American Public Power Association
2301 M Street, N.W.
Washington, D.C. 20037-1484
202-467-2900
202-467-2910 (fax)
www.APPAnet.org
Memo
To:
APPA 316(b) Working Group and APPA Environmental Listserver
From:
Theresa Pugh, Manager, Environmental Services
Date:
Nov. 22, 2004
Re:
EPA Proposed Phase III 316(b) Rulemaking
This memo focuses on Phase III rulemaking issues for cooling water intake structure regulations
from the EPA.
On November 1, 2004, EPA Administrator Michael Leavitt signed Proposed Regulations to
Establish Requirements for Cooling Water Intake Structures at Phase III Facilities (the “Phase III
Rules” or “the Rule”). EPA expects the proposed rule to appear in the Federal Register
sometime around Thanksgiving. EPA is setting a 120-day public comment period, but has said in
conversations with APPA outside counsel that it will not entertain requests for extensions to this
fairly generous comment period.
APPA has posted a number of items on our members-only website at:
http://www.appanet.org/legislative/environmentlist.cfm?sn.ItemNumber=2073&tn.ItemNumber=9934&sn.ItemNumber=2073
The EPA pre-publication version of the Phase III proposal is posted at:
http://www.epa.gov.waterscience/316b.
The facilities potentially subject to regulation under Phase III include existing power generating
facilities with design cooling water intake flows of between 2 and 50 MGD, [and existing
manufacturing facilities with design cooling water intake flows above 2 MGD.]1 Proposed Rule
p. 56 at footnote 4. By EPA’s estimate, 683 manufacturing and utility facilities are potentially
subject to regulation under Phase III. APPA believes that there are approximately 81 APPA
members in Phase III rulemaking based upon the 2000 EIA database. (We believe that there are
approximately 100 IOUs and NRECA members in Phase III but generally speaking, they are
cooling tower facilities).
In this proposed rule, EPA has set forth two alternatives for fulfilling its obligation under the
Consent Decree in Riverkeeper, Inc. v. Leavitt, which requires the Agency to “take final action”
with respect to requirements for these Phase III facilities. As its first alternative, EPA is
considering three possible design intake flow thresholds, from among which it would choose one
to define which Phase III facilities should be subject to categorical performance standards.
1
The proposed rule also discusses requirements for new oil and gas platforms,
but those issues will not be covered in this summary for APPA members.
Regardless of which option EPA picks, it anticipates that all existing facilities having design
intake flows above the chosen threshold will be subject to performance standards and compliance
alternatives that are virtually identical to those set forth in the Phase II Final Rule. Existing
facilities with design intake flows falling below the chosen threshold would be regulated on a
BPJ basis.
Second, EPA is considering not promulgating, “at this time, categorical requirements under
section 316(b) for cooling water intake structures unregulated by Phase I and Phase II.” Proposed
Rule p. 25. Rather, for all facilities, EPA would continue to rely on the permitting authority’s
best professional judgment “to determine the best technology available to minimize adverse
environmental impact, in order to allow these requirements to be better tailored to local
conditions.” This is something at APPA worked very hard on as we believe that BPJ would often
determine that a facility would not have to install any new control or diversion technology or
conduct expensive studies. [If most states, have under the EPA Phase III rule, a BPJ
determinations, most state programs would look more like the post 1977 Technical Determination
documents policy and most localities would not require any 316(b) additional requirements unless
there is a serious impingement or entrainment problem meriting action]
Because EPA does not discuss the “no regulation” alternative, other than to provide it as an
option, this memorandum focuses on the alternative including three different design intake flow
thresholds. Section A of this memorandum discusses EPA’s definition of existing facilities and
how power producing facilities are affected. Section B of this memorandum outlines the coproposed design intake flow thresholds and EPA’s rationale for them. Section C of this
memorandum discusses the best technology available for minimizing adverse environmental
impact at Phase III existing facilities, including EPA’s basis for the performance standards and
alternative compliance options. Section D summarizes our recommendations for further UWAG
action.
II. DISCUSSION
For the Phase III rulemaking, EPA says that it interpreted “the Clean Water Act section 316(b) as
authorizing EPA to consider not only technologies but also their effects on and benefits to the
water from which the cooling water is withdrawn.” EPA states that, based on these two
considerations, the proposed rule “establishes national requirements for facilities to install
technology, as appropriate, that is technically available, economically practicable, cost-effective,
and justified by the benefits to the source waterbody.”
A. Existing Facilities
The proposed rule defines “existing facility” to mean “any manufacturing or industrial facility
that commenced construction on or before January 17, 2002 (or 60 days after publication of
the final rule for an offshore oil and gas extraction facility), any modification of, or any addition
of a unit at such a facility that does not meet the definition of a new facility at § 125.83.”2
Proposed Rule p. 7. An existing facility, as defined above, is a Phase III existing facility if it
meets each of the following criteria:
2
This definition is the same as in Phase II, except for the oil and gas language,
because oil and gas extraction facilities will become subject to the 316(b)
regulations for the first time with the publication of these rules, if EPA chooses to
regulate them here.
(1)
it is a point source;
(2)
it uses or proposes to use cooling water intake structures with a total design intake
flow of 50 MGD or more to withdraw cooling water from waters of the United
States;
(3)
it is an existing facility other than a Phase II existing facility as defined in § 125.91
and § 125.93; and
(4)
it uses at least 25 percent of water withdrawn exclusively for cooling purposes,
measured on an average annual basis.
While power producing facilities are certainly covered under the definition of existing facility,
they are not subject to the rule given the current threshold options EPA has proposed.
Specifically, EPA states “[a]ll Electric Generators with a design intake flow of 50 MGD or
greater were already covered by the final Phase II regulation. As a result, no Electric
Generators are subject to the national categorical requirements of the three co-proposed options.”
Proposed Rule p. 265.
B. Co-Proposed Design Intake Flow Thresholds
As indicated above, EPA is co-proposing three different design intake flow thresholds because
EPA believes that each alternative is viable when balancing the many factors the Agency
considers in establishing best technology available for minimizing adverse environmental
impact, including the percentage of cooling water flow subject to national requirements,
costs, benefits, cost-effectiveness, permitting burden and the need for flexibility in
implementation, projected closures, and potential impacts on small businesses. Proposed
Rule p. 55. EPA says it believes considerations of costs, benefits, economic practicability and
cost-effectiveness are appropriate factors to consider under CWA section 301 and 304. . In
addition, the Agency cites the effect of the proposed rule on small businesses as an appropriate
factor to consider under the Regulatory Flexibility Act (often called Reg Flex Act) and the Small
Business Regulatory Enforcement Fairness Act. APPA filed comments along with two member
utilities as to the SBREFA impacts and Reg Flex Act impacts as well as unfunded mandates. This
is an area where APPA will continue to focus since so many APPA communities fall into the
Phase III SBREFA definitions of <50 MGD and serve communities with 35,000 households or
50,000 people.
1.
50 MGD or More From Any Waterbody Type
The first of EPA’s co-proposed options would regulate facilities with a design intake flow of 50
MGD or greater from any waterbody type. The focus of this option would be on facilities with
moderate to large intake flows that “cause a greater potential for causing significant adverse
environmental impacts than those withdrawing less than 50 MGD.” Proposed Rule p. 56. Under
this option, “75% of the design intake capacity, and 23% of the facilities (155 facilities)
potentially covered by the Phase III rule” would be subject to regulation. With full
implementation of the Phase II rule and the Phase III proposal with this option, more than “97%
of the total cooling water withdrawals associated with existing facilities” would be regulated.
Proposed Rule p. 57. “EPA estimates this option would cost $47.3 to $50.1 million or
$348,000 to $368,000 on average annually per facility” and provide quantified benefits equal
to $1.5 million to $1.9 million (annualized use value).
In addition, because this option covers the greatest number of facilities, EPA says it may also
have the greatest ecological protection benefits (although the Agency was unable to quantify any
such benefits). Frankly, APPA provided a presentation in June, 2004 arguing that the costs
exceeded the ecological benefits to smaller systems. EPA listened to these arguments. While this
option has the highest benefits, it also has the highest cost, which results in the lowest quantified
benefits-to-cost ratio and the lowest (i.e., greatest negative) quantified net benefits.
EPA found that setting the threshold at 50 MGD excludes all small businesses (and many APPA
members) from the national rule requirements, which it says is consistent with the
recommendations from the Small Business Advocacy Rule Panel final report (which included
recommendations from APPA’s two participant members). Proposed Rule p. 58. The SBA report
asked EPA to analyze options between 20 and 50 MGD, which would minimize impacts on small
businesses while at the same time achieving the desired environmental benefits. APPA will
comment on this again during the comment period.
2.
200 MGD or More From Any Waterbody Type
EPA’s second threshold option includes facilities with a design intake flow of 200 MGD or
greater from any waterbody type. There are some APPA members, usually larger facilities,
which fall into this category. Under this option, “45% of the design intake capacity and 5% of
the facilities potentially covered by the Phase III rule” would be subject to regulation. With full
implementation of the Phase II rule and Phase III proposal with this option, more than “94% of
the total cooling water withdrawals associated with existing facilities withdrawing greater than 2
MGD” would be regulated. Proposed Rule p. 59. “EPA estimates this option would cost $22.8
to $24.1 million or $912,000 to $964,000 on average annually per facility” and provide
quantified benefits equal to $0.98 million to $1.26 million (annualized use value). In
comparison to the 50 MGD option, this option yields 66% of the quantified benefits at 48% of the
costs and greater (i.e., lower negative) quantified net benefits. This option would also avoid
facility closures and exclude all existing small businesses. APPA would need some specific cost
information for facilities with intakes >200 MGD from a waterbody types for comments on this
section.
3.
100 MGD or More and Withdraws Water From An Ocean, Tidal
River, Estuary or Great Lake
EPA’s third threshold option includes facilities with a design intake flow of 100 MGD or greater
that withdraw water from an ocean, tidal river, estuary or Great Lake. Proposed Rule p. 59.
APPA has members in this category too and we would need specific comments from these
facilities as to costs, types of controls, etc.
This option focuses on withdrawals from waters that are, in EPA’s view, the most sensitive.
Proposed Rule p. 60. Under this option, “4 percent of the facilities potentially subject to
regulation under Phase III would be subject to national requirements, and 18 percent of the total
design intake capacity associated with potential Phase III facilities” would be subject to
regulation. With full implementation of the Phase II rule and Phase III proposal with this option,
more than “91 percent of the total cooling water withdrawals associated with existing facilities”
would be regulated. “EPA estimates this option would cost $17.6 to $18.2 million or $926,000
to $958,000 on average annually per facility” and provide quantified benefits equal to $1.1
million to $1.4 million (annualized use value). In comparison to the 50 MGD option, this option
yields 75 percent of the quantified benefits at 36 percent of the costs and greater (i.e., lower
negative) quantified net benefits. This option would also avoid facility closures and exclude all
existing small businesses.
C.
Best Technology Available for Minimizing Adverse Environmental Impact at
Phase III Existing Facilities
Under the proposed rule, existing Phase III facilities would be subject to the same national
performance standards as Phase II facilities (reduce impingement mortality by 80 to 95 percent
and/or entrainment by 60 to 90 percent), and would be authorized to meet these requirements
through the same five compliance alternatives provided in the Phase II rule. Proposed Rule
p. 104. Obviously this approach is not APPA’s preference.
EPA says it proposed the performance standards because they reflect “the best technology
available for minimizing adverse environmental impact determined on a national categorical
basis.” Proposed Rule p. 105. The Agency says that it found no significant differences in either
the types of cooling water intake structures or types of fish protection technologies used by
proposed Phase III existing facilities and Phase II facilities. Proposed Rule p. 106. EPA found
that the technologies are economically practicable at the Phase III existing facilities it is
considering for regulation. Proposed Rule p. 107.
There are a couple of differences in how the performance standards would apply. Under the
Phase II rule, power producing facilities with a capacity utilization rate of less than 15 percent are
not required to meet the performance standard for entrainment, based on EPA’s determination that
entrainment impacts at capacity factors below this threshold would be minimal. Proposed Rule p.
117. (There is no analogous provision for manufacturing facilities, as EPA has not been able to
identify a similar threshold of operations below which impacts would be considered minimal).
Also, for purposes of application of the “cost-cost” test, EPA is proposing to limit the comparison
of like facilities to Phase III existing facilities within the scope of the Rule because EPA used
different cost assumptions in estimating costs for the Phase II and Phase III existing facilities.
Proposed Rule p. 129.
D. Recommendations for APPA Action
Clearly, the hard work that APPA and UWAG did to demonstrate to EPA that further regulation of
power plants under Phase III was unnecessary and inappropriate has paid off. APPA and UWAG
will file targeted comments designed to support EPA’s decision in effect to exclude Phase III
power plants from categorical regulation. UWAG will, of course, want to coordinate with other
groups, including APPA and the Cooling Water Intake Structure Coalition (the manufacturing
community), of which both APPA and UWAG are members. Even at this early point in the
process, however, we see three primary objectives for possible free standing APPA comments.
This approach would likely be consistent with UWAG comments:
(1)
Defend EPA’s decision set, at the very lowest, at a threshold of 50 MGD (frankly,
since so many APPA members in Phase III are SBREFA facilities, we may decide to
support a “no regulation” approach, if the facts warrant while UWAG supports the
<50 MGD de minimis);
(2)
Advocate for preamble language (a) endorsing the view that, as a matter of “BPJ”,
permit writers need not require any CWIS modifications or studies in the absence of
some reason to believe that adverse environmental impact is occurring (especially in
cases where the facility has in the past received approval under § 316(b), and (b)
clarifying that, in any case, BPJ requirements should not be more stringent than for
Phase II; and
(3) Identify some sort of state or “post card” registration program for Phase III public
power facilities to avoid any new Phase III studies where there is a cooling tower.
(4)
Consider whether there are any Phase II issues on which it would be useful to seek
clarification in the Phase III Rules (given that the regulatory requirements are the
same), and submit comments on those for which the chances of success appear
substantial.
III. CONCLUSION
We have every opportunity to win this issue and save your facilities tens of thousand of dollars—
perhaps as much as $500,000 per facility annually for 3 years. These regulatory wins are rare. But
frankly, APPA (and UWAG) laid the foundatation over the last three or four years. There has
never been a strong argument for a national EPA entrainment and impingement program requiring
diversion controls at facilities that are smaller users of water.
If EPA chooses to regulate based on one of the three proposed design intake flow thresholds,
power producing facilities would not be subject to the Phase III regulations. If, per chance, EPA
promulgates a final rule with a design intake flow threshold lower than 50 MGD, it would appear
that the facility would be subject to the same performance standards and the same compliance
alternatives as are available in the final Phase II rule. I believe that if APPA members provide
APPA (and UWAG) with adequate examples of what the Phase III requirements would mean in
terms of costs to a community resulting from a performance standard that we will win the
regulatory debate.
WHAT WE NEED FROM YOU:
When the EPA officially proposes the rule (with the technical supporting documents and
regulatory analysis available), we will send you items for which we need your comments. This
will address costs of permitting, costs of getting engineering firms to look at your data (or the
lack of data at your facility) and the costs of downtime at your utility should control/diversion
technologies be installed. We will need real world cost information from you—even if they are
only estimates. Please begin to collect these ideas between now and early January. APPA would
aggregate this data for the purposes of filing comments this winter and for following up with the
EPA. We would also like our members to file individual letters or “comments” to the EPA to
support either the “no rule” or BPJ approach. (BPJ is legally more defensible so we will sort out
that strategy over the next month or two).
What about litigation?
Well, I am usually rather cynical about these issues getting tied up in court or where the judges
defer to the most stringent interpretation as to EPA’s authority.
But I honestly don’t believe that Phase III facilities (especially those that are smaller utility users
of water) were the impetus for the Phase III 316(b) regulations over the last six years or so. While
anyone can always sue (and usually does!), I just don’t think that Phase III is as controversial as
Phase I or II and I don’t think that the advocates for E and I technologies were really as frustrated
with aquatic losses at <50 MGD facilities. (As you know, I am rarely this optimistic—especially
when it comes to air regulations so this attitude is unusual for me). So, I believe that APPA should
pursue the regulatory outcomes advantageous to our industry and remain optimistic even if the
opponents sue. The fact that the EPA has acknowledged in the proposed rule that the benefits do
not exceed the costs is rather extraordinary. APPA and UWAG got that acknowledgment from
the EPA in the proposed rule. It is hard for the EPA to push for the most stringent
regulatory approach in a final rule once they have admitted that the costs just don’t achieve
an aquatic benefit to justify the impacts to industry. APPA is indebted to the SBA and OMB
who read our preliminary comments over 2002-2004 and listened to us.
How often is this type of acknowledgment by the EPA in a proposed rule? In 18 years of
regulatory work, I have only seen this acknowledgment a few times—and never for industries for
which I worked. Approximately six years ago the industrial laundries and the brick manufacturers
had two separate rulemakings poised at their industries (air and water regulations). In both
instances, the SBA and OMB (and the industries associations’) argued that the benefits did not
exceed the costs as they did in this rulemaking. The EPA withdrew the proposed water regulation
for the industrial and commercial laundries. I believe that the same happened for the brick
industry.
Next steps:
APPA will hold a conference call after the New Year with APPA members and outside counsel,
Kristy Bulleit, to go over the ideas for our draft comments. We will wait to schedule this until
about one month after the Phase III proposed rule has been published. Our comments will be due
120 days later. No extensions are going to be given so APPA is not even going to ask for one.
Phase II workshop:
On April 20-21, 2004 APPA will hold a Phase II rulemaking workshop with Golder, Alden Lab,
and Kleinschmidt to discuss strategies for 316(b) Phase II implementation with your state
agencies as you prepare for NPDES permit renewals. Also we will discuss related thermal issues
as all the utilities across the country up for 2006 NPDES renewals are saying that this is coming
up (again).
April 20-21, 2005 Memphis, 316(b) compliance workshop.
To register go to the APPA 316(b) compliance workshop:
http://www.appanet.org/events/index.cfm?ItemNumber=10380
http://www.appanet.org/events/index.cfm?ItemNumber=10380>
Upcoming other APPA meetings: Mark Your Calendar!
* Feb. 17-18, 2005 San Antonio "Building New Generation: Coal, IGCC, CFB, and
renewables. This workshop will include speakers from technology companies, other utilities with
new construction and permits approved, and with plans to build. The workshop will look at
renewables as a part of the package. Registration information: not yet available. Will be available
in ten days
* April 17-20, 2005 Memphis, Engineering and Operations meeting with environmental
compliance sessions
To see detailed agenda, go to:
http://www.appanet.org/events/index.cfm?ItemNumber=10215
<http://www.appanet.org/events/index.cfm?ItemNumber=10215>
To register for the E & O, go to:
http://www.appanet.org/events/index.cfm?ItemNumber=10380
<http://www.appanet.org/events/index.cfm?ItemNumber=10380>