (in real terms) in this analysis,

rather than the 11.4 percent discount rate used in the proposal, for

two reasons. First, the seven percent discount rate is strongly

recommended by the Office of Management and Budget for use in economic

analyses (see the EA for more details). Second, the cost of capital has

generally declined since 1990. This change in discount rate, however,

has little effect on the analysis. A comparison of estimated impacts in

the proposal to impacts as estimated here show that the analyses are

not sensitive to assumptions about discount rates in the ranges used.

In terms of content, the economic analyses are now presented as a

more comprehensive report, in which the EIA and Regulatory Impact

Analysis (RIA) have been combined into one report (the EA). The cost-

benefit portion of the RIA is now contained in Section 10 of the EA

report.

EPA has also made a few methodological changes in its firm and

facility analyses. In the EIA for the proposal, EPA included salvage

value in the calculations for the facility closure analysis for

projection of baseline closures (i.e., before compliance costs are

considered) and postcompliance closures. EPA recognized some potential

difficulties with the salvage value calculations and, in the proposal

EIA, investigated the effects of assuming salvage value does not play a

role in determining facility viability. EPA found that the facility

closure projections were not sensitive to the alternate salvage value

assumption. Furthermore, industry also commented that using salvage

value overstated baseline closures. Thus EPA believes that its current

analysis, which does not consider salvage value but rather uses

negative posttax earnings as the indicator of closure, is the best

methodology to use, given the uncertainty of salvage value data.

An additional difference in the closure analysis addresses the

issue of non-self-supporting facilities (baseline facility closures).

In the current analysis, EPA investigates all baseline closures at the

firm level to determine if a multi-facility firm could install and

operate pollution control equipment at all of its affected facilities,

including those estimated as baseline closures. If the firms can

continue to support a baseline closure facility without risk of

failure, EPA determines that impacts to the firm and its affected

facilities are minimal. EPA performed this analysis under the

assumption that if the facility was not expected to support itself in

the baseline, the firm level is the appropriate level at which to

assess impacts.

EPA also modified the methodology for determining impacts on firms.

In response to comments that baseline firm failures were overstated

because the Agency used benchmarks that identified lowest quartile

firms as baseline failures, EPA reassessed the methodology and turned

to a more sophisticated method for determining firm financial health.

EPA used a multi-discriminant analysis approach for evaluating the

financial health of firms. This analysis, developed by Edward Altman,

is known as Altman's Z-score analysis. This approach allows the

simultaneous analysis of several common financial ratios and answers

the question of how to determine financial health when some ratios

appear strong and some appear weak. The equation developed by Altman

assigns relative weights to the various ratios on the basis of how well

they predict bankruptcy (determined using actual firm data and

information on whether the firms did in fact go bankrupt). This

approach reduced the proportion of firms considered baseline failures

from 28 percent in the EIA for the proposal to about 10 percent (see

Section V.D.3), thus allowing for substantially more firms to be

evaluated at the firm level in the postcompliance

[[Page 50405]]

analysis. The Altman's Z analysis is also described in Section V.B

above and is fully described in Section 6 of the EA Report.

The Agency has added an analysis of national-level output and

employment effects to the EA for the final rule. Output is measured in

terms of revenues, and under the assumption that industry cannot pass

through compliance costs to consumers, the worst-case output loss to

the pharmaceutical industry is equal to the pretax costs of compliance.

The output losses occurring in the pharmaceutical industry (direct

effects) affect input industries, which are industries that provide

inputs (e.g., raw chemicals) to the pharmaceutical industry. These

effects are known as indirect effects. The direct output losses also

affect consumption, as workers lose jobs or work fewer hours and their

households reduce purchases of goods and services. These effects are

called induced effects. Thus a dollar of output lost in the

pharmaceutical industry can also result in additional dollars lost in

the U.S. economy as a whole through indirect and induced effects. EPA

calculates these additional losses at the national level using input-

output analysis. The relevant multipliers used in the analysis were

developed by the U.S. Department of Commerce's Bureau of Economic

Analysis (BEA).

In addition to output losses, EPA calculates national-level output

gains based on output gains in pollution control industries. These

industries receive revenues from the pharmaceutical industry for

pollution control equipment and operations. Using BEA multipliers, the

Agency calculates the subsequent effect of these gains on the pollution

control industries' input industries and consumption (i.e., indirect

and induced effects). By comparing national-level output losses and

gains, EPA develops a net national-level output loss or gain.

In the EA, EPA no longer relies exclusively on employment losses

from closures and failures to calculate employment losses in the

pharmaceutical industry or national-level employment losses. Because

output effects and employment are linked in input-output analysis, EPA

calculates employment losses based on output effects using BEA's final

demand and direct effect multipliers. EPA uses final demand employment

multipliers to compute the total number of jobs lost (including direct,

indirect, and induced job losses) given the total loss of output in

millions of dollars in the pharmaceutical industry and uses direct

effect multipliers to compute the total number of job losses occurring

just in the pharmaceutical industry (direct losses), given the total

jobs lost nationwide (which include direct, indirect, and induced

losses).

Output-based employment losses can be thought of as longer-term

losses associated with longer-term market equilibrium, whereas losses

associated with closures and failures can be considered the more

immediate impact of the rule before market equilibrium is achieved.

Thus output-based employment losses may be greater than or less than

the losses estimated on the basis of closures and failures, which means

that nonclosing facilities might gain or lose production and employment

depending on how many facilities close. If no facilities close,

nonclosing facilities might lose some production and employment. If

many facilities close, nonclosing facilities might actually gain

production and employment if closure losses ``overshoot'' the expected

losses at market equilibrium. Note, however, that both the output-based

employment effects and the closure/failure employment effects derived

here are worst-case impacts within the pharmaceutical industry since

EPA assumes the industry cannot pass through the costs of compliance to

consumers.

EPA also computes employment gains on the basis of output gains in

pollution control industries in much the same way as was done for the

EIA for the proposal. The approach has been changed slightly to

accommodate labor costs estimated as a part of the engineering cost

analysis rather than relying on assumed labor shares. EPA compares the

employment losses and gains to estimate a net gain or loss in

employment both at the national level and in the pharmaceutical

industry alone (some gains will occur in the pharmaceutical industry

since labor to operate pollution control equipment is required).

EPA now performs an assessment of impacts on profit margins to

address commenter concerns that pharmaceutical firms will locate (or

relocate) facilities outside of the U.S. because of environmental

regulatory requirements. EPA assumes that those firms most likely to

consider relocating facilities are those with measurable differences in

profitability with sufficient means to effect a relocation. EPA also

addresses comments that reductions in loadings to POTWs will result in

substantial impacts on POTWs.

All other methodologies used and analyses undertaken in the EA

remain substantively the same as those in the EIA for the proposal.

D. Estimated Economic Impacts

1. Costs of Compliance

Table V.D.1 presents a summary of compliance costs for the effluent

limitations guidelines and standards and for the MACT standards. EPA

estimated annualized compliance costs on both a pre-tax and post-tax

basis; both sets of costs are shown in Table V.D.1. Post-tax costs

reflect tax savings accruing to the industry from the installation and

operation of pollution control equipment; the post-tax costs are used

in the economic analysis to assess impacts to facilities and firms in

the industry. Pre-tax costs are a component of the total social cost of

the regulatory action (see Section V.F).

EPA describes the cost annualization procedure in Section V.B and

in the EA. The annualized costs in Table V.D.1 for both the effluent

limitations guidelines and standards and the MACT standards rule

incorporate the same annualization period assumptions. The annualized

costs reported in the preamble to the MACT standards rule are based on

another annualization period and thus, do not correspond exactly to

Table V.D.1. As noted in Section V.B, costs are annualized over 16

years (with an 1-year installation period and a 15-year project life),

while in the preamble to the MACT standards rule, costs are annualized

over 10 years (with no delay for installation). As an illustration,

Table V.D.1 reports pre-tax annualized costs for the MACT standards

rule for all facilities (referred to as ``existing sources'' in the

MACT standards rule) at $58.4 million. In the preamble to the MACT

standards rule, the corresponding annualized costs are reported at

$64.8 million.

The annualized post-tax compliance costs for effluent guidelines

for the selected options are $39.4 million. The annualized post-tax

compliance costs of the MACT standards for the subset of facilities

also subject to effluent guidelines are $32.4 million. The total

annualized costs for facilities covered by both the effluent guidelines

and MACT standards are $71.8 million, and the total annualized costs

for all facilities (i.e., including those facilities covered by MACT

standards only) are $77.5 million.

[[Page 50406]]

Table V.D.1--Annualized Costs of Compliance for Effluent Guidelines and MACT Requirements

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

Posttax Pretax

annualized annualized

cost of cost of

Subcategory Option compliance compliance

(million (million

1997$) 1997$)

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

A/C Direct.................................... BPT=Revise COD and modify $1.6 $2.5

cyanide.

BAT=Add organics, ammonia and 2.3 3.6

COD and modify cyanide.

B/D Direct.................................... Revise BPT COD and withdraw 0.9 1.4

cyanide.

A/C Indirect.................................. PSES=Add organics and ammonia 28.8 44.5

and modify cyanide.

B/D Indirect.................................. PSES=Add organics and withdraw 5.8 8.8

cyanide.

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

Total Annualized Cost of Effluent ................................ 39.4 60.8

Guidelines for all Selected Options.

Cost of MACT Standards........................ Effluent Guidelines Facilities.. 32.4 49.6

All Facilities.................. 38.1 58.4

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

Total Annualized Cost of Effluent ................................ 71.8 110.4

Guidelines and MACT Standards for

Effluent Guidelines Facilities.

===============================

Total Annualized Costs of Effluent ................................ 77.5 119.2

Guidelines and MACT Standards for All

Facilities.

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

2. Economic Impacts on Facilities

EPA determined on the basis of zero or negative posttax earnings

that 18 facilities, or 9 percent of all facilities in the analysis,

would be likely to close even without the effect of the effluent

guidelines or MACT standards requirements. The impacts to the firms of

installing and operating pollution control equipment at these

facilities are, however, assessed at the firm level to determine if the

firms can continue to support these facilities postcompliance (see

below under results of the firm analysis). When all MACT standards

costs are incorporated into the initial baseline financial conditions

(Baseline 3), no additional facilities close.

When the costs of compliance for this final effluent guidelines

rule are incorporated into the financial conditions of facilities in

the analysis (the postcompliance analysis), only one additional

facility closes (an A/C indirect). Even though this facility does not

close when faced with costs of meeting this effluent guidelines rule

alone, EPA conservatively attributes this closure to the effluent

guidelines. In general, however, neither MACT standards costs nor

effluent guidelines costs singly or together have major impacts on

pharmaceutical facilities operated by multifacility firms.

3. Economic Impacts on Firms

EPA projected that 18 firms would be likely to fail even without

the effect of the effluent guidelines or MACT standards requirements

(Baseline 1). Two additional firms are projected to fail before

effluent guidelines costs are considered when all MACT standards costs

are included in the initial baseline financial conditions (Baseline 3).

In the postcompliance analysis, EPA estimated that four firms would

fail under the Baseline 1 scenario and two firms would fail under the

Baseline 3 scenario. (There are two fewer postcompliance firm failures

under the Baseline 3 scenario because these failures were estimated to

be precompliance failures when all MACT standards costs were included.)

Thus at most, regardless of baseline, four firms fail postcompliance.

To be conservative in the EA, EPA attributes these failures to the

Pharmaceutical Effluent Guidelines alone. Out of the four firm failures

projected to occur, EPA estimates only one will result in both a firm

failure and a facility closure (because earnings become negative at the

only facility owned by the firm). The other three firms will incur

substantial impacts, up to and including firm failure, but own

financially viable facilities. Because the facilities are self-

supporting, they are likely to be attractive for acquisition by

financially stronger firms. Therefore, the three failing firms with

viable facilities might not fail, but instead might be forced to sell

their facilities.

As discussed in Section V.D.2, EPA evaluated all facilities

projected to close in the baseline analysis at the firm level, under

the assumption that perhaps these facilities are not expected to be

self-supporting and thus might not close in the baseline. If this is

so, the appropriate level of analysis is the firm. EPA determined that

all facilities projected to close in the baseline facility closure

analysis can continue to be supported by their firms postcompliance

without significant impact on these firms.

Table V.D.3 Firm Failure Analysis Results (Baseline 1)

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

Failures only

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

Type of discharger Number Percentage of Percentage of

Failures with total firms in Number total firms in

closures subcategory subcategory

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

A/C Direct.................................... 0 0 0 0

B/D Direct.................................... 0 0 0 0

A/C Indirect.................................. 2 3.2 1 1.6

B/D Indirect.................................. 1 1.2 0 0

[[Page 50407]]

Total All Firms........................... 3 1.8 1 0.6

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

4. Impacts on Output and Employment

EPA estimates that at the national level, output gains will exceed

output losses. EPA determines a net output gain of about $21.7 million

(1996$) as a result of the effluent guidelines. Net output gains for

the combined rulemakings (including MACT standards for facilities in

the effluent guidelines analysis only) will total $40.1 million

(1996$). EPA also determines that employment gains will exceed

employment losses at the national level. The net gain in national-level

employment as a result of the effluent guidelines alone will total 218

full-time equivalents (a full-time equivalent, or FTE, equals 2,080

hours per year of labor), and net employment gains for the combined

rulemakings (including MACT standards for facilities in the effluent

guidelines analysis only) will total 407 FTEs.

Despite net employment gains at the national level, EPA calculates

that losses will exceed gains in the pharmaceutical industry. Direct

losses in the pharmaceutical industry are composed of two types of

losses--output-based losses and closure/failure type losses. As noted

in Section V.C., closure/failure employment losses might be less than

the output-based employment losses that are driven by the contraction

in the pharmaceutical industry as it responds to the compliance costs

and a new market equilibrium is achieved. Closure/failure employment

losses can also be greater than these output-based losses if they

``overshoot'' the expected market equilibrium result. In this case, the

direct losses computed on the basis of output losses (and net of gains

in employment in the industry due to the need to operate the pollution

control equipment) are slightly greater than the closure/failure losses

(which are estimated to total 139 FTEs). Output-based losses total 138

FTEs, or 0.1 percent of pharmaceutical employment in the analysis. With

MACT standards costs for facilities included in the effluent guidelines

analysis, net direct employment losses will total 254 FTEs, or 0.1

percent of employment.

Because output-based employment losses are greater than closure/

failure employment losses, nonclosing facilities might experience some

small reductions in labor hours and production over time that are

additional to the losses of labor hours and production associated with

facilities that close or fail (assuming a worst-case scenario where no

costs can be passed through to consumers).

The losses in employment due to closures/failures will have a

negligible impact on individual communities. No community is expected

to experience a change in its unemployment rate exceeding 0.4 percent.

5. Other Secondary Impacts

No trade losses or major changes in the balance of payments are

associated with closures/failures of firms or facilities, as these

firms and facilities indicate no foreign shipments. Thus EPA finds that

neither rule, together or separately, will have a substantial impact on

trade or the balance of payments.

An analysis of profit margin shows only a few firms will experience

impacts on profit margin as a result of the effluent guidelines. A

total of 8 firms (6 percent of the firms analyzed) have a greater than

10 percent change (e.g., go from a 5 percent profit margin to a 4.5

percent profit margin) in their profit margin. Most of these firms are

considered the least likely to relocate their facilities to foreign

countries. These firms tend to be small, and generally, they are

unlikely to have experience in international locations. The transaction

costs of learning how to operate in foreign countries, along with the

expense of relocating, are likely to be prohibitively expensive for

these firms. With the MACT standards costs included for the facilities

analyzed as part of this effluent guidelines final rule, one additional

firm shows a greater than 10 percent change in profit margin. Thus EPA

has determined that even under the combined effect of the two rules,

firms are unlikely to relocate to foreign countries to escape the

impacts on profitability induced by the two rules.

The rules, together or separately, will have no major impact on

inflation, as the costs of the two rules are at most only 0.001 percent

of gross domestic product (GDP).

Although the Agency received comments on the proposal arguing

otherwise, EPA expects that impacts on POTWS will be minimal. EPA is

promulgating pretreatment standards for 24 VOCs for all four

subcategories and ammonia for subcategories A and C. The Agency expects

that the reduction in the BOD discharged to POTWs as the result of

compliance with PSES for these pollutants will be minimal. As a result,

EPA believes that any reduction in revenue to POTWs that charge

industrial users subject to the PSES will be insignificant. Since many

of these pollutants are highly volatile and are volatilized in the

POTWs primary units before they can be biodegraded, EPA believes that

the final PSES should not have any substantial effect on the variable

operating costs of POTWs as well. In summary, EPA believes that

compliance with the final PSES by pharmaceutical facilities should not

have any significant effect on the POTW revenues. Furthermore, EPA

believes that the benefits associated with reduced discharges of VOCs

and ammonia to POTWs by pharmaceutical industrial users will outweigh

any revenue losses.

Based on the analysis in the proposal EIA and further investigation

in the EA for this final rule, the MACT standards and effluent

guidelines, together or separately, will have no major distributional

impacts. Compliance costs are generally a very small percentage of

baseline operating costs, thus any cost increases are likely to be very

small and are not likely to have any major effect on any one group of

consumers.

Impacts on environmental justice also should be minimal. As noted

above, any price increases on drugs will be very small and impacts on

disadvantaged groups such as the poor and certain minority groups will

be minimal. Furthermore, many of these groups will benefit from the

effluent guidelines final rule. A large portion of the affected

facilities are located in urban areas where poor or minority

populations tend to be high. Although everyone benefits, it is these

populations that will

[[Page 50408]]

likely benefit the most from the cleaner water resulting from both

rules.

6. Impacts on New Sources

The selected options for new sources are equivalent to the selected

options for existing sources. Because the costs for designing in

pollution control technologies are generally no more expensive than and

are usually less expensive than retrofitting pollution control

technologies, costs for new facilities will be no more expensive than

costs for existing facilities. Because EPA has shown that the

requirements for existing sources are economically achievable, they

should be economically achievable for new sources. Furthermore, since

the requirements for new sources will not be more expensive than those

for existing sources, the rule will not pose a barrier to entry for new

sources. In response to proposal comments, EPA also investigated

whether impacts from the effluent guidelines rule (with and without

MACT standards) might contribute to firms locating new facilities in

foreign countries. EPA found the median percentage of capital costs of

compliance to total costs to build a new facility to be negligible

(0.21 percent, on average including MACT standards costs among surveyed

newer facilities). Thus compliance costs are unlikely to be a major

impetus to locating new facilities outside the U.S.

E. Regulatory Flexibility Analysis

There are no major changes to EPA's Regulatory Flexibility Analysis

(RFA), except that the Agency has undertaken a revenue test in addition

to the closure analysis to better assess the potential impact on small

firms. The revenue test measures impact on the basis of annual

compliance costs as a percentage of annual revenues. The analysis

indicates that out of 145 firms considered small (i.e., firms with

fewer than 750 employees), only four firms will experience annual

compliance costs that are greater than one percent of annual revenues

(six with MACT costs included). No firms will experience annual

compliance costs exceeding 3 percent. When MACT standards costs are

included only one small firm will experience annual compliance costs

that exceed three percent of annual revenues, but this firm is not

estimated to incur any effluent guideline costs.

The RFA further also considered impacts to small firms in terms of

firm failures or facility closures. Five small firms are significantly

affected by the rule. The regulatory action is found to be economically

achievable for all dischargers, including small entities as detailed in

Section V.D. Further, the analysis indicates no disproportionate effect

on small entities, compared to large entities. Based on these findings,

EPA certifies that this final rule does not have a significant impact

on a substantial number of small entities.

F. Cost-Benefit Analysis

Because the combined costs of the rules are at the level that

defines a major rule both under Executive Order 12866 and UMRA

(although neither rule considered separately would be near this level),

EPA has undertaken a cost-benefit analysis. As in the proposal, pretax

costs for all facilities are used as a proxy for social cost. The major

portion of the social cost of the effluent guidelines is the total

pretax annual cost, which is $60.8 million (1997$). Adding in the cost

of administering the rule and providing administrative services to the

unemployed (the only other significant cost categories), the total

social cost of the rule is $61.0 million (1997$). Combined with the

costs of the MACT standards rule for facilities in the effluent

guidelines analysis, the two rules together have annual social cost of

$110.7 million (1997$). (Costs of both rules including MACT standards

costs to facilities that will not be affected by the effluent

guidelines are $119.5 million (1997$)).

Benefits include the benefits of water removals and benefits of air

removals. Types of benefits analyzed include human health risk,

recreational use benefits, benefits to POTWs, and benefits of

reductions in VOCs (other than human health). The benefits to POTWs,

however, could not be monetized (see Section VI.E. of this preamble for

more details). Total monetizable benefits of the effluent guidelines

alone total $0.93 to $14.0 million (1997$), while the combined benefits

of the two rules total $4.06 to $81.1 million (1997$).

Table V.F.1

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

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

Costs ($ millions)

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

Total Social Cost of Effluent Guidelines. $61.0

Total Social Cost of MACT (ELG facilities 49.7

only).

Total Social Cost of MACT (all 58.4

facilities).

Social Cost of Combined Rules (ELG 110.7

facilities only).

Social Cost of Combined Rules (all 119.5

facilities).

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

Benefits ($ millions)

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

Effluent Guidelines...................... 0.9 to 14.0

MACT Standards........................... 3.9 to 67.2

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

Total................................ 4.8 to 81.1

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

G. Cost-Effectiveness Analysis

Cost-effectiveness evaluates the relative efficiency of options in

removing toxic pollutants. Costs evaluated include direct compliance

costs, such as capital expenditures and operation and maintenance

costs.

Cost-effectiveness results are expressed in terms of the

incremental and average costs per pound-equivalent removed. A pound

equivalent is a measure that addresses differences in the toxicity of

pollutants removed. Total pound-equivalents are derived by taking the

number of pounds of a pollutant removed and multiplying this number by

a toxic weighting factor. EPA calculates the toxic weighting factor

using ambient water quality criteria and toxicity values. The toxic

weighting factors are then standardized by relating them to a

particular pollutant, in this case copper. EPA's standard procedure is

to rank the options considered for each subcategory in order of

increasing pounds-equivalent (PE) removed. The Agency calculates

incremental cost-effectiveness as the ratio of the incremental annual

costs to the incremental pounds-equivalent 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 pounds-equivalent removed. EPA reports annual costs for all

cost-effectiveness analyses in 1981 dollars to enable limited

comparisons of the cost-effectiveness among regulated industries.

Table V.G.1 presents the results of the cost-effectiveness analysis

for all subcategories. As the table shows, the average and incremental

cost-effectiveness of the selected BAT option for subcategories A and C

is $224/lb. eq., the average and incremental cost-effectiveness of the

selected PSES option for subcategories A and C is $96/lb. eq. and the

average and incremental cost-effectiveness of the selected PSES option

for subcategories B and D is $66/lb. eq. The selected BAT option for

the subcategories B and D directs is the no additional action

alternative, so no cost-effectiveness results are calculated.

The cost-effectiveness determined for this rule does not represent

an estimate of the removal of the toxic pounds resulting from the

removal of COD. As discussed previously in section IV.C., discharges

from pharmaceutical manufacturing facilities exhibit toxicity as

measured by the whole effluent

[[Page 50409]]

toxicity test and reported as part of the routine NPDES discharge

monitoring reports (DMRs). One study conducted by EPA at a

pharmaceutical manufacturing facility showed a significant decrease in

toxicity with a corresponding decrease in COD level for the tested

effluent sample from the facility and a sample effluent of a pilot

scale biological treatment plant study. Because of the limited amount

of data, and the inability to identify the different mix of specific

organic compounds represented by the COD measurement, the total amount

of toxic pound-equivalent represented by the nonconventional pollutant

parameter of COD could not be determined.

Based on the lack of pound-equivalents associated with COD removals

the cost-effectiveness analysis results understates the true cost-

effectiveness of this rule. EPA therefore considers these options to be

cost-effective.

Table V.G.1--Cost/Effectiveness Analysis Results

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

Total Annual Incremental

---------------------------------------------------------------- Average C-E Incremental C-

Option Lb. eq. Lb. eq. ($/lb.eq.) E ($/lb. eq.)

removed Cost (1981$) removed Cost (1981$)

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

A/C Direct

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

MACT Only............................................... 0 $0 0 $0 NA NA

Advanced Bio............................................ 9,780 2,186,106 9,780 2,186,106 $224 $224

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

A/C Indirect

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

MACT Only............................................... 0 0 0 0 NA NA

Steam Stripping no alcohols............................. 282,614 26,990,998 282,614 26,990,998 96 96

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

B/D Indirect

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

MACT Only............................................... 0 0 0 0 NA NA

Steam Stripping no alcohols............................. 80,807 5,353,790 80,807 5,353,790 66 66

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

VI. Environmental Benefits

In addition to costs and impacts, EPA also estimated the

environmental and human health benefits of implementing CWA

requirements. Benefits identified as a result of this final rule are

associated with improvements in both water quality and air quality,

since many of the regulated and incidentally controlled pollutants are

prone to volatilization from the effluent waste streams. Section IV of

this preamble and Section IX of the TDD describe the estimated

reductions in effluent discharges, and those reductions and the

estimates of incremental environmental improvements noted in Section IV

are derived compared to a baseline consisting of current discharges.

Because current discharges are a function of current technology, this

is the same baseline that is used to establish the costs of complying

with this rule.

EPA is confident that its estimation of compliance costs is a full

and accurate account of such costs; however, EPA is less confident that

the estimation of benefits is similarly complete. EPA is not currently

able to quantitatively evaluate all human health and ecosystem benefits

associated with air and water quality improvements. EPA is even more

limited in its ability to assign monetary values to these benefits. A

comparison of costs to only the limited monetized subset compromises

the validity of the cost-benefit analysis. The economic benefit values

described below and in Section 10.4 of the EA should be considered a

limited subset of the total benefits of this rule and should be

evaluated along with descriptive assessments of benefits and the

acknowledgment that even these may fall short of the real-world

benefits that may result from this rule. For example, the analyses

consider the impacts of toxic pollutants, but do not evaluate the

impacts of other pollutants (such as BOD5, COD, and TSS)

which can produce significant adverse environmental impacts.

Within these limitations, EPA analyzes the effects of current air

and water emissions and assesses the benefits of reductions in these

emissions resulting from this final regulation. EPA expects a variety

of human health, environmental, and economic benefits to result from

these reductions in effluent loadings and air emissions (See

Environmental Assessment of the Final Effluent Guidelines for the

Pharmaceutical Manufacturing Industry, (July 1998, EPA-821-B-98-008).

In particular, the benefits assessment addresses the following benefit

categories: human health and agricultural benefits due to reductions in

emissions of ozone precursors (i.e., reductions in VOC emissions);

human health benefits due to reductions in excess cancer risk; human

health benefits due to reductions in non-carcinogenic hazard

(systemic); ecological and recreational benefits due to improved water

quality with respect to toxic pollutants, including intrinsic benefits;

and benefits to publicly owned treatment works (POTWs) from reductions

in interference, pass through, and sludge contamination problems,

improvements in worker health and safety, and elimination of some of

the efforts associated with establishing local pretreatment limits. EPA

monetizes the estimated benefits for reductions in air emissions of

ozone precursors, cancer risk reductions, improvements in recreational

fishing opportunities, and improvements in intrinsic value, but is

unable to quantify the dollar magnitude of benefits from the other

benefit categories. Air benefits due to reductions in emissions of

ozone precursors, are estimated using the methods and data summarized

in the November 5, 1997 OAQPS memorandum titled ``Benefits-Transfer

Analysis for Pulp and Paper''. This methodology is based on the

recently published benefits analyses provided in the Regulatory Impact

Analyses for the Particulate Matter and Ozone National Ambient Air

Quality Standards and Proposed Regional Haze Rule. The methodology and

data used in the estimate of all benefits are descr

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