FR Doc 03-6453

[Federal Register: March 19, 2003 (Volume 68, Number 53)]
[Proposed Rules]
[Page 13521-13587]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19mr03-29]

[[Page 13521]]

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Part IV

Environmental Protection Agency

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40 CFR Part 125

National Pollutant Discharge Elimination System--Proposed Regulations
To Establish Requirements for Cooling Water Intake Structures at Phase
II Existing Facilities; Notice of Data Availability; Proposed Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 125

[FRL-7468-6]
RIN 2040-AD62

National Pollutant Discharge Elimination System--Proposed
Regulations To Establish Requirements for Cooling Water Intake
Structures at Phase II Existing Facilities; Notice of Data Availability

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule; Notice of data availability.

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SUMMARY: On April 9, 2002, EPA published proposed standards for cooling
water intake structures at Phase II existing facilities as part of
implementing section 316(b) of the Clean Water Act (CWA). This notice
presents a summary of significant data EPA received or collected since
proposal, a discussion of how EPA is considering using these data in
revised analyses supporting the rule, a discussion of some refinements
that EPA is considering for the proposed regulatory requirements, and
additional information regarding data quality. This notice also
provides new information on a broader suite of technology options that
may be appropriate for compliance at specific sites. EPA solicits
public comment on the information presented in this notice and the
record supporting this notice.

DATES: Comments on this notice of data availability and all aspects of
the April 9, 2002, proposal must be received or postmarked on or before
midnight June 2, 2003.

ADDRESSES: Comments may be submitted electronically, by mail, or
through hand delivery/courier. Mail comments to the Water Docket,
Environmental Protection Agency, Mailcode: 4101T, 1200 Pennsylvania
Ave., NW., Washington, DC 20460, Attention Docket ID No. OW-2002-0049.
Follow the detailed instructions as provided in Section I.B. of the
SUPPLEMENTARY INFORMATION section for additional ways to submit
comments.

FOR FURTHER INFORMATION CONTACT: For additional technical information
contact Debra D. Hart at (202) 566-6379. For additional economic
information contact Lynne Tudor, Ph.D. at (202) 566-1043. For
additional biological information contact Dana A. Thomas, Ph.D. at
(202) 566-1046. The e-mail address for the above contacts is
rule.316b@epa.gov.

SUPPLEMENTARY INFORMATION:

Contents

I. General Information
A. How Can I Get Copies Of This Document and Other Related
Information?
B. How and To Whom Do I Submit Comments?
C. How Should I Submit CBI To the Agency?
II. Purpose of this Notice
III.Major Changes to Assumptions Used in EPA's Analyses
IV. Engineering Cost Analysis
A. Facility Flow Verifications
B. Technology Cost Modules
C. Facility-Level Costing Options
D. Clarifications and Corrections
V. IPM Analyses
A. Changes to the IPM Analyses Since Proposal
B. Revised Results for the Preferred Option
C. Revised Results for the Waterbody/Capacity-based Option
VI.Other Economic Analyses
A. National Costs
B. Cost-to-Revenue Measure
C. Cost Per Household
D. Electricity Price Analysis
VII.Performance Standards
A. Technology Efficacy Database to Support Performance Standards
B. Streamlined Technology Option For Certain Locations
VIII. Cost Tests
IX. Biology--Supporting Information
A. Entrainment Survival
B. Restoration
C. Request for Impingement and Entrainment Data
X. National Benefits
A. Case Study Clarifications and Corrections
B. Regional Approach To Developing Benefits Estimates
C. North Atlantic Regional Study
D. Northern California Regional Study
E. Nonuse Benefits
F. Regional-Level Benefit Cost Analysis
G. Break-Even Analysis
XI. Implementation and Other Regulatory Refinements
A. Definition and Methods for Determining the ``Calculation
Baseline''
B. Options for Evaluating Compliance with Performance Standards
C. Compliance Timelines, Schedules, and Determination
D. Determining Capacity Utilization Rates
E. Clarifications and Corrections
XII. General Solicitation of Comments

I. General Information

A. How Can I Get Copies of This Document and Other Related Information?

1. Docket. EPA has established an official public docket for this
action under Docket ID No. OW-2002-0049. The official public docket
consists of the documents specifically referenced in this action, any
public comments received, and other information related to this action.
The official public docket is the collection of materials that is
available for public viewing at the Water Docket in the EPA Docket
Center, (EPA/DC) EPA West, Room B102, 1301 Constitution Ave., NW.,
Washington, DC. The EPA Docket Center Public Reading Room is open from
8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Public Reading Room is (202)
566-1744, and the telephone number for the Water Docket is (202) 566-
2426.
2. Electronic Access. You may access this Federal Register document
electronically through the EPA Internet under the ``Federal Register''
listings at http://www.epa.gov/fedrgstr/.

An electronic version of the public docket is available through

EPA's electronic public docket and comment system, EPA Dockets. You may
use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public

use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public

comments, access the index listing of the contents of the official
public docket, and to access those documents in the public docket that
are available electronically. Once in the system, select ``search,''
then key in the appropriate docket identification number.
Certain types of information will not be placed in EPA Dockets.
Information claimed as confidential business information (CBI) and
other information whose disclosure is restricted by statute, which is
not included in the official public docket, will not be available for
public viewing in EPA's electronic public docket. EPA's policy is that
copyrighted material will not be placed in EPA's electronic public
docket but will be available only in printed, paper form in the
official public docket. To the extent feasible, publicly available
docket materials will be made available in EPA's electronic public
docket. When a document is selected from the index list in EPA Dockets,
the system will identify whether the document is available for viewing
in EPA's electronic public docket. Although not all docket materials
may be available electronically, you may still access any of the
publicly available docket materials through the docket facility
identified in Unit I.A1. EPA intends to work towards providing
electronic access to all of the publicly available docket materials
through EPA's electronic public docket.
For public commenters, it is important to note that EPA's policy is
that public comments, whether submitted electronically or on paper,
will be made available for public viewing in EPA's electronic public
docket as EPA receives them and

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without change, unless the comment contains copyrighted material, CBI,
or other information whose disclosure is restricted by statute. When
EPA identifies a comment containing copyrighted material, EPA will
provide a reference to that material in the version of the comment that
is placed in EPA's electronic public docket. The entire printed
comment, including the copyrighted material, will be available in the
public docket.
Public comments submitted on computer disks that are mailed or
delivered to the docket will be transferred to EPA's electronic public
docket. Public comments that are mailed or delivered to the Docket will
be scanned and placed in EPA's electronic public docket. Where
practical, physical objects will be photographed, and the photograph
will be placed in EPA's electronic public docket along with a brief
description written by the docket staff.

B. How and to Whom Do I Submit Comments?

You may submit comments electronically, by mail, or through hand
delivery/courier. Please submit with your comments any references cited
in your comments. To ensure proper receipt by EPA, identify the
appropriate docket identification number in the subject line on the
first page of your comment. Please ensure that your comments are
submitted within the specified comment period. Comments received after
the close of the comment period will be marked ``late.'' EPA is not
required to consider these late comments, however, late comments may be
considered if time permits. If you wish to submit CBI or information
that is otherwise protected by statute, please follow the instructions
in Unit I.C. Do not use EPA Dockets or e-mail to submit CBI or
information protected by statute.
1. Electronically. If you submit an electronic comment as
prescribed below, EPA recommends that you include your name, mailing
address, and an e-mail address or other contact information in the body
of your comment. Also include this contact information on the outside
of any disk or CD ROM you submit, and in any cover letter accompanying
the disk or CD ROM. This ensures that you can be identified as the
submitter of the comment and allows EPA to contact you in case EPA
cannot read your comment due to technical difficulties or needs further
information on the substance of your comment. EPA's policy is that EPA
will not edit your comment, and any identifying or contact information
provided in the body of a comment will be included as part of the
comment that is placed in the official public docket, and made
available in EPA's electronic public docket. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment.
i. EPA Dockets. Your use of EPA's electronic public docket to
submit comments to EPA electronically is EPA's preferred method for
receiving comments. Go directly to EPA Dockets at http://www.epa.gov/
edocket
, and follow the online instructions for submitting comments. To

access EPA's electronic public docket from the EPA Internet Home Page,
select ``Information Sources,'' ``Dockets,'' and ``EPA Dockets.'' Once
in the system, select ``search,'' and then key in Docket ID No. OW-
2002-0049. The system is an ``anonymous access'' system, which means
EPA will not know your identity, e-mail address, or other contact
information unless you provide it in the body of your comment.
ii. E-mail. Comments may be sent by electronic mail (e-mail) to OW-
Docket@epa.gov, Attention Docket ID No. OW-2002-0049. In contrast to

EPA's electronic public docket, EPA's e-mail system is not an
``anonymous access'' system. If you send an e-mail comment directly to
the Docket without going through EPA's electronic public docket, EPA's
e-mail system automatically captures your e-mail address. E-mail
addresses that are automatically captured by EPA's e-mail system are
included as part of the comment that is placed in the official public
docket, and made available in EPA's electronic public docket.
iii. Disk or CD ROM. You may submit comments on a disk or CD ROM
that you mail to the mailing address identified in Unit I.B.2. These
electronic submissions will be accepted in WordPerfect or ASCII file
format. Avoid the use of special characters and any form of encryption.
2. By Mail. Send an original and three copies of your comments to
the Water Docket, Environmental Protection Agency, Mailcode: 4101T,
1200 Pennsylvania Ave., NW., Washington, DC 20460, Attention Docket ID
No. OW-2002-0049.
3. By Hand Delivery or Courier. Deliver copies of your comments to:
Water Docket, EPA Docket Center, EPA West, Room B102, 1301 Constitution
Ave., NW., Washington, DC, Attention Docket ID No. OW-2002-0049. Such
deliveries are only accepted during the Docket's normal hours of
operation as identified in Unit I.A.1.

C. How Should I Submit CBI to the Agency?

Do not submit information that you consider to be CBI
electronically through EPA's electronic public docket or by e-mail.
Send information claimed as CBI by mail only to the following address,
Office of Science and Technology, Mailcode 4303T, U.S. Environmental
Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460,
Attention: Debbi Hart/Docket ID No. OW-2002-0049. You may claim
information that you submit to EPA as CBI by marking any part or all of
that information as CBI (if you submit CBI on disk or CD ROM, mark the
outside of the disk or CD ROM as CBI and then identify electronically
within the disk or CD ROM the specific information that is CBI).
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR Part 2.
In addition to one complete version of the comment that includes
any information claimed as CBI, a copy of the comment that does not
contain the information claimed as CBI must be submitted for inclusion
in the public docket and EPA's electronic public docket. If you submit
the copy that does not contain CBI on disk or CD ROM, mark the outside
of the disk or CD ROM clearly that it does not contain CBI. Information
not marked as CBI will be included in the public docket and EPA's
electronic public docket without prior notice. If you have any
questions about CBI or the procedures for claiming CBI, please consult
the person identified in the FOR FURTHER INFORMATION CONTACT section.

II. Purpose of This Notice

On April 9, 2002, EPA published proposed standards for cooling
water intake structures at Phase II existing facilities (67 FR 17122).
EPA received voluminous comments and data submissions during the 120-
day public comment period on the proposal. However, many commenters,
including both industry and environmental groups, requested additional
time to review the proposal and the supporting record and to prepare
further comments. Therefore, EPA is reopening the comment period on all
aspects of the April 9, 2002, proposal. In addition, following
publication of the proposal, EPA collected more data and revised
several methodologies related to costing and benefits estimations. This
notice makes these new data available for comment and discusses the
relevance of these data to the analyses conducted by EPA. Thus, EPA
also solicits public comment on the information presented

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in this notice and the record supporting this notice.
EPA notes that all options and issues discussed in its proposal are
still under consideration for the final rule. This notice merely makes
new information available for public review that the Agency will
consider in making decisions for the final rule.

Summary of Proposed Rule for Existing Facilities

The proposed rule would implement section 316(b) of the Clean Water
Act (CWA) for certain existing power producing facilities that employ a
cooling water intake structure and that withdraw 50 million gallons per
day (MGD) or more of water from rivers, streams, lakes, reservoirs,
estuaries, oceans, or other waters of the U.S. for cooling purposes.
The proposed rule constitutes Phase II in EPA's development of section
316(b) regulations and would establish national requirements applicable
to the location, design, construction, and capacity of cooling water
intake structures at these facilities. The proposed national
requirements, which would be implemented through National Pollutant
Discharge Elimination System (NPDES) permits, would minimize the
adverse environmental impact associated with the use of these
structures.
The proposed rule would establish location, design, construction,
and capacity requirements that reflect the best technology available
for minimizing adverse environmental impact from the cooling water
intake structure based on waterbody type and the amount of water
withdrawn by a facility. The Environmental Protection Agency (EPA)
proposed to group surface water into five categories--freshwater rivers
and streams, lakes and reservoirs, Great Lakes, estuaries and tidal
rivers, and oceans--and establish requirements for cooling water intake
structures located in distinct waterbody types. In general, the more
sensitive or biologically productive the waterbody type, the more
stringent the requirements proposed as reflecting the best technology
available for minimizing adverse environmental impact. Proposed
requirements also vary according to the percentage of the source
waterbody withdrawn and facility utilization rate.
A facility may choose one of three options for meeting best
technology available requirements under the proposed rule. These
options are (1) demonstrating that the facility's existing design and
construction technology, operational measures, and/or restoration
currently meets specified performance standards; (2) selecting and
implementing design and construction technologies, operational
measures, or restoration measures that meet specified performance
standards; or (3) demonstrating that the facility qualifies for a site-
specific determination of best technology available because its costs
of compliance are significantly greater than either (1) the costs
considered by the Agency during the development of the rule, or (2) a
site-specific determination of the benefits of compliance with the
proposed performance standards. The proposed rule also provides that
facilities may use restoration measures in addition to or in lieu of
other technology measures to meet the performance standards established
in the rule or on a site-specific basis.
EPA expects that the proposed regulation would minimize adverse
environmental impact, including substantially reducing the harmful
effects of impingement (organisms trapped against intake screens or
other barriers at the entrance of cooling water intake structures) and
entrainment (organisms drawn into a cooling water intake structure), at
existing facilities over the next 20 years. As a result, the Agency
anticipates that the proposed rule would help protect ecosystems in
proximity to cooling water intake structures. The proposal would help
preserve aquatic organisms, including threatened and endangered
species, and the ecosystems they inhabit in waters used for cooling
purposes by existing power producing facilities. EPA considered the
potential benefits of the proposed rule and discussed these benefits in
both quantitative and non-quantitative terms. Benefits, among other
factors, are based on a decrease in expected mortality or injury to
aquatic organisms that would otherwise be subject to entrainment into
cooling water systems or impingement against screens or other devices
at the entrance of cooling water intake structures. Benefits may also
accrue at multiple ecological scales including population, community,
or ecosystem levels.
In addition to the proposed regulatory requirements, EPA also
invited comments on a number of other regulatory alternatives. The
Agency will continue to consider all of these regulatory alternatives
when making decisions on a final rule.

III. Major Changes to Assumptions Used in EPA's Analyses

Based on comments received, additional information made available,
and the results of subsequent analyses, EPA is considering a number of
revisions to the assumptions that were used in developing the
engineering costs, the information collection costs, the economic
analyses, and the benefits analyses. These new assumptions are
presented below and were used in the current analyses, the results of
which are presented in this Notice of Data Availability (NODA). EPA
requests comment on each of these revised assumptions.

1. Number of Phase II Facilities

Since proposal, EPA verified design flow information for facilities
that had been classified as either Phase II or Phase III facilities.
This verification resulted in the following changes: five facilities
that were classified as Phase II facilities at proposal have been
reclassified as Phase III facilities. Conversely, six facilities that
were classified as Phase III facilities at proposal have been
reclassified as Phase II facilities. As a result, the overall number of
Phase II facilities increased from 539 to 540 facilities.\1\ For the
NODA, all cost and economic analyses are based on the updated set of
Phase II facilities.
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\1\ Note that these numbers are unweighted. On a sample-weighted
basis, the number of Phase II facilities increased from 550 to 551.
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2. Technology Costs

EPA used new information to revise the capital and operation and
maintenance (O&M) costs for several compliance technologies, including
those used as the primary basis for the proposed regulatory option.
Overall, the cost updates resulted in the following changes. For the
preferred option (discussed above at Section II), total capital costs
increased by 66 percent and total O&M costs increased by 48 percent.
For the waterbody/capacity-based option, which would set performance
standards for impingement mortality and entrainment reduction based on
closed-cycle, recirculating cooling for some facilities and
technologies such as fine-mesh screens and fish-return systems for
others, total capital costs increased by 40 percent (net of existing
condenser cost savings), while total O&M costs decreased by 13 percent.
These comparisons are based on the raw costs, adjusted to year-2002
dollars, which have not been discounted or annualized.\2\
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\2\ Based on additional research between the proposal and the
NODA, some facilities also experienced a change in their projected
compliance response. This change, together with the increase in in-
scope Phase II facilities, may have contributed to the change in
total compliance costs. See section IV of the NODA preamble for more
information.

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The revised costing assumptions are discussed in detail below. EPA
notes that the proposed rule includes a compliance option that allows
site-specific flexibility in cases where compliance costs for a
particular facility significantly exceed those estimated in the
analysis for the final rule. EPA is currently considering whether the
final rule should provide additional guidance on how to conduct this
comparison, including how best to use the costing information in the
rule record. EPA requests comment on its costing methodology; its
relationship to the proposed site-specific, cost-cost comparison
provisions; and what additional guidance, if any, EPA should provide on
implementation of these provisions.

3. Permitting and Monitoring Costs

At proposal, the single most costly permitting activity was the
``Impingement Mortality and Entrainment Characterization Study,'' a
required element of the ``Comprehensive Demonstration Study.'' See
proposed Sec. 125.95(b). The proposed rule did not require facilities
with cooling towers to conduct these studies but, inadvertently, EPA
included costs for the Impingement Mortality and Entrainment
Characterization Study in its cost estimates for facilities projected
to have cooling towers in the base case (i.e., those projected to have
cooling towers in the absence of the rule). EPA also applied costs for
this study to facilities that EPA projected to install cooling towers
under certain regulatory options. For the NODA analysis, EPA did not
include the cost of the Impingement Mortality and Entrainment
Characterization Study for facilities projected to have cooling towers
in the base case or the waterbody/capacity-based option.

4. Net Installation Downtime for Compliance Technologies Other Than
Recirculating Cooling Towers

In the analysis for the proposed rule, EPA made the assumption that
compliance technologies other than recirculating cooling towers would
not require facility downtime for installation. EPA has since revised
this assumption. EPA expects additional unscheduled downtimes of
between two and eight weeks for the installation of the various non-
recirculating compliance technologies.

5. Net Installation Downtime and Other Site-Specific Factors for
Recirculating Cooling Towers

To support the proposed Phase II rule, EPA assumed that each
projected cooling system conversion would require a net downtime of
four weeks. This estimate was based on information that had been
previously available to EPA on the downtime needed for fossil-fuel and
nuclear power plants. Just prior to proposal, EPA received additional
technical information on the amount of operational downtime needed
during cooling system conversions from once through to closed-cycle,
recirculating with cooling towers at nuclear power plants (see DCN 4-
2529). For the new analyses, EPA is incorporating the new information
which suggests that cooling system conversions at nuclear power plants
may take seven months. To the extent that conversions at nuclear power
plants take less time to complete, costs for this factor would be
lower.
For non-nuclear power plants, EPA's cost estimates at proposal
assumed four weeks downtime for the retrofit of wet cooling towers at
existing power plants. The Agency requests comment on whether more or
less downtime may be required at some plants due to site-specific
factors and, if so, whether EPA should use a different estimate of
downtime in analyzing the costs of this regulatory option.

6. Energy Penalties

For the proposed Phase II rule, the average annual energy penalty,
by region and fuel type, was applied to each facility upgrading to a
closed-cycle, recirculating cooling system. Based on comments received,
EPA has changed the energy penalty assumption to attempt to account for
seasonal, peak effects. For the new analyses, the energy penalty
applied is the greater of the peak-summer penalty or the average annual
penalty for each facility projected to convert their cooling systems to
a closed-cycle, recirculating cooling system. EPA notes that the
approach used at proposal might have understated potential impacts of
the energy penalty on generating capacity. Conversely, using the
greater of the peak summer penalty and the average annual penalty might
overestimate potential impacts of the energy penalty on generating
capacity. EPA has adopted the latter approach in order to ensure that
impacts are not underestimated.

7. Capacity Utilization Rates

For the proposed Phase II rule, the 15 percent capacity utilization
determination was based on the generation and capacity of the entire
facility, including steam electric and non-steam generators. EPA
believes that utilization of the steam electric part of a facility
better reflects a facility's potential for adverse environmental impact
because only the steam electric generators use cooling water. As
discussed at Section XI below, EPA is considering refining its
regulatory definition for ``capacity utilization rate'' at the proposed
Sec. 125.93 to reflect use of the steam electric part of a facility.
For the NODA, EPA is using the capacity utilization of only the steam
electric generators at Phase II facilities so that its updated economic
analyses include this potential refinement.
In addition, at proposal, EPA used the average capacity utilization
based on EIA data for 1995 to 1999. This utilization rate was often
different from the rate based on the ``IPM base case results'' EPA used
to support its estimates of the economic impacts of the rule (see
section V for additional description of EPA's economic analysis
methodology. For the NODA analyses, EPA used projected capacity
utilization rates for 2008 (the first model-run year in EPA's economic
analysis), in order to ensure internal consistency in the analysis. For
many facilities, this resulted in a lower capacity utilization rate in
the baseline. As a result, the compliance requirements and compliance
costs for these facilities may be lower, depending on the waterbody
type from which they withdraw and the impingement mortality and
entrainment technologies they already have in place in the baseline.
Facilities with lower projected compliance costs than under the
previous assumption may also have lower projected impacts in the
analysis, depending on the magnitude of the cost differential and the
facilities' operating characteristics in the baseline (e.g., a change
in cost for marginal units would have a greater effect than for units
that generate electricity well below the cost of the marginal unit).
EPA requests comment on this change in assumptions.

8. Compliance Schedule

At the time of proposal, promulgation of the final section 316(b)
Phase II rule was scheduled for August 28, 2003. As a result, EPA
assumed that facilities would come into compliance with the preferred
option between 2004 and 2008 as their existing NPDES permits expired
and were reviewed. For regulatory options based on the reductions in
impingement and entrainment achievable using a closed-cycle
recirculating system, EPA further assumed that facilities costed with a
cooling tower would come into compliance between 2005 and 2012. Since
proposal, the section 316(b) regulatory development schedule has
changed. Promulgation of the final rule is now scheduled for February
16, 2004,

[[Page 13526]]

making it impossible for facilities to come into compliance in 2004
(the assumption in all economic analyses is that facilities comply in
the beginning of the year in which they receive requirements in their
permit). As a result, EPA shifted the compliance schedule for the NODA
analysis by one year for all Phase II facilities. Facilities costed
with a cooling tower are now assumed to have a compliance window from
2005 to 2013, while facilities without a recirculating requirement are
assumed to come into compliance between 2005 and 2009 (during the year
of their first post-promulgation permit). For purposes of the cost and
impacts analysis, EPA used the 2010 model run year instead of the 2008
model run year, as at proposal. Under the preferred option, all
facilities are projected to come into compliance by 2009.

9. Number of Facilities Projected To Upgrade to Recirculating Wet
Cooling (Waterbody/Capacity-Based Option)

For the proposed Phase II rule, EPA estimated that 51 model
facilities would upgrade their cooling systems from once-through to
closed-cycle, recirculating cooling systems under the waterbody/
capacity-based option. EPA estimates for these analyses that 44 model
facilities would upgrade cooling systems for the same option. The
requirements of the regulatory alternative have not changed. The change
in number of facilities that would be required to upgrade their cooling
system is due to: (1) EPA's effort to update, correct, and verify
facility design intake flows and (2) the fact that EPA no longer needs
to use a statistical methodology to determine the number of short
technical questionnaire facilities that withdraw more than one percent
of the mean tidal excursion. EPA has updated design intake flows for a
number of in-scope facilities. In a few cases, these database flow
changes have impacted the determination of whether a facility is
projected to upgrade its cooling system because the requirements for
the waterbody/capacity-based option, in some instances, hinge on intake
flow. Since proposal, EPA has identified those short technical
questionnaire facilities whose design intake flow exceeds one percent
of the mean tidal excursion. This information was not available for the
analyses supporting the proposal, and as such, EPA utilized a
statistical method to project which facilities would meet these
criteria. For these current analyses, EPA has utilized the actual data
in lieu of the statistical method. As a result, a number of changes
have been made to the list of short-technical questionnaire model
facilities projected to upgrade their cooling systems.

IV. Engineering Cost Analysis

A. Facility Flow Verifications

In order to ensure the accuracy and quality of the data used for
the costing effort, the Agency revisited its database of facility and
intake design flows. Flow is an important factor in calculating costs.
The Agency first screened the flow data in order to identify facilities
with potentially inaccurate flow information. From this first set of
facilities, the Agency attempted to identify errors by inspecting the
original questionnaires on which the flows were reported. Through this
effort, the Agency was able to correct a few flow values by identifying
survey reporting errors (such as unit conversion inconsistencies). The
remainder of the potentially inaccurate flow data set required outreach
to 25 facilities to solve the identified discrepancies. In many cases,
the original reported flows were correct. In others, incorrect initial
reporting had led to incorrect calculations of design flow rates. The
Agency corrected these flows for the master database used to support
analyses presented in this Notice of Data Availability (see ``Flow
Correction and Verification,'' in the Confidential Business Information
portion of the docket).

B. Technology Cost Modules

The Agency developed a new approach to developing compliance costs
that includes a broader range of compliance technologies than it used
for calculating compliance costs for the proposed rule requirements. In
order to do so, the Agency sought to evaluate new and/or additional
costs for a wider range of intake technologies identified as having the
potential to meet the proposed regulation requirements without the
expense and energy penalty associated with capacity-reduction
technologies such as cooling towers. In selecting among available
technologies, EPA revised its traditional least cost approach, and
instead assigned costs based on the projected performance of available
technologies on a site-specific basis. This approach is discussed in
more detail in section IV.C. below.
The revised and new technology modules analyzed by the Agency
include the following:
--Addition of fish handling and return system to an existing
traveling screen system,
--Addition of fine-mesh screens (both with and without a fish
handling and return system) to an existing traveling screen system,
--Addition of a new, larger intake in front of an existing intake
screen system,
--Addition of passive fine-mesh screen system (cylindrical
wedgewire) near shoreline,
--Addition of a fish net barrier system,
--Addition of an aquatic filter barrier system,
--Relocation of an existing intake to a submerged offshore location
(with velocity cap inlet, passive fine-mesh screen inlet, or onshore
traveling screens),
--Addition of a velocity cap inlet to an existing offshore intake,
--Addition of passive fine-mesh screen to an existing offshore
intake,
--Addition or modification of a shoreline-based traveling screen
for an offshore intake system, and
--Addition of dual-entry, single-exit traveling screens (with fine-
mesh) to a shoreline intake system.
The explanation and derivation of each of these modules is
discussed in the public record (see ``316(b) Phase II NODA Cost
Modules.'')
At proposal, EPA based its cost analysis primarily on the addition
of fine-mesh traveling screens with fish handling systems. EPA
recognized at proposal that some facilities would need to add larger
intakes, move intakes, or modify offshore intakes, and included an
approximate adjustment factor in its cost estimates to account for
these types of modifications, but lacked sufficient data to model them
explicitly. In the NODA analysis, EPA has added explicit cost modules
for each of these activities. As a result, the per facility costs for
adding traveling screens with fish handling systems have gone down
significantly, but a significant number of facilities (about 40% of the
in-scope universe) have been costed for other technologies, which are
significantly more expensive than traveling screens. To help commenters
better understand the impacts of these revisions, EPA has placed a
summary document in the record that shows modeled costs for a range of
flows for each major technology module used at proposal and in this
NODA, broken out by salt water versus freshwater and nuclear facility
versus non-nuclear facility (see ``Comparison of Capital and Net O & M
Compliance Costs for Technologies Costed in Proposed Rule and NODA'').
As discussed in section III above, EPA also modified its estimate of
facility downtime potentially necessary to install these technologies,
as well as

[[Page 13527]]

capacity reduction technologies such as cooling towers.
EPA has not yet examined other new information suggesting that
site-specific factors may affect the costs of retrofitting wet towers
at existing power plants. For example, in October 2002, the Department
of Energy (DOE) provided EPA with a study analyzing the costs of
retrofitting wet cooling towers at four facilities (see DCN W-00-32,
316(b) Phase II, comment 2.11). The study found costs at these
facilities would be higher than EPA estimated for similar facilities in
its proposal record. EPA invites comment on the data contained in the
DOE study, and will consider these data as the Agency makes decisions
for the final rule. In January 2003, the DOE/National Energy Technology
Laboratory (NETL) provided EPA with an addendum to their October 2002
(see DCN W-00-32, 316(b) Phase II, comment 2.14). In that addendum, DOE
determined that three out of four facilities would likely require plume
abatement technologies that could double the capital costs of the
cooling tower portion of a retrofit project. In February 2003, DOE
provided additional information indicating that one plant located on
brackish waters in a densely populated urban area that is considering a
cooling tower retrofit may install a reverse osmosis system to reduce
particulate salt emissions (see ``Astoria Repowering Project Article X
Supplement,'' Reliant Energy, November 12, 2002). EPA notes that some
other facilities located on brackish water using cooling towers do not
use such systems to reduce particulate emissions (see DCN 4-2553) . The
Agency requests comment on whether site-specific factors other than
those addressed in the Agency's derivation of cost estimates for the
waterbody/capacity-based option at proposal could increase or lower the
costs of retrofitting a wet cooling tower at an existing plant.

C. Facility-Level Costing Options

In order to implement the revised costing approach (see section
IV.B. above), the Agency necessarily changed its approach to developing
costs at the model facility level. This approach focuses as much as
possible on site-specific characteristics for which the Agency obtained
data through the 316(b) questionnaire. In addition, EPA utilized
available geographic information, including detailed topographic
mapping and overhead satellite imagery, to better utilize site-specific
characteristics of each model facility's intake(s) to inform decisions
on the proper costing modules projected for compliance. ``Technology
Costing Module Applications for Model Facilities,'' provides the
background and explanation of the Agency's approach to model facility
level costing.
EPA's approach to model facility-level costing may be described as
follows. In order to project upgrades to technologies as a result of
compliance with the proposed rule, the Agency utilizes as much
information as is available about the characteristics of the hundreds
of facilities within the scope of the proposed rule. By incorporating
as many site-specific features as possible into the design and
implementation of its costing approach the Agency has been able to
capture a representative range of compliance costs at what it deems
``model facilities.'' However, the Agency did not have and will never
have the opportunity to visit and study in detail all of the
engineering aspects of each facility complying with this rule (over 400
facilities could incur technology-related compliance costs as a result
of this rule). Therefore, although the Agency has developed costs that
represent EPA's best effort to develop a site-specific engineering
assessment for a particular facility, this assessment does not
incorporate certain peculiarities that only long-term study of each
facility would bear out. Hence, the Agency refers to its approach as a
``model'' facility approach.
In selecting technology modules for each model facility, EPA
departed from its traditional least cost approach. This is because,
while the Agency is confident that the suite of available technologies
can achieve compliance with the proposed performance generally (60-90%
reduction in entrainment and 80-95% reduction in impingement relative
to the calculation baseline) EPA lacks sufficient data to determine the
performance of each technology on a site-specific basis. The Agency
thus selected the best performing technology (rather than the least
costly technology) that was suitable for each site, in order to ensure
that the technology on which costs were based would in fact achieve
compliance at that site. EPA recognizes that this approach may entail a
greater degree of cost conservatism than is typical in regulatory
analyses, and that this may have implications for the cost-cost
comparison provisions in the proposed rule. EPA requests comment on its
revised approach for selecting model facility cost modules.
EPA believes that its modular approach to deriving costs of
technologies and the costs to install and operate technologies
incorporates sufficient flexibility to derive costs that reflect a
broad range of applications. To ensure that the Agency does not
underestimate the costs of the rule, EPA has approached the compliance
costing effort with great conservatism. When there is uncertainty or
the data are inconclusive, EPA has favored conservative approaches to
costs (that is, higher than average). Therefore, the Agency is
confident that the compliance costs represented in the analyses
accompanying this Notice of Data Availability represent conservative
estimates for the range of model facilities represented. However, for a
particular facility, the costs may be higher or may be lower than would
actually be realized.

D. Clarifications and Corrections

Estimating Design Intake Flows for Short Technical Questionnaire
Facilities
At proposal, the Agency utilized a statistical methodology based on
linear regression to assess the design intake flow information for
facilities that responded to the short technical questionnaire. Because
the Agency initially asked short technical respondents for only their
actual annual intake flow for the reporting year, it was necessary to
obtain design intake flow information for the purpose of accurately
assessing compliance costs. The Agency did not include the statistical
methodology for estimating design intake flows for short technical
questionnaire facilities and its results in the record for the proposed
rule. The Agency continues to use this methodology for this Notice of
Data Availability and hereby includes the supporting information in the
record (see DCN 5-2501).

V. IPM Analyses

At proposal, EPA used an electricity market model, the Integrated
Planning Model 2000 (IPM^[reg] 2000), to identify potential
economic and operational impacts of various regulatory options
considered for proposal.\3\ EPA conducted impact analyses at the market
level, by North American Electric Reliability Council (NERC) region,\4\
and for facilities subject to the

[[Page 13528]]

Phase II regulation. Analyzed characteristics included changes in
capacity, generation, revenue, cost of generation, and electricity
prices. These changes were identified by comparing two scenarios: (1)
The base case scenario (in the absence of any Section 316(b)
regulation) and (2) the post compliance scenario (after the
implementation of the new Section 316(b) regulations). The results of
these comparisons were used to assess the impacts of the preferred
option and two of the five alternative regulatory options considered by
EPA: (1) the ``Intake Capacity Commensurate with Closed-Cycle,
Recirculating Cooling System based on Waterbody Type/Capacity'' Option
(hereafter the ``waterbody/capacity-based'' option) and (2) the
``Intake Capacity Commensurate with Closed-Cycle, Recirculating Cooling
System for All Facilities'' Option (hereafter the ``all closed-cycle''
option).
---------------------------------------------------------------------------

\3\ For a detailed description of the IPM 2000 see Chapter B3 of
the Economic and Benefits Analysis (EBA) document in support of the
proposed rule (DCN 4-0002; http://www.epa.gov/ost/316b/econbenefits/
b3.pdf
).

\4\ The ten NERC regions modeled by the IPM are: ECAR (East
Central Area Reliability Coordination Agreement), ERCOT (Electric
Reliability Council of Texas), FRCC (Florida Reliability
Coordinating Council), MAAC (Mid-Atlantic Area Council), MAIN (Mid-
America Interconnected Network, Inc.), MAPP (Mid-Continent Area
Power Pool), NPCC (Northeast Power Coordination Council), SERC
(Southeastern Electricity Reliability Council), SPP (Southwest Power
Pool), and WSCC (Western Systems Coordinating Council). Electric
generators in Alaska and Hawaii are not modeled by the IPM.
---------------------------------------------------------------------------

Since publication of the proposed rule, EPA has made several
changes to its IPM analysis. The following sections present a
discussion of these changes and the results of the re-analysis of the
preferred option and the waterbody/capacity-based option. EPA would use
the same methodology as described in Chapter B3 of the EBA (as amended
in this NODA) to analyze other options presented at proposal but not
explicitly analyzed for this NODA if they were chosen for promulgation.

A. Changes to the IPM Analyses Since Proposal

This section presents the changes to the IPM assumptions and
modeling procedures used at proposal. This section also describes
modifications EPA made to the analyses to correct errors that were
discovered after publication of the proposed rule.
1. IPM Analysis of the Proposed Regulatory Requirements
For the proposal, EPA did not explicitly analyze the preferred
option because of time constraints. Rather, EPA conducted an
electricity market model analyses of two alternative options that had
higher costs than those of the preferred option. To assess the expected
economic impacts of the preferred option at proposal, EPA adopted an
indirect approach.\5\ EPA acknowledges that an analysis specific to the
requirements of the preferred option is preferable, and, as a result,
EPA conducted an IPM model run using the proposed regulatory
requirements for this NODA. The results of this analysis are presented
in Section V.B below.
---------------------------------------------------------------------------

\5\ For more information on this analysis, please refer to
Section VIII.A of the preamble to the proposed rule and Chapter B3
of the EBA document.
---------------------------------------------------------------------------

2. Model Aggregation
At proposal, the steam electric generators of the 530 Phase II
facilities that are modeled by the IPM were disaggregated from the
existing IPM model plants (as used in the standard IPM base case used
for other EPA regulations, the EPA Base Case 2000) and ``run'' as
individual facilities along with the other existing model plants. This
change increased the total number of model plants from 1,390 under the
EPA Base Case 2000 to 1,777 under the 316(b) Proposal Base Case.\6\ For
this NODA, EPA made two further changes to the model aggregation, which
increased the total number of model plants from 1,777 to 2,096:
---------------------------------------------------------------------------

\6\ For more information on changes made to the EPA Base Case
2000, see EBA, Chapter B3, Section B3-2.2.
---------------------------------------------------------------------------

[sbull] Disaggregation of non-steam generators at Phase II
facilities. At proposal, EPA only disaggregated Phase II steam electric
generators from the original model plant specification. These steam
electric generators were then re-aggregated to the facility-level, and
the facility-level output was used in EPA's facility impact analyses.
Disaggregating only steam-electric generators led to the
underestimation of certain facility-level operating characteristics
(e.g., generation and revenues) because the facility-level results
produced by the model did not include the economic activities of non-
steam generators at Phase II facilities. Therefore, for this NODA
analysis, EPA also disaggregated the non-steam generators at facilities
subject to the rule from the original model plant specification, so
that the facility-level results include the economic activities of the
entire plant.
[sbull] Phase III facilities. In addition to disaggregating
generators at Phase II facilities, EPA also disaggregated generators at
Phase III facilities for this NODA. (At the time this analysis was
started, the section 316(b) regulatory schedule called for proposal of
the Phase III rule three months before promulgation of the Phase II
rule.)
Because changes in model aggregation can result in changes to the
base case results, EPA compared the base case results generated for the
proposal and NODA analyses. This comparison identified little
difference in the base case results caused by the modification in the
model aggregation: Base case total production costs (capital, O&M, and
fuel) using the revised NODA specifications are lower by 0.2% to 0.3%
in the years 2008, 2010, and 2020. Early retirements of base case oil
and gas steam capacity under the NODA specifications decreased by 1,258
MW. Early retirements of base case nuclear and coal capacity remained
constant. In addition, the revised model specifications result in
changes in base case coal and gas fuel use by less than 1.0 percent.
3. Capacity Utilization
Under the preferred option and the alternative regulatory options
considered at proposal, facilities with a capacity utilization rate of
less than 15 percent may be subject to less stringent compliance
requirements than facilities with a utilization rate of 15 percent or
more, depending on the water body from which they withdraw and the
technologies they already have in place. EPA made the following changes
to the determination of the capacity utilization of Phase II facilities
for the economic analysis:
[sbull] Capacity utilization rates based on steam-electric
generators only. At proposal, the 15 percent capacity utilization
determination was based on the generation and capacity of the entire
facility, including steam electric and non-steam generators. As
discussed at Section III above, EPA believes that utilization of the
steam electric part of the facility better reflects the facility's
potential for adverse environmental impact because only the steam
electric generators use cooling water subject to this regulation. At
Section XI below, EPA invites comment on a refinement to the definition
of ``capacity utilization rate'' at proposed Sec. 125.93 to focus only
on the steam electric generators at a facility. For the NODA, EPA is
using the capacity utilization of only the steam electric generators at
Phase II facilities so that the updated economic analyses, including
the IPM analysis, include this potential refinement.
[sbull] IPM capacity utilization rates. At proposal, EPA used the
average capacity utilization based on Energy Information Administration
(EIA) data for 1995 to 1999. This utilization rate was often different
from the rate based on the IPM base case results. This discrepancy
might have led to an underestimation of economic impacts for those
facilities whose utilization rate is less than 15 percent based on EIA
data but 15 percent or more based on IPM data, and to an overestimation
of economic impacts for those facilities whose utilization rate is 15
percent or more based on EIA data but less than 15

[[Page 13529]]

percent based on IPM data. To make the compliance response and costs
consistent with the economic performance of facilities in the IPM, EPA
used projected IPM capacity utilization rates for 2008 (the first
model-run year) for the NODA.

As a result of these two changes, of the 530 facilities modeled by the
IPM at proposal, 19 facilities that had a capacity utilization rate of
less than 15 percent for the proposal analysis have a rate of 15
percent or more for the NODA analysis (base case using the EPA
electricity demand growth assumption). Conversely, 75 facilities that
had a rate of 15 percent or more for the proposal analysis have a rate
of less than 15 percent for the NODA analysis (base case using the EPA
electricity demand growth assumption). The net effect of these changes
is that for the NODA analysis more facilities are estimated to have the
less stringent compliance requirements associated with a low capacity
utilization rate than was the case for the proposal analysis.

[sbull] Generation cap. A final modification to the capacity
utilization of Phase II facilities relates to the potential change in
the utilization rate between the base case and the post-compliance
cases. Because facilities with a baseline capacity utilization rate of
less than 15 percent are potentially subject to less stringent
compliance requirements (depending on the water body from which they
withdraw and the technologies they already have in place), they would
not be able to increase their post-compliance capacity utilization
without incurring more stringent compliance requirements. In order to
ensure that the capacity utilization rate in the post-compliance case
is consistent with the costing assumptions, the generation of
facilities with a steam-electric capacity of less than 15 percent in
the base case was capped so that their post-compliance capacity
utilization would remain below 15 percent.
4. Treatment of Installation Downtime
The IPM models the electric power market over the 26-year period
2005 to 2030. Due to the data-intensive processing procedures, the
model is run for a limited number of years only. Run years are selected
based on analytical requirements and the necessity to maintain a
balanced choice of run years throughout the modeled time horizon. EPA
selected the following run years for the Section 316(b) analyses: 2008,
2010, 2013, 2020, and 2026.\7\ 2005 to 2009 are mapped into the 2008
run year; 2010 to 2012 are mapped into the 2010 run year; and 2013 to
2015 are mapped into the 2013 run year. The years that are mapped into
a run year are assumed to have the same characteristics as the run year
itself. This model characteristic creates a challenge in correctly
representing estimated downtimes associated with recirculating systems
and other compliance technologies exactly the way they are estimated to
occur (downtimes assigned to a model run year are also assigned to non-
run years, and downtimes assigned to non-run years are not taken into
account).
---------------------------------------------------------------------------

\7\ Model run years 2020 and 2026 were specified for model
balance, while run years 2008, 2010, and 2013 were selected to
provide output across the compliance period. Output for 2020 and
2026 is not used in EPA's analyses. For more information on IPM
model run years, see Chapter B3, section B3-2.1.d of the EBA.
---------------------------------------------------------------------------

There are different options of accounting for downtimes. At
proposal, EPA decided to model the downtime for each facility in its
estimated year of compliance. Since 2005 through 2009 are all mapped
into 2008, a facility that had downtime in 2008 was modeled as if it
also had downtimes in 2005, 2006, 2007, and 2009. This may have
understated the net present value (NPV) of the facility's operations
and therefore overestimated its closure decision. Conversely, a
facility that had a downtime in a non-model run year was modeled as if
it had no downtime at all. This may have overestimated its NPV and
therefore understated its closure decision. While this approach
potentially affected the facility-level analysis, it provided for a
realistic snapshot of the market effect of downtimes in the model run
year.
For the NODA analysis, EPA decided to change the representation of
downtimes to an average over the years that are mapped into each model
run year. For example, a facility with a downtime in 2008 was modeled
as if 1/5th of its downtime occurred in each year between 2005 and
2009. This approach more closely models potential facility-level
impacts as it accounts for the correct total amount of downtime for
each facility. The potential drawback of this approach is that the
snapshot of the market-level effect of downtimes during the model run
year is the average effect; this approach does not model potential
worst-case effects of above-average amounts of capacity being down in
one NERC region during a specific year.
5. Correction of Errors
EPA corrected two IPM input errors that were discovered after
publication of the proposed rule: (1) At proposal, the capital costs of
compliance were erroneously considered sunk and were not taken into
account in making early retirement decisions; (2) The energy penalty
was omitted for a few facilities costed with a recirculating system
(one out of 49 facilities under the waterbody/capacity-based option and
nine out of 408 facilities under the all closed-cycle option). These
errors may have led the IPM to understate the modeled economic impacts
at these facilities.
6. Other Changes Affecting the IPM Results
In addition to the modeling changes described above, a number of
other changes affect the results presented below. These changes are
outlined in Section III above and include the following: an increase in
the estimated number of in-scope Phase II facilities from 550 to 551
(as a result, the number of Phase II facilities modeled by the IPM
increased from 530 to 531); revisions of technology and permitting/
monitoring costs; changes to the assumption of construction downtimes
of recirculating cooling towers and other compliance technologies; an
adjustment of energy penalties; changes in the estimation of the
capacity utilization threshold; and adjustments to the compliance
schedule.
EPA also notes that in 2010, non-dispatched capacity in the IPM
base case (based on EPA's electricity demand growth assumption) is
approximately 12 percent of total capacity, which is consistent with
historical rates to ensure system reliability. (Non-dispatched
facilities are those that operate on a stand-by basis throughout the
year but are not called upon to generate and dispatch electricity.)
Most of this capacity is oil/gas steam capacity (66 percent) and gas
turbines (27 percent). Overall, 11 percent of steam electric capacity
and 15 percent of non-steam capacity are modeled to be on stand-by. A
large portion of the non-dispatched steam electric capacity is subject
to Phase II regulation. In total, approximately 12 percent of Phase II
steam electric capacity is not dispatched in the base case. This number
is higher than historical data for these facilities. The main reason
for this difference is that over time, existing capacity, especially
oil/gas steam capacity, is expected to become less competitive relative
to new capacity additions, especially combined-cycle facilities. Oil
and gas steam units generally have (a) higher heat rates, (b) higher
fuel costs, (c) higher variable O&M costs, and (d) higher emission
rates than other steam electric capacity. As a result, some relatively
inefficient oil and gas steam units are modeled to be idle in the IPM.

[[Page 13530]]

All Phase II facilities are subject to the requirements of the
Phase II regulation, even if they do not generate electricity.
Therefore, unless EPA modeled a facility to cease operations and exit
the marketplace, EPA assigned compliance costs to non-dispatched
facilities. While none of the Phase II units that stand-by in the base
case are modeled to be economic closures under the preferred option, it
is possible that other economic measures, e.g., impacts on pre-tax
income, may be overestimated for these facilities. This would be the
case because revenues might be understated if the modeling assumption
that these facilities do not generate electricity is not realistic.
EPA requests comment on this part of the analysis.

B. Revised Results for the Preferred Option

This section presents the revised impact analysis of the preferred
option. The impacts of compliance with the preferred option are defined
as the difference between the model output for the base case scenario
and the model output for the post-compliance scenario.\8\ EPA analyzed
impacts from the preferred option using output from model run year
2010. 2010 was chosen to represent the effects of the preferred option
for a typical year in which all facilities are in compliance
(compliance years for the preferred option are 2005 to 2009).\9\ The
analysis was conducted at two levels: the market level including all
facilities (by NERC region) and the Phase II facility level (including
analyses of the in-scope Phase II facilities as a group and of
individual Phase II facilities). The results of these analyses are
presented below.
---------------------------------------------------------------------------

\8\ Two base case scenarios were used to analyze the impacts
associated with the preferred option and the waterbody/capacity-
based option. The base case scenario used to analyze the preferred
option was developed using EPA's electricity demand assumption.
Under this assumption, demand for electricity is based on the Annual
Energy Outlook (AEO) 2001 forecast adjusted to account for demand
reductions resulting from the implementation of the Climate Change
Action Plan (CAAP). The base case for the waterbody/capacity-based
option was developed using the unadjusted electricity demand from
the AEO 2001. (See the Appendix of ch.B8 of the EBA, as published
for the proposed rule, for further explanation on the two base
cases; http://www.epa.gov/ost/316b/econbenefits/b8.pdf.) EPA is

cases; http://www.epa.gov/ost/316b/econbenefits/b8.pdf.) EPA is

currently completing additional IPM runs and will develop analyses
of both options using both base cases. EPA intends to place these
additional analyses in the docket during the comment period on this
Notice. EPA expects to use information from the analyses in today's
Notice and these additional analyses to support decision-making for
the final rule.
\9\ EPA also analyzed potential market-level impacts of the
preferred option for a year within the compliance period during
which some Phase II facilities experience installation downtimes.
This analysis used output from model run year 2008. See ch. B3, sec.
B3-4.3 of the EBA, as updated for this NODA analysis, for the
results of this analysis.
---------------------------------------------------------------------------

1. Market-Level Impacts of the Preferred Option
The market-level analysis includes results for all generators
located in each NERC region including facilities both in scope and out
of scope of the proposed Phase II rule. Exhibit 1 below presents five
measures used by EPA to assess market-level impacts associated with the
preferred option: (1) Incremental capacity closures, calculated as the
difference between capacity closures under the preferred option and
capacity closures under the base case; (2) incremental capacity
closures as a percentage of baseline capacity; (3) post-compliance
changes in variable production costs per MWh, calculated as the sum of
total fuel and variable O&M costs divided by total generation; (4)
post-compliance changes in energy price, where energy prices are
defined as the wholesale prices received by facilities for the sale of
electric generation; and (5) post-compliance changes in pre-tax income,
where pre-tax income is defined as total revenues minus the sum of
fixed and variable O&M costs, fuel costs, and capital costs. Additional
results are presented in Chapter B3: Electricity Market Model Analysis
(sec. B3-4.1) of the EBA, as updated for this NODA analysis. Chapter B3
also presents a more detailed interpretation of the results of the
market-level analysis.

Exhibit 1.--Market-Level Impacts of the Preferred Option (2010)
----------------------------------------------------------------------------------------------------------------
Closures as Change in Change in
Baseline Incremental % of variable Change in pre-tax
NERC region capacity capacity baseline production energy price income
(MW) closures (MW) capacity cost per MWh per MWh ($2002)
----------------------------------------------------------------------------------------------------------------
ECAR..................... 118,529 0 0.0 0.1 0.0 -1.1
ERCOT.................... 75,290 0 0.0 0.0 6.1 -6.0
FRCC..................... 50,324 0 0.0 0.4 0.6 -3.1
MAAC..................... 63,784 0 0.0 -0.1 0.0 -0.9
MAIN..................... 59,494 434 0.7 0.8 -0.3 -0.7
MAPP..................... 35,835 0 0.0 -0.1 -0.4 -0.6
NPCC..................... 72,477 0 0.0 -0.4 0.9 0.8
SERC..................... 194,485 0 0.0 -0.1 0.0 -0.5
SPP...................... 49,948 0 0.0 -0.1 -0.2 -0.4
WSCC..................... 167,748 0 0.0 0.0 0.0 -1.1
--------------
Total................ 887,915 434 0.0 0.0 n/a -1.1
----------------------------------------------------------------------------------------------------------------

One of the ten NERC regions modeled, MAIN, would experience
economic closures of existing capacity as a result of the preferred
option. However, this closure of 434 MW of nuclear capacity represents
a relatively small percentage of baseline capacity in the region (0.7
percent). Three NERC regions would experience increases in variable
production costs per MWh, although the largest increase would not
exceed 1.0 percent. In addition, three NERC regions would experience an
increase in energy price under the preferred option. Of these, only
ERCOT would experience an increase of more than 1.0 percent (6.1
percent). Pre-tax incomes would decrease in all but one region, but the
majority of these changes would be on the order of 1.0 percent or less.
ERCOT would experience the largest decrease in pre-tax income (-6.0
percent). Only one region, NPCC, would experience an increase in
market-level pre-tax income (0.8 percent).
2. Facility-Level Impacts of the Preferred Option
The results from model run year 2010 were used to analyze two
potential facility-level impacts associated with the preferred option:
(1) Potential changes in the economic and operational characteristics
of the group

[[Page 13531]]

of in-scope Phase II facilities and (2) potential changes to individual
facilities within the group of Phase II facilities. EPA analyzed
incremental capacity closures, changes in variable production costs per
MWh of generation, total generation, and pre-tax income to assess
impacts to all Phase II facilities resulting from the preferred option.
Exhibit 2 below presents the results of this analysis, by NERC region.

Exhibit 2.--Impacts on Phase II Facilities of the Preferred Option (2010)
----------------------------------------------------------------------------------------------------------------
Incremental closures Change in
Baseline --------------------------- variable Change in Change in
NERC region capacity % of production generation pre-tax
(MW) Capacity baseline cost per MWh (%) Income (%)
(MW) capacity (%)
----------------------------------------------------------------------------------------------------------------
ECAR........................ 82,313 0 0.0 0.0 -0.1 -1.4
ERCOT....................... 43,522 0 0.0 -0.7 -1.7 -11.0
FRCC........................ 27,537 0 0.0 0.3 -0.8 -4.1
MAAC........................ 33,590 0 0.0 0.0 0.2 -1.4
MAIN........................ 35,373 434 1.2 0.5 -1.1 -1.0
MAPP........................ 15,727 0 0.0 0.0 0.0 -1.6
NPCC........................ 37,651 0 0.0 -1.4 -2.3 -0.8
SERC........................ 107,450 0 0.0 -0.2 -0.2 -0.7
SPP......................... 20,471 0 0.0 -0.4 -0.6 -1.0
WSCC........................ 27,206 0 0.0 -1.0 -5.5 -27.0
--------------
Total................... 430,840 434 0.1 -0.5 -0.8 -2.0
----------------------------------------------------------------------------------------------------------------

Similar to the market level results, MAIN is the only region that
would experience incremental capacity closures at Phase II facilities
under this regulatory option: A total of 434 MW, or 1.2 percent of all
Phase II capacity in this region, would be retired. Total capacity
closures in MAIN are a net estimate (i.e., policy case closures minus
base cases closures) consisting of 519 MW of capacity retiring at one
facility and an 85 MW reduction in closures at a second facility.
Variable production costs per MWh at Phase II facilities would increase
in two regions and decrease in five regions under the preferred option.
No region would experience an increase in Phase II variable production
costs that exceeds 0.5 percent while Phase II facilities in NPCC and
WSCC would see reductions of 1.4 percent and 1.0 percent, respectively.
Phase II facilities in four NERC regions would experience decreases in
generation in excess of 1.0 percent as a result of the preferred
option. The largest decrease would be in WSCC, where Phase II
facilities would experience a 5.5 percent reduction in both generation
and revenues. Overall, pre-tax income would decrease by 2.0 percent for
the group of Phase II facilities. The effects of this change are
concentrated in a few regions: WSCC would experience a reduction in
pre-tax income of 27.0 percent, which is driven by a reduction in both
generation and revenues (not presented in this exhibit). ERCOT and FRCC
are estimated to experience a reduction of 11.0 and 4.1 percent,
respectively.
Results for the group of Phase II facilities as a whole may mask
shifts in economic performance among individual facilities subject to
this rule. To assess potential distributional effects, EPA analyzed
facility-specific changes in capacity utilization (defined as
generation divided by capacity times 8,760 hours), generation, revenue,
variable production costs per MWh (defined as variable O&M cost plus
fuel cost divided by generation), and pre-tax income.
Exhibit 3 presents the total number of Phase II facilities with
different degrees of change in each of these measures. This exhibit
excludes 18 in-scope facilities with significant status changes (10
facilities are baseline closures, one facility is a policy closure, and
seven facilities changed their repowering decision between the base
case and the policy case). These facilities are either not operating at
all in either the base case or the post-compliance case, or they
experience fundamental changes in the type of units they operate;
therefore, the measures presented below would not be meaningful for
these facilities. In addition, the change in variable production cost
per MWh of generation could not be developed for 57 facilities with
zero generation in either the base case or post-compliance scenario.
For these facilities, the change in variable production cost per MWh is
indicated as ``n/a.''

Exhibit 3.--Operational Changes at Phase II Facilities From the Preferred Option (2010) ^a
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reduction Increase
----------------------------------------------------------------------
Economic measures No change N/A
[lE]=1% 1-3% 3% [lE]=1% 1-3% 3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Capacity Utilization ^b.......................... 9 15 24 9 6 9 441 0
Change in Generation...................................... 7 1 44 10 3 17 431 0
Change in Revenue......................................... 80 27 42 100 22 15 227 0
Change in Variable Production Costs/MWh................... 33 13 9 140 13 14 234 57
Change in Pre-Tax Income.................................. 105 113 199 22 13 37 24 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
^a For all measures percentages used to assign facilities to impact categories have been rounded to the nearest 10th of a percent.
^b The change in capacity utilization is the difference between the capacity utilization percentages in the base case and post-compliance case. For all
other measures, the change is expressed as the percentage change between the base case and post-compliance values.

Exhibit 3 indicates that the majority of Phase II facilities would
not experience changes in capacity utilization or generation due to
compliance with the preferred option. Of those facilities with changes
in post-compliance capacity

[[Page 13532]]

utilization and generation, most would experience decreases in these
measures. Exhibit 3 also indicates that the majority of facilities with
changes in post-compliance variable production costs would experience
increases. However, more than 80 percent of those increases would not
exceed 1.0 percent. Changes in revenues at most Phase II facilities
would also not exceed 1.0 percent. The largest effect of the preferred
option would be on facilities' pre-tax income: over 80 percent of
facilities would experience a reduction in pre-tax income, with almost
40 percent experiencing a reduction of 3.0 percent or greater.

C. Revised Results for the Waterbody/Capacity-Based Option

This section presents the revised impact analysis of the
alternative waterbody/capacity-based option. Under this option,
facilities that withdraw water from an estuary, tidal river, or ocean
and that meet certain intake flow requirements, would generally be
required to meet performance standards for reducing impingement
mortality and entrainment based on a level that can be attained by
using a closed-cycle, recirculating cooling system. These facilities
would have the choice to comply with Track I or Track II requirements.
Facilities that choose to comply with Track I would be required to
reduce their intake flow to a level commensurate with that which can be
attained by a closed-cycle, recirculating system. Facilities that
choose to comply with Track II would have to demonstrate that
alternative technologies would reduce impingement and entrainment to
comparable levels that would be achieved with a closed-cycle
recirculating system (see section VI.B.2 of the proposal preamble for a
discussion of Track I and Track II under this option). Other facilities
would be required to reduce impingement mortality or impingement
mortality and entrainment based on the performance of technologies such
as fine-mesh screens and fish-return systems.
EPA's estimation of impacts associated with the alternative
waterbody/capacity-based option is based on an electricity market model
analysis that assumes that all facilities required to reduce
impingement mortality and entrainment based on the performance of a
closed-cycle recirculating cooling system would choose to comply with
the requirements of Track I. This analysis further assumes that such
facilities would install a recirculating wet cooling tower. These
requirements would be met by the end of the term of the first permit
after promulgation of the final rule (2005 to 2013), depending on when
a permittee's first NPDES permit after promulgation expires. The
impacts of compliance with the waterbody/capacity-based option are
defined as the difference between the model output for the base case
scenario and the model output for the post-compliance scenario.\10\
---------------------------------------------------------------------------

\10\ Two base case scenarios were used to analyze the impacts
associated with the preferred option and the waterbody/capacity-
based option. See footnote 8 above for a full explanation.
---------------------------------------------------------------------------

EPA analyzed impacts using IPM output from model run year 2013.
2013 was chosen to represent the effects of the waterbody/capacity-
based option for a typical year in which all facilities are in
compliance (compliance years for the waterbody/capacity-based option
are 2005 to 2013; however, for the purposes of this analysis, all
facilities are modeled to comply by 2012).\11\ The analysis was
conducted at two levels: the market level including all facilities (by
NERC region) and the Phase II facility level (including analyses of the
in-scope Phase II facilities as a group and of individual Phase II
facilities), using the same framework as the analysis of the preferred
option presented above. It should be noted that a direct comparison of
the results of the preferred option and the waterbody/capacity-based
option is not possible because (1) the analyses use output for
different model run years (2010 for the preferred option and 2013 for
the waterbody/capacity-based option) and (2) the two analyses use
different base cases with different assumptions about future growth in
electricity demand. As noted above, EPA will provide analyses of both
regulatory options for both base cases and intends to place these in
the docket during the comment period on this Notice.
---------------------------------------------------------------------------

\11\ EPA also analyzed potential market-level impacts of the
alternative waterbody/capacity-based option for a year within the
compliance period during which some Phase II facilities experience
installation downtimes. This analysis used output from model run
year 2008. See Chapter B8, Section B8-4 of the EBA, as updated for
this NODA analysis, for the results of this analysis.
---------------------------------------------------------------------------

1. Market-Level Impacts of the Waterbody/Capacity-Based Option

The market-level analysis includes results for all generators
located in each NERC region including facilities both in scope and out
of scope of Phase II regulation. Exhibit 4 below presents the same five
measures as discussed for the preferred option: (1) Incremental
capacity closures, calculated as the difference between capacity
closures under the waterbody/capacity-based option and capacity
closures under the base case; (2) incremental capacity closures as a
percentage of baseline capacity; (3) post-compliance changes in
variable production costs per MWh, calculated as the sum of total fuel
and variable O&M costs divided by total generation; (4) post-compliance
changes in energy price, where energy prices are defined as the prices
received by facilities for the sale of electric generation; and (5)
post-compliance changes in pre-tax income, where pre-tax income is
defined as total revenues minus the sum of fixed and variable O&M
costs, fuel costs, and capital costs. Additional results are presented
in Chapter B8 (Section B8-2) of the EBA, as updated for this NODA
analysis. Chapter B8 also presents a more detailed interpretation of
the results of the market-level analysis.

Exhibit 4.--Market-Level Impacts of the Waterbody/Capacity-Based Option (2013) --
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in
Baseline Incremental Closures as % variable Change in Change in pre-
NERC Region capacity capacity of baseline production cost energy price tax income
(MW) closures (MW) capacity per MWh per MWh ($2002)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ECAR......................................................... 133,048 0 0.0% 0.5% 0.8% 1.3%
ERCOT........................................................ 86,609 0 0.0 1.2 1.7 -0.1
FRCC......................................................... 57,078 0 0.0 1.7 3.8 -5.4
MAAC......................................................... 71,441 0 0.0 1.3 1.4 -4.1
MAIN......................................................... 66,420 1,012 1.5 2.2 1.6 1.4
MAPP......................................................... 39,694 0 0.0 0.3 1.8 2.0
NPCC......................................................... 77,557 0 0.0 1.2 1.1 -3.3
SERC......................................................... 220,567 0 0.0 1.0 1.4 0.2
SPP.......................................................... 55,711 0 0.0 0.6 1.5 1.2

[[Page 13533]]

WSCC......................................................... 186,001 2,150 1.2 2.9 1.4 -1.7
--------------
Total.................................................... 994,126 3,162 0.3 1.2 n/a -0.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

Two of the ten NERC regions modeled, MAIN and WSCC, would
experience economic closures of facilities as a result of this option.
The capacity closures in MAIN and WSCC represent 1.5 percent and 1.2
percent, respectively, of baseline capacity in these regions and 0.3
percent of total baseline capacity for all regions taken as a whole.
Variable production costs per MWh and energy prices would increase in
all NERC regions. The increases in variable production costs would
exceed 1.0 percent in six NERC regions, and two regions, MAIN and WSCC,
would experience increases of more than 2.0 percent. Energy prices
would increase by more than 1.0 percent in nine of the ten regions
modeled, with FRCC experiencing the largest increase (3.8 percent).
Half of the regions would experience a reduction in pre-tax income,
while the other half would experience increases in this measure. The
majority of these changes would be less than 2.0 percent. FRCC, MAAC,
and NPCC would experience the largest decrease in pre-tax income (-5.4,
-4.1, and -3.3 percent, respectively), while the largest increase would
occur in MAPP (2.0 percent).
2. Phase II Facility-Level Impacts of the Waterbody/Capacity-Based
Option
The results from model run year 2013 were used to analyze two
potential facility-level impacts associated with the preferred option:
(1) Potential changes in the economic and operational characteristics
of the group of in-scope Phase II facilities and (2) potential changes
to individual facilities within the group of Phase II facilities. EPA
analyzed the same measures as discussed for the preferred option to
assess impacts to the group of Phase II facilities resulting from the
waterbody/capacity-based option: economic closures, changes in variable
production costs per MWh of generation, total generation, and pre-tax
income. Exhibit 5 below presents the results from this analysis, by
NERC region.

Exhibit 5.--Impacts on Phase II Facilities of the Waterbody/Capacity--Based Option (2013)
----------------------------------------------------------------------------------------------------------------
Closure analysis Change in
Baseline ---------------------------- variable Change in Change in pre-
NERC capacity Capacity % of baseline production cost generation tax income
(MW) (MW) capacity per MWh
----------------------------------------------------------------------------------------------------------------
ECAR.................... 82,258 0 0.0% 0.3% 0.1% 1.0%
ERCOT................... 44,400 0 0.0 0.3 0.6 0.5
FRCC.................... 27,513 0 0.0 0.3 3.5 10.5
MAAC.................... 34,696 0 0.0 0.8 1.0 7.7
MAIN.................... 34,944 1,012 2.9 1.2 2.5 1.5
MAPP.................... 15,723 0 0.0 0.0 0.1 2.0
NPCC.................... 37,219 0 0.0 0.8 -0.6 -9.2
SERC.................... 107,458 0 0.0 0.7 0.1 -0.1
SPP..................... 20,471 0 0.0 -0.7 -0.6 1.4
WSCC.................... 28,093 2,150 7.7 0.5 -29.2 -30.7
--------------
Total............... 432,776 3,162 0.7 0.0 -2.1 -2.1
----------------------------------------------------------------------------------------------------------------

Similar to the results of the broader market-level analysis, MAIN
and WSCC are the only regions that would experience incremental
capacity closures at Phase II facilities under this regulatory option.
In MAIN, 1,012 MW, or 2.9 percent of baseline Phase II capacity, would
retire; in WSCC, 2,150 MW, or 7.7 percent of baseline Phase II
capacity, would retire. In aggregate, these closures of 3,162 MW
represents less than 1.0 percent of total baseline Phase II capacity.
Phase II facilities in only one region, MAIN, would experience an
increase in excess of 1.0 percent in variable production cost per MWh.
Phase II facilities in seven NERC regions would experience a decrease
in generation. Of these, three regions would see reductions in excess
of 2.0 percent with the largest decrease occurring in WSCC (-29.2
percent), partially because of the post-compliance closures. Similar to
the market level, FRCC, MAAC, and NPCC would experience relatively
large reductions in pre-tax income (-10.5, -7.7, and -9.2 percent,
respectively). However, the highest reduction would be seen in WSCC (-
30.7 percent), where the compliance costs per MW of Phase II capacity
is relatively high, and where only a relatively small portion of the
overall capacity is regulated under the Phase II rule.
To assess potential shifts in economic performance among individual
facilities subject to this rule, EPA analyzed the same facility-
specific changes as for the preferred option: changes in capacity
utilization (defined as generation divided by capacity times 8,760
hours), generation, revenue, variable production costs per MWh (defined
as variable O&M cost plus fuel cost divided by generation), and pre-tax
income.
Exhibit 6 presents the total number of Phase II facilities with
different degrees of change in each of these measures. This exhibit
excludes 30 in-scope facilities with significant status changes (nine
facilities are baseline closures, three facilities are policy closures,
and 18 facilities changed their repowering decision between the base
case and the policy case). These facilities are either not operating at
all in either the base case or the post-compliance case, or they
experience fundamental changes in the type of units they operate;
therefore,

[[Page 13534]]

the measures presented below would not be meaningful for these
facilities. In addition, the change in variable production cost per MWh
of generation could not be developed for 62 facilities with zero
generation in either the base case or post-compliance scenario. For
these facilities, the change in variable production cost per MWh is
indicated as ``n/a.''

Exhibit 6.--Number of Phase II Facilities With Operational Changes at Phase II Facilities Waterbody/Capacity-Based Option (2013) ^a
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reduction Increase
Economic measures -------------------------------------------------------------------------- No change N/A
[lE]1% 1-3% 3% [lE]1% 1-3% 3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Capacity Utilization \b\.................... 4 11 21 6 14 15 430 0
Change in Generation.................................. 7 24 37 5 7 23 398 0
Change in Revenue..................................... 56 13 41 108 247 28 8 0
Change in Variable Production Costs/MWh............... 18 5 8 154 115 21 118 62
Change in Pre-Tax Income.............................. 51 62 164 45 141 36 2 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For all measures percentages used to assign facilities to impact categories have been rounded to the nearest 10th of a percent.
\b\ The change in capacity utilization is the difference between the capacity utilization percentages in the base case and post-compliance case. For all
other measures, the change is expressed as the percentage change between the base case and post-compliance values.

Exhibit 6 indicates that the majority of Phase II facilities would
not experience changes in capacity utilization or generation due to
compliance with the waterbody/capacity-based option. Of facilities with
post-compliance changes in capacity utilization and/or generation, the
majority would experience a decrease in these measures. Exhibit 6 also
indicates that the majority of Phase II facilities would experience
increases in both revenues and variable production costs of between 0.0
and 3.0 percent. Similarly, almost all Phase II facilities would
experience a change in pre-tax income, with a slight majority seeing a
reduction in this measure.

VI. Other Economic Analyses

EPA updated several of its other economic analyses conducted at
proposal to determine the effect of changes made to the assumptions for
this NODA on steam electric generating facilities. For more detailed
information on these analyses, refer to the memo entitled ``Supporting
Documentation of Changes to Economic Impacts in Support of the Section
316(b) Phase II NODA'' (DCN 5-3004). This section and the supporting
memo discuss changes made to EPA's methodology and assumptions as well
as the updated results. For a discussion of the original methodology
used by EPA for the proposal analysis, refer to the chapters in Part B
of the Economic and Benefits Analysis (EBA) document in support of the
proposed rule at http://www.epa.gov/waterscience/316b/econbenefits/.

It should be noted that the measures presented in this section are

provided in addition to the impact measures based on the Integrated
Planning Model (IPM[reg]) analyses (see Section V of this Notice). The
following measures are used to assess the magnitude of compliance
costs; they are not used to predict closures or other types of economic
impacts on facilities subject to Phase II regulation.
It should also be noted that the results of the preferred option
and the waterbody/capacity-based option cannot be directly compared to
each other. EPA used two different demand growth assumptions for the
IPM base cases of the preferred option (EPA electricity demand
assumption) and the waterbody/capacity-based option (AEO electricity
demand assumption, upon request by the Department of Energy). Since EPA
is using IPM base case data in its estimate of the cost of installation
downtime, the cost of the energy penalty, and revenues, the results
presented in this section could vary between the two options, even for
facilities or NERC regions with identical compliance requirements under
the two options.\12\ EPA intends to place additional IPM runs in the
record during the NODA comment period to allow direct comparisons of
both policy alternatives under both base cases.
---------------------------------------------------------------------------

\12\ For example, compliance requirements in NERC regions
without estuarine/tidal river or ocean facilities (i.e., ECAR, MAIN,
MAPP, and SPP) are identical under the two options. For this NODA
analysis, all facilities in these regions would have had identical
compliance costs under the two options, were it not for the
difference in base case assumptions.
---------------------------------------------------------------------------

A. National Costs

Based on the NODA analysis, EPA estimates that facilities subject
to the preferred option would incur annualized post-tax compliance
costs of approximately $265 million (at proposal, this estimate was
$178 million). These costs include one-time technology costs of
complying with the rule, a one-time cost of installation downtime,\13\
annual operating and maintenance costs, and permitting costs (including
initial permit costs, annual monitoring costs, and permit reissuance
costs). This cost estimate does not include the costs of administering
the rule by permitting authorities and the federal government. Also
excluded are compliance costs for eight facilities that are projected
to be baseline closures. Including compliance costs for projected
baseline closure facilities would result in a total annualized
compliance cost of approximately $269 million (at proposal, this
estimate was $182 million). The cost differences between proposal and
the NODA are accounted for primarily by the expanded range of
technology options considered for the NODA and the ``best performing
technology'' selection criteria used to assign cost modules to model
facilities (see Section IV of this Notice).
---------------------------------------------------------------------------

\13\ At proposal, EPA assumed that the technologies required to
comply with the preferred option would not require installation
downtimes (see Section III.4 of this Notice).
---------------------------------------------------------------------------

EPA also updated the estimated total national annualized post-tax
cost of compliance for the alternative waterbody/capacity-based option.
Costs for this option include the same components as the estimate for
the preferred option (one-time technology costs, cost of downtime,
annual operating and maintenance costs, and permitting costs) but also
include the cost of the energy penalty incurred by facilities estimated
to upgrade to a recirculating cooling tower system. For the NODA
analysis, the estimated total annualized post-tax cost of compliance
for the waterbody/capacity-based option is approximately $793 million
(at proposal, this estimate was $585 million). This increase reflects a
number

[[Page 13535]]

of changes including increased technology costs, increased downtime for
technology installation, and the use of electric demand assumptions
from DOE's Annual Energy Outlook. Not included in this estimate are
seven facilities that are projected to be baseline closures.\14\
Including compliance costs for projected baseline closure facilities
would result in a total annualized cost of compliance with the
waterbody/capacity-based option of approximately $797 million (at
proposal, this estimate was $595 million).
---------------------------------------------------------------------------

\14\ The number of baseline closures is different for the
preferred option and the waterbody/capacity-based option because
different IPM base cases were used to estimate baseline closures.
See footnote 8 above for a full explanation.
---------------------------------------------------------------------------

Exhibit 7 below summarizes the changes between the proposal and
NODA analyses for the preferred option and the waterbody/capacity-based
option.

Exhibit 7--Summary of Changes in National Costs
----------------------------------------------------------------------------------------------------------------
Proposal NODA Change
($2001; ($2002; -------------------------
mill.) mill.) Absolute Percent
----------------------------------------------------------------------------------------------------------------
Preferred Option
----------------------------------------------------------------------------------------------------------------
Number of Phase II facilities............................... 550 551 1 0.2
All facilities (pre-tax).................................... $279 $416 $137 49.1
All facilities (post-tax)................................... $182 $269 $87 47.8
Number of baseline closures................................. 11 8 (3) -27.3
Non-baseline closures (pre-tax)............................. $271 $410 $139 51.3
Non-baseline closures (post-tax)............................ $178 $265 $87 48.9
-------------------------------------------------------------
Waterbody/Capacity-Based Option
----------------------------------------------------------------------------------------------------------------
Number of Phase II facilities............................... 550 551 1 0.2
All facilities (pre-tax).................................... $968 $1,280 $312 32.2
All facilities (post-tax)................................... $595 $797 $202 34.0
Number of baseline closures................................. 9 7 (2) -22.2
Non-baseline closures (pre-tax)............................. $951 $1,273 $322 33.9
Non-baseline closures (post-tax)............................ $585 $793 $208 35.6
----------------------------------------------------------------------------------------------------------------

B. Cost-to-Revenue Measure

1. Facility-Level Analysis
EPA examined the annualized post-tax compliance costs of the
preferred option and the waterbody/capacity-based option as a
percentage of baseline annual revenues, for each of the 551 facilities
subject to Phase II of the Section 316(b) regulation. This measure
allows for a comparison of compliance costs incurred by each facility
with its revenues in the absence of Phase II regulation. The revenue
estimates are facility-specific baseline projections from the IPM base
case for 2008 (see Section V of this Notice for a discussion of EPA's
analyses using the IPM).\15\
---------------------------------------------------------------------------

\15\ EPA used 2008 rather than 2010 baseline revenues for this
analysis because 2008 is the first model run year specified in the
IPM analyses. EPA used the first model run year because it more
closely resembles the current operating conditions of in-scope
facilities than later run years (over time, facilities may be
increasingly affected by factors other than a Phase II regulation).
---------------------------------------------------------------------------

Similar to the findings at proposal, the results of this analysis
show that the vast majority of facilities subject to the preferred
option, 404 out of 551 (73 percent), would incur annualized costs of
less than one percent of revenues. Of these, 292 facilities would incur
compliance costs of less than 0.5 percent of revenues. Ninety-seven
facilities (18 percent) would incur costs of between one and three
percent of revenues, and 41 facilities (seven percent) would incur
costs of greater than three percent. Eight facilities are estimated to
be baseline closures, and for one facility, revenues are unknown.\16\
Exhibit 8 below summarizes these findings and also presents the ratios
estimated at proposal.
---------------------------------------------------------------------------

\16\ For the preferred option, IPM revenues for 2008 were not
available for eight facilities estimated to be baseline closures,
ten facilities not modeled by the IPM, and five facilities projected
to have zero baseline revenues. EPA used facility-specific
electricity generation and firm-specific wholesale prices as
reported to the Energy Information Administration (EIA) to calculate
the cost-to-revenue ratio for the 15 non-baseline closure facilities
with missing information. The revenues for one of these facilities
remains unknown.

Exhibit 8--Cost-to-Revenue Ratio for the Preferred Option (Facility Level)
----------------------------------------------------------------------------------------------------------------
Proposal NODA
---------------------------------------------------
Annualized cost-to-revenue ratio Percent of Percent of
All phase total phase All phase total phase
II II II II
----------------------------------------------------------------------------------------------------------------
<0.5%....................................................... 331 60 292 53
/= 0.5 to <1.0%.................................. 78 14% 112 20
/= 1.0% to <3.0%................................. 82 15 97 18
/= 3.0%.......................................... 46 8 41 7
Baseline Closure............................................ 11 2 8 1
n/a......................................................... 1 0 1 0
--------------
Total................................................... 550 100 551 100
----------------------------------------------------------------------------------------------------------------

Exhibit 9 below presents the same information for the waterbody/
capacity-based option.\17\

[[Page 13536]]

Exhibit 9.--Cost-to-Revenue Ratio for the Waterbody/Capacity-Based Option (Facility Level)
----------------------------------------------------------------------------------------------------------------
Proposal NODA
---------------------------------------------------
Annualized cost-to-revenue ratio Percent of Percent of
All phase total phase All phase total phase
II II II II
----------------------------------------------------------------------------------------------------------------
<0.5%....................................................... 355 65 281 51
/=0.5 to <1.0%................................... 60 11 101 18
/=1.0 to <3.0%................................... 57 10 102 19
/=3.0%........................................... 67 12 58 11
Baseline Closure............................................ 9 2 7 1
n/a......................................................... 1 0 1 0
--------------
Total................................................... 550 100 551 100
----------------------------------------------------------------------------------------------------------------

2. Firm-Level Analysis
The firms owning the facilities subject to Phase II regulation may
experience greater impacts than individual in-scope facilities if they
own more than one facility with compliance costs. EPA therefore also
analyzed the cost-to-revenue ratios at the firm level. EPA identified
the domestic parent entity of each in-scope facility and obtained their
sales revenue from publicly available data sources (the Dun and
Bradstreet database for parent firms of investor-owned utilities and
nonutilities; and Form EIA-861 for all other parent entities) and EPA's
2000 Section 316(b) Industry Survey. This analysis showed that 128
unique domestic parent entities own the facilities subject to Phase II
regulation. For both analyzed options, EPA compared the aggregated
annualized post-tax compliance costs for each facility owned by the 128
parent entities to the firms' total sales revenue.
---------------------------------------------------------------------------

\17\ For the waterbody/capacity-based option, IPM revenues for
2008 were not available for seven facilities estimated to be
baseline closures, ten facilities not modeled by the IPM, and two
facilities projected to have zero baseline revenues. EPA used
facility-specific electricity generation and firm-specific wholesale
prices as reported to the Energy Information Administration (EIA) to
calculate the cost-to-revenue ratio for the 12 non-baseline closure
facilities with missing information. The revenues for one of these
facilities remains unknown.
---------------------------------------------------------------------------

Since proposal, EPA has not updated the parent firm determination
for Phase II facilities. However, EPA updated the average Form EIA-861
data used for this analysis from 1996 to 1998 (used at proposal) to
1997 to 1999 (used for the NODA). In addition, EPA made one
modification to the data sources used: At proposal, EPA used Dun and
Bradstreet (D&B) data for any parent entity listed in the database. If
D&B data were not available, EPA used the EIA database or the Section
316(b) Survey. For the NODA analysis, EPA used the D&B database for
privately-owned entities only. For other entities, EPA used the EIA
database.
For the preferred option, EPA estimates that of the 128 unique
entities, only two entities would incur compliance costs of greater
than three percent of revenues; 11 entities would incur compliance
costs of between one and three percent of revenues; eight entities
would incur compliance costs of between 0.5 and one percent of
revenues; and the remaining 107 entities would incur compliance costs
of less than 0.5 percent of revenues. The highest estimated cost-to-
revenue ratio for this NODA analysis is 7.4 percent of the entities'
annual sales revenue (at proposal this value was 5.3 percent). Exhibit
10 below summarizes these findings and also presents the ratios
estimated at proposal.

Exhibit 10.--Cost-to-Revenue Ratio for the Preferred Option (Firm Level)
----------------------------------------------------------------------------------------------------------------
Proposal NODA
---------------------------------------------------
Annualized cost-to-revenue ratio Percent of Percent of
All phase total phase All phase total phase
II II II II
----------------------------------------------------------------------------------------------------------------
<0.5%....................................................... 104 79 107 84
/= 0.5 to <1.0%.................................. 12 9 8 6
/= 1.0 to <3.0%.................................. 10 8 11 9
/= 3.0%.......................................... 3 2 2 2
Baseline Closure............................................ 2 2 0 0
--------------
Total................................................... 131 100 128 100
----------------------------------------------------------------------------------------------------------------

Exhibit 11 below presents the same information for the waterbody/
capacity-based option.

Exhibit 11.--Cost-to-Revenue Ratio for the Waterbody/Capacity-Based Option (Firm Level)
----------------------------------------------------------------------------------------------------------------
Proposal NODA
---------------------------------------------------
Annualized cost-to-revenue ratio Percent of Percent of
All phase total phase All phase total phase
II II II II
----------------------------------------------------------------------------------------------------------------
< 0.5%...................................................... 108 82 95 74
/= 0.5 to <1.0%.................................. 12 9 16 13
/= 1.0 to <3.0%.................................. 6 5 15 12

[[Page 13537]]

/= 3.0%.......................................... 3 2 2 2
Baseline Closure............................................ 2 2 0 0
--------------
Total................................................... 131 100 128 100
----------------------------------------------------------------------------------------------------------------

C. Cost Per Household

EPA also conducted an analysis that evaluates the potential cost
per household, if Phase II facilities were able to pass compliance
costs on to their customers. This analysis estimates the average
compliance cost per household for each North American Electricity
Reliability Council (NERC) region,\18\ using two data inputs: (1) The
average annual pre-tax compliance cost per megawatt hour (MWh) of total
electricity sales and (2) the average annual MWh of residential
electricity sales per household.
---------------------------------------------------------------------------

\18\ There are twelve NERC regions: ASCC (Alaska Systems
Coordinating Council), ECAR (East Central Area Reliability
Coordination Agreement), ERCOT (Electric Reliability Council of
Texas), FRCC (Florida Reliability Coordinating Council), HI
(Hawaii), MAAC (Mid-Atlantic Area Council), MAIN (Mid-America
Interconnected Network, Inc.), MAPP (Mid-Continent Area Power Pool),
NPCC (Northeast Power Coordination Council), SERC (Southeastern
Electricity Reliability Council), SPP (Southwest Power Pool), and
WSCC (Western Systems Coordinating Council).
---------------------------------------------------------------------------

The results of this analysis show that the average annual cost per
residential household would range from $0.55 (in ASCC) to $5.69 (in HI)
for the preferred option and from $0.55 (in ASCC) to $20.41 (in HI) for
the waterbody/capacity-based option. Exhibit 12 below presents the
values for each NERC region for the preferred option and the waterbody/
capacity-based option. The exhibit also presents the values for the
preferred option at proposal.

Exhibit 12.--Summary of Cost per Household by NERC Region
----------------------------------------------------------------------------------------------------------------
Preferred option W/C-based
------------------------------------------- option
NERC region Proposal -------------
($2001) NODA ($2002) Change NODA ($2002)
----------------------------------------------------------------------------------------------------------------
ASCC................................................... $0.33 $0.55 $0.22 $0.55
ECAR................................................... 0.99 1.49 0.50 1.52
ERCOT.................................................. 1.01 1.12 0.11 1.75
FRCC................................................... 1.58 2.04 0.46 12.08
HI..................................................... 2.55 5.69 3.14 20.41
MAAC................................................... 1.16 1.50 0.34 9.53
MAIN................................................... 0.84 1.32 0.48 1.32
MAPP................................................... 0.88 1.09 0.21 1.10
NPCC................................................... 1.09 1.49 0.40 4.57
SERC................................................... 0.83 1.17 0.34 3.21
SPP.................................................... 0.64 0.88 0.24 0.88
WSCC................................................... 0.36 0.94 0.58 5.08
U.S. Average........................................... 0.87 1.30 0.43 4.00
----------------------------------------------------------------------------------------------------------------

D. Electricity Price Analysis

EPA also considered potential effects of the proposed Phase II rule
on electricity prices. EPA used three data inputs in this analysis: (1)
Total pre-tax compliance cost incurred by facilities subject to Phase
II regulation, (2) total electricity sales, based on the Annual Energy
Outlook (AEO) 2002, and (3) prices by end use sector (residential,
commercial, industrial, and transportation), also from the AEO 2002.
All three data elements were calculated by NERC region.
The results of the NODA analysis show that the annualized costs of
complying (in cents per KWh sales) range from 0.007 cents in SPP to
0.020 cents in NPCC for the preferred option, and from 0.007 cents in
SPP to 0.096 cents in MAAC for the waterbody/capacity-based option.
To determine potential effects of these compliance costs on
electricity prices, EPA compared the per KWh compliance cost to
baseline electricity prices by end use sector and for the average of
the sectors. This analysis shows that the average increase in
electricity prices would be 0.17 percent under the preferred option and
0.51 percent under the waterbody/capacity-based option. (At proposal,
the estimated increase in electricity prices for the preferred option
was 0.11 percent.)
Exhibit 13 below presents the values for each NERC region for the
preferred option and the waterbody/capacity-based option. The exhibit
also presents the values for the preferred option at proposal.\19\
---------------------------------------------------------------------------

\19\ Note that Alaska and Hawaii are not represented in the AEO.

[[Page 13538]]

Exhibit 13.--Summary of Electricity Prices by NERC Region
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preferred option W/C-based option
--------------------------------------------------------------------------------------
Proposal ($2001) NODA ($2002) NODA ($2002)
--------------------------------------------------------------------------------------
NERC region Annualized pre- Annualized pre- Annualized pre-
tax compliance % change in tax compliance % change in tax compliance % change in
cost (cents/ price cost (cents/ price cost (cents/ price
KWh sales) KWh sales) KWh sales)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ECAR............................................................. 0.010 0.15 0.015 0.23 0.015 0.23
ERCOT............................................................ 0.007 0.11 0.008 0.12 0.013 0.18
FRCC............................................................. 0.012 0.15 0.015 0.20 0.088 1.16
MAAC............................................................. 0.012 0.13 0.015 0.17 0.096 1.05
MAIN............................................................. 0.010 0.14 0.016 0.22 0.016 0.22
MAPP............................................................. 0.008 0.13 0.010 0.15 0.010 0.16
NPCC............................................................. 0.017 0.19 0.020 0.22 0.061 0.68
SERC............................................................. 0.006 0.10 0.008 0.14 0.023 0.38
SPP.............................................................. 0.005 0.09 0.007 0.12 0.007 0.12
WSCC............................................................. 0.004 0.05 0.010 0.13 0.053 0.70
U.S. Average..................................................... 0.008 0.11 0.012 0.17 0.037 0.51
--------------------------------------------------------------------------------------------------------------------------------------------------------

VII. Performance Standards

In the proposed rule, EPA set up a framework that would require
facilities that did not reduce their intake capacity commensurate with
a closed-cycle recirculating cooling system to meet certain other
performance standards for reducing impingement mortality and
entrainment based on technologies such as fine-mesh screens and fish-
return systems. These other performance standards were based on the
source water body type where the cooling water intake structure is
located, the facility's capacity utilization rate, and the proportion
or volume of the water body that is withdrawn by the facility. In
general, most facilities would be required to implement control
technologies that reduce impingement mortality by 80 to 95 percent and/
or entrainment by 60 to 90 percent unless they demonstrate the need for
a site-specific determination of best technology available. (See
proposed Sec. 125.94 and Chapter VI. Best Technology Available for
Minimizing Adverse Environmental Impact at Phase II Existing Facilities
(67 FR 17140)).

A. Technology Efficacy Database to Support Performance Standards

In an effort to document and further assess the performance of
various technologies and operational measures designed to minimize the
impacts of cooling water withdrawals, EPA compiled a database of
documents that analyzes the efficacy of a specific technology or suite
of technologies. The database contains materials that range from brief
journal articles to more intensive analyses found in historical section
316(b) demonstration reports and technology evaluations. At this time,
EPA is assembling as much documentation as possible to support future
Agency decisions. Information entered into the database includes some
notation of the limitations the individual studies may have for use in
further analyses (e.g., no biological data or conclusions).
EPA's intent in assembling this information is four-fold. First,
EPA seeks to develop a categorized database containing a comprehensive
collection of available literature regarding technology performance
that will serve as a more rigorous compilation of data supporting the
determination that the proposed performance standards are best
technology available. Second, EPA expects to use the data to
demonstrate that the technologies chosen as compliance technologies for
costing purposes are reasonable and can meet the performance standards.
Third, the availability of a user-friendly database would allow EPA,
State permit writers, and the public to more easily evaluate potential
compliance options, facility compliance with performance standards, and
data pertaining to the streamlined option described in this NODA (see
section VII.B below). Fourth, EPA has attempted to evaluate the
technology efficacy data against objective criteria in order to assess
the general quality and thoroughness of each study. This may assist in
further analysis of conclusions made using the data.
Basic information from each document is recorded in the database
(e.g., type of technology evaluated, facility at which it was tested,
etc.) In addition to basic document information, the database contains
information in two principal areas: (1) General facility information
and (2) detailed study information.
For those documents that refer to a specific facility (or
facilities), basic technical information is included to enable EPA to
classify facilities according to general categories. EPA collected
locational data (e.g., waterbody type, name, state) as well as basic
cooling water intake structure configuration information. Each
technology evaluated in the study is also recorded, along with specific
details regarding its design and operation. Major categories of
technology include modified traveling screens, wedge-wire screens,
fine-mesh screens, velocity caps, barrier nets, and behavioral
barriers. (Data identifying the technologies present at a facility as
well as the configuration of the intake structure refer to the
configuration at the time the study was conducted and do not
necessarily reflect the present facility set-up.)
Information on the type of study and any study results, is recorded
in the second portion of the database. EPA identifies whether the study
evaluates the technology with respect to impingement mortality
reduction (or avoidance), entrainment survival, or entrainment
exclusion (or avoidance). Some studies address more than one area of
concern and are noted accordingly. If provided, EPA records basic
biological data used to evaluate the technology. These include target
or commercially/recreationally valuable species, species type, life
history stage, size, sample size, and raw numbers of impinged and/or
entrained organisms. Finally, EPA records any overall conclusions
reached by the study, usually presented as a percentage reduction or
increase, depending on the area of focus. Identifying this information
for each document allows EPA and others to more readily locate

[[Page 13539]]

and compare documents addressing similar technologies.
Each document is reviewed according to five areas of data quality
where possible: (1) Applicability and utility, (2) soundness, (3)
clarity and completeness, (4) uncertainty and variability, and (5)
evaluation and review. Because the literature in question comes from
many different sources and was developed under widely varying
standards, EPA was not able to evaluate all of these criteria for all
documents contained in the database.
To date, EPA has collected 148 documents for inclusion in the
database. EPA did not exclude any document that addressed technology
performance in relation to impingement and entrainment, regardless of
the overall quality of the data. Sample questions are included in
Exhibit 1 below. The proposed technology database is available in the
record (See the document ``Technology Efficacy Database'' in the
docket).

Exhibit 1.--Quality Assurance Sample Questions
------------------------------------------------------------------------
QA Criteria Sample Questions
------------------------------------------------------------------------
Applicability and Utility................. [sbull] Does the study
address impingement and/or
entrainment reduction?
[sbull] Does the study
evaluate a technology (or
technologies) in situ or
against performance data
from another source?
[sbull] Does the study
include biological data?
-------------------------------------------
Soundness................................. [sbull] Does the study
detail the CWIS
configuration at the time
of the study?
[sbull] Are SOPs for
sampling and testing
included?
[sbull] Is some measure of
before and after biological
data included?
[sbull] Are O&M procedures
described for the test
period?
-------------------------------------------
Clarity and Completeness.................. [sbull] Is the sampling
method clearly described?
[sbull] Is a complete
biological data set
included?
[sbull] Are results clearly
and completely documented?
-------------------------------------------
Uncertainty and Variability............... [sbull] Does the study
identify potential
uncertainties or mitigating
factors such as those due
to environmental
conditions?
-------------------------------------------
Evaluation and Review..................... [sbull] What is the source
of the document?
[sbull] Is the document a
primary study?
[sbull] Has the document
been peer reviewed?
[sbull] Was the purpose of
the study to evaluate the
performance of a specific
technology?
------------------------------------------------------------------------

EPA is seeking comment on the applicability, quality, and quantity
of the information and analyses in this database upon which EPA is
relying. More specifically, EPA requests comment on whether these data
are of sufficient quantity and quality to support the determination
that the proposed performance standards are best technology available
and that the existing facilities can meet these standards by
implementing design and construction technologies either singly or in
conjunction with other design and construction technologies (including
operational and restoration measures). In addition, EPA requests
comment on limitations of the data and identification of other relevant
information available to be included in this database. Based on a
preliminary review of the available data, the Agency continues to
believe that an 80-95% reduction in impingement mortality and a 60-90%
reduction in entrainment are achievable.

B. Streamlined Technology Option for Certain Locations

EPA received a number of comments expressing concern that the
proposed Comprehensive Demonstration Study requirements at Sec.
125.95(b) would impose a significant burden on permit applicants. As
proposed, the Comprehensive Demonstration Study would have as many as
seven different components: (1) A Proposal for Information Collection,
(2) Source Waterbody Flow Information; (3) an Impingement Mortality and
Entrainment Characterization Study; (4) a Design and Construction
Technology Plan; (5) Information to Support any Proposed Restoration
Measures; (6) Information to Support Site-Specific Determination of
Best Technology Available for Minimizing Adverse Environmental Impact;
and (7) a Verification Monitoring Plan.\20\ The proposed Comprehensive
Demonstration Study requirement would allow a permit applicant to
either identify and compile available existing data, or to perform new
site-specific studies to characterize the waterbody within the
influence of the cooling water intake structure and the efficacy of
proposed technologies.
---------------------------------------------------------------------------

\20\ Information to support the use of restoration measures and/
or the use of site-specific determinations would be required to be
collected and submitted only by permit applicants that choose to use
restoration measures or demonstrate that a site-specific
determination of best technology available is appropriate for their
facility.
---------------------------------------------------------------------------

Some commenters suggested that EPA provide an additional, more
streamlined compliance option under which a facility could implement
certain specified technologies that are deemed highly protective in
exchange for not having to perform, or greatly reducing the scope of,
the proposed Comprehensive Demonstration Study required at Sec.
125.95(b). In response to these comments EPA is considering, and
invites the public to comment on two variations of a streamlined
compliance option that would reduce the information collection burden
imposed on permit applicants.
Under the first variation, EPA would evaluate the effectiveness of
specific technologies using the impingement mortality and entrainment
performance standards specified in the proposed rule as assessment
criteria. Specifically, EPA would require that the demonstrated
efficacy of the control technology would at least reduce impingement
mortality by 80 to 95 percent for fish and shellfish. If it was also to
be used by facilities with an additional requirement to reduce
entrainment by 60 to 90 percent for all life stages of fish and
shellfish, then EPA would ensure that the technology would also satisfy
this requirement. Evaluation of the level of impingement mortality or
entrainment reduction would be based on review and analysis of
available data, studies, and literature. The Agency also would assess
the conditions where such technologies are effective (e.g., location,
whether a technology reduces impingement or entrainment or both, flow,
velocity, species, life stage, etc.). If, based on such an assessment,
the Agency identifies technologies that are sufficiently protective and
for which applicability conditions can be defined, EPA would promulgate
regulations (either as part of the 316(b) Phase II rule or at some
later date) that allow for their use as a means of complying with Phase
II section 316(b) requirements.
EPA is in the process of assessing this option and has not
completed a comprehensive review of control technology efficacy data
for the purpose of identifying and delineating technologies that might
qualify under this option. However, the efficacy data

[[Page 13540]]

currently available to EPA do seem to support the use of a streamlined
technology option for certain limited locations. Such a technology
would be used to treat the entire cooling water intake flow and would
not be used in combination with restoration measures to meet the
performance standards. EPA is considering whether the following
technology operated in the following locations would qualify for
streamlined application requirements:

Use of submerged wedge-wire screens where the cooling water
intake structure is located in a freshwater river or stream,
sustained countercurrents exist to promote cleaning of the screen
face, and the design intake velocity is 0.5 feet per second (ft/s)
or less.

EPA believes that sufficient data exist in the record to
demonstrate that all facilities that meet the criteria (e.g., cooling
water intake structure is located in a freshwater river or stream,
facility proposes to use wedge-wire screen technology only, technology
has a design intake velocity of 0.5 ft/s or less, and sustained
countercurrents exist) and employ this technology would meet both the
impingement mortality and entrainment reduction performance standards
and that the record would thus justify limiting the amount of site-
specific information required to be collected to support the use of
this technology in freshwater systems (See DCN 1-3075, 1-5069, 1-5070,
3-0002, and 4-4002B). Facilities that choose to comply under this
compliance option would still be required to meet the proportional flow
standards in Sec. 125.94(b)(2), (3), or (4).
At a minimum, the permitting authority would require each facility
applying to use this technology to provide documentation that the
facility's cooling water intake meets the applicability conditions
specified for the technology and that, once installed, the facility
will properly operate and maintain the technology. In addition, at a
minimum, monitoring would be required as necessary to verify that the
technology is in fact achieving an acceptable level of performance.
Under the second variation of this option, the Phase II regulations
would establish the criteria and process for approving cooling water
intake structure control technologies, but would allow the approval
process to be carried out by the Director, perhaps with EPA oversight
or approval. Under this option, the rule would define the criteria that
a control technology must meet to be approved, and the process for
approval. The criteria would focus on reducing impingement mortality
and/or entrainment levels consistent with the proposed performance
standards (see Sec. 125.94), as appropriate under specified
conditions. This option would also specify the data requirements and
process required to have a control technology approved. Under the
option, the requisite data would be submitted to the Director who would
determine whether the technology satisfied the applicable performance
criteria. If so, the technology would be approved for use by any
eligible facility (i.e., any facility that meets the applicability
criteria) under the jurisdiction of the Director. The Director's draft
determinations would likely be published and an opportunity for public
comment would be provided. The Director would then modify the State's
implementing regulations to include the other technology as one
eligible for a streamlined comprehensive demonstration study. This
option could create an incentive for the regulated community to develop
and document both existing and new innovative technologies to reduce
cooling water structure impacts.
The two variations are not mutually exclusive. If EPA implemented
both, it might adopt regulatory language similar to that provided below
as a new Sec. 125.94(a)(4). Note that 4(i) corresponds to the first
approach and 4(ii) to the second.

(4)(i) You may demonstrate to the Director that your Phase II
existing facility meets the conditions in (A), (B) and (C), and you
will properly install, operate, and maintain submerged wedge-wire
screen technology;
(A) Your cooling water intake structure is located in a
freshwater river or stream;
(B) Your cooling water intake structure is situated such that
sufficient ambient counter currents exist to promote cleaning of the
screen face; and
(C) Your design intake velocity is 0.5 ft/s or less.
(ii) Any interested person may submit a request that a
technology be approved for use under the compliance option in Sec.
125.94(a)(4). If the Director approves, the technology may be used
with compliance option Sec. 125.94(a)(4) by all facilities under
their jurisdiction. Requests for alternative technologies for
compliance under Sec. 125.94(a)(4) must be submitted to the
Director and include the information in paragraphs (A), (B), and (C)
below:

(A) A detailed description of the technology;
(B) A list of design criteria for the technology and site
characteristics and conditions that each facility must posses in order
to ensure that the technology can consistently meet the appropriate
impingement mortality and entrainment performance standards in Sec.
125.94(b); and
(C) Information and data sufficient to demonstrate that all
facilities under the jurisdiction of the Director can meet the
applicable impingement mortality and entrainment performance standards
in Sec. 125.94(b) if the applicable design criteria and site
characteristics and conditions are present at the facility.
Another paragraph could be added as Sec. 125.95(c) that would
establish the streamlined information collection requirements for the
new compliance option at Sec. 125.94(a)(4). The language might read as
follows:
(c) You must submit to the director the application information
required by 40 CFR 122.21(r)(2), (3), and (5) and the Verification
Monitoring Plan in 125.95(b)(7).

Both options discussed above pose several implementation issues.
There is the question of how, and on what basis, should technology
effectiveness be assessed? Because each control technology is being
assessed in a general context (i.e., not as applied to a specific
facility, but as applied in specified conditions), it is not clear that
an appropriate baseline can be established. Thus, EPA is considering
using available data, studies, and literature to establish the
performance levels of specific control technologies. Such an approach
presents additional issues, such as which data are of sufficient
quality to be considered, how much data are needed to make a national
determination, whether actual data or modeled data suffice, and whether
sufficient data exist to pursue such an approach. Another issue is
determining what factors beyond impingement mortality and entrainment
reduction efficacy are most critical to determining when a specific
control technology can be used effectively. As noted above, many
factors influence control technology efficacy. Additionally, EPA would
have to determine how broadly applicable a technology must be before it
could qualify as ``pre-approved.'' Finally, where a facility plans to
implement an approved technology, EPA expects that Directors would
retain discretion to impose permit conditions necessary to ensure the
technology meets applicable standards, as well as the ability to add
permit conditions as necessary to ensure all Phase II existing
facilities that pursue this compliance option meet section 316(b)
standards.
EPA requests comment on both variations of this option for Phase II
section 316(b) compliance. The Agency is interested in comments on the
overall approach, as well as on the specific issues each option
presents, as discussed above. In addition, EPA is

[[Page 13541]]

interested in comments on the criteria used to determine eligibility
for the streamlined technology option presented above, the availability
of data needed to make technology determinations in general, as well as
in receiving actual data that may support such determinations.

VIII. Cost Tests

Under the proposed rule, a facility may choose a site-specific
alternative to demonstrate use of best technology available for
minimizing adverse environmental impact at its site. If a facility
chooses this alternative, the facility must demonstrate to the Director
that the costs of compliance with the applicable performance standards
would be ``significantly greater'' than the costs considered by the
Administrator when establishing the performance standards, or that
costs would be ``significantly greater'' than the benefits of complying
with the applicable performance standards at its site. As discussed in
the proposed rule, EPA's new facility rule required costs to be
``wholly out of proportion'' to the costs EPA considered when
establishing the requirement at issue rather than ``significantly
greater'' as proposed for existing facilities (see 67 FR 17146). This
difference in standards for new and existing facilities is based on (1)
the greater flexibility available to new facilities for selecting the
location of their intakes and installing technologies at lower costs
relative to the costs associated with retrofitting existing facilities
and (2) the desire to avoid economically impracticable impacts on
energy prices, production costs, and energy production that could occur
if large numbers of Phase II existing facilities incurred costs that
were more than ``significantly greater'' than but not ``wholly out of
proportion'' to the costs in EPA's record. At proposal, EPA invited
comment on whether a ``significantly greater'' cost test was
appropriate for evaluating requests for alternative requirements by
Phase II existing facilities but did not specify what degree of
difference in cost or cost as compared to benefit is ``significant''.
Many commenters requested that ``significantly'' be explicitly defined
for the purposes of this rulemaking.
At this time, EPA requests comment on whether the Agency should
adopt a quantitative definition of ``significantly greater,'' and if
so, what specific ratio would be appropriate.

IX. Biology--Supporting Information

A. Entrainment Survival

Following publication of the proposed rule, EPA reviewed an
additional 23 facility reports that evaluated entrainment survival. To
date, EPA has reviewed a total of 36 entrainment survival studies. The
additional facility studies examined by EPA after publication of the
proposed rule include studies from the following facilities: Anclote
Power Plant, Bergum Power Station, Bowline Point Generating Station,
Connecticut Yankee Atomic Power Company, Contra Costa Power Plant,
Danskammer Point Generating Station, Fort Calhoun Nuclear Station,
Ginna Generating Station, Indian Point Generating Station, Muskingum
River Plant, Northport Generating Station, Pittsburg Power Plant, and
Roseton Generating Station.
Based on its review, EPA believes that the entrainment survival
studies support the use of a default assumption of zero percent
survival in the benefits assessment. The studies reviewed are
characterized by significant uncertainty and variability which
complicates efforts to synthesize the various results in a manner that
would provide useful generalizations of the results or application to
other particular facilities. The primary issue with regard to these
studies is whether the results can support a defensible estimate of
survival substantially different from the value of zero percent
survival assumed by EPA. The review of the studies has shown that while
some individual organisms may be alive in the discharge samples, the
proportion of the organisms that are alive in the samples is highly
variable and unpredictable. The current state of knowledge would not
support reliable predictions of entrainment survival for the range of
species, life stages, regions, and facilities involved in EPA's
national benefits estimates. Therefore, EPA believes that the reported
results do not provide a clear indication as to the extent of
entrainment survival above zero percent to be used as a defensible
assumption to calculate national benefits for this rule. EPA requests
comment on this issue.
The revised version of Chapter A7: Entrainment Survival from the
Case Study Analysis for the Section 316(b) Phase II Existing Facilities
Rule provides more detailed information on the scientific basis for
this position and has been added to the docket. EPA plans to conduct a
formal, external peer review of this document prior to the final rule,
and results from the peer review will be added to the docket when
complete.
As at proposal, EPA notes that the proposed rule language does not
preclude the use of estimates of entrainment mortality and survival
when presenting a fair estimation of the monetary benefits achieved
through the installation of the best technology available, instead of
assuming 100 percent entrainment mortality. In EPA's view, estimates of
entrainment mortality and survival used for this purpose should be
based on sound scientific studies. EPA believes such studies should
address times of both full facility capacity and peak abundance of
entrained organisms. EPA requests comment on whether it is appropriate
to allow consideration of entrainment mortality and survival in benefit
estimates, and if so, should EPA set minimum data quality objectives
and standards for a study of entrainment mortality and survival used to
support a site-specific determination of best technology available for
minimizing adverse environmental impact. EPA also requests comment on
how an applicant can design and implement an entrainment mortality and
survival study to properly account for those organisms which may
disintegrate upon passage through a facility. EPA may decide to specify
data quality objectives and standards either in the final rule language
or through guidance.

B. Restoration

Restoration projects, when successful, can recreate otherwise lost
natural resources. The Agency proposed in Sec. 125.94(d) (67 FR 17221)
that a facility may implement restoration measures in lieu of or in
combination with reductions in impingement mortality and entrainment
upon demonstration to the Director that such efforts will maintain fish
and shellfish in the waterbody, including the community structure and
function, at a level comparable to that which would be achieved through
compliance with standards proposed in Sec. Sec. 125.94(b) and (c) (67
FR 17221).
The Agency believes restoration projects have the potential to
mitigate harm to fish and shellfish from cooling water intake
structures. However, careful execution of these projects is vital to
their successful use (see ``Note to Docket on Restoration Information
Sources.'') Use of good practices drawn from historical experiences
with restoration increases the probability of restoration project
success, and therefore, reduces environmental and compliance costs
associated with project failure. Therefore, EPA is considering
requiring the following

[[Page 13542]]

practices during the development of restoration projects:

[sbull] Documentation of sources and magnitude of uncertainty in
expected restoration project performance
[sbull] Creation and implementation of an adaptive management plan
[sbull] Use of an independent peer review to evaluate restoration
proposals

These practices are described in greater detail below. This discussion
supplements the discussions and requirements for restoration found in
the Phase II proposal.
1. Documentation of Sources and Magnitude of Uncertainty
A clear and thorough documentation of the sources and nature of
uncertainty in predictions of a project's ability to meet performance
targets is vital to fully evaluating the capabilities of a project and
subsequently taking, as necessary, the appropriate steps to prevent or
compensate for potential performance shortfalls. Restoration projects
in particular require careful documentation because of the
uncertainties found in the current state of the art. Documentation of
uncertainty must be quantitative wherever possible, qualitative
otherwise, and make use of sound statistical techniques. The Agency is
considering requiring permittees to submit documentation of uncertainty
as part of the information required under proposed Sec. 125.95(b)(5).
Because of the complexity and evolving nature of restoration
projects as an environmental management tool, most will have several
areas of uncertainty in descriptions of their performance. These areas
may include project organism productivity, time lag before full
productivity, and comparison of compensatory project performance with
adverse environmental impact measurements, among others. The Agency
solicits comment on these and other areas of uncertainty in restoration
projects and on appropriate methods for their characterization. Sample
regulatory language is offered below (new language is in italic):
Add to Section 125.95(b)(5):

(ii) A quantification of the combined benefits from implementing
design and construction technologies, operational measures and/or
restoration measures and the proportion of the benefits that can be
attributed to each. This quantification must include: the percent
reduction in impingement mortality and entrainment that would be
achieved through the use of any design and construction technologies
or operational measures you have selected (i.e., the benefits you
would achieve through impingement and entrainment reduction); a
demonstration of the benefits that could be attributed to the
restoration measures you have selected; a demonstration that the
combined benefits of design and construction technologies,
operational measures, and/or restoration measures will maintain fish
and shellfish at a level comparable to that which would be achieved
under Sec. 125.94. If it is not possible to demonstrate
quantitatively that restoration measures such as creation of new
habitats to serve as spawning or nursery areas or establishment of
riparian buffers will achieve comparable performance, you may make a
qualitative demonstration that such measures will maintain fish and
shellfish in the waterbody at a level substantially similar to that
which would be achieved under Sec. 125.94. To the extent that
restoration measures are relied upon, the documentation should
include a discussion, and quantification where feasible, of
uncertainty associated with the implementation and results of these
measures.

2. Adaptive Management

Under adaptive management, an approach is chosen to address a
problem and its effectiveness monitored during its implementation.
Information from this monitoring is then used to make adjustments,
as necessary, to the approach. Adaptive management is a particularly
useful method when the outcome of a chosen approach is uncertain.
Because of the uncertainty and evolving nature of restoration
projects as an environmental management tool, the Agency is
considering requiring permittees who choose to utilize restoration
projects to create and implement an adaptive management plan.
Permittees would submit this plan to the Director as part of the
information required under Sec. 125.95(b)(5).
The adaptive management plan would outline, to the extent
possible, the actions a permittee would take should monitoring of
project performance indicate deviation of performance from
acceptable levels. The plan would describe, quantitatively where
possible, the performance levels at which project adjustment would
be necessary.
The adaptive management process relies heavily on adequate
performance measurement methods and metrics to alert project
managers to project deviations from expected performance levels or
to indicate that a project is meeting performance goals. It is
important for these reasons that project planners choose performance
metrics that reflect attainment of project goals (i.e., maintenance
of fish and shellfish levels in a waterbody) as accurately and
directly as possible. Proxy measurement methods should be used with
adequate caution. Project planners should also, where feasible,
monitor for information useful for making corrections, as needed, in
a project's performance. The Agency is considering requiring that
permittees would stipulate performance measurement methods and
metrics in their monitoring plan. (See proposed Sec. 125.95(b)(7)
(67 FR 17178, 17224)). Sample regulatory language is offered below
(new language is in italic):
Add to Sec. 125.95(b)(5):

(iii) A plan utilizing the adaptive management method for
implementing and maintaining the efficacy of the restoration
measures you have selected and supporting documentation to show that
the restoration measures, or the restoration measures in combination
with design and construction technology(is) and operational
measures, will maintain the fish and shellfish in the waterbody,
including the community structure and function, to a level
comparable or substantially similar to that which would be achieved
through Sec. 125.94(b) or (c).

EPA requests comment on requiring an adaptive management plan for
restoration projects.
3. Independent Peer Review
One challenge of successful restoration planning is the
coordination of information from a large number of scientific
disciplines, particularly hydrology, landscape ecology, and organismal
biology. The Agency believes a thorough, multi-disciplinary review of
restoration proposals would help to ensure their quality and therefore
maximize the probability of project success. The Agency is concerned,
however, that thorough review of restoration proposals may place a
significant additional burden on the review capacities of permit
writers, the majority of whom are trained primarily in the engineering
sciences. To aid permit writers in their review of restoration
proposals and to aid permittees in ensuring that the full range of
pertinent expertise is brought to bear upon project plans, the Agency
is considering requiring that the information a facility develops under
proposed Sec. Sec. 125.95(b)(5) and (7) in support of its restoration
plan undergo an independent peer review prior to the plan's submission
to the Director. EPA is considering whether a facility should be
required to choose the members of the peer review panel in consultation
with Federal, State, and Tribal fish and wildlife management agencies
with responsibility for fish and shellfish potentially affected by the
facility cooling water intake structure. The peer reviewers would be
scientists who are otherwise independent of the permitting process for
the facility and who, as a panel, have the appropriate multi-
disciplinary expertise for the review of the restoration proposal. Peer
reviewers would be charged with evaluating specific elements of each
restoration proposal (e.g., the quantitative or qualitative
descriptions of the uncertainty associated with restoration goals and
projected outcomes, delays between project initiation and when a
restoration program shows measurable success, and the nexus between
impingement and entrainment losses and the productivity of the proposed
restoration program.). If permittees

[[Page 13543]]

decided to combine restoration measures with technologies or
operational measures, they would provide peer reviewers, for background
information purposes, with access to materials for submission to the
Director under proposed Sec. Sec. 125.95(b)(2)-(4). EPA requests
comment on whether adding a peer review requirement may add expense and
delay to the permitting process and, if so, what might be the extent of
the expense or delay. EPA also requests comment on whether a peer
review may result in cost savings by ensuring that restoration projects
are effective and cost-effective. If EPA were to add such a
requirement, regulatory language might be modified as follows:
Add to Section 125.95(b)(5):

(vi) The final report from an independent peer review of the
items you submit under (b)(5)(I), (ii), (iii), (iv), (v), and (b)(7)
of this section. You must choose the peer reviewers in consultation
with Federal, State, and Tribal fish and wildlife management
agencies with responsibility for fish and wildlife potentially
affected by your cooling water intake structure.

EPA requests comment on adding such a requirement.

C. Request for Impingement and Entrainment Data

EPA solicits data on additional impingement and entrainment at
facilities withdrawing cooling water from surface waters of the U.S.
Facilities responding to EPA's questionnaire surveys reported studies
of impingement or entrainment at the following water sources: estuary
or tidal river, 98 facilities; freshwater stream or river, 201
facilities; the Great Lakes, 20 facilities; lake or reservoir, 74
facilities; ocean, 21 facilities. Despite the large number of
facilities reporting studies in freshwater, EPA has received relatively
few such studies. To date, EPA has received approximately 20 studies
from inland facilities. Thus, EPA especially requests recent
impingement and entrainment studies and data for freshwater sources
(streams, rivers, lakes, and reservoirs). Please see the section
entitled FOR FURTHER INFORMATION CONTACT at the beginning of this
notice for technical points of contact to whom studies and/or data may
be submitted.

X. National Benefits

A. Case Study Clarifications and Corrections

EPA had numerous lengthy telephone conferences with industry and
environmental groups to respond to questions on the cost-benefit
analysis presented at proposal. EPA also provided detailed written
responses to these questions in a series of memoranda provided to
commenters during the summer of 2002. These materials are entitled:
``Appendix 2: Summary of CBI and Non-CBI Facilities from
Questionnaires,'' ``Response to UWAG Questions Re: Phase II Proposal
Record, Revised December 2, 2002,'' ``Appendix 1: Additional Detail on
Extrapolation,'' ``Appendix 3: Tables 1-4,'' ``Response to Riverkeeper
Questions Regarding Phase II Proposal Record, Revised July 31, 2002,''
``Example calculations for national extrapolation,'' ``Responses to
Riverkeeper Questions on Sec. 316(b) Phase II Case Study Benefits
Analyses,'' ``Responses to PG&E Questions about the Sec. 316(b) Phase
II Brayton Point Case Study,'' ``Responses to Riverkeeper Follow-Up
Questions on Sec. 316(b) Phase II Case Study Benefits Analyses,''
``Responses to Riverkeeper Questions on Sec. 316(b) Phase II Case
Study Benefits Analyses,'' and ``Responses to Riverkeeper Questions
About the Sec. 316(b) Phase II Case Study I&E Analyses.'' The
memorandum entitled ``Analytical and Clerical Errors in the Sec.
316(b) Phase II Case Study Document, Preamble, and Economic and
Benefits Analysis'' is an additional memorandum that corrects any
clerical or analytical errors that were identified subsequent to
proposal.

B. Regional Approach to Developing Benefits Estimates

1. Objectives of Regional Approach
In its analysis for section 316(b) Phase II proposal, EPA relied on
nine case studies to estimate the potential economic benefits of
reduced impingement and entrainment. EPA extrapolated facility-specific
estimates to other facilities located on the same waterbody type and
summed the results for all waterbody types to obtain national
estimates. A number of commenters expressed concern about this method
of extrapolation, noting that even within the same water body type,
there are important ecological and socioeconomic differences among
different regions of the country. For example, commercial and
recreational fisheries of Atlantic Coast estuaries are substantially
different from those of Pacific Coast estuaries.
To address this concern, EPA has revised the design of its analysis
to examine cooling water intake structure impacts at the regional-
scale. The regional approach to developing national benefits estimates
involves evaluating changes in impingement and entrainment losses and
the associated monetary values for improved recreational and commercial
catch and nonuse value of these changes in impingement and entrainment,
at the regional level. The estimated benefits will then be aggregated
across all regions to yield the national benefit estimate. For this
analysis, coastal regions are fisheries regions defined by National
Oceanic and Atmospheric Administration (NOAA) National Marine Fisheries
Service (NMFS). Freshwater facilities are grouped into either the Great
Lakes region or the interior region of the U.S. (The regional approach
is further discussed in the document entitled ``Regional Methodology
Used in the section 316(b) Phase II Notice of Data Availability.'') EPA
believes that these regional definitions are both ecologically and
economically meaningful, and offer a better scale of resolution upon
which to base estimates of national impacts and benefits.
EPA is proposing this regional analytical approach for this
national rulemaking effort, but is not advocating this approach for
impact and/or benefits analyses that might be conducted for individual
National Pollution Discharge Elimination System (NPDES) permits. At the
individual permit level it should be generally necessary to conduct a
more detailed, site-specific analysis of the environmental
ramifications of the cooling water intake structures governed by the
permit in question than is necessary or feasible for this national-
level rulemaking analysis. Such a site-specific analysis to support a
permit might, for example, consider detailed, species specific
information on impingement mortality and entrainment, different
factors, or use different approaches in estimating total benefits.
In addition, EPA received a number of comments on the valuation
approaches applied to evaluate the proposed rule. In estimating
benefits of the proposed rule for each case study, the Agency used
several valuation approaches that are the focus of this NODA: (1)
Commercial fishery benefits were valued using market data; (2)
recreational fishery benefits were valued using both primary research
and benefit transfer from other nonmarket valuation studies; (3) nonuse
benefits were estimated based on benefits transfer using the ``50
percent rule'' (i.e., 50 percent of use value).
Several commenters posed questions or expressed concern with how
the Agency at proposal attempted to convert projected changes in
commercial landings into suitable measures of producer and consumer
surplus. Most commenters agreed that properly executed benefits
transfer is an

[[Page 13544]]

appropriate method for valuing nonmarket goods, and they pointed out
that original travel cost analysis is one of the most appropriate
approaches for estimating recreational use benefits. Most commenters
agreed that nonuse values are difficult to estimate. Stated preference
methods have been the most commonly used methods for estimating nonuse
benefits. With these methods, people are asked through surveys to state
their willingness to pay for particular ecological improvements, such
as increased protection of aquatic species or habitats with particular
attributes. According to these commenters, benefits transfer is the
second best approach if conducting an original stated preference study
is not feasible. Some commenters recommended that EPA use benefits
transfer for valuing improved protection of threatened and endangered
species.
EPA notes that there are advantages and disadvantages associated
with using stated preference studies to value non-use benefits. On the
one hand, there are no other generally accepted methods available for
identifying and measuring non-use benefits for a non-market good or
service. Benefit transfer methods used for estimating non-use benefits
must ultimately rely on stated preference studies that independently
assess non-use benefits. On the other hand, there is evidence that
stated preference methods can over-estimate or misrepresent values
because of a number of difficulties linked to the hypothetical nature
of the survey instrument. These difficulties include (1) the absence of
a real budget constraint (though survey respondents are often requested
to think about their income constraints and purchases prior to stating
their preferences), and (2) a frequent focus in the survey instrument
on a limited number of resources or amenities to the exclusion of
others. However, substantial research has been conducted to show that
potential bias associated with hypothetical bids, lack of income
constraint consideration, complex amenities, and whole/part
complications is often manageable through careful survey design and
pretesting, and/or may be accounted for through adjustments to utility-
theoretic values derived from stated preference studies (see, e.g.,
Carson, et al., 1996).
In order to address some of the sources of bias in stated
preference studies, a number of ``best practices'' for conducting
stated preferences surveys and using them in policy analysis have
evolved over the past decade. In 1992, the National Oceanic and
Atmospheric Administration convened a panel of economic and survey
research experts, who had no vested interest in stated preference
methods, to conduct hearings on the validity of the contingent
valuation (CV) method (form of stated preference) (FR 58:19, 4601-14,
1993). This panel issued proposed guidelines, consisting of a number of
recommendations about survey design and implementation, ``compliance
with which would define an ideal CV survey.''
The panel's general guidelines address the following issues: Sample
type and size; minimizing nonresponses; use of personal interviews;
pretesting for interviewer effects; reporting; careful pretesting of a
CV questionnaire; conservative design; elicitation format; referendum
format; accurate description of the program or policy; pretesting of
photographs; reminder of undamaged substitute commodities; adequate
time lapse from the accident; temporal averaging; ``no-answer'' option;
yes/no follow-ups; cross-tabulations; checks on understanding and
acceptance; alternative expenditure possibilities; deflection of
transaction value; steady state or interim losses; present value
calculations of interim losses; advance approval; burden of proof; and
reliable reference surveys.
The NOAA panel concluded that (1) non-use (referred to by the panel
as passive-use) losses are a meaningful component of environmental
damages; (2) it is plausible that the results of CV surveys may be
variable, sensitive to details of the survey instrument used, and
vulnerable to upward bias; (3) under the suggested guidelines and
conditions, CV studies convey reliable information--``the more closely
the guidelines are followed, the more reliable the result will be. It
is not necessary, however, that every single injunction be completely
obeyed;'' (4) ``To the extent that the design of CV instruments makes
conservative choices * * *, this intrinsic [upward] bias may be offset
or even over-corrected;'' and (5) a well-conducted CV survey ``contains
information that judges will wish to use, in combination with other
evidence, including the testimony of expert witnesses.''
In addition to the guidelines generated by the NOAA panel, The
Office of Management and Budget (OMB), in its recent Draft 2003 Report
to Congress on the Costs and Benefits of Federal Regulations (68 FR
5492, Feb. 3, 2003), comments on the use of stated preference studies
as it relates to policy/regulatory analysis. OMB notes that ``the
contingent valuation instrument must portray a realistic choice
situation for respondents--where the hypothetical choice situation
corresponds closely with the policy context to which estimates will be
applied.'' (68 Fed. 5519.) OMB also provides specific guidelines for
sampling, survey design, transparency and replicability of results, and
benefit transfer.
In response to comments, EPA made the following changes to the
analysis: (1) Developed original or used available region-specific
recreational angler behavior models to estimate recreational fishing
benefits from reduced impingement and entrainment; (2) refined its
commercial fishery analysis; and (3) developed a revised benefit
transfer approach to estimate total value (including nonuse values) of
impingement and entrainment losses for commercial, recreational, and
forage species. In addition, EPA also carefully examined available
evidence concerning total benefits, including use and nonuse values
from the surface water valuation studies that are potentially
applicable to the section 316(b) regulation. Section E.2 of today's
notice summarizes EPA's findings from the review of the surface water
valuation studies and outlines further steps in developing an approach
for analyzing nonuse value of the aquatic resources affected by
impingement and entrainment for the final rule analysis.
In this NODA, EPA presents its regional methodology and use
benefits estimates for two regions, Northern California and the North
Atlantic. Regional definitions are provided in the following section,
followed by a summary of methods and results for commercial and
recreational fishing. Discussion of a possible methodology for
estimating nonuse benefits and some preliminary results are presented
in Section E.
2. Study Regions
The Agency identified eight study regions based on similarities in
the physical characteristics of the affected water bodies, aquatic
species present in the area, and characteristics of commercial and
recreational fishing activities in the area. EPA used NMFS definitions
of marine fishery regions to define the six coastal regions. Table X-1
presents these geographic areas and the number of facilities included
in each marine fishery region. A total of 124 Phase II facilities are
withdrawing water from the nation's estuaries and oceans. Facilities in
the Great Lakes region include all those that withdraw water from Lakes
Ontario, Erie, Michigan, Huron, and Superior or are located on a
waterway with open passage of Great Lakes fishery species to a Great
Lake and within 30 miles of the lake. There

[[Page 13545]]

are 55 facilities in the Great Lakes Region. The remaining 372
facilities were included in the Interior region of the U.S.

Table X-1.--Definition of Coastal Regions
----------------------------------------------------------------------------------------------------------------
Number of Number of
Region Geographic area estuarine ocean Total number
facilities facilities of facilities
----------------------------------------------------------------------------------------------------------------
North Atlantic..................... Maine, New Hampshire, 19 2 21
Massachusetts, Rhode
Island, Connecticut.
Mid Atlantic....................... New York, New Jersey, 43 1 44
Delaware, Maryland and
Virginia.
South Atlantic..................... North Carolina, South 13 1 14
Carolina, Georgia, East
Florida.
Gulf of Mexico..................... West Florida, Alabama, 20 3 23
Missouri, Louisiana, Texas.
Northern California................ All Counties North of Point 6 2 8
Conception.
Southern California................ All Counties South of Point 2 9 11
Conception.
-----------------
Total Number of Estuarine and ........................... 103 18 121
Ocean Facilities ^a.
----------------------------------------------------------------------------------------------------------------
^a In addition, there are 3 ocean facilities in Hawaii that are not included in the NMFS-defined regions.

The analysis of direct use benefits for each region proceeds in
three steps: (1) Estimating regional impingement and entrainment
losses; (2) estimating benefits to recreational anglers from improved
fishing opportunities due to reduced impingement and entrainment based
on a region-specific valuation function; and (3) estimating benefits
from improved commercial fishery yield. The following sections discuss
each of these steps in detail.
3. Estimating Regional Impingement and Entrainment Losses
a. Species Groups
For the case studies presented at proposal, EPA conducted species-
specific analyses of impingement and entrainment on a facility-specific
basis. For the new regional studies, EPA is evaluating species groups
comprised of species with similar life histories. Groups are based on
family groups or groups used by NMFS for landings data. For example,
bay goby, blackeye goby, yellowfin goby, and other gobies are grouped
together as ``gobies.'' For the regional studies, EPA evaluated
impingement and entrainment rates for such species groups and developed
a regional total impingement and entrainment estimate by summing
results for each group. An exception was made for species of
exceptionally high commercial or recreational value (e.g., striped
bass). Such species were evaluated as single species.
Aggregation of species into groups of similar species facilitated
parameterization of the fisheries models used by EPA to evaluate
facility impingement and entrainment monitoring data. As noted by many
commenters and by EPA in the section 316(b) Phase II Case Study
Document, life history data are very limited for many of the species
that are impinged and entrained. As a result, there are many data gaps
for individual species. To overcome this limitation, in its new studies
EPA used the available life history data for closely related species to
construct a single representative life history for a given species
group. For previously completed case studies, EPA used the species-
specific life history information that was previously developed and
then aggregated impingement and entrainment results for the species
within a given group to obtain a group estimate. The document,
``Regional Methodology Used in the section 316(b) Phase II Notice of
Data Availability,'' summarizes the regional methodology. The
documents, ``Appendix 1: Life History Parameter Values Used to Evaluate
I and E in the North Atlantic Region,'' and ``Appendix 2: Life History
Parameter Values Used to Evaluate I and E in the Northern California
Region,'' provide tables of all of the life history data and data
sources used by EPA for the two regional analyses presented in this
NODA.
EPA believes that the species group approach is appropriate for the
national rulemaking given the many data limitations associated with our
lack of knowledge of specific fish life histories, particularly the
growth and mortality rates of early life stages. At the individual
permit level, more detailed information should be available based on
the data collected to support a permit application (see, for example,
the proposed permit application requirements at Sec. 122.21 (r) and
Sec. 125.95).
b. Impingement and Entrainment Methods
EPA evaluated facility impingement and entrainment monitoring data
for all individual fish species with losses over one percent of the
facility total. EPA converted annual impingement and entrainment losses
for each species group into (1) age 1 equivalents, (2) fishery yield,
and (3) biomass production foregone using standard fishery modeling
techniques (Ricker, 1975; Hilborn and Walters, 1992; Quinn and Deriso,
1999). Details of these methods are provided in Chapter A5 of Part A of
the section 316(b) Phase II Case Study Document, except for the
corrections given in the preceding section ``Case Study Corrections and
Clarifications'' and the changes noted below. Section A5-4 of Chapter
A5 discusses data uncertainties. For all analyses, EPA assumed 100%
entrainment mortality based on the analysis of entrainment survival
studies presented in Chapter A7 of Part A of the section 316(b) Phase
II Case Study Document
(1) Yield Equation
As several commenters pointed out, the equation for yield presented
in Chapter A5 of the section 316(b) Phase II Case Study Document,
contains a typographical error. The correct equation is:

Yk = [Delta]j [Delta]^a Ljk
Sja Wa (Fa / Za ) (1 -
e^-Z a )

where:

Y^k = foregone yield (pounds) due to impingement and
entrainment losses in year k
Ljk = losses of individual fish of stage j in the year k
Sja = cumulative survival fraction from stage j to age a
Wa = average weight (pounds) of fish at age a
Fa = instantaneous annual fishing mortality rate for fish of
age a

[[Page 13546]]

Za = instantaneous annual total mortality rate for fish of
age a

EPA would like to note that it verified that the correct equation
was used for the case study analyses. The error was only in the
transcription of the equation in Chapter A5.
(2) Trophic Transfer Rates Used To Model Production Foregone
For the case studies submitted at proposal, EPA used a simple model
of trophic structure and trophic transfer efficiency to estimate the
yield of harvested species that is lost because of the loss of forage
species to impingement and entrainment (see Chapter A5 of Part A of the
section 316(b) Phase II Case Study Document for details). The net
trophic transfer efficiency in that model was 2.5 percent. Based on
additional review of the scientific literature, EPA has modified the
model so that the net trophic transfer efficiency is 20 percent. This
transfer efficiency is used in natural resource damage assessments
involving injuries to fish, as discussed in Reed et al. (1994).
Although this change in transfer efficiency increases the portion of
the total yield attributable to the consumption of forage fish, the net
effect is insignificant because the trophic transfer pathway accounts
for a very small portion of the total foregone yield.
(3) Impingement and Entrainment Extrapolation
To obtain regional impingement and entrainment estimates, EPA
extrapolated losses from facilities with impingement and entrainment
data to facilities without data. These results were then summed to
obtain a regional total. This analysis was done separately within each
region for different water body types (estuaries/tidal rivers, oceans,
Great Lakes, inland freshwater rivers and lakes).
Average annual results for facilities with impingement and
entrainment data were averaged and extrapolated on the basis of
operational flow, in millions of gallons per day (MGD), to facilities
without data. The extrapolation method used, by region, is:

(Total losses at case study facilities/Flow at case study
facilities) * Total flow in the region

The flow values used in this calculation have been weighted
(weighted flow = average daily flow * weight) using the same facility
weights applied in the cost analysis. The purpose of this weighting is
to calculate costs and benefits for all 551 in-scope facilities, based
on surveys received from 540 facilities.
The regional analyses incorporated data for many more facilities
than were evaluated for proposal, and thus improved the basis for EPA's
national benefits estimates.
(4) Impingement
In the case studies prepared for proposal, EPA determined that all
impinged fish are age 1 because of a lack of data on the actual ages of
impinged fish. As several commenters pointed out, this biases estimates
low because impinged fish may include older individuals that are closer
to harvestable age. This is confirmed by data on the ages of impinged
fish presented in studies conducted at Salem (PSEG, 1999) and Millstone
(Northeast Utilities Environmental Laboratory, 1992). To address this
concern, the current studies relax the assumption that all impinged
fish are age 1, and assume instead that the ages of impinged fish are 1
and older, and follow an age distribution that is implied by the
associated survival rates. This approach takes into consideration the
common observation that relatively few older, larger fish are impinged.
The effect of this adjustment is that a higher proportion of impinged
fish are assumed to survive until harvest. As a result of this
adjustment, the estimate of foregone yield associated with impingement
increases by a factor ranging from about three to ten, depending on a
species` age-specific survival rates.
4. Recreational Fishing Benefits
For the final rule analysis, EPA's analysis of recreational fishing
benefits from reduced impingement and entrainment will be based on
region-specific models of recreational anglers' behavior for seven of
the eight study regions: North Atlantic, Mid-Atlantic, South Atlantic,
Gulf of Mexico, Northern California, Southern California, and Great
Lakes. EPA's analysis of benefits for the interior U.S. region will
combine an original random utility model (RUM) for the Ohio River and a
benefit transfer approach for other rivers, lakes, and reservoirs
affected by impingement and entrainment. Additional detail on the
methods EPA will use throughout the recreational benefits analysis are
provided in DCN 5-1008 and DCN 5-1009. These methods are similar to the
methods used for the Delaware Bay, Tampa Bay, and Ohio River case study
analyses, but EPA developed the travel coast models at the regional
levels.
For the NODA, EPA developed recreational anglers' behavior models
for three of the six coastal regions including Northern and Southern
California and the Mid-Atlantic. Today's notice presents results only
for the Northern California Region because impingement and entrainment
data are not available for the Mid-Atlantic and Southern California
regions at this time. For the final rule analysis, the Agency intends
to expand the Tampa Bay case study used in the proposed rule analysis
to include the whole Gulf of Mexico region and to develop an original
travel coast model for the Great Lakes region. For the South Atlantic
EPA is considering using the recreational anglers' behavior models
developed by NMFS. The NMFS model is appropriate for benefit function
transfer for the North Atlantic region, because it estimates region-
specific values for the most important species affected by impingement
and entrainment (e.g., winter flounder). The Agency will further assess
the applicability of the South Atlantic NMFS model for estimating
benefits from reduced impingement and entrainment in the South Atlantic
region when impingement and entrainment data for this region become
available. If necessary, EPA will estimate a recreational behavior
model for the South Atlantic region to support valuation of the most
important species affected by impingement and entrainment in this
region.
The regional recreational fishing studies use information on
recreational anglers' behavior to infer anglers' economic value for the
quality of fishing in the case study areas. The model's main assumption
is that anglers will get greater satisfaction, and thus greater
economic value, from sites where the catch rate is higher due to
reduced impingement and entrainment, all else being equal. This benefit
may occur in two ways: First, an angler may get greater enjoyment from
a given fishing trip when catch rates are higher, and thus get a
greater value per trip; second, anglers may take more fishing trips
when catch rates are higher, resulting in greater overall value for
fishing in the region.
EPA will rely on the following primary data sources in the regional
analyses of recreational fishing benefits:
[sbull] For the six coastal regions, EPA intends to use the NMFS
Marine Recreational Fishing Statistics Survey (MRFSS) combined with the
Add-On MRFSS Economic Survey (AMES) (NMFS, 1994; 1997; 2000);
[sbull] For the Great Lakes region the Agency is considering using
the 1995 Michigan Recreational Anglers survey to develop a RUM model.
The Agency will

[[Page 13547]]

apply estimated values from Michigan sites to Great Lakes sites in
other affected states. To transfer values from the Michigan study to
other Great Lakes states, EPA is considering using information from
state-level anglers' surveys on recreational fishing participation,
targeted species, and site-specific catch rates at Great Lakes
recreational fishing sites.
[sbull] For the interior U.S. region, the Agency is also
considering using the 2000 National Survey of Recreation and
Environment and the National Survey of Fishing, Hunting and Wildlife-
Associated Recreation (U.S. Fish and Wildlife Service, 1996; 2001) to
estimate the value of recreational fishery losses from impingement and
entrainment at cooling water intake structures located on rivers,
lakes, and reservoirs. DCN 5-1310 and DCN 5-1311 provide further
information on these data sources.
These data sets provide information on where anglers fish, what
fish they catch, and their personal characteristics. When anglers
choose among fishing sites they reveal information about their
preferences.
The Agency uses standard assumptions and specifications of the RUM
model that are readily available in the recreation demand literature.
Among these assumptions are that anglers choose a fishing mode and then
the site at which to fish; and that anglers' choice of target species
is exogenous to the model. EPA modeled an angler's decision to visit a
site as a function of site-specific cost, fishing trip quality, and
additional site attributes such as presence of boat launching
facilities at the site.
The Agency uses the 5-year historical catch rates per hour of
fishing as a measure of fishing quality in the case studies. Catch rate
is one of the most important attributes of a fishing site from the
angler's perspective. This attribute is also a policy variable of
concern because catch rate is a function of fish abundance, which may
be affected by fish mortality caused by impingement and entrainment.
The Agency uses the estimated model coefficients in conjunction
with the estimated impingement and entrainment losses at the cooling
water intake structures located in the relevant region to estimate per
trip welfare losses from impingement and entrainment to recreational
anglers.
The random utility models generate welfare measures for changes in
catch rates on a per trip basis. To capture the effect of changes in
catch rates on the number of fishing trips taken per recreational
season, EPA will combine regional RUM models and a trip frequency
model.\21\ The trip frequency model estimates the number of trips that
an angler will take annually. The Agency is considering developing trip
frequency models for those regions for which sufficient data on
anglers' socioeconomic characteristics are available. For the proposed
rule analysis, the Agency developed trip frequency models for the three
case studies used in the proposed rule analysis--Delaware Estuary,
Tampa Bay, and the Ohio River. For the final rule analysis, the Agency
will re-estimate these models to include all recreational anglers in a
given region. The Agency also plans to estimate trip frequency models
for the Great Lakes, North Atlantic, and South Atlantic regions for the
final rule analysis. EPA will not estimate trip frequency models for
the Northern and Southern California regions due to the lack of
socioeconomic data for these regions. The Agency will use an average
percentage increase in trip frequency from other regions to approximate
changes in trip frequency for the Northern and Southern California
regions due to improved fishing opportunities. However, in the regions
where changes in trip participation can be calculated for the proposed
rule, the increase in the number of trips was very small.
---------------------------------------------------------------------------

\21\ The trip frequency model is also called a trip
participation model.
---------------------------------------------------------------------------

To estimate the economic value to recreational anglers of changes
in catch rates resulting from changes in impingement and entrainment in
a given region, EPA combines fishing participation estimates for a
given region with the estimated per trip welfare gain (loss) under each
policy scenario. The welfare estimates presented in the following
sections are based on the estimates of baseline recreational fishing
participation provided by NMFS. Thus, welfare estimates presented in
today's notice do not account for changes in recreational fishing
participation due to improved quality of the fishing sites, but these
changes are likely to be small.
5. Commercial Fishing Benefits Methods
EPA will estimate the commercial fishing benefits expected under
the final Phase II regulation for each region in the final analysis:
the North Atlantic, Mid-Atlantic, South Atlantic, Gulf of Mexico,
Northern California, Southern California, and Great Lakes. Additional
detail on the regions is provided above. Additional detail on the
methods EPA uses for this NODA and additional methods EPA is
considering are provided in ``Chapter A13: Methods For Estimating
Commercial Fishing Benefits'' that accompanies this NODA. These methods
are similar to the methods used for the analysis for the proposed rule,
but EPA has made some changes and clarification to these methods as
indicated in the following steps.
1. Estimate losses to commercial harvest (in pounds of fish)
attributable to impingement and entrainment under current conditions.
EPA models these losses using the methods presented in Chapter A5 of
Part A of the section 316(b) Phase II Case Study Document. Changes in
these methods for the NODA and subsequent analyses are provided in the
preceding sections ``Case Study Corrections and Clarifications'' and
``Impingement and Entrainment Methods.'' The basic approach is to
assume linearity between stock and harvest, such that if, for example,
10% of the current commercially targeted stock is harvested, then 10%
of any increase in stock due to this rule would be harvested.
2. Estimate gross revenue of lost commercial catch. The approach
EPA uses to estimate the value of the commercial catch lost due to
impingement and entrainment relies upon landings and dockside price ($/
lb) as reported by NMFS for the period 1991-2001. These data are used
to estimate the revenue of the lost commercial harvest under current
conditions (i.e., the increase in gross revenue that would be expected
if all impingement and entrainment impacts were eliminated). Note that
EPA currently assumes current prices when estimating changes in gross
revenue, however, EPA will explore options for predicting new prices
(e.g., based on available elasticities), and solicits comment on the
availability of information or data to assist in this matter.
3. Estimate lost economic surplus. The conceptually suitable
measure of benefits is the sum of any changes in producer and consumer
surplus. As detailed in ``Chapter A13: Methods For Estimating
Commercial Fishing Benefits'' that accompanies this NODA, the methods
used for estimating the change in surplus depends on whether the
physical impact on the commercial fishery market appears sufficiently
small such that it is reasonable to assume there will be no appreciable
price changes in the markets for the impacted fisheries.
3a. Estimate lost surplus when no change in price anticipated. For
the 2 regions analyzed to date by EPA, it is reasonable to assume no
change in

[[Page 13548]]

price, which implies that the welfare change is limited to changes in
producer surplus. As described in ``Chapter A13: Methods For Estimating
Commercial Fishing Benefits,'' this change in producer surplus is
currently assumed to be equivalent to a portion of the change in gross
revenues, as developed under step 2. Currently, EPA is using a range of
0% to 40% of the gross revenue losses estimated in step 2 as a means of
estimating the change in producer surplus. This is based upon a review
of empirical literature (restricted to only those studies that compared
producer surplus to gross revenue) and is consistent with
recommendations made in comments on the EPA analysis at proposal. This
represents a change from the analysis for the proposed rule, which
assumed a range of 40% to 70%.
EPA will continue to review this approach for the final analysis.
In particular, EPA believes this is a conservative approach to
estimating producer surplus when there are no anticipated price
changes, because it does not account for shifts in marginal cost
curves. If greater abundance of fish is assumed to imply that the same
quantity of fish can be caught (i.e., no change in managed quota) at a
lower cost, then these cost savings may be over or underestimated using
this method, depending on the slope and magnitude of shift of the
marginal cost curve for harvesters. If a management council increases
the optimal quota to account for greater stock size (and the cost of
harvesting fish again decreases), then it is possible that the
corresponding increase in producer surplus is equal to or greater than
100% of gross revenue change. EPA solicits comment on these approaches
for assessing producer surplus.
3b. Estimate economic surplus if a change in price anticipated. EPA
currently relies on the methodology in Step 9a above for estimating
benefits for the two regional examples in this NODA, but EPA will
explore alternative methods if changes in price are anticipated. As
described in ``Chapter A13: Methods For Estimating Commercial Fishing
Benefits'' that accompanies this NODA, if the impact on commercial
fisheries in other regions analyzed for the final regulation are
sufficiently large that a change in market prices becomes a likely
outcome, then a more complex approach may be considered by the Agency.
This approach would include estimates of consumer and other post
harvest surplus, plus any net change in producer surplus (noting that
one of the important aspects would be to net out potential transfers of
surplus from producers to consumers, so as to avoid potential double-
counting). This analysis would be conducted primarily to determine the
distribution of surplus between consumers and producers. Joint
estimation of consumer and producer surplus can lead to potential
double counting as follows. If no price change is assumed when
estimating gross revenue in step 2 above, then, theoretically, there is
no consumer surplus. If however, change in gross revenue in Step 2 is
based on a predicted price decrease, then change in producer surplus is
not capturing changes in consumer surplus, assuming transfers on infra-
marginal production are netted out.
EPA anticipates that the net change in producer surplus result can
be added to consumer and post-harvest surplus estimated in the manner
outlined by Bishop and Holt (2003). The work to date by Dr. Richard
Bishop of the University of Wisconsin-Madison and Dr. Matthew Holt of
North Carolina State University suggests that for the fishery markets
they have studied, the percent change in consumer and post-harvest
surplus roughly equals the percent change in gross revenue (as
estimated in step 2), and this result may be refined in light of their
recommendations and future work by EPA. EPA recognizes, however, that
it would not be appropriate to add this change to an independently
estimated change in producer surplus that already captures part or all
of potential consumer surplus.
EPA will continue to review this approach for the final analysis,
and in particular is examining and soliciting comment on using
empirical information from the literature to (1) estimate price change
for revenue calculations and netting out surplus transfers, (2) adjust
existing estimates of normal profit so that they might better reflect
the more suitable measure of producer surplus, (3) model changes in
harvest cost that may result from increased stock size.
In conjunction with this NODA, EPA is asking for comment on the
issues and approaches discussed above and as discussed in further
detail in ``Chapter A13: Methods For Estimating Commercial Fishing
Benefits'' that accompanies this NODA. Specific input is sought
regarding assumptions and approaches including: (1) The likelihood that
supply curves will shift, thereby creating the context for generating
greater net surplus; (2) how best to incorporate fishery management
regimes into the analysis; (3) estimates of normal profit and how to
interpret them to estimate a more suitable measure of producer surplus;
and (4) the likelihood and magnitude of price changes that may result
from increased harvest.
6. Discounting Future Use Benefits
Discounting refers to the economic conversion of future benefits
and costs to their present values, accounting for the fact that
individuals tend to value future outcomes less than comparable near-
term outcomes. Discounting is important when benefits and costs may
occur in different years, and enables a comparison of benefits to costs
across time periods.
For the section 316(b) rulemaking, discounting arises because some
fishery benefits are realized a year or more after costs are borne. The
issue of time lags between implementation of BTA and resulting
increased fishery yields stems from the fact that one or more years may
pass between the time an organism is spared impingement and
entrainment, and the time of its ultimate harvest. For example, a
larval fish spared from entrainment (in effect, at age 0) may be caught
by a recreational angler at age 3, meaning that a 3-year time lag
arises between the incurred cost of BTA and the realization of the
estimated recreational benefit. Likewise, if a 1 year old fish is
spared from impingement and is then harvested by a commercial waterman
at age 2, there is a 1-year lag between the incurred BTA cost and the
subsequent commercial fishery benefit.
At proposal, EPA did not apply any discounting to the beneficial
fishery impacts from the reduced impingement and entrainment attributed
to regulatory options, and instead assumed a steady state scenario (in
effect, applying a discount rate of zero). The Agency approach at
proposal was limited by the lack of age-specific monitoring data
provided by the industry and the complexity of estimating appropriate
species-specific and facility-specific discounting. As discussed above,
the Agency also assumed at proposal that all impinged organisms were
age 1, which decreased the fishery yield impacts estimated at proposal.
For the new regional analysis, EPA will apply discounting by species
groups in each regional study, as described below.
Two key factors determine how much the discounting will affect the
benefit-cost results: the range of ages at which different types of
fish are typically landed by commercial or recreational anglers, and
the discount rate applied in the analysis. EPA uses the best available
estimates of commercial fishing mortality rates to estimate the
proportion of each species group, by age, that is caught annually
following

[[Page 13549]]

implementation of BTA. This provides an estimate of the time-path of
increases in future landings attributable to the rule. EPA discounts
these future changes using two discount rates: a real rate of 3% and a
real rate of 7%. Additional detail on EPA's discounting methods is
provided in the document entitled ``Discounting Commercial and
Recreational Fishing Benefits.'' The Agency notes that discounting is
applied to recreational and commercial fishing benefits only. Nonuse
benefits are independent of fish age and size and, thus, start as soon
as impingement and entrainment ceases.
EPA recognizes that, by addressing species groups rather than
individual species, potentially important species-specific differences
cannot be accounted for. However, the lack of life history data,
fishing mortality rates, and other information necessary to calculate
foregone yield and other endpoints of interest at the regional and
national level makes it necessary to group species in this way.

C. North Atlantic Regional Study

1. Background: Marine Fisheries of the North Atlantic
Commercial and recreational fisheries of the North Atlantic Region
are managed by the New England Fisheries Management Council (NEFMC)
according to Fishery Management Plans (FMP's) developed by NEFMC (NMFS,
2002). The NMFS Northeast Fisheries Science Center provides scientific
and technical support for management, conservation, and fisheries
development.
The multispecies groundfish fishery is the most valuable commercial
fishery of the North Atlantic region, followed by American lobster
(Homarus americanus) (NMFS, 1999a). Important groundfish species
include Atlantic cod (Gadus morhua), haddock (Melanogrammus
aeglefinus), yellowtail flounder (Pleuronectes ferrugineus), windowpane
flounder (Scophthalmus aquosus), and winter flounder (Pleuronectes
americanus). Atlantic pelagic fisheries are dominated by Atlantic
mackerel (Scomber scombrus), Atlantic herring (Clupea harengus),
bluefish (Pomatomus saltatrix), and butterfish (Peprilus triacanthus)
(NMFS, 1999a). Important recreational fisheries of the region include
Atlantic cod, winter flounder, Atlantic mackerel, striped bass (Morone
saxatilis), bluefish, and bluefin tuna (Thunnus thynnus) (NMFS, 1999a).
Fifteen groundfish species making up 25 stocks are managed under
the Northeast Multispecies FMP of the NEFMC (NMFS, 2002). Table X-2
summarizes the stock status of these species, indicating which stocks
are subject to overfishing (the harvest rate exceeds threshold) and
which stocks are overfished (stock size is below threshold).
Overfishing refers to a level of fishing mortality that jeopardizes the
long term capacity of the stock to produce the potential maximum
sustainable yield on a continuing basis. In some cases, heavy fishing
in the past may have reduced a stock to low abundance, so that it is
now considered overfished even though the stock is not currently
subject to overfishing.

Table X-2.--Summary of Stock Status for Harvested Species of the North Atlantic Region Included in Federal
Fishery Management Plans
----------------------------------------------------------------------------------------------------------------
Stock (Species in bold are major Overfishing? (Is Overfished? (Is
stocks, with annual landings over fishing mortality above biomass below Approaching
200,000 pounds) threshold?) threshold?) Overfished Condition?
----------------------------------------------------------------------------------------------------------------
Cod:
Gulf of Maine.................... Yes..................... Rebuilding............. No.
Georges Bank..................... No...................... Rebuilding............. No.
Haddock:
Gulf of Maine.................... Yes..................... Rebuilding............. No.
Georges Bank..................... No...................... Rebuilding............. No.
American Plaice...................... Yes..................... No..................... No.
Redfish (ocean perch)................ No...................... Yes.................... N/A.
Witch Flounder....................... No...................... No..................... No.
Yellowtail Flounder:
Georges Bank..................... No...................... No..................... No.
Southern New England............. No...................... Yes.................... N/A.
Cape Cod......................... No...................... Rebuilding............. No.
Middle Atlantic.................. Yes..................... Yes.................... N/A.
White Hake........................... Yes..................... Yes.................... N/A.
Pollock.............................. Unknown................. Unknown................ Unknown.
Ocean Pout........................... No...................... Yes.................... N/A.
Atlantic Halibut..................... Unknown................. Yes.................... N/A.
Windowpane Flounder:
Gulf of Maine/Georges Bank....... No...................... No..................... No.
Southern New England/Middle No...................... No..................... Yes.
Atlantic.
Winter Flounder:
Gulf of Maine.................... Unknown................. Undefined.............. Unknown.
Georges Bank..................... No...................... Rebuilding............. No.
Southern New England............. No...................... No..................... No.
Silver Hake:
Gulf of Maine/Northern Georges Unknown................. Rebuilding............. No.
Bank.
Southern Georges Bank/Middle Unknown................. Yes.................... N/A.
Atlantic.
Offshore Hake........................ Unknown................. Unknown................ Unknown.
Red Hake:
Gulf of Maine/Northern Georges No...................... No..................... No.
Bank.
Southern Georges Bank/Middle No...................... ....................... Unknown.
Atlantic.
----------------------------------------------------------------------------------------------------------------
Source: Table 4 in NMFS (2002).

[[Page 13550]]

As indicated in Table X-2, seven of the stocks managed under the
Northeast Multispecies FMP are classified as overfished, including
redfish (Sebastes spp.), the southern New England and Middle Atlantic
stocks of yellowtail flounder, white hake (Urophycis tenuis), ocean
pout (Macrozoarces americanus), Atlantic halibut (Hippoglossus
hippoglossus), and the Southern Georges Bank stock of silver hake
(Merluccius bilinearis). Other stocks are in the process of being
rebuilt from levels below the maximum sustainable yield, including the
Gulf of Maine and Georges Bank stocks of Atlantic cod and haddock, the
Cape Cod stock of yellowtail flounder, the Georges Bank stock of winter
flounder, and the Gulf of Maine/Northern Georges Bank stock of silver
hake (NMFS, 2002).
Stocks of another 12 North Atlantic species are under the
jurisdiction of the Atlantic States Marine Fisheries Commission (ASMFC)
and are not included in federal FMPs. These stocks and their status are
given in Table X-3.
Offshore fisheries for crustaceans and molluscs, particularly
American lobster (Homarus americanus) and sea scallop (Placopecten
magellanicus), are among the most valuable fisheries in the Northeast
(NMFS, 1999a). Surfclams (Spisula solidissima), ocean quahogs (Arctica
islandica), squids (Loligo pealeii and Illex illecebrosus), northern
shrimp (Pandalus borealis), and red crab (Chaceon quinquedens) also
provide important invertebrate fisheries.

Table X-3.--Summary of Stock Status of Harvested Species of the North Atlantic Region Under AFSMC Jurisdiction
and Not Included in Federal Fishery Management Plans
----------------------------------------------------------------------------------------------------------------
Stock (species in bold are major Overfishing? (fishing
stocks, with annual landings over mortality above Overfished? (stock Approaching overfished
200,000 pounds) threshold) size below threshold) condition?
----------------------------------------------------------------------------------------------------------------
American Eel........................ Unknown................ Unknown................ Unknown
American Lobster.................... Yes.................... Undefined.............. Unknown
Atlantic Croaker.................... Unknown................ Unknown................ Unknown
Atlantic Menhaden................... No..................... No..................... Unknown
Atlantic Sturgeon................... No..................... Yes.................... N/A
Horseshoe Crab...................... Unknown................ Unknown................ Unknown
Northern Shrimp..................... Yes.................... Undefined.............. Unknown
Spot................................ Unknown................ Unknown................ Unknown
Spotted Seatrout.................... Unknown................ Unknown................ Unknown
Striped Bass........................ No..................... No..................... Unknown
Tautog.............................. Yes.................... Undefined.............. Unknown
Weakfish............................ Undefined.............. No..................... No
----------------------------------------------------------------------------------------------------------------
Source: Table 6 in NMFS (2002).

The Northeast lobster fishery is second in commercial value after
the multispecies groundfish fishery. The most recent comprehensive
stock assessment, completed in 1996, indicated that lobster fishing
mortality rates for both inshore and offshore populations greatly
exceed the levels needed to provide maximum yields (NMFS, 1999a).
Lobster fishing mortality in the Gulf of Maine was almost double the
overfishing level. Inshore from Cape Cod through Long Island Sound
fishing mortality was three times the overfishing level.
2. Impingement and Entrainment Results
Table X-4 provides a list of impinged and entrained species for the
North Atlantic region that EPA was able to evaluate at the time of the
NODA. The life history data used in EPA's analysis and associated data
sources are provided in ``Appendix 1: Life History Parameter Values
Used to Evaluate I & E in the North Atlantic Region.''

Table X-4.--Species Groups and Associated Species for the North Atlantic Region
----------------------------------------------------------------------------------------------------------------
Species Commercial Recreational Forage
----------------------------------------------------------------------------------------------------------------
Alewife...................................................... X ............... ...............
American fourspot flounder................................... ............... ............... X
American plaice.............................................. X ............... ...............
American sand lance.......................................... ............... ............... X
American shad................................................ X X ...............
Atlantic tomcod.............................................. ............... ............... X
Atlantic cod................................................. X X ...............
Atlantic seasnail............................................ ............... ............... X
Atlantic silverside.......................................... X ............... ...............
Atlantic menhaden............................................ X ............... ...............
Atlantic mackerel............................................ X X ...............
Atlantic herring............................................. X ............... X
Bay anchovy.................................................. ............... ............... X
Blackspotted stickleback..................................... ............... ............... X
Blue mussel.................................................. X X ...............
Blueback herring............................................. X X ...............
Bluefish..................................................... X X ...............
Butterfish................................................... ............... ............... X
Clearnose skate.............................................. X ............... ...............
Cunner....................................................... X X ...............
Cusk......................................................... ............... ............... X
Fourbeard rockling........................................... ............... ............... X

[[Page 13551]]

Fourspine stickleback........................................ ............... ............... X
Grubby sculpin............................................... ............... ............... X
Gulf snailfish............................................... ............... ............... X
Haddock...................................................... X ............... ...............
Hickory shad................................................. X ............... X
Hogchoker.................................................... ............... ............... X
Lined seahorse............................................... ............... ............... X
Little skate................................................. X ............... ...............
Longhorn sculpin............................................. ............... ............... X
Lumpfish..................................................... ............... ............... X
Lumpsucker................................................... ............... ............... X
Moustache sculpin............................................ ............... ............... X
Mummichog.................................................... ............... ............... X
Ninespine stickleback........................................ ............... ............... X
Northern kingfish............................................ ............... ............... X
Northern pipefish............................................ ............... ............... X
Northern searobin............................................ ............... X ...............
Pollock...................................................... X X ...............
Radiated shanny.............................................. ............... ............... X
Rainbow smelt................................................ X X ...............
Red hake..................................................... X ............... ...............
Rock gunnel.................................................. ............... ............... X
Round herring................................................ X ............... ...............
Scup......................................................... X X ...............
Sea raven.................................................... X ............... ...............
Seaboard goby................................................ ............... ............... X
Seahorse..................................................... ............... ............... X
Searobin..................................................... ............... X ...............
Shorthorn sculpin............................................ ............... ............... X
Silver hake.................................................. X ............... ...............
Smallmouth flounder.......................................... ............... ............... X
Smooth flounder.............................................. ............... ............... X
Spot......................................................... ............... ............... X
Spotted hake................................................. X ............... X
Striped bass................................................. X X ...............
Striped killifish............................................ ............... ............... X
Striped searobin............................................. ............... X ...............
Summer flounder.............................................. ............... ............... X
Tautog....................................................... X X ...............
Threespine stickleback....................................... ............... ............... X
Weakfish..................................................... X X ...............
White hake................................................... X ............... ...............
White perch.................................................. X X ...............
Windowpane................................................... X X ...............
Winter flounder.............................................. X X ...............
Witch flounder............................................... X ............... ...............
Yellowtail flounder.......................................... X X ...............
----------------------------------------------------------------------------------------------------------------

Sixteen of a total of 67 distinct species (24%) that are known to
be impinged and entrained by facilities of the North Atlantic region
are harvested species for which some stock assessment has been
conducted. These include several stocks that are currently overfished,
stocks that have been overfished and are rebuilding, or stocks that are
approaching an overfished condition (Atlantic cod, haddock, silver
hake, windowpane flounder, and winter flounder) and stocks for which
stock size is uncertain (American lobster, spot, and tautog). Table X-5
summarizes the stock status of the 16 impinged and entrained species of
the North Atlantic that are harvested. Note that status is uncertain
for nearly half of the stocks listed.

Table X-5.--Summary of Stock Status of Harvested Species of the North Atlantic Region That Are Impinged and
Entrained
----------------------------------------------------------------------------------------------------------------
Overfishing? (Is
Stock (All are major stocks, with fishing mortality above Overfished? (Is stock Approaching overfished
annual landings over 200,000 pounds) threshold?) size below threshold?) condition?
----------------------------------------------------------------------------------------------------------------
American lobster.................... Yes.................... Undefined.............. Unknown.
American plaice..................... Yes.................... No..................... No.
Atlantic cod-Gulf of Maine.......... Yes.................... Rebuilding............. No.
Atlantic cod-Georges Bank........... No..................... Rebuilding............. No.
Atlantic croaker.................... Unknown................ Unknown................ Unknown.
Atlantic haddock-Gulf of Maine...... Yes.................... Rebuilding............. No.

[[Page 13552]]

Atlantic haddock-Georges Bank....... No..................... Rebuilding............. No.
Atlantic herring.................... No..................... No..................... No.
Atlantic menhaden................... No..................... No..................... Unknown.
Pollock............................. Unknown................ Unknown................ Unknown.
Red hake-Gulf of Maine/Northern No..................... No..................... No.
Georges Bank.
Red hake-Southern Georges Bank/ No..................... ....................... Unknown.
Middle Atlantic.
Silver hake-Gulf of Maine/Northern Unknown................ Rebuilding............. No.
Georges Bank.
Silver hake-Southern Georges Bank/ Unknown................ Yes.................... N/A.
Middle Atlantic.
Spot................................ Unknown................ Unknown................ Unknown.
Striped bass........................ No..................... No..................... Unknown.
Tautog.............................. Yes.................... Undefined.............. Unknown.
Weakfish............................ Undefined.............. No..................... No.
Windowpane flounder-Gulf of Maine/ No..................... No..................... No.
Georges Bank.
Windowpane flounder-Southern New No..................... No..................... Yes.
England/Middle Atlantic.
Winter flounder-Gulf of Maine....... Unknown................ Undefined.............. Unknown.
Winter flounder-Georges Bank........ No..................... Rebuilding............. No.
Winter flounder-Southern New England No..................... No..................... No.
----------------------------------------------------------------------------------------------------------------
Source: Table 3 in NMFS (2002).

3. Impingement and Entrainment Losses Expressed as Age 1 Equivalents,
Foregone Yield, and Production Foregone
At the outset, it should be noted that many of the species for
which impingement and entrainment estimates are provided are presently
at or near historic low levels of abundance. As a result, EPA's
estimates of impingement and entrainment may reflect lower totals than
would be produced by healthy populations. With ongoing fisheries
management efforts by federal and state government and fisheries
management councils designed to increase fish populations, impingement
and entrainment numbers may increase in the future. For example, NMFS
has spent approximately $150 million in the New England fishing vessel
buy-back program to reduce fishing pressure on groundfish stocks. In
addition, extensive fishing restrictions, habitat restoration projects,
and other efforts are also being carried out to help rebuild groundfish
stocks.
Table X-6 provides EPA's estimate of the annual age 1 equivalents,
foregone fishery yield, and production foregone resulting from the
impingement of aquatic species at facilities located on estuaries/tidal
rivers in the North Atlantic Region. Table X-7 displays this
information for entrainment. Table X-8 provides EPA's estimate of the
annual age 1 equivalents, foregone fishery yield, and biological
production foregone resulting from the impingement of aquatic species
at ocean facilities in the North Atlantic Region.

Table X-6.--Total Annual Impingement Losses for All Estuary/Tidal River Facilities in the North Atlantic Region
Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
Age 1 Production
Species equivalents Total yield foregone
(s) (lbs) (lbs)
----------------------------------------------------------------------------------------------------------------
Alewife......................................................... 164,315 0 15,240
American sand lance............................................. 3,288,738 0 9,226
Atlantic cod.................................................... 19,771 6,506 20,031
Atlantic herring................................................ 619 138 161
Atlantic mackerel............................................... 121 30 33
Atlantic menhaden............................................... 25,320 3,239 6,078
Atlantic silverside............................................. 33,187 0 134
Bay anchovy..................................................... 58,826 0 90
Bluefish........................................................ 1,118 706 954
Butterfish...................................................... 9,915 401 900
Cunner.......................................................... 14,593 73 954
Fourbeard rockling.............................................. 18 0 2
Grubby.......................................................... 48,273 0 11,756
Hogchoker....................................................... 790,907 0 7,293
Northern pipefish............................................... 13,040 0 71
Pollock......................................................... 525 817 1,601
Radiated shanny................................................. 35 0 0
Rainbow smelt................................................... 22,041 46 655
Red hake........................................................ 1,414 306 488
Rock gunnel..................................................... 435 0 9
Scup............................................................ 1,030 129 541
Searobin........................................................ 1,683 99 559
Silver hake..................................................... 81,196 31,094 81,393
Skate species................................................... 4,575 1,000 1,844

[[Page 13553]]

Striped bass.................................................... 81 128 234
Striped killifish............................................... 7,767 0 202
Tautog.......................................................... 12,435 5,679 22,039
Threespine stickleback.......................................... 78,481 0 92
Weakfish........................................................ 10,829 7,882 13,033
White perch..................................................... 31,126 389 4,079
Windowpane...................................................... 16,074 1,774 2,881
Winter flounder................................................. 572,714 61,802 283,550
-----------------
Total....................................................... 5,311,206 122,238 486,124
----------------------------------------------------------------------------------------------------------------

Table X-7.--Total Annual Entrainment Losses for All Estuary/Tidal River Facilities in the North Atlantic Region
Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
Age 1 Production
Species equivalents Total yield foregone
(s) (lbs) (lbs)
----------------------------------------------------------------------------------------------------------------
Alewife......................................................... 1,643 0 2,032
American sand lance............................................. 2,538,069 0 225,821
Atlantic menhaden............................................... 46,389 6,886 429,124
Atlantic silverside............................................. 28,589 0 32,912
Bay anchovy..................................................... 4,399,749 0 5,163,216
Cunner.......................................................... 1,892,973 8,981 153,386
Grubby.......................................................... 3,197,585 0 899,274
Hogchoker....................................................... 122,044 0 280,069
Rainbow smelt................................................... 176,933 1,255 20,408
Scup............................................................ 1,820 777 16,903
Seaboard goby................................................... 5,410,421 0 191,385
Silver hake..................................................... 6 190 396
Tautog.......................................................... 152,431 67,949 243,253,891
Threespine stickleback.......................................... 2,332 0 128
Weakfish........................................................ 1,757 1,265 8,420,351
White perch..................................................... 0 0 638
Windowpane...................................................... 26,337 2,705 1,088,284
Winter flounder................................................. 8,114,448 876,449 22,039,724
-----------------
Total....................................................... 26,113,529 966,457 282,217,941
----------------------------------------------------------------------------------------------------------------

Table X-8.--Total Annual Impingement Losses for All Ocean Facilities in the North Atlantic Region Expressed as
Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
Age 1 Production
Species equivalents Total yield foregone
(s) (lbs) (lbs)
----------------------------------------------------------------------------------------------------------------
Alewife......................................................... 19,507 100 3,179
American plaice................................................. 0 0 0
American sand lance............................................. 4,134 0 111
Atlantic cod.................................................... 893 311 905
Atlantic herring................................................ 36,716 5,119 9,538
Atlantic mackerel............................................... 27 13 7
Atlantic menhaden............................................... 16,581 5,718 6,611
Atlantic silverside............................................. 39,296 22 123
Bay anchovy..................................................... 147 0 0
Blueback herring................................................ 1,457 13 317
Bluefish........................................................ 98 56 84
Butterfish...................................................... 775 48 192
Cunner.......................................................... 2,464 15 161
Fourbeard rockling.............................................. 22 0 2
Grubby.......................................................... 7,745 0 1,886
Hogchoker....................................................... 33 0 8
Little skate.................................................... 870 209 351
Lumpfish........................................................ 910 0 941
Northern pipefish............................................... 1,402 0 8
Pollock......................................................... 2,356 3,485 7,186
Radiated shanny................................................. 283 0 3

[[Page 13554]]

Rainbow smelt................................................... 25,005 190 4,854
Red hake........................................................ 7,054 1,287 2,434
Rock gunnel..................................................... 1,883 0 38
Sculpin species................................................. 1,704 0 415
Scup............................................................ 764 154 500
Searobin........................................................ 234 17 78
Striped bass.................................................... 581 815 1,679
Striped killifish............................................... 458 0 12
Tautog.......................................................... 370 429 1,003
Threespine stickleback.......................................... 880 0 0
White perch..................................................... 310 0 12
Windowpane...................................................... 2,063 181 299
Winter flounder................................................. 6,981 2,224 5,375
-----------------
Total....................................................... 184,004 20,406 48,312
----------------------------------------------------------------------------------------------------------------

Table X-9 displays this information for entrainment. In these
tables, ``total yield'' includes direct losses of harvested species as
well as the yield of harvested species that is lost due to losses of
forage species. As discussed in detail in Chapter A5 of Part A of the
section 316(b) Phase II Case Study Document, EPA used a simple model of
trophic structure and trophic transfer efficiency to estimate the yield
of harvested species that is lost because of the loss of forage to
impingement and entrainment. The conversion of forage to yield
contributes only a very small fraction to total yield.

Table X-9.--Total Annual Entrainment Losses for All Ocean Facilities in the North Atlantic Region Expressed as
Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
Age 1 Production
Species equivalents Total yield foregone
(s) (lbs) (lbs)
----------------------------------------------------------------------------------------------------------------
Alewife......................................................... 0 0 1,119
American plaice................................................. 1,388 952 859
American sand lance............................................. 4,513,770 0 267,006
Atlantic cod.................................................... 4,468 2,887 4,827
Atlantic herring................................................ 34,143 5,837 20,037
Atlantic mackerel............................................... 7,716 1,441 13,253
Atlantic menhaden............................................... 8,124 3,729 14,845
Atlantic silverside............................................. 5,087 3 600
Bluefish........................................................ 5 62 13
Butterfish...................................................... 27 81 10
Cunner.......................................................... 1,177,927 5,584 92,933
Fourbeard rockling.............................................. 576,339 0 69,754
Grubby.......................................................... 252,098 0 70,899
Lumpfish........................................................ 6,094 0 36,035
Northern pipefish............................................... 782 0 33
Pollock......................................................... 499 1,050 6,617
Radiated shanny................................................. 1,789,347 0 20,033
Rainbow smelt................................................... 1,330,867 9,997 386,647
Red hake........................................................ 2,539 1,005 3,379
Rock gunnel..................................................... 8,080,717 0 214,957
Sculpin species................................................. 764,165 0 214,910
Searobin........................................................ 3,925 527 1,563
Tautog.......................................................... 882 2,417 2,537
Windowpane...................................................... 27,575 3,788 5,418
Winter flounder................................................. 287,616 92,710 227,283
-----------------
Total....................................................... 18,876,100 132,070 1,675,567
----------------------------------------------------------------------------------------------------------------

4. Recreational Fishing Valuation
As noted above, anglers will get greater satisfaction, and thus
greater economic value, from sites where the catch rate is higher, all
else being equal. Recreational fishery losses due to impingement and
entrainment may reduce recreational catch rates and thus negatively
impact angler welfare. To estimate welfare losses to recreational
anglers in the North Atlantic region from impingement and entrainment
at cooling water intake structures in North Atlantic, the Agency used a
model developed by R. Hicks et al. (NMFS, August 1999). For details see
`` The Economic Value of New England and

[[Page 13555]]

Mid-Atlantic Sportfishing in 1994'' provided in DCN 5-1271.
To estimate per trip welfare losses to recreational anglers from
impingement and entrainment in the North Atlantic region, the Agency
combined the Hicks' model coefficients with the estimated impingement
and entrainment losses at cooling water intake structures located in
the North Atlantic and NMFS data on recreational landings. The Hicks'
model includes three fishing modes--boat, shore, and charter boat--and
five species groups--big game, small game, flatfish, bottom fish, and
``no target catch''. The ``no target catch'' group includes all species
caught by anglers not targeting any specific fish species. For details
on species groupings, see Table 1.3 in the ``The Economic value of New
England and Mid-Atlantic Sportfishing in 1994'' report provided in DCN
5-1271. EPA used Hicks' definition of species groups to estimate
changes in the average historical catch rate from eliminating
impingement and entrainment.
Table X-10 shows the total average recreational landings for each
species group, the number of fish impinged and entrained, and the
estimated percent change in recreational landings if impingement and
entrainment effects are eliminated. Eliminating impingement and
entrainment would increase flatfish catch rates by 12.5%; small game
catch rates by 0.01%; bottom fish catch rates by 1.05%; and no target
catch rates by 1.45%. Table X-10 also shows the reductions in
impingement and entrainment losses that would result from installation
of the preferred option at each facility in the North Atlantic region,
as well as the resulting increases in catch rates. Reductions in
baseline impingement and entrainment losses due to the preferred option
will result in a 3.64% increase in catch rates for flounders; a 0.23%
increase in bottom fish catch rate; and a 0.4% increase in catch rate
for no target anglers.

Table X-10.--Estimated Change in the Total Recreational Catch for North Atlantic Under the Baseline and Post-
Compliance Scenarios
----------------------------------------------------------------------------------------------------------------
Baseline Preferred option
---------------------------------------------------------------
Change in
Avg. total Total Impingement recreational Reduced
Species catch 1997- recreational and losses from impingement
2001 losses from entrainment as reduced and
impingement % of total impingement entrainment as
and catch and % of total
entrainment entrainment catch
----------------------------------------------------------------------------------------------------------------
Flatfish........................ 2,525,530 315,703 12.50 91,995 3.64
Small Game...................... 15,678,352 1,020 0.01 105 0.00
Bottom Fish..................... 8,869,064 93,111 1.05 20,535 0.23
No Target Catch................. 28,280,214 409,960 1.45 112,652 0.40
----------------------------------------------------------------------------------------------------------------

Table X-11 presents the willingness to pay (WTP) values for
anglers, regardless of fishing mode, for catching an additional fish
per trip. Table X-11 also presents the estimated per trip welfare
losses from the baseline impingement and entrainment levels at cooling
water intake structures in the North Atlantic region, and the estimated
welfare gain from the post-compliance impingement and entrainment
reduction. The estimated per trip welfare losses from baseline
impingement and entrainment at the cooling water intake structures are
$0.34, $0.02, and $0.02 for flatfish, bottom fish, and no target catch,
respectively (all in 2002$). Per trip welfare gains from the preferred
option are $0.10, $0.005, and $0.004 for flatfish, bottom fish, and no
target catch, respectively (all in 2002$). As shown in Table X-11, the
greatest welfare gain from reducing impingement and entrainment losses
at cooling water intake structures in the North Atlantic region results
from improved opportunity for catching flatfish (i.e., flounders).

Table X--11.--Per Trip Welfare Gain From Various Improvements in Fishing Quality at All Sites in North Atlantic
(2002$)
----------------------------------------------------------------------------------------------------------------
All Fishing Modes/All Anglers
-----------------------------------------------
Reducing
Eliminating impingement
Species group baseline and
impingement entrainment +1 Fish
and under the
entrainment preferred
losses option
----------------------------------------------------------------------------------------------------------------
Big Game........................................................ NA NA 5.90
Small Game...................................................... $0.0003 $0.00003 2.53
Flatfish........................................................ $0.34 $0.10 3.57
Bottom Fish..................................................... $0.02 $0.005 1.06
No Target Catch................................................. $0.02 $0.004 1.66
----------------------------------------------------------------------------------------------------------------

EPA combined these estimates of per trip welfare change with
fishing participation estimates from NMFS to estimate the annual value
to recreational anglers of improved catch rates resulting from post-
compliance reductions in impingement and entrainment at cooling water
intake structures in the North Atlantic. Table X-12 provides the total
number of angler days in the North Atlantic.

[[Page 13556]]

Table X-12.--Total North Atlantic Fishing Trips in 2001
------------------------------------------------------------------------
All fishing
modes
------------------------------------------------------------------------
Total North Atlantic Trips, 2001........................ 8,084,261
------------------------------------------------------------------------
Source: Marine Recreational Fishery Statistics Survey, NMFS, 2001.

EPA calculated total recreational losses to North Atlantic anglers
by multiplying the estimated per trip welfare loss from baseline
impingement and entrainment for a given species group by the number of
recreational fishing trips in 2001. Table X-13 summarizes the results
of this calculation. The total value of recreational losses for all
species impinged and entrained at the cooling water intake structures
in the North Atlantic is $3.1 million per year (2002$), for all anglers
before discounting. Discounting the baseline losses at three percent
and seven percent yields total recreational losses of $2.6 million, and
$2.3 million, respectively, for all anglers (2002$). Table X-13 also
presents estimates of the total welfare gain to recreational anglers
from the post-compliance impingement and entrainment reduction. The
estimated welfare gain from reduction in baseline losses resulting from
the preferred option is $0.88 million, before discounting, for all
anglers (2002$). Applying the discount factors for three and seven
percent yield total losses of $0.76 million and $0.65 million,
respectively (2002$).

Table X-13.--Estimated Annual Welfare Change to Recreational Anglers in the North Atlantic Region Under the Baseline and Post-Compliance Scenarios
(2002$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total baseline welfare losses Welfare gain from reduction in baseline
----------------------------------------------------------- impingement and entrainment losses
Species groups --------------------------------------------------
Before Discounted using 3% Discounted Before Discounted Discounted
discount using 7% discounting using 3% using 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Big Game.................................. NA NA NA NA NA NA
Small Game................................ $2,425.28 $1,527.93 $1,358.16 $242.53 $184.32 $169.77
Flat Fish................................. 2,748,648.74 2,418,810.89 2,061,486.56 808,426.10 711,414.97 606,319.58
Bottom Fish............................... 161,685.22 88,926.87 77.608.91 40,421.31 21,019.08 18,189.59
No Target Catch........................... 151,685.22 129,348.18 111,562.80 32,337.04 26,193.01 22,312.56
------------------
All Species........................... 3,074,444.46 2,638,613.86 2,252,016.42 881,426.98 758,811.37 646,991.49
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Commercial Fishing Valuation
Table X-14 provides EPA's estimate of the value of gross revenues
lost in commercial fisheries resulting from the impingement of aquatic
species in the North Atlantic region. Table X-15 displays this
information for entrainment. As described above, EPA estimates that 0
to 40% of these revenue losses represent surplus losses to producers,
assuming no change in prices or fishing costs. EPA will refine these
assumptions for the final rule.

Table X-14a.--Annual Commercial Fishing Gross Revenues Lost Due to Impingement at Estuary Facilities in the
North Atlantic Region
----------------------------------------------------------------------------------------------------------------
Estimated value of harvest lost (in dollars)
Estimated -----------------------------------------------
Species pounds of Discounted Discounted
harvest lost Undiscounted using 3% using 7%
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Atlantic cod.................................... 3,253 $2,928 $2,657 $2,349
Atlantic herring................................ 138 8 7 7
Atlantic mackerel............................... 23 7 6 5
Atlantic menhaden............................... 3,236 153 145 135
Bluefish........................................ 77 19 18 16
Butterfish...................................... 401 249 244 237
Pollock......................................... 409 286 245 203
Rainbow smelt................................... 46 24 23 22
Red hake........................................ 305 64 60 56
Scup............................................ 64 53 46 40
Searobin........................................ 16 33 30 27
Silver hake..................................... 31,094 10,496 9,281 7,952
Skate species................................... 1,000 140 131 122
Tautog.......................................... 443 331 240 159
Weakfish........................................ 6,729 5,474 4,926 4,324
White perch..................................... 82 92 84 75
Windowpane...................................... 1,774 993 925 845
Winter flounder................................. 30,901 39,524 34,738 29,657
-----------------

[[Page 13557]]

Total....................................... 79,991 60,874 53,806 46,231
----------------------------------------------------------------------------------------------------------------

Table X-14b.--Annual Commercial Fishing Gross Revenues Lost Due to Impingement at Ocean Facilities in the North
Atlantic Region
----------------------------------------------------------------------------------------------------------------
Estimated value of harvest lost (in dollars)
Estimated -----------------------------------------------
Species pounds of Discounted Discounted
harvest lost Undiscounted using 3% using 7%
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
American plaice................................. 0 $0 $0 $0
Atlantic cod.................................... 156 129 117 104
Atlantic herring................................ 5,113 256 231 204
Atlantic mackerel............................... 10 3 2 2
Atlantic menhaden............................... 5,712 228 216 200
Atlantic silverside............................. 22 12 12 12
Blueback herring................................ 13 1 1 1
Bluefish........................................ 6 2 1 1
Butterfish...................................... 48 23 22 21
Little skate.................................... 208 40 37 34
Pollock......................................... 1,743 1,202 1,031 854
Rainbow smelt................................... 189 38 35 32
Red hake........................................ 1,285 283 267 248
Scup............................................ 77 80 70 60
Searobin........................................ 3 6 5 5
Tautog.......................................... 33 21 19 17
White perch..................................... 0 0 0 0
Windowpane...................................... 181 103 96 87
Winter flounder................................. 1,112 1,535 1,330 1,114
-----------------
Total....................................... 15,910 3,962 3,492 2,995
----------------------------------------------------------------------------------------------------------------

Table X-15a.--Annual Commercial Fishing Gross Revenues Lost Due to Entrainment at Estuary Facilities in the
North Atlantic Region
----------------------------------------------------------------------------------------------------------------
Estimated value of harvest lost (in dollars)
Estimated -----------------------------------------------
Species pounds of Discounted Discounted
harvest lost Undiscounted using 3% using 7%
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Atlantic menhaden............................... 6,878 $326 $299 $267
Rainbow smelt................................... 1,253 244 226 206
Scup............................................ 389 315 269 221
Silver hake..................................... 190 62 53 44
Tautog.......................................... 5,299 3,966 2,786 1,779
Weakfish........................................ 1,080 806 705 595
White perch..................................... 0 0 0 0
Windowpane...................................... 2,705 1,514 1,369 1,204
Winter flounder................................. 438,225 560,512 478,280 393,062
-----------------
Total....................................... 456,019 567,746 483,987 397,377
----------------------------------------------------------------------------------------------------------------

Table X-15b.--Annual Commercial Fishing Gross Revenues Lost Due to Entrainment at Ocean Facilities in the North
Atlantic Region
----------------------------------------------------------------------------------------------------------------
Estimated value of harvest lost (in dollars)
Estimated -----------------------------------------------
Species pounds of Discounted Discounted
harvest lost Undiscounted using 3% using 7%
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
American plaice................................. 951 $1,142 $957 $770
Atlantic cod.................................... 1,444 1,198 1,056 899

[[Page 13558]]

Atlantic herring................................ 5,831 292 255 217
Atlantic mackerel............................... 1,121 314 280 242
Atlantic menhaden............................... 3,725 149 137 122
Atlantic silverside............................. 3 2 2 2
Bluefish........................................ 7 2 2 1
Butterfish...................................... 80 38 35 32
Pollock......................................... 525 362 302 241
Rainbow smelt................................... 9,987 1,997 1,810 1,599
Red hake........................................ 1,004 221 202 181
Searobin........................................ 85 174 155 133
Tautog.......................................... 188 121 106 90
Windowpane...................................... 3,788 2,159 1,940 1,692
Winter flounder................................. 46,355 63,970 53,829 43,393
-----------------
Total....................................... 75,094 72,142 61,067 49,613
----------------------------------------------------------------------------------------------------------------

6. Total Recreational and Commercial Losses From Baseline Impingement
and Entrainment in the North Atlantic Region
Table X-16 presents EPA's estimates of total baseline recreational
and commercial fishing losses from impingement and entrainment at
cooling water intake structures in the North Atlantic region. Total
commercial and recreational fishing losses are $3.3 million per year
for all species and fishing modes, before discounting. Discounting
these total baseline welfare losses by three and seven percent yield
total losses of $2.8 million and $2.4 million, respectively.

Table X-16.--Estimated Discounted Commercial and Recreational Baseline Welfare Losses in the North Atlantic
Region from Impingement and Entrainment (2002$) ^a
----------------------------------------------------------------------------------------------------------------
Discounted Discounted
Benefit type Before using 3% using 7%
discounting discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Recreational.................................................... $3,074,444 $2,638,614 $2,252,016
Commercial ^b.................................................... 281,889 240,941 198,487
-----------------
Total....................................................... 3,356,333 2,879,555 2,450,503
----------------------------------------------------------------------------------------------------------------
^a Welfare losses represent losses due to both impingement and entrainment because recreational estimates cannot
be presented separately for these categories.
^b Based on 40 percent of gross revenues, or upper bound of 0-40 percent range assumed to represent producer
surplus.

7. Estimated Use Benefits of Proposed Regulatory Option in the North
Atlantic Region
Table X-17 presents EPA's estimates of the gain from the post-
compliance reduction in impingement and entrainment at cooling water
intake structures in the North Atlantic region. The total reduction in
commercial and recreational fishing is $ 0.96 million per year for all
species and fishing modes, before discounting. Discounting these total
reduced welfare losses by three and seven percent yields total losses
of $0.83 million and $0.70 million, respectively. These numbers may
change for final if additional impingement and entrainment data become
available.

Table X-17.--Estimated Discounted Commercial and Recreational Reduced Welfare Losses in the North Atlantic
Region from Impingement and Entrainment (2002$) ^a
----------------------------------------------------------------------------------------------------------------
Discounted Discounted
Benefit type Expected % Before using 3% using 7%
reduction discounting discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Recreational.................................... 28.7% $881,426 $758,811 $646,991
Commercial ^b.................................... 29.2 82,222 70,256 57,860
-----------------
Total....................................... 28.7 963,648 829,067 704,851
----------------------------------------------------------------------------------------------------------------
^a Welfare losses represent losses due to both impingement and entrainment because recreational estimates cannot
be presented separately for these categories.
^b Based on 40 percent of gross revenues, or upper bound of 0-40 percent range assumed to represent producer
surplus.

[[Page 13559]]

D. Northern California Regional Study

1. Background: Marine Fisheries of Northern California
The Northern California NMFS region extends from Point Conception
north to the Oregon border. The oceanic transition zone off Point
Conception creates a natural ecological separation between northern and
southern California. North of Point Conception, coastal waters are cold
and oceanic conditions are harsh, whereas to the south waters are
warmer and conditions are moderate. As a result, the fish species
composition differs between the two regions (Leet et al., 2001).
Fisheries of the Northern California Region are managed by the Pacific
Fishery Management Council (PFMC), which governs commercial and
recreational fisheries in federal waters from 3-200 nautical miles off
the coasts of Washington, Oregon and California. The NMFS Northwest
Fisheries Science Center provides scientific and technical support for
management, conservation and fisheries development.
There are 83 species of groundfish included under PFMC's Groundfish
FMP, including nearly 50 species of rockfish (Sebastes spp.) (Table 3
in NMFS, 2002). Pacific whiting (Merluccius productus) dominates the
commercial catch, accounting for 78% of Pacific Coast landings (NMFS,
1999a). During the 1990's a major fishery developed for nearshore
species, including rockfishes, cabezon, and sheephead (Leet et al.,
2001). Rockfishes are important for both commercial and recreational
fisheries (NMFS, 1999a). In 1994, a limited entry program was
implemented for the groundfish fishery due to concerns about
overfishing (NMFS, 1999a).
There are five species of anadromous Pacific salmon supporting
coastal and freshwater commercial and recreational fisheries along the
Pacific Coast, including chinook (Oncorhynchus tshawytscha), coho (O.
kisutch), sockeye (O. nerka), pink (O. gorbuscha), and chum (O. keta)
salmon (NMFS, 1999a).
Since 1991, NMFS has listed 20 Evolutionary Significant Units
(ESU's) \22\ of Pacific Coast salmon and steelhead trout (O. mykiss)
under the federal Endangered Species Act (ESA) (NMFS, 1999b). In NMF's
Northern California region, listed species include steelhead, coho
salmon, and chinook salmon of the central California Coast and
steelhead and chinook salmon of California's Central Valley.
---------------------------------------------------------------------------

\22\ An Evolutionarily Significant Unit (ESU) is a term
introduced by NMFS in 1991 to refer to the Endangered Species Act
(ESA) interpretation of ``distinct population segment.'' A stock
must satisfy two criteria to be considered an ESU: (1) ``it must be
substantially reproductively isolated from other conspecific
population units,'' and (2) ``it must represent an important
component in the evolutionary legacy of the species.''
---------------------------------------------------------------------------

Ocean fisheries for chinook and coho salmon are managed by the PFMC
under the Pacific Coast Salmon FMP. In Puget Sound and the Columbia
River, chinook and coho fisheries are managed by the states and tribal
fishery agencies. Declines in chinook and coho salmon coast-wide have
led to reductions and closures of ocean fisheries in recent years
(NMFS, 1999a).
The Pacific Salmon FMP contains no fishery management objectives
for sockeye, chum, even-year pink, and steelhead stocks because fishery
impacts are considered inconsequential (Table 3 in NMFS, 2002). Pink,
chum, and sockeye salmon are managed jointly by the Pacific Salmon
Commission, Washington state, and tribal agencies (NMFS, 1999a).
Pacific Coast pelagic species managed by the PFMC include Pacific
mackerel (Scomber japonicus), jack mackerel (Trachurus symmetricus),
Pacific sardine (Sardinops sagax), northern anchovy (Engraulis mordax),
and California market squid (Loligo opalescens) (NMFS, 2002). These
species typically fluctuate widely in abundance, and currently most
stocks are low relative to historical levels (NMFS, 1999a). Pacific
mackerel and Pacific sardine are not overfished, but the stock size of
the other species governed by the Coastal Pelagic FMP is unknown (Table
3 in NMFS, 2002). Due to increases in abundance in recent years,
Pacific mackerel now accounts for over half of recent landings of
Pacific Coast pelagic species (NMFS, 1999a).
Pacific Coast shellfish resources are important both commercially
and recreationally (NMFS, 1999a). Shrimps, crabs, abalones, and clams
command high prices and contribute substantially to the value of
Pacific Coast fisheries, even though landings are small.
2. Impingement and Entrainment Results
Table X-18 provides a list of impingement and entrainment species
in the Northern California region and the species groups that were
evaluated in EPA's analysis of regional impingement and entrainment.
The life history data used in EPA's analysis and associated data
sources are provided in ``Appendix 2: Life History Parameter Values
Used to Evaluate I & E in the Northern California Region.''

Table X-18.--Species groups and associated species for the Northern California Regional Study
--------------------------------------------------------------------------------------------------------------------------------------------------------
Group evaluated Species Commercial Recreational Forage Special status
--------------------------------------------------------------------------------------------------------------------------------------------------------
Anchovies.......................... Northern anchovy..... X X ........................
Bay shrimps........................ Bay shrimp........... .............. X ........................
Other bay shrimp \a\. .............. X ........................
Cabezon............................ Cabezon.............. X X ........................
California halibut................. California halibut... X X ........................
Drums/croakers..................... Queenfish............ X X ........................
White croaker........ X X ........................
Other croakers....... .............. X ........................
Dungeness crab..................... Dungeness crab....... X X ........................
Flounders.......................... Dover sole........... X X ........................
English sole......... X X ........................
Pacific sanddab...... X X ........................
Rock sole............ X X ........................
Sand sole............ X X ........................
Starry flounder...... X X ........................
Other flounders \B\.. X X ........................
Gobies............................. Bay goby............. .............. ........................ X
Blackeye goby........ .............. ........................ X
Blind goby........... .............. ........................ X
Longjaw mudsucker.... .............. ........................ X

[[Page 13560]]

Shadow goby.......... .............. ........................ X
Yellowfin goby....... .............. ........................ X
Herrings........................... Pacific herring...... X X ........................
Pacific sardine...... X X ........................
Other herrings....... .............. X ........................
Rock crabs......................... Slender crab......... .............. ........................ X
Brown rock crab...... .............. X ........................
Hairy rock crab...... .............. ........................ X
Red rock crab........ X X ........................
Slender rock crab.... .............. ........................ X
Yellow crab.......... .............. X ........................
Rockfishes......................... Aurora rockfish...... X X ........................
Black and yellow X X ........................
rockfish.
Black rockfish....... X X
Blue rockfish........ X X ........................
Boccacio............. X X ........................
Brown rockfish....... X X ........................
California X X ........................
scorpionfish.
Chilipepper.......... X X ........................
Copper rockfish...... X X ........................
Gopher rockfish...... X X ........................
Grass rockfish....... X X ........................
Kelp rockfish........ X X ........................
Olive rockfish....... X X ........................
Shortbelly rockfish.. X X ........................
Yellowtail rockfish.. X X ........................
Other rockfish....... X X ........................
Sculpins........................... Other sculpins\c\.... X X ........................
Silversides........................ Jacksmelt............ .............. X ........................
Other silversidesd... .............. X ........................
Smelts............................. Surf smelt........... X X ........................
Other smelts \e\..... X X ........................
Surfperches........................ Barred surfperch..... X X
Black surfperch...... X X
Pile surfperch....... X X
Shiner perch......... X X
Striped surfperch.... X X
Walleye surfperch.... X X
White surfperch...... X X
Other surfperch \f\.. X X
Chinook salmon..................... Chinook salmon....... .............. ........................ ........................ X (FT, ST, FE, SE, FCT)
Delta smelt........................ Delta smelt.......... .............. ........................ ........................ X (FT, ST)
Green sturgeon..................... Green sturgeon....... .............. ........................ ........................ X (SOC)
Longfin smelt...................... Longfin smelt........ .............. ........................ ........................ X (SOC)
Sacramento splittail............... Sacramento splittail. .............. ........................ ........................ X (FT)
Steelhead.......................... Steelhead............ .............. ........................ ........................ X (FT)
Striped bass....................... Striped bass......... .............. X ........................
Herrings........................... American shad........ .............. X ........................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Other bay shrimp includes Alaskan bay shrimp, black tailed bay shrimp, blackspotted bay shrimp, Franciscan bay shrimp, smooth bay shrimp, and
spotted bay shrimp.
\b\ Other flounders includes CO Turbot, curlfin turbot, diamond turbot, fantail sole, horneyhead turbot, slender turbot, and speckled turbot.
\c\ Other sculpin includes bonyhead sculpin, brown Irish lord, buffalo sculpin, coralline sculpin, fluffy sculpin, manacled sculpin, pacific staghorn
sculpin, prickly sculpin, rosy sculpin, roughcheek sculpin, smoothhead sculpin, snubnose sculpin, staghorn sculpin, tidepool sculpin, and wooly
sculpin.
\d\ Other silversides includes topsmelt.
\e\ Other smelts includes night smelt and popeye blacksmelt.
\f\ Other surfperch includes dwarf surfperch, kelp surfperch, rainbow surfperch, and spotfin surfperch.
FT = federally listed as threatened
ST = state listed as threatened
FE = federally listed as endangered
SE = state listed as endangered
FCT = federal candidate for listing as threatened
SOC = species of concern

Available impingement and entrainment data indicate that 20 of a
total of 92 distinct species that are impinged and entrained by
northern California facilities are harvested species subject to FMP's
developed by the PFMC. Table X-19 summarizes information on the stock
status of these species. Note that stock status is known for only 4 of
these species. Most of the species listed are rockfish species.
Northern anchovy falls under the

[[Page 13561]]

Coastal Pelagic FMP and the other species in the table are included in
the Groundfish FMP. Although under the jurisdiction of the PFMC, there
are no fishery management objectives for Central Valley chinook salmon
and Central California Coast coho salmon because of their ESA listing
(NMFS, 2002). There are also no fishery management goals for steelhead
because fishery impacts are considered inconsequential (NMFS, 2002).

Table X-19.--Summary of Stock Status of Harvested Species of the Northern California Region That Are Impinged
and Entrained and Are Included in Federal FMP's
----------------------------------------------------------------------------------------------------------------
Stock (species in bold are major Overfishing? Is fishing
stocks, with annual landings over mortality above Overfished? (Is stock Approaching
200,000 pounds) threshold?) size below threshold?) overfished condition?
----------------------------------------------------------------------------------------------------------------
Aurora rockfish...................... Unknown................. Unknown................. Unknown
Black rockfish....................... No...................... No...................... No
Black-and-yellow rockfish............ Unknown................. Unknown................. Unknown
Blue rockfish........................ Unknown................. Unknown................. Unknown
Bocaccio............................. No...................... Yes..................... N/A
Cabezon.............................. Unknown................. Unknown................. Unknown
California scorpionfish.............. Unknown................. Unknown................. Unknown
Central California Coast coho N/A..................... N/A..................... N/A
salmon\a\.
Central Valley chinook salmon\a\..... N/A..................... N/A..................... N/A
Chilipepper rockfish................. No...................... No...................... No
Copper rockfish...................... Unknown................. Unknown................. Unknown
Gopher rockfish...................... Unknown................. Unknown................. Unknown
Grass rockfish....................... Unknown................. Unknown................. Unknown
Kelp rockfish........................ Unknown................. Unknown................. Unknown
Northern anchovy-central ........................ Undefined............... Unknown
subpopulation.
Olive rockfish....................... Unknown................. Unknown................. Unknown
Shortbelly rockfish.................. No...................... No...................... No
Starry flounder...................... Unknown................. Unknown................. Unknown
Steelhead\b\......................... N/A..................... N/A..................... N/A
Yellowtail rockfish.................. No...................... No...................... No
----------------------------------------------------------------------------------------------------------------
Source: Table 4 in NMFS (2002).
\a\ There are no fishery management goals for Central Valley chinook salmon and Central California Coast coho
salmon because of their ESA listing (NMFS, 2002).
\b\ There are no fishery management goals for steelhead because fishery impacts are considered inconsequential
(NMFS, 2002).

3. Impingement and Entrainment Losses Expressed as Age 1 Equivalents,
Foregone Yield, and Production Foregone
Table X-20 provides EPA's estimate of the annual age 1 equivalents,
foregone fishery yield, and production foregone resulting from the
impingement of aquatic species at facilities located on estuaries/tidal
rivers in the Northern California Region. Table X-21 displays this
information for entrainment. Table X-22 provides EPA's estimate of the
annual age 1 equivalents, foregone fishery yield, and production
foregone resulting from the impingement of aquatic species at ocean
facilities in the Northern California Region. Table X-23 displays this
information for entrainment.

Table X-20.--Total Annual Impingement Losses for All Estuary/Tidal River Facilities in the Northern California
Region Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
Age 1
Species group equivalents Total yield Production
(s) (lbs) foregone
----------------------------------------------------------------------------------------------------------------
Anchovies....................................................... 6,483,908 10,156 86,487
Bay shrimps..................................................... 310,400 22 169
Cabezon......................................................... 968 1,882 4,569
Chinook salmon.................................................. 1,880 0 50,674
Croakers........................................................ 6,737 390 710
Delta smelt..................................................... 18,454 0 25
Dungeness crab.................................................. 1,028 404 995
Flounders....................................................... 56,767 4,652 16,970
Gobies.......................................................... 10,819 0 47
Herrings........................................................ 545,982 25,560 65,791
Longfin smelt................................................... 189,940 0 6,553
Rock crabs...................................................... 840,492 165 115,125
Rockfishes...................................................... 257,596 62,420 164,021
Sacramento splittail............................................ 24,188 0 11,166
Sculpins........................................................ 128,009 1,304 9,151
Silversides..................................................... 888,074 39,672 202,453
Smelts.......................................................... 71,279 1,620 13,400
Striped bass.................................................... 762,529 277,119 1,270,930
Surfperches..................................................... 725,358 45,156 109,915
-----------------
Total....................................................... 11,324,407 470,522 2,129,153
----------------------------------------------------------------------------------------------------------------

[[Page 13562]]

Table X-21.--Total Annual Entrainment Losses for All Estuary/Tidal River Facilities in the Northern California
Region Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
Age 1 Production
Species group equivalents Total yield foregone
(s) (lbs) (lbs)
----------------------------------------------------------------------------------------------------------------
Anchovies....................................................... 332,963 525 47,178
Bay shrimps..................................................... 5,820,260 419 4,164
Cabezon......................................................... 20 46 2,868
California halibut.............................................. 717 2,686 5,476
Chinook salmon.................................................. 88 0 3,033
Croakers........................................................ 0 0 476
Delta smelt..................................................... 268,874 0 3,894
Dungeness crab.................................................. 80,574 37,273 184,655
Flounders....................................................... 1,984 193 2,602
Gobies.......................................................... 2,874,204 0 44,209
Herrings........................................................ 1,495,230 69,974 257,242
Longfin smelt................................................... 333 0 19
Rock crabs...................................................... 2,491,669 490 1,406,358
Rockfishes...................................................... 63 17 5,512
Sacramento splittail............................................ 39 0 87
Sculpins........................................................ 78,819 4,731 32,034
Silversides..................................................... 5,744 321 1,948
Smelts.......................................................... 386 16 565
Striped bass.................................................... 1,950,593 708,904 3,383,949
-----------------
Total....................................................... 15,402,559 825,595 5,386,270
----------------------------------------------------------------------------------------------------------------

Table X-22.--Total Annual Impingement Losses for All Ocean Facilities in the Northern California Region
Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
Age 1 Production
Species group equivalents Total yield foregone
(s) (lbs) (lbs)
----------------------------------------------------------------------------------------------------------------
Anchovies....................................................... 63 0 1
Bay shrimps..................................................... 17,240 1 9
Cabezon......................................................... 20 39 94
Croakers........................................................ 581 34 61
Dungeness crab.................................................. 3,431 1,583 3,322
Flounders....................................................... 2,583 212 772
Rock crabs...................................................... 3,841 1 526
Rockfishes...................................................... 3,938 949 2,497
Sculpins........................................................ 935 10 67
Silversides..................................................... 841 30 192
Surfperches..................................................... 2,802 122 425
-----------------
Total....................................................... 36,275 2,981 7,965
----------------------------------------------------------------------------------------------------------------

Table X-23.--Total Annual Entrainment Losses for All Ocean Facilities in the Northern California Region
Expressed as Age 1 Equivalents, Foregone Fishery Yield, and Production Foregone
----------------------------------------------------------------------------------------------------------------
Age 1 Production
Species group equivalents Total yield foregone
(s) (lbs) (lbs)
----------------------------------------------------------------------------------------------------------------
Anchovies....................................................... 5,382 8 87,011
Bay shrimps..................................................... 1,410,174 101 3,721
Cabezon......................................................... 170 331 24,314
California halibut.............................................. 5,413 19,617 42,161
Croakers........................................................ 1 0 1,892
Flounders....................................................... 5,198 431 6,817
Gobies.......................................................... 415,594 0 6,392
Herrings........................................................ 847,884 39,634 215,090
Rock crabs...................................................... 63,433,607 12,467 38,249,035
Rockfishes...................................................... 1,620 390 142,462
Sculpins........................................................ 539,868 5,523 38,624
Silversides..................................................... 19 13 6
Smelts.......................................................... 778 19 1,140
-----------------
Total....................................................... 66,665,707 78,534 38,818,665
----------------------------------------------------------------------------------------------------------------

[[Page 13563]]

In these tables, ``total yield'' includes direct losses of harvested
species as well as the yield of harvested species that is lost due to
losses of forage species. As discussed in detail in Chapter A5 of Part
A of the section 316(b) Phase II Case Study Document, EPA used a simple
model of trophic structure and trophic transfer efficiency to estimate
the yield of harvested species that is lost because of the loss of
forage to impingement and entrainment. The conversion of forage to
yield contributes only a very small fraction to total yield.
4. Recreational Fishing Valuation
This notice presents results for the Northern California regional
analysis, including benefits calculations for this region. Details of
the Northern California study are presented in DCN 5-1009. As noted
above, the Northern California region is defined based on NMFS regional
boundaries. Northern California includes all northern counties to, and
including, San Luis Obispo County. EPA included anglers and sites from
the counties on each regional border in the model, to allow anglers to
travel to substitute sites in the bordering region. For example, EPA
added Santa Barbara County from the Southern California region to allow
anglers from Northern California to travel to all substitute sites
located within a one day travel distance limit.
The Northern California model focuses on the following species and
species groups: salmon, sturgeon, flounders, small game fish, big game
fish, bottom fish, and other species. The flounder category includes
flounders and halibut; the small game group includes striped bass and
small tuna and mackerel; the big game category includes large tuna,
sharks, marlin, and dolphin fish; the bottom fish category includes
greenlings, sculpins, surfperches, croakers, rockfishes and other
bottom species; and the other species category includes only anchovies,
smelts, silversides and herrings. Approximately 20 percent of anglers
fishing from boats and 47 percent of anglers fishing from shore target
no particular species. These anglers (hereafter, no-target anglers)
caught fish in all species groups. Therefore, EPA used average catch
rates for all species caught by no-target anglers to define fishing
site quality for no-target anglers.
The methodology used in the Northern California study follows
closely that of McConnell and Strand (1994) and Hicks (1999) work for
NMFS. EPA maintained most important aspects of the methodologies used
in the previous recreational NMFS studies. The Agency, however,
estimated separate models for boat and shore anglers for the Northern
California region. The Agency attempted to estimate a nested RUM model
for Northern California, including both boat and shore anglers.
However, preliminary model results indicated that nesting was not
appropriate for the data. The Agency did not estimate a model for the
charter boat mode for the NODA, however, because charter boat trips
represent only thirteen percent of the total angling trips in this
region. For the NODA analysis, the welfare gain from improved catch
rates to charter boat anglers is approximated based on the regression
coefficients developed for boat anglers.
The Agency combined the estimated model coefficients with the
estimated impingement and entrainment losses at the cooling water
intake structures in the Northern California Region to estimate per
trip welfare losses from impingement and entrainment. Table X-24 shows
the total average recreational landings for each species group, the
number of fish impinged and entrained, and the estimated percent change
in recreational landings from impingement and entrainment elimination.
Eliminating impingement and entrainment is expected to increase
flounders catch rates by 0.58%; small game catch rates by 56.02%;
bottom fish catch rates by 6.6%; and other species catch rates by 5.5%.

Table X-24.--Impingement and Entrainment as Percent of Total Catch for Northern California
----------------------------------------------------------------------------------------------------------------
Change in
recreational Reduced
Avg. total losses from impingement and
Species catch 1996-2000 reduced entrainment as
impingement and % of total
entrainment catch
----------------------------------------------------------------------------------------------------------------
Flounders.................................................... 238,394 1,377 0.578
Small Game................................................... 459,563 257,431 56.016
Bottom Fish.................................................. 3,665,520 241,089 6.595
Other........................................................ 1,442,356 79,047 5.480
All Species.................................................. 5,795,833 578,944 9.989
----------------------------------------------------------------------------------------------------------------

Table X-25 shows the impingement and entrainment reductions that
would result from installation of the preferred option at each facility
in Northern California, as well as the resulting increases in catch
rates. The preferred option will result in a 0.32% reduction in
impingement and entrainment losses for flounders; a 14.9% reduction in
losses for small game fish; a 5% reduction in losses for bottom fish;
and a 4.4% reduction in losses for other species.

Table X-25.--Estimated Change in Catch Rates Resulting from the Preferred Option for Northern California
----------------------------------------------------------------------------------------------------------------
Change in
Total recreational
recreational losses from
Species Avg. total losses from impingement and
catch 1996-2000 impingement and entrainment as
entrainment % of total
catch
----------------------------------------------------------------------------------------------------------------
Flounders.................................................... 238,394 762 0.320
Small Game................................................... 459,563 68,615 14.931
Bottom Fish.................................................. 3,665,520 183,651 5.024

[[Page 13564]]

Other........................................................ 1,442,356 62,760 4.351
All Species.................................................. 5,795,833 315,788 5.449
----------------------------------------------------------------------------------------------------------------

The willingness to pay values for boat and shore anglers for an
additional fish per trip, and for the expected benefits from reducing
impingement and entrainment at cooling water intake structures in the
Northern California region are shown in Table X-26. Table X-26 shows
that boat anglers value most highly the improvements in catch rates for
sturgeon and salmon, followed by flounder and big game fish. Boat and
shore anglers show a few notable differences in values. For example,
the value for flounders is higher for boat anglers. This can be
explained by the fact that most boat anglers target and catch halibut,
a larger species; most shore anglers catch the smaller flounders. The
value for flounders is also higher for boat anglers. This can be
explained by the fact that most boat anglers target and catch halibut,
a larger species; most shore anglers catch the smaller flounders.

Table X-26.--Per Trip Welfare Gain from Improvements in Fishing Quality at All Sites in Northern California (2002$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Per trip welfare gain (2002$) WTP for an additional fish per
------------------------------------------------------------------ trip (2002$)
Eliminating impingement and Reducing impingement and -------------------------------
Targeted species group entrainment entrainment with preferred
--------------------------------- technology
--------------------------------- Boat anglers Shore anglers
Boat anglers Shore anglers Boat anglers Shore anglers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Flounders............................................. $0.32 $0.96 $0.02 $0.01 $2.97 $0.99
Small Game fish....................................... 1.19 3.37 0.32 0.96 0.76 3.55
Bottom fish........................................... 0.24 0.11 0.18 0.08 0.75 0.54
Other fish............................................ NA 0.58 NA 0.46 NA 1.10
No Target............................................. 2.66 0.02 2.48 0.00 8.53 0.76
Salmon................................................ NA NA NA NA 9.40 10.66
Sturgeon.............................................. NA NA NA NA 33.5 NA
Big Game fish......................................... NA NA NA NA 4.05 NA
--------------------------------------------------------------------------------------------------------------------------------------------------------

As shown in Table X-26, the estimated welfare gains from
impingement and entrainment reduction are $0.02, $0.32, and $0.24 per
trip for boat anglers targeting flounders, small game and bottom fish,
respectively; and $0.01, $0.96, $0.08, and $0.46 per trip for shore
anglers targeting flounders, small game, bottom fish and other specie,
respectively (all in 2002$). Anglers targeting small game are expected
to experience the greatest welfare gain from reducing impingement and
entrainment at cooling water intake structures in Northern California.
EPA then combined the estimated per trip welfare gain from
eliminating impingement and entrainment at Northern California cooling
water intake structures with NMFS fishing participation estimates to
estimate the annual value to recreational anglers of improved catch
rates resulting from reduced impingement and entrainment in the
Northern California region. Table X-27 provides the total number of
angler days in Northern California by fishing mode and targeted
species.

Table X-27.--Total Northern California Fishing Trips by Mode, 2001 and Percent of Anglers Targeting Each Species
--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Northern California trips, 2001 Boat mode
Shore mode
Charter mode
920,196
864,178
193,007
=========================================================
Percent of Anglers Targeting Each Species by Mode and Number of Trips by Mode and Species
-----------------
Salmon.................................................. 34.93% 321,424 1.41% 12,185 27.54% 53,154
Sturgeon................................................ 8.73% 80,333 1.41% NA 0.00% 0
Flounders............................................... 13.86% 127,539 1.86% 16,074 0.00% 0
Small Game.............................................. 7.28% 66,990 22.2% 191,848 1.32% 2,548
Big Game................................................ 2.12% 19,508 0.83% NA 0.00% 0
Bottom Fish............................................. 13.27% 122,110 23.1% 199,625 57.97% 111,886
Other Fish.............................................. 0.03% NA 1.86% 16,074 0.00% 0
No Target............................................... 19.77% 181,923 47.34% 409,102 13.18% 25,438
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 13565]]

EPA calculated total baseline recreational losses to Northern
California anglers by multiplying the estimated per trip welfare gain
from impingement and entrainment elimination for a given species group
by the relevant number of recreational fishing trips in 2001.
Similarly, EPA calculated the total gains resulting from the preferred
technology. Table X-28 summarizes results of these calculations. The
total value of baseline recreational losses for all species impinged
and entrained is $1,432,645 per year (2002$), for boat, shore, and
charter anglers. The total annual value of reduced recreational losses
with the preferred option is $790,560 per year (2002$), for boat,
shore, and charter anglers. Table X-28 also presents the discounted
values, using EPA's preferred 3% discount rate and OMB's 7% discount
rate.

Table X-28.--Estimated Annual Welfare Change to Recreational Anglers in Northern California Under the Baseline and Post-Compliance Scenarios (2002$) --
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total baseline welfare losses Total welfare gain from reductions in
------------------------------------------------- impingement and entrainment baseline
losses under the preferred option
Species -----------------------------------------
Before 3% Discount 7% discount 7%
discounting rate rate Before 3% discount discount
discounting rate rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
Salmon \a\................................................... N/A N/A N/A N/A N/A N/A
Sturgeon \a\................................................. N/A N/A N/A N/A N/A N/A
Flounders.................................................... $56,634 $45,307 $35,679 $2,702 $2,189 $1,729
Small Game................................................... 728,909 634,151 532,104 206,584 183,860 157,004
Big Game..................................................... N/A N/A N/A N/A N/A N/A
Bottom Fish.................................................. 77,312 71,900 67,261 59,041 54,908 51,366
Other Fish................................................... 9,276 7,699 6,772 7,376 5,975 5,458
No Target.................................................... 560,514 465,227 409,175 514,857 471,034 390,994
-----------------
Totals................................................... 1,432,645 1,224,284 1,050,991 790,560 663,965 596,551
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Impingement and entrainment data are not available for these species.

5. Commercial Fishing Valuation
Table X-29 provides EPA's estimate of the value of gross revenues
lost in commercial fisheries resulting from the impingement of aquatic
species in the Northern California region. Table X-30 displays this
information for entrainment. As described above, EPA estimates that 0
to 40% of these revenue losses represent surplus losses to producers,
assuming no change in prices or fishing costs. EPA will refine these
assumptions for the final rule.

Table X-29a.--Annual Commercial Fishing Gross Revenues Lost Due to Impingement at Estuary Facilities in the
Northern California Region
----------------------------------------------------------------------------------------------------------------
Estimated Value of Harvest Lost (in dollars)
Estimated -----------------------------------------------
Species pounds of Discounted Discounted
harvest lost Undiscounted using 3% using 7%
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Anchovies....................................... 10,156 $812 $781 $744
Cabezon......................................... 1,019 3,383 2,899 2,401
Croakers........................................ 97 55 48 40
Dungeness....................................... 404 623 588 546
Flounders....................................... 4,606 1,428 1,368 1,294
Herrings........................................ 25,560 5,368 4,840 4,257
Rock crabs...................................... 165 188 171 151
Rockfishes...................................... 38,955 21,425 16,863 12,547
Sculpins........................................ 147 384 367 345
Smelts.......................................... 1,520 395 375 352
Surfperches..................................... 3,198 5,020 4,650 4,219
-----------------
Total....................................... 85,826 39,082 32,949 26,897
----------------------------------------------------------------------------------------------------------------

Table X-29b.--Annual Commercial Fishing Gross Revenues Lost Due to Impingement at Ocean Facilities in the
Northern California Region
----------------------------------------------------------------------------------------------------------------
Estimated Value of Harvest Lost (in dollars)
Estimated -----------------------------------------------
Species pounds of Discounted Discounted
harvest lost Undiscounted using 3% using 7%
discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Anchovies....................................... 0 $0 $0 $0
Cabezon......................................... 21 69 59 49
Croakers........................................ 8 5 4 3
Dungeness....................................... 1,583 2,438 2,301 2,137

[[Page 13566]]

Flounders....................................... 210 65 62 59
Rock crabs...................................... 1 1 1 1
Rockfishes...................................... 592 325 256 191
Sculpins........................................ 1 3 3 3
Surfperches..................................... 9 13 12 11
-----------------
Total....................................... 2,424 2,920 2,699 2,454
----------------------------------------------------------------------------------------------------------------

Table X-30a.--Annual Commercial Fishing Gross Revenues Lost Due to Entrainment at Estuary Facilities in the
Northern California Region
----------------------------------------------------------------------------------------------------------------
Estimated value of harvest lost (in dollars)
Estimated -----------------------------------------------
Species pounds of Discounted Discounted
harvest Undiscounted using 3% using 7%
lost discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Anchovies.......................................... 525 $42 $39 $36
Cabezon............................................ 25 82 69 55
California halibut................................. 1,076 2,701 2,145 1,600
Croakers........................................... 0 0 0 0
Dungeness.......................................... 37,273 57,400 52,594 47,024
Flounders.......................................... 192 59 55 50
Herrings........................................... 69,974 14,695 12,864 10,893
Rock crabs......................................... 490 558 492 419
Rockfishes......................................... 10 6 4 3
Sculpins........................................... 2,096 5,490 5,087 4,612
Smelts............................................. 15 4 4 3
--------------
Total.......................................... 111,675 81,039 73,353 64,696
----------------------------------------------------------------------------------------------------------------

Table X-30b.--Annual Commercial Fishing Gross Revenues Lost Due to Entrainment at Ocean Facilities in the
Northern California Region
----------------------------------------------------------------------------------------------------------------
Estimated value of harvest lost (in dollars)
Estimated -----------------------------------------------
Species pounds of Discounted Discounted
harvest Undiscounted using 3% using 7%
lost discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Anchovies.......................................... 8 $1 $1 $1
Cabezon............................................ 179 595 495 394
California halibut................................. 2,816 7,067 5,604 4,177
Croakers........................................... 0 0 0 0
Flounders.......................................... 427 132 123 112
Herrings........................................... 39,634 8,323 7,286 6,170
Rock crabs......................................... 12,467 14,212 12,532 10,659
Rockfishes......................................... 243 134 102 73
Sculpins........................................... 621 1,627 1,507 1,366
Smelts............................................. 18 5 4 4
--------------
Total.......................................... 56,413 32,096 27,655 22,956
----------------------------------------------------------------------------------------------------------------

6. Total Recreational and Commercial Losses from Baseline Impingement
and Entrainment in the Northern California Region
Table X-31 presents EPA's estimates of total baseline welfare
losses from impingement and entrainment at cooling water intake
structures in the Northern California region. Total commercial and
recreational fishing losses are 1.5 million per year for all species
and fishing modes, before discounting. Discounting these total baseline
welfare losses by 3% and 7% yields total losses of $1.3 million and
$1.1 million, respectively.

[[Page 13567]]

Table X-31.--Estimated Commercial and Recreational Baseline Welfare Losses in Northern California from
Impingement and Entrainment (2002$) ^a
----------------------------------------------------------------------------------------------------------------
Discounting Discounted
Benefit type Before using 3% using 7%
discounting discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Recreational.................................................... $1,432,645 $1,224,284 $1,050,991
Commercial ^b.................................................... 62,055 54,662 46,801
-----------------
Total....................................................... 1,494,700 1,278,946 1,097,792
----------------------------------------------------------------------------------------------------------------
^a Welfare losses represent losses due to both impingement and entrainment because recreational estimates cannot
be presented separately for these categories.
^b Based on 40 percent of gross revenues, or upper bound of 0-40 percent range assumed to represent producer
surplus.

7. Estimated Use Benefits of Proposed Regulatory Options for the
Northern California Region
Table X-32 presents EPA's estimates of total welfare gain from
post-compliance impingement and entrainment reduction at cooling water
intake structures in the Northern California region. Total commercial
and recreational fishing gains are $0.85 million per year for all
species and fishing modes, before discounting. Discounting the
estimated welfare gain by 3% and 7% yields total losses of $0.71
million and $0.64 million, respectively.

Table X-32.--Estimated Discounted Commercial and Recreational Reduced Welfare Losses in Northern California From
Impingement and Entrainment (2002$) \a\
----------------------------------------------------------------------------------------------------------------
Discounted Discounted
Benefit type Expected % Before using 3% using 7%
reduction discounting discount rate discount rate
----------------------------------------------------------------------------------------------------------------
Recreational....................................... 55.2% $790,560 $663,965 $596,551
Commercial \b\..................................... 36.7 22,755 19,514 16,208
--------------
Total.......................................... 54.4 847,448 712,749 637,080
----------------------------------------------------------------------------------------------------------------
\a\ Welfare losses represent losses due to both impingement and entrainment because recreational estimates
cannot be presented separately for these categories.
\b\ Based on 40 percent of gross revenues, or upper bound of 0-40 percent range assumed to represent producer
surplus.

E. Nonuse Benefits

Reducing impingement and entrainment losses of fish and shellfish
results in both use and nonuse benefits. Impingement and entrainment
losses to commercial and recreational fish that are harvested by
fishermen can be valued as direct use benefits. Methodologies for
estimating use values for recreational and commercial species are well
developed, and some of these species have been extensively studied. As
a result, these values are relatively easy to estimate. The portion of
impingement and entrainment losses consisting of fish that are
recreationally and commercially landed, however, represented only
approximately 0.15 percent of the total age one equivalent impingement
and entrainment losses at five estuary/tidal river and ocean case study
facilities evaluated for the section 316(b) Phase II proposal (See
Appendix 4 of Estimating Total and Nonuse Values for Fish, Based on
Habitat Values for Coastal Wetlands and Eelgrass (SAV) DCN 5-1010.)
\23\ The remaining impingement and entrainment losses at these five
facilities are distributed as follows:
---------------------------------------------------------------------------

\23\ The estuary/tidal river facilities incorporated in this
estimate include Salem, Big Bend, and Brayton Point. The ocean
facilities are Seabrook and Pilgrim.
---------------------------------------------------------------------------

[sbull] Unharvested recreational and commercial fish represent 0.77
percent of the total age one equivalent impingement and entrainment
losses,
[sbull] Forage fish represent 99.08 percent of the total age one
equivalent loss.
Neither forage species nor the unlanded portion of recreational and
commercial species have direct uses; therefore, they do not have direct
use values. The lack of use values for the unlanded fish means that EPA
did not directly value approximately 99.85 percent of the total age one
equivalent impingement and entrainment losses at the five cooling water
intake structures discussed above.\24\ Although individuals do not use
these resources directly, they may nevertheless care about and be
affected by changes in their status or quality. Monetary expression of
individuals' preferences for these resources is known as nonuse value.
Both commercial and recreational fishermen, as well as those who do not
use the resource, may have nonuse values for these species.
---------------------------------------------------------------------------

\24\ Although the percentages vary by case study, the same trend
occurs in the other case studies. For example, the total percentage
unvalued in the Great Lake case study (J. R. Whiting and Monroe) was
99.92 percent. For example, the total percentage unvalued in the
Great Lake case study (J. R. Whiting and Monroe) was 99.92 percent.
Note that some use value for forage fish is accounted for in the
commercial and recreational fishing benefits through trophic
transfer. However, trophic transfer accounts for a small percentage
of total recreational and commercial yield.
---------------------------------------------------------------------------

Given that aquatic species without any direct uses account for the
majority of cooling water intake structure losses, it is important to
try to account for nonuse values in the benefits analysis. Stated
preference methods, or benefit transfers based on stated preference
studies, are the only generally accepted techniques for estimating
nonuse values. Stated preference methods rely on surveys, which ask
people to state their willingness to pay for particular ecological
improvements, such as increased protection of aquatic species or
habitats with particular attributes. Benefits transfer involves
adapting research conducted for another purpose, from the available
literature, to address the policy questions at hand. It is not feasible
to conduct a primary stated-preference study for the section 316(b)
rule, because of the regulatory schedule and the time and significant
resources

[[Page 13568]]

necessary to properly perform such a study. Thus, EPA's analysis of
nonuse benefits of the section 316(b) regulation relies on benefits
transfer. As noted above, however, stated preference methods have
several limitations that must be considered when conducting benefits
transfer. EPA recognizes that benefits transfer of stated preference-
based WTP estimates to a policy context that differs from the study
context can be problematic, given the significant influence of context
on stated-preference values. EPA is still considering whether the
underlying studies in the current analysis are close enough to the
policy context to warrant benefits transfer and requests comment on
this issue.
For the proposed rule analysis, EPA used a ``50 percent'' rule to
estimate nonuse benefits from reducing impingement and entrainment
losses (see the proposed rule Case Study Analysis for detail, available
at http://www.epa.gov/waterscience/316b/). The Agency received numerous

at http://www.epa.gov/waterscience/316b/). The Agency received numerous

comments on this approach. Specifically, commenters argued that the
``50 percent rule'' is outdated and that EPA needs to revise this
approach based on more recent studies of use and nonuse benefits
associated with environmental quality improvements.
In response to public comments, EPA has developed a revised
analysis of nonuse benefits and is requesting comment in the NODA on
this revised methodology. First, the Agency developed a benefit
transfer approach that combines an estimate of the amount of habitat
required to offset impingement and entrainment losses (including forage
species and the unlanded portion of commercial and recreational
species) by means of wild fish production with a benefits transfer
estimate of WTP for aquatic habitat preservation/restoration. The
following section briefly summarizes this approach. Second, EPA
reviewed available evidence concerning total benefits (including use
and nonuse values) from the surface water valuation studies that are
potentially applicable to the section 316(b) regulation. Section E.2
below discusses EPA's review of these studies and outlines further
steps in analyzing nonuse and use benefits from available economic
literature.
1. Benefit Transfer Approach
The methodology used in this analysis uses values that survey
respondents indicated for preservation/restoration of eelgrass
(submerged aquatic vegetation, SAV), and wetlands to evaluate losses of
fishery resources. Because one of the results of aquatic habitat
preservation/restoration is increased production of fish and shellfish,
it may be appropriate to use valuation of habitat restoration as a
proxy for the value of the fish and shellfish lost due to impingement
and entrainment. The method used by EPA in this NODA for such indirect
valuation first assesses respondents' values for habitats that play a
significant role in the production of fish or shellfish, and then
estimates the quantity of such habitat required to replace fish and
shellfish lost to impingement and entrainment. These data are then
combined to yield an indirect estimate of household values for fish and
shellfish. Survey respondents were asked to value acres of habitat
(e.g., eelgrass or wetlands) without knowing the exact quantities of
each species produced by the habitat. These values per acre were then
translated, using estimates of fish abundance in these habitats, into
values for specific species and quantities of fish or shellfish. The
habitat valuation study used in this analysis specifically described
eelgrass as ``habitat for fish and shellfish.'' The authors of this
study concluded, based on comments made by participants in focus
groups, that the survey population was familiar with both eelgrass and
wetlands, and that they associated both of these habitats with
production of and habitat for fish and shellfish. Another study
(Johnston et al., 2002) found that ecological improvements to statewide
fish and shellfish populations were among the attributes that affected
respondents' relative valuation of various wetlands restoration
projects. This suggests that respondents in the habitat valuation study
were aware of the fish production ``services'' provided by SAV
(eelgrass), and may have been aware of the fish production ``services''
provided by wetlands.
EPA's approach to estimating values for fish and shellfish habitats
needed to offset impingement and entrainment losses of fish involves
three general steps:
[sbull] Estimate the amount of wetland and eelgrass habitat needed
to produce organisms to the level necessary to offset impingement and
entrainment losses for the subset of species for which production
information is available;
[sbull] Develop willingness to pay (WTP) values for the fish
production services of the relevant habitat types; and
[sbull] Estimate the value of impingement and entrainment losses,
based on values for the restored habitat required to offset impingement
and entrainment losses, by multiplying the WTP values for the fish and
shellfish production services per acre of restored eelgrass and wetland
habitat by the required number of restored acres of each habitat type.
The Agency solicits comments on whether this approach provides a
more comprehensive value that addresses all impingement and entrainment
losses.
The following NODA sections briefly summarize this benefits
transfer approach and its application to estimating the value of the
fish habitat required to offset impingement and entrainment losses in
the North Atlantic Region. Additional detail on the methods and data
EPA will use throughout this analysis are provided in ``Estimating
Total and Nonuse Values for Fish, Based on Habitat Values for Coastal
Wetlands and Eelgrass'' (DCN 5-1010) that accompanies this NODA.

a. Estimating the Amount of Different Habitat Types Needed To Offset
Impingement and Entrainment Losses for Specific Species

The first step in the analysis involves calculating the area of SAV
or wetland habitat needed to offset impingement and entrainment losses,
for the subset of species for which restoration of these habitats was
identified by local experts as the preferred restoration alternative,
and for which production information is available; i.e., the habitat
that will produce the equivalent quantity of fish impinged and
entrained. Details on this analysis are provided in Estimating Total
and Nonuse Values for Fish, Based on Habitat Values for Coastal
Wetlands and Eelgrass, DCN 5-1010, that accompanies this NODA.
Table X-33 presents lower and upper bound estimates of the total
wetland and SAV restoration required to offset North Atlantic
impingement and entrainment. These estimates reflect the acreage needed
for the species requiring the maximum quantity of habitat restoration
to offset its impingement and entrainment losses. The amount of tidal
wetland restoration in the North Atlantic region is based on the
acreage required for winter flounder. The lower bound estimate is
winter flounder restoration estimate derived for Brayton Point and the
upper bound estimate is the estimate for Pilgrim. The lower bound
estimate for regional SAV restoration is based on the acreage needed
for northern pipefish at Pilgrim and the upper bound estimate is based
on the acreage needed for scup at Brayton Point.

[[Page 13569]]

Table X-33.--Lower and Upper Bound Estimates of Total Wetland and SAV
Restoration Required To Offset North Atlantic Impingement and
Entrainment
------------------------------------------------------------------------
Lower bound Upper bound
on required on required
Habitat restoration category number of number of
acres acres
------------------------------------------------------------------------
Tidal wetland restoration..................... 25,589 43,813
SAV restoration............................... 151 1,205
------------------------------------------------------------------------

These estimates are derived from abundance data for these species
in wetland and SAV habitats. Abundance data were used because estimates
of production rates in these habitats are not available for the species
of interest. Individuals were counted within subsampling areas of the
habitats (e.g., 100 square meters), and the resulting counts were
scaled up to derive per acre density estimates by species. Usable data
were available for three species for which impingement and entrainment
data were also available that were found in wetlands (winter flounder,
Atlantic silverside, and striped killifish) and for three species that
were found in SAV (threespine stickleback, northern pipefish, and
scup). The amount of wetlands acreage needed to restore impingement and
entrainment losses ranged from 11-12 acres for killifish to 25,589-
48,813 acres for winter flounder. While it is not known how many acres
would be needed for the many other species found in wetlands, it
appears from the available data that the acreage needed for winter
flounder significantly overstates the acreage needed for other species,
and restoring this many acres would lead to more than offsetting
increases in these other species. For SAV, the acreage estimated ranged
from 105-180 acres for threespine stickleback, to 1205 acres for scup.
EPA requests comment on using abundance data for these analyses. EPA
also requests comment on using the species that require the maximum
quantity of habitat to offset impingement and entrainment losses as the
basis for estimating the total habitat required to offset regional
losses. Finally, EPA requests comment on using estimates of fish
production per acre as the basis for benefits transfer, given that
respondents were likely not aware of the quantitative relationship
between habitat and fish production when they provided valuation
information.

b. Developing WTP Values for Fish Production Services Provided by
Submerged Aquatic Vegetation and Wetlands for the North Atlantic Region

For the North Atlantic Region, EPA based the benefit transfer of
both total and nonuse values for fish habitat provided by eelgrass and
wetlands on a site-specific study of the Peconic Estuary, located on
the East End of Long Island, New York (Johnston et al., 2001a, Opaluch
et al., 1995, 1998; Mazzotta, 1996). For detail on the Peconic Estuary
study used in this analysis see DCN's 5-1275, 5-1292, 5-1293, and 5-
1284. Conducted in 1995, the study provides information for the Peconic
Estuary Program's Comprehensive Conservation and Management Plan (see
http://www.savethepeconicbays.org/ccmp/).

http://www.savethepeconicbays.org/ccmp/).

Both eelgrass and wetlands located in the Peconic Estuary support
aquatic species that are found throughout the North Atlantic region and
that are likely to be affected by impingement and entrainment (e.g.,bay
anchovy, Atlantic silverside, scup, summer flounder, winter flounder,
windowpane flounder, weakfish, tautog, bay scallops, and hard
clams).\25\ The Peconic Estuary study thus provides values for eelgrass
and wetlands that may be representative of habitat needed to produce
many of the species affected by impingement and entrainment at power
plants. EPA will further evaluate applicability of the habitat in the
Peconic study to other study regions such as the mid-Atlantic. EPA will
also evaluate other aquatic habitat valuation studies for their
applicability to the analysis of benefits of the section 316(b) rule in
other regions.
---------------------------------------------------------------------------

\25\ Further detail on fish SAV in the North and mid-Atlantic
can be found in Wyda, et al, 2002 ``The response of fishes to
submerged aquatic vegetation complexity in two ecoregions of the
Mid-Atlantic Bight: Buzzards Bay and Chesapeake Bay'' (see DCN 5-
1318).
---------------------------------------------------------------------------

EPA re-estimated the Peconic model with separate coefficients for
users and nonusers of fishery resources in order to separate out nonuse
values. The Agency defined users as those who stated that they either
fish or shellfish. These individuals have both nonuse and indirect use
values from the fish habitat services of eelgrass and wetlands. EPA
estimated nonuse values only for those who do not fish or
shellfish.\26\ Table X-34 presents the Peconic model results. For
eelgrass, the value for nonusers is 77.7 percent of the total value for
users. For wetlands, the value for nonusers is 94.4 percent of the
total value for users. Nonuse values, defined here as total values for
nonusers of the fishery resources, represent a large portion of the
total value estimated in the study. Nonusers assigned similar values to
both types of habitat, while users assigned a slightly higher value to
eelgrass, perhaps because it was explicitly identified on the survey as
fish and shellfish habitat. It is difficult to determine ex post why
the values for eelgrass and wetlands are similar for nonusers. However,
the fact that non-users assigned similar values to both types of
habitat may indicate that they did not significantly differentiate the
two habitat types on dimensions affecting valuation or, alternatively,
they differentiated among habitat types, but assigned similar values.
Since SAV was explicitly identified as fish and shellfish habitat and
wetlands was not, this may mean that fish and shellfish services were
not a significant attribute affecting respondents' valuation, or,
alternatively that they were aware that wetlands also provide habitat
for fish and shellfish based on knowledge external to the survey.
---------------------------------------------------------------------------

\26\ Note that this is not strictly true for wetlands, because
other services exist that allow for use values such as birdwatching.
The value of wetlands is adjusted to reflect fish production
services only in the section on wetlands below.

Table X-34.--Estimated WTP Values Per Household from the Peconic Study
(2002$) ^a
------------------------------------------------------------------------
Wetlands ^b Eelgrass (SAV)
-------------------------------------
$/HH/ $/HH/
Acre/ Nonuse Acre/ Nonuse
Year ^c value % Year ^c value %
------------------------------------------------------------------------
All Residents..................... 0.056 95.80 0.063 82.40
Users............................. 0.057 94.40 0.067 77.70
Nonusers ^d........................ 0.054 100.0 0.052 100.0
------------------------------------------------------------------------
^a EPA made dollar value adjustments using the Consumer Price Index for
all urban consumers for the first half of 2002.

[[Page 13570]]

^b Note that wetlands values presented here are WTP for all wetland
services, not just fish habitat services. The adjustment for fish
habitat values appears below.
^c Values shown are WTP per household per additional (i.e, marginal) acre
per year.
^d Nonusers are defined as respondents who neither fish nor shellfish.

Because coastal wetlands provide a number of services (e.g.,
habitat, water purification, storm buffering, and aesthetics), EPA
attempted to separate values for fish habitat from values for other
wetland services. Given survey data available from the Peconic Study,
however, there is no direct means to estimate the proportion of total
wetland value associated with fish and shellfish habitat services
alone. EPA therefore used a stated preference study from Narragansett
Bay, Rhode Island to adjust wetland values to reflect fish and
shellfish habitat services (Johnston et al., 2002, (DCN 5-1273 ). Based
on the Johnston et al. (2002) study, the proportion of saltwater
wetland value associated with fish habitat is 0.2564; and the
proportion of value associated with shellfish habitat is 0.2778. For
detail on estimating the proportion of wetland value associated with
fish and shellfish habitat services see Estimating Nonuse Values for
Fish Based on Habitat Values for Coastal Wetlands and Eelgrass (SAV),
provided in DCN 5-1010.
Briefly, the Johnston et al. study asked survey respondents to
choose among different hypothetical restoration projects based on
attributes of these projects. Attributes of hypothetical restoration
plans characterized relative statewide improvement in bird populations,
fish populations, shellfish populations, and mosquito control. On
average these attributes received roughly equal weight in the
valuations (with bird populations being weighted a little less heavily,
and mosquito control a little more heavily than the other two). Based
on model results, the authors concluded that roughly one-fourth of the
value derived from each project was attributable to each type of
services.
The Peconic survey described eelgrass specifically as fish and
shellfish habitat. EPA is not aware of other direct uses of eelgrass.
Based on focus groups during survey development and pretesting, the
authors concluded that individuals were aware of eelgrass and its
importance for fish and shellfish production. Thus, EPA assigned all of
the estimated WTP for SAV restoration to fish and shellfish production
services. Based on these same focus groups and pretests the authors
also concluded that, individuals were aware of and valued a number of
functions of wetlands, including fish and other wildlife habitat, storm
buffering, and aesthetics. Therefore, EPA assigned only a portion of
the estimated WTP for wetlands restoration to fish habitat services,
based on results from the Johnston et al. study described above. EPA
requests comment on its methodology for assigning a share of WTP to
``fish production services'' for each habitat type.
EPA estimated the value of saltwater wetlands associated with fish
and shellfish habitat services by multiplying the proportions presented
above by the total wetland values from the Peconic Estuary study. Table
X-35 presents the final per household values for an acre of wetlands
that were ascribed to fish and shellfish habitat services. Because the
overall values of Peconic Estuary residents for eelgrass and wetlands
are similar, once adjustments are made to wetlands values to ascribe a
portion to fish habitat services, the values for fish and shellfish
habitat of eelgrass are estimated as four times higher than those for
fish habitat only for wetlands. EPA requests comments on whether such
adjustments are appropriate and whether further adjustments are needed
for eelgrass values.

Table X-35.--Estimated WTP Values per Household for Fish and Shellfish Habitat Services of Wetlands (2002$) From
the Peconic Study
----------------------------------------------------------------------------------------------------------------
$/HH/Acre/ $/HH/Acre/
$/HH/Acre/ Fish Yearfor Shellfish Year for
Year ^a habitat % fish habitat % shellfish
habitat ^b habitat ^c
----------------------------------------------------------------------------------------------------------------
All Residents............................................ 0.056 25.64 0.014 27.78 0.016
Users.................................................... 0.057 25.64 0.015 27.78 0.016
Nonusers ^d............................................... 0.054 25.64 0.014 27.78 0.015
----------------------------------------------------------------------------------------------------------------
^a Values shown are WTP per household per additional (i.e, marginal) acre per year.
^b Total value per acre per year times 25.64 percent.
^c Total value per acre per year times 27.78 percent.
^d Note that wetland values for fish and shellfish services are not linearly additive within the same acreage,
due to the functional form use in Johnston et al (2002).

c. Estimating Total and Nonuse Values for Fish Production Services
Provided by Submerged Aquatic Vegetation and Wetlands in the North
Atlantic Region

The SAV and wetland values from the Peconic study presented in
Table X-34 and Table X-35 are per household values for individuals
residing in towns bordering the Peconic Estuary. Estimating the total
value per acre of SAV and wetlands requires defining and using the
affected population for the study area. The Peconic study defined the
affected population as the total number of households (both year-round
and seasonal) in the towns bordering the Peconic Estuary. Similarly,
EPA defines the affected population as households residing in the
counties that abut the water bodies in the North Atlantic Region. These
households are likely to value gains of fish or shellfish in the nearby
water body due to their close proximity to the affected resource.
Analysis of data from the Rhode Island Salt Marsh Restoration
Survey (Johnston et al. 2002) reveals that values were ascribed to even
relatively small-scale salt marsh restoration actions (i.e., 3-12
acres) were stated by respondents from various parts of the state. EPA
thus assumed for the current analysis that residents within a similar
distance from the coast as residents in the Johnston et al. (2002)
study would have positive values for improving fish habitat. EPA
calculated the average distance from Johnston's studied locations to
the farthest edges of Rhode Island, which totaled 32.43 miles. The
Agency then assumed that all households living within the same distance
of the affected

[[Page 13571]]

resource as Rhode Island residents from the studied resource would also
value fish habitat improvements in their affected water body.
Additionally, EPA notes that a study by Pate and Loomis (1997)
found that respondents outside the political jurisdiction in which a
study site is located were also willing to ascribe stated preference
values to the amenity being studied. The study was designed to
determine the effect of distance on WTP for public goods with large
nonuse values. Specifically, the study evaluated environmental programs
designed to improve wetlands habitat and wildlife in the San Joaquin
Valley. It compared WTP values for households residing in the San
Joaquin Valley, California, to values for California households outside
the Valley, and to households in Washington State, Oregon, and Nevada.
The study found that WTP values for California residents outside the
Valley were 97.7 percent of the WTP of the Valley residents. WTP values
for Oregon residents were approximately 27 percent of the WTP of the
Valley residents. As with the Rhode Island study, care should be taken
in interpreting these results.
In this analysis, EPA calculated per acre WTP values using two
different definitions of affected populations: (1) The average number
of households residing in counties abutting the affected water body and
(2) the average number of households living within the 32.4 mile radius
of each affected water body in the region. Average per acre values for
SAV and wetlands were calculated based on these estimates of the
average affected population for each facility. The average number of
affected households in counties abutting affected water bodies is
210,357 and the average number of households within a 32.4 mile radius
of each facility is 737,711. Detailed information used in calculating
the average number of affected households in counties abutting affected
water bodies and the average number of households within a 32.4 mile
radius of each facility is provided in DCN 5-1008.
Table X-36 presents an average value per acre per year for restored
SAV for households in the counties abutting the affected water bodies
and for households within the larger radius (32.4 miles), for the North
Atlantic Region. The total annual value per acre for eelgrass (SAV) for
households living in counties abutting the region's affected water
bodies is $13,341 for all residents; and the total nonuse only value is
$10,993. The table also shows two estimates of the values for
households living within the larger area. EPA calculated these values
based on the findings of Pate and Loomis (1997), as shown below. EPA
assigned the value per household from the Peconic study to the average
number of households residing in the counties abutting the affected
water bodies in the North Atlantic Region (210,357 households). For
households beyond these coastal counties (an additional 527,354
households), EPA multiplied the Peconic values by 97.7 percent and 27
percent to provide a range of WTP values.

Table X-36.--Household WTP Values for SAV for the North Atlantic Region
(2002$)
------------------------------------------------------------------------
Total WTP/ Total WTP/Acre/Year
Acre/Year for HH within 32.4
for HH in mile radius of
$/HH/ Counties affected water body
Value category Acre/ abutting ^c
Year ^a affected ---------------------
water
bodies ^b 97.7% 27.0%
------------------------------------------------------------------------
Total Value................. $0.063 $13,341 $45,949 $22,371
Nonuse Value ^d.............. 0.052 10,993 37,863 18,434
------------------------------------------------------------------------
^a Values shown are WTP per household per additional (i.e, marginal) acre
per year from the Peconic study.
^b Total WTP per acre is calculated as household WTP per acre times the
average of 210,357 households in the counties abutting affected water
bodies.
^c Total WTP per acre is calculated as household WTP per acre times
737,711, the average number of households within a 32.43-mile radius
of affected water bodies. Adjustments to WTP values are described in
the text.
^d Total nonuse value is calculated as value per acre for nonusers only
times all households in the study area.

Table X-37 presents the values per acre per year for the fish and
shellfish habitat services of wetlands for the total affected
population for the regional study area. For the counties abutting the
affected water bodies, the total annual value per acre for fish habitat
services provided by wetlands is $3,017 for all households, whereas the
total nonuse only value is $2,891. For the larger area, the total
annual value per acre for fish habitat services provided by wetlands
ranges from $5,059 to $10,390 for all households, whereas the total
nonuse only value ranges from $4,848 to $9,958.
The table also shows the corresponding values if the estimated WTP
share for ``shellfish production services'' rather than the WTP for
``fish production services'' is used.

Table X-37.--Estimated WTP Values for Fish and Shellfish in Wetlands for
the North Atlantic Region (2002$)
------------------------------------------------------------------------
Total WTP/ Total WTP/Acre/Year
Acre/Year for HH within 32.4
$/HH/ for HH in mile radius of
Acre/ Counties affected water body
Year ^a abutting ^c
affected ---------------------
waterbody ^b 97.7% 27%
------------------------------------------------------------------------
Fish
------------------------------------------------------------------------
Total Value................. $0.014 $3,017 $10,390 $5,059
Nonuse Value ^c.............. 0.014 2,891 9,958 4,848
-----------------------------

[[Page 13572]]

Shellfish
------------------------------------------------------------------------
Total Value................. $0.016 $3,268 $11,258 $5,481
Nonuse Value ^d.............. 0.015 3,132 10,789 5,253
------------------------------------------------------------------------
^a Values shown are WTP per household per additional (i.e, marginal) acre
per year from the Peconic study.
^b Total WTP per acre is calculated as household WTP per acre times the
average of 210,357 households in the counties abutting affected water
bodies.
^c Total WTP per acre is calculated as household WTP per acre times
737,711, the average number of households within a 32.43-mile radius
of affected water bodies.
^d Total nonuse value is calculated as value per acre for nonusers only
times all households in the region.

d. Estimates of the Value of Baseline Impingement and Entrainment
Losses for the North Atlantic Region

EPA multiplied the estimated number of acres of SAV and wetlands
needed to offset impingement and entrainment losses for the North
Atlantic region by the estimated per acre values of SAV and wetlands to
assess the value of baseline impingement and entrainment losses. As
discussed above, EPA performed this analysis on the SAV--and wetlands-
dependent species requiring the maximum restoration acres among these
for which productivity estimates are available.
Table X-38 presents the estimated values for SAV restoration for
the North Atlantic Region. EPA estimated that between 151 and 1,204
acres of revegetated SAV (eelgrass) is required to offset average
annual impingement and entrainment losses of scup and northern
pipefish, depending on whether Brayton Point or Pilgrim is used for the
productivity estimates. Based on the estimated value per acre to
residents of counties abutting the affected water bodies, the total
value of restoring 151 acres of eelgrass is $2,014,450. Nonuse only
value is $1,659,930. The estimated total value to all households
residing within 32.43 miles from the affected water bodies, ranges from
$3,377,982 to $6,938,316 per year. Nonuse only value ranges from
$2,783,496 to $5,717,253. Figures are given in 2002 dollars.

Table X-38.--WTP Values for SAV Restoration of Fish for the North Atlantic Region (2002$)
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Species benefitting from SAV Acres of required SAV Total willingness to pay per acre per year
restoration restoration
------------------------------------
Counties Abutting Affected Water Bodies
----------------------------------------------------------------------------------------------------------------
Scup ......................... Total Value.................. $2,014,450
--------------------------------
Threespine stickleback 151 acres Nonuse Value................. 1,659,243
----------------------------
Northern pipefish ......................... Total Value.................. 16,075,574
--------------------------------
1,205 acres Nonuse Value................. 13,246,458
------------------------------------
All Households Residing Within 32.43 Miles of Affected (High Estimate)
----------------------------------------------------------------------------------------------------------------
Scup ......................... Total Value.................. $6,938,316
--------------------------------
Threespine stickleback 151 acres Nonuse Value................. 5,717,253
----------------------------
Northern pipefish ......................... Total Value.................. 55,368,683
--------------------------------
1,205 acres Nonuse Value................. 45,624,433
------------------------------------
All Households Residing Within 32.43 Miles of Affected Water Bodies (Low Estimate)
----------------------------------------------------------------------------------------------------------------
Scup ......................... Total Value.................. $3,377,982
--------------------------------
Threespine stickleback 151 acres Nonuse Value................. 2,783,496
----------------------------
Northern pipefish ......................... Total Value.................. 26,956,743
--------------------------------
1,205 acres Nonuse Value................. 22,212,667
----------------------------------------------------------------------------------------------------------------

[[Page 13573]]

Table X-39 presents the estimated values for wetlands restoration
for the North Atlantic Region. EPA estimated that between 25,589 and
43,813 acres of restored tidal wetlands is required to offset average
annual impingement and entrainment losses to winter flounder. Based on
the estimated value per acre to residents of counties abutting affected
water bodies, the total value of restoring 25,589 acres of coastal
wetlands (after adjusting for the estimated portion attributable to
fish production services) is $77 million per year, whereas nonuse only
value is $74 million. For all households residing within 32.43 miles of
affected water bodies, the total value of restoring 25,589 acres of
coastal wetlands ranges from $129 million to $266 million per year,
whereas the nonuse only value ranges from $124 million to $254 million
for fish habitat only. Figures are given in 2002 dollars.
Based on the estimated value per acre to residents of counties
abutting affected water bodies, the total value of restoring 43,813
acres of coastal wetlands is $132 million per year, whereas nonuse only
value is $127 million, adjusted to fish production services only. For
all households residing within 32.43 miles of affected water bodies,
the total value of restoring 43,813 acres of coastal wetlands ranges
from $222 to $455 million per year, whereas the nonuse only value
ranges from $212 to $436 million, adjusted to fish production services
only. Figures are given in 2002 dollars. This analysis does not include
fish or shellfish losses caused by thermal discharges which are covered
under section 316(a).
EPA estimated the total WTP value for the amount of habitat
required to offset baseline impingement and entrainment losses in the
North Atlantic region by adding the SAV and wetland values presented in
Table X-38 and Table X-39. Based on the estimated value per acre to
residents of counties abutting the affected water bodies, the total
value of habitat required to offset impingement and entrainment losses
in the North Atlantic region ranges from $79 million to $511 million
per year, whereas nonuse only value ranges from $76 million to $482
million.

Table X-39.--WTP Values for Wetlands Restoration of Fish for the North Atlantic Region (2002$)
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Species Benefitting from tidal Acres of required Total willingness to pay per acre per year
wetlands restoration wetlands restoration
------------------------------------
Counties Abutting Affected Water Bodies
----------------------------------------------------------------------------------------------------------------
Winter flounder ......................... Total Value.................. $77,194,196
--------------------------------
Atlantic silverside 25,589 acres Nonuse Value................. 73,982,015
----------------------------
Striped killifish ......................... Total Value.................. 132,170,436
--------------------------------
43,813 acres Nonuse Value................. 126,670,601
------------------------------------
All Households Residing Within 32.43 Miles of Affected (Low Estimate)
----------------------------------------------------------------------------------------------------------------
Winter flounder ......................... Total Value.................. $265,877,962
--------------------------------
Atlantic silverside 25,589 acres Nonuse Value................. 254,814,331
----------------------------
Striped killifish ......................... Total Value.................. 455,231,200
--------------------------------
43,813 acres Nonuse Value................. 436,288,260
------------------------------------
All Households Residing Within 32.43 Miles of Affected Water Bodies (Low Estimate)
----------------------------------------------------------------------------------------------------------------
Winter flounder ......................... Total Value.................. $129,445,085
--------------------------------
Atlantic silverside 25,589 acres Nonuse....................... 124,058,656
----------------------------
Striped killifish ......................... Total Value.................. 221,633,417
--------------------------------
43,813 acres Nonuse Value................. 212,410,876
----------------------------------------------------------------------------------------------------------------

The values in Table X-39 do not account for all species lost to
impingement and entrainment in the North Atlantic Region (e.g., tautog)
and include benefits for species not affected by impingement and
entrainment. EPA continues to evaluate this approach as an alternative
for estimating comprehensive non-use benefits associated with this
regulation.

e. Estimates of the Value of the Preferred Option for the North
Atlantic Region

Table X-40 shows the percent reduction in impingement and
entrainment losses for each of the affected species included in this
analysis. The preferred option is expected to reduce impingement and
entrainment losses by 18.4 to 23.8 percent, depending on species. EPA
applied the percent reduction for the species that determined the
number of acres of restoration required. For tidal wetlands, winter
flounder required the largest number of acres of restoration.
Accordingly, EPA used the 18.73% reduction in impingement and
entrainment for winter flounder to calculate the benefits of the
preferred technology. Similarly, EPA used the 18.97% reduction for
northern pipefish to estimate benefits of the lower bound estimate of
SAV restoration, and the 23.75% reduction for scup to estimate upper
bound benefits for SAV.

Table X-40.--Reductions in Impingement and Entrainment Losses With the
Preferred Option
------------------------------------------------------------------------
Percent
Species reduction
------------------------------------------------------------------------
Winter flounder............................................ 18.73
Atlantic silverside........................................ 21.78

[[Page 13574]]

Striped killifish.......................................... 18.43
Threespine stickleback..................................... 31.17
Northern pipefish.......................................... 18.97
Scup....................................................... 23.75
------------------------------------------------------------------------

Table X-41 gives the range of WTP values for the preferred option
for the North Atlantic region. Summing the values for wetlands and SAV
restoration, the total benefits of the preferred option for the six
species identified above range from $15 to $98 million (2002$). Nonuse
value only ranges from $14 to $92 million (2002$).

Table X-41.--WTP Values for Wetlands and SAV Restoration of Fish for the
North Atlantic Region, Based on the Preferred Option (2002$)
------------------------------------------------------------------------
Lower bound Upper bound
------------------------------------------------------------------------
Counties Abutting Affected Water Bodies
------------------------------------------------------------------------
Total Value............................. $14,840,614 $28,573,472
Nonuse Value............................ 14,171,720 26,871,437
-----------------------------------------
All Households Residing Within 32.43 Miles of Affected Water Bodies
(High Estimate)
------------------------------------------------------------------------
Total Value............................. $51,115,141 $98,414,866
Nonuse Value............................ 48,811,287 92,552,594
-----------------------------------------
All Households Residing Within 32.43 Miles of Affected Water Bodies (Low
Estimate)
------------------------------------------------------------------------
Total Value............................. $24,885,868 $47,914,165
Nonuse Value............................ 23,764,215 45,060,065
------------------------------------------------------------------------

f. Per Household Values of Changes in Impingement and Entrainment
Losses for the North Atlantic Region

Another way of presenting these results is to calculate the implied
per household WTP for households residing in the two different
definitions of the study area. Table X-42 presents results of these
calculations. A total of 3.65 million households live in the counties
abutting affected water bodies while 4.2 million households live within
a 32.4 mile radius of affected water bodies. This implies a total WTP
to eliminate all I&E losses of $21.70 to $40.62 and non-use WTP of
$20.73 to $33.97 per household residing in the counties abutting
affected water bodies.
If a 32.4 mile radius is used in these calculations, the implied
WTP values to reduce all I&E losses range from $31.62 to $121.57 and
non-use WTP range $29.92 to $113.68 per household residing in the 32.4
mile-radius area. All values are given in 2002$.

Table X-42.--Values Per Household for Total Affected Population of the North Atlantic, for SAV and Wetlands
Restoration
----------------------------------------------------------------------------------------------------------------
Baseline losses Preferred option
---------------------------------------------------------------
Lower bound Upper bound Lower bound Upper bound
----------------------------------------------------------------------------------------------------------------
Households in Bordering Counties
---------------------------------------------------------------------------------
Total Value (nonuse + use)...................... $79,208,646 $148,246,010 $14,840,614 $28,573,472
Total value/hh.................................. 21.70 40.62 4.07 7.83
Total non-use value............................. 75,641,944 139,917,060 14,171,720 26,871,437
Non-use value/hh................................ 20.73 33.97 3.44 6.52
-------------------------------------------------
Households Within 32.4 Mile Radius (high estimate)
---------------------------------------------------------------------------------
Total Value (nonuse + use)...................... $272,816,278 $510,599,883 $51,115,141 $98,414,866
Total value/hh.................................. 64.96 121.57 12.17 23.43
Total non-use value............................. 260,531,584 481,912,693 48,811,287 92,552,594
Non-use value/hh................................ 61.46 113.68 11.51 21.83
-------------------------------------------------
Households Within 32.4 Mile Radius (low estimate)
---------------------------------------------------------------------------------
Total Value (nonuse + use)...................... $132,823,067 $248,590,160 $24,885,868 $47,914,165
Total value/hh.................................. 31.62 59.19 5.93 11.41
Total non-use value............................. 126,842,152 234,623,543 23,764,215 45,060,065
Non-use value/hh................................ 29.92 55.35 5.61 10.63
----------------------------------------------------------------------------------------------------------------

[[Page 13575]]

This calculation implies a total WTP to reduce impingement and
entrainment losses of $4.07 to $7.83 and non-use WTP of $3.44 to $6.52
per household residing in the counties abutting affected water bodies.
If a 32.4 mile radius is used in these calculations, the implied WTP
values to reduce all I&E losses range from $5.63 to $23.43 and non-use
WTP range from $5.61 to $21.83 per household residing in the 32.4 mile-
radius area. All values are provided in 2002$.
2. Future Steps in Analyzing Nonuse Values
In addition to the nonuse valuation approach summarized in the
preceding sections, EPA is also exploring and soliciting comment on
alternative methodologies for estimating nonuse benefits for the Final
rule.

a. Nonuse and Use Values: Literature Review

In response to public comments regarding the analysis of non-use
values in the proposed rule, the Agency continues to review and
summarize surface water valuation studies that estimate non-use and
total use values for water resources. The purpose of this review is to
report on the range of nonuse values for water resources in the
economic literature, to compare estimates of use and nonuse values for
users and nonusers, and explore the feasibility of deriving nonuse
values based on these comparisons.
Based on comments received, EPA is re-evaluating past studies and
their applicability to this rule. These studies summarized and compared
nonuse and use values (e.g., Fisher and Raucher's (1984) and Brown's
(1993)). The Fisher and Raucher's (1984) comparison of nonuse and use
values relies on eight contingent valuation studies of benefits of
improved water quality published from 1974 to 1983. This analysis
served as a basis for developing the 50 percent rule used for
estimating non-use benefits in the proposed rule analysis. Brown (1993)
conducts a similar assessment of nonuse and use values that relies on
31 contingent valuation studies published from 1980 to 1992.
EPA is also identifying a set of new studies that may contain
information about the relative magnitude of use and nonuse values for
aquatic resources affected by this rule. As of the publication of this
NODA, EPA is reviewing 18 surface water valuation studies that meet a
set of criteria for suitability and reliability (e.g., the resource
amenities valued in the study must be water bodies that provide
recreational fishing, U.S. populations are surveyed in the study,
research methods in the study are supported by literature). As a
consequence of these criteria, EPA has identified fewer applicable
studies than Brown (1993). These studies use either stated preference
or a combination of stated and revealed preference techniques to elicit
nonuse and use values associated with aquatic habitat improvements (see
document ``Comparison of Nonuse and Use Values from Surface Water
Valuation Studies'' (See DCN 5-1011)). These studies vary in several
respects, including the specific environmental change valued, the types
of values estimated, the magnitude of the change, the geographic region
affected by environmental changes and survey administration methods.
EPA is qualitatively analyzing these studies and interpreting relevant
characteristics to determine their relevance for the analysis of nonuse
values resulting from this rule.
These 18 valuation studies provide 27 observations of use and non-
use values associated with various aquatic habitat improvements,
because six studies generated more than one nonuse value estimate. A
list of the studies being considered by EPA is provided in Table X-43;
Appendix A in the document ``Comparison of Nonuse and Use Values from
Surface Water Valuation Studies'' (See DCN 5-1011)'' that accompanies
this NODA presents key information from each study compiled by EPA.

Table X-43.--Examples of Studies That Provide Information About Use and Nonuse Values
----------------------------------------------------------------------------------------------------------------
Author Year Title Source
----------------------------------------------------------------------------------------------------------------
Clonts & Malone............... 1990......... Preservation Attitudes and In: Social Science and Natural
Consumer Surplus in Free Resource Recreation
Flowing Rivers. Management, Joanne Vining,
editor. Westview Press,
Boulder, CO. pp. 301-317.
Croke et al................... 1986-87...... Estimating the Value of Improved Journal of Environmental
Water Quality in an Urban River Systems. Vol. 16, No. 1. pp.
System. 13-24.
Cronin........................ 1982......... Valuing Nonmarket Goods Through Pacific Northwest Laboratory,
Contingent Markets. PNL-4255, Richland, WA.
Desvousges et al.............. 1983......... Contingent Valuation Design and In: A Comparison of Alternative
Results: Option and Existence Approaches for Estimating
Values. Recreation and Related
Benefits of Water Quality
Improvements. U.S.
Environmental Protection
Agency, Economic Analysis
Division, Washington, D.C.
Huang et al................... 1997......... Willingness to Pay for Quality Journal of Environmental
Improvements: Should Revealed Economics and Management Vol.
and Stated Preference Data Be 34, No. 3. pp. 240-255.
Combined?.
Kaoru......................... 1993......... Differentiating Use and Nonuse Environmental and Resource
Values for Coastal Pond Water Economics. Vol. 3. pp. 487-
Quality Improvements. 494.
Lant & Roberts................ 1990......... Greenbelts in the Cornbelt: Environment and Planning. Vol.
Riparian Wetlands, Intrinsic 22. pp. 1375-1388.
Values, and Market Failure.
Magat et al................... 2000......... An Iterative Choice Approach to Journal of Risk and
Valuing Clean Lakes, Rivers, Uncertainty. Vol. 21, No. 1.
and Streams. pp. 7-43.
Mitchell & Carson............. 1981......... An Experiment in Determining Preliminary Draft of a report
Willingness to Pay for National to the U.S. Environmental
Water Quality Improvements. Protection Agency. Resources
for the Future, Inc.,
Washington, D.C.
Olsen et al................... 1991......... Existence and Sport Values for Rivers. Vol. 2, No. 1. pp. 44-
Doubling the Size of Columbia 56.
River Basin Salmon and
Steelhead Runs.
Roberts & Leitch.............. 1997......... Economic Valuation of Some Agricultural Economics Report
Wetland Outputs of Mud Lake. No. 381, Department of
Agricultural Economics, North
Dakota Agricultural Experiment
Station, North Dakota State
University.
Rowe et al.................... 1985......... Economic Assessment of Damage Energy and Resource
Related to the Eagle Mine Consultants, Inc., Boulder,
Facility. CO.

[[Page 13576]]

Sanders et al................. 1990......... Toward Empirical Estimation of Water Resources Research. Vol.
the Total Value of Protecting 26, No. 7. pp. 1345-1357.
Rivers.
Sutherland & Walsh............ 1985......... Effect of Distance on the Land Economics. Vol. 61, No. 3.
Preservation Value of Water pp. 282-291.
Quality.
Walsh et al................... 1978......... Option Values, Preservation EPA-600/5-78-001, Socioeconomic
Values and Recreational Environmental Studies Series,
Benefits of Improved Water Office of Research and
Quality: a Case Study of the Development, U.S.
Southe Platte River Basin, Environmental Protection,
Colorado. Research Triangle Park, NC.
Welle......................... 1986......... Potential Economic Impacts of Dissertation, University of
Acid Deposition: A Contingent Wisconsin-Madison.
Valuation Study of Minnesota.
Whitehead & Groothuis......... 1992......... Economic Benefits of Improved Rivers. Vol. 3. pp. 170-178.
Water Quality: a case study of
North Carolina's Tar-Pamlico
River.
Whitehead et al............... 1995......... Assessing the Validity and Journal of Environmental
Reliability of Contingent Economics and Management. Vol.
Values: A Comparison of On-Site 29. pp. 238-251.
Users, Off-Site Users, and Non-
users.
----------------------------------------------------------------------------------------------------------------

The Agency is considering applying the results of this type of
review and analysis to estimate nonuse value for aquatic resources
potentially affected by impingement and entrainment for the final rule
analysis, and recognizes that this approach requires careful accounting
of factors that are likely to affect nonuse values of aquatic resources
such as the geographic scale of environmental improvements, regional or
national importance of the affected resources, and the magnitude of
environmental quality changes. The Agency seeks comment on this general
approach as well as the applicability and feasibility of estimating
nonuse values that are based on (1) a percent or fraction of use values
per household (see Section X B 4 of this preamble for summary of
methods for assessing recreational use values) and/or (2) specific user
and nonuser populations for this rule. The agency also solicits
feedback about the studies reviewed by EPA as well as other studies
that might be suitable.

b. Meta Analysis

In addition to simply reviewing available information about the
relative magnitudes of nonuse and use values, EPA is also considering
regression-based meta-analysis of nonuse WTP for water resources.
Depending on the suitability of available data, a meta-analysis can
provide information on the relative influence of various study,
economic, and natural resource characteristics on nonuse willingness to
pay. Economic literature characterize meta analysis as a rigorous
alternative to the more casual, narrative discussion of research
studies which typify many attempts to summarize available information
about environmental values. The primary advantage of a regression-based
approach is that it may account for differences among study sites that
may contribute to changes in nonuse values, to the extent permitted by
available data. The following discussion briefly summarizes EPA's
approach to this analysis. DCN 5-1011 provides further detail.
The dependent variable in the regression-based meta-analysis may be
either the estimated nonuse value or the total value (including use and
nonuse value) of aquatic habitat improvements. The total value can be
modeled as a function of explanatory variables that include (1) core
economic variables and (2) study design effects variables. The core
economic variables are used to characterize specifics of the
resource(s) valued (e.g. whether they are estuarine or freshwater); the
geographic scale of resource improvements (e.g., single water body
versus multiple water bodies); the estimated use values for
environmental quality improvement, quantitative or categorical measures
of environmental quality improvements, and survey respondents'
characteristics such as mean income of survey respondents. Study design
effects characterize the year in which a study was conducted, the
elicitation format of the survey (e.g., telephone and mail); the
elicitation method (e.g., open ended WTP method). DCN 5-1011 provides
information on key variables available from the 18 studies reviewed by
EPA.
EPA also notes potential limitations of this approach. Limitations
of the regression analysis approach specifically stem from the number
of studies that meet criteria for inclusion, the number of variables
that could be included in the regression analysis (which depends on the
number of and information available from the original studies), as well
as degrees of freedom and statistical significance. For example, study
differences often prevent the use of a single measure of the degree of
environmental quality improvements. Prior meta-analyses of this type,
including Woodward and Wui (2000) and Poe et al. (2001), lack a
continuous and quantified measure of environmental quality improvement.
The use of other economic variables that might be desirable from a
theoretical perspective (e.g., information on substitute goods) may
complicate extraction of suitable data from the underlying studies. EPA
also recognizes that clear and objective criteria are needed to
determine which studies are suitable for inclusion in meta analysis;
criteria should acknowledge issues related to potential bias associated
with stated preference studies, and steps that the researchers should
take to minimize bias, as noted in Section X B 1 of this preamble. One
key challenge of both of the approaches discussed in this section is to
determine the applicability of study results to the policy case of
interest (i.e., fish impacts due to impingement and entrainment in this
rule) because of significant variations in study objectives and
methodologies. The use (and interpretation) of the value estimates to
predict WTP in specific cases will follow the methodologies from the
benefits transfer literature (e.g., Vandenberg et al. 2001; Desvousges
et al., 1998).
EPA seeks comments on appropriateness of the meta-analysis approach
for calculating nonuse values for aquatic habitat improvements
associated with reduced impingement and entrainment in this rule.

F. Regional-Level Benefit Cost Analysis

This section presents EPA's estimates of the total monetary value
of the baseline impingement and entrainment losses at cooling water
intake structures located in the North Atlantic and Northern California
study regions. A comprehensive estimate of the value of the resource
should include both use

[[Page 13577]]

and nonuse values. However, EPA was able to estimate nonuse values for
the North Atlantic region only due to data limitations. ``Nonuse
values, like use values, have their basis in theory of individual
preferences and the measurement of welfare changes. According to
theory, use values and nonuse values are additive'' (M. Freeman, 1993).
The following sections present the estimated monetary value of
impingement and entrainment losses under the baseline scenario and the
estimated impingement and entrainment reduction benefits under the
preferred option for the two study regions. The Agency, however, points
out the estimate of benefits for the Northern California region is
incomplete and includes recreational and commercial fishing benefits
only.
1. Benefit-Cost Analysis of the Preferred Option for the North Atlantic
Region

a. Total Monetary Value of Baseline Impingement and Entrainment Losses
in the North Atlantic Region

Table X-44 presents EPA's estimates of the total value of baseline
impingement and entrainment losses at cooling water intake structures
in the North Atlantic region. The estimated nonuse value of fishery
resources lost to impingement and entrainment ranges from $75.64
million to $139.92 million per year (2002$). Note that EPA has provided
two different estimates of total value in Table X-44. The first total
value is the sum of aggregate use value and the nonuse component of
restoration-based value. The second total value (i.e., restoration-
based total value) is simply the total value (including nonuse) for SAV
and wetland restoration acres as presented in Section X E d of this
preamble. The estimated total value of impingement and entrainment
losses in the North Atlantic region ranges from $79 to $143 million
(2002$) per year when commercial/recreational use values are added to
the nonuse component of restoration-based values. The total value based
on the total restoration-based value is similar in range ($79 to $148
million).

Table X-44.--Annual Value of Baseline Losses From Impingement and Entrainment in the North Atlantic Region
(Millions 2002$)
----------------------------------------------------------------------------------------------------------------
Before discounting Discounted using 3% Discounted using 7%
-------------------------- discount rate discount rate
---------------------------------------------------
Low High Low High Low High
----------------------------------------------------------------------------------------------------------------
Use Value of Resources Lost
----------------------------------------------------------------------------------------------------------------
Commercial Use \a,b\.............. $0.28 $0.28 $0.24 $0.24 $0.20 $0.20
Recreational Use \a,b\............ 3.07 3.07 2.64 2.64 2.25 2.25
Aggregate Use Benefits............ 3.36 3.36 2.88 2.88 2.45 2.45
-----------------------------------
Nonuse Value of Resources Lost \c\
----------------------------------------------------------------------------------------------------------------
Restoration-based nonuse value.... 75.64 139.92 75.64 139.92 75.64 139.92
-----------------------------------
Total Monetary Value of Resources Lost
----------------------------------------------------------------------------------------------------------------
Total value (aggregate use + 79.00 143.28 78.52 142.80 78.09 142.37
restoration-based non-use).......
Restoration-based total value \d\. 79.21 148.25 79.21 148.25 79.21 148.25
----------------------------------------------------------------------------------------------------------------
Note: Sum of components may not equal totals due to rounding.
\a\ Welfare losses represent losses due to both impingement and entrainment because recreational estimates
cannot be presented separately for these categories. Commercial/recreational use values are annual values
derived in Section X C.
\b\ Commercial and recreational losses are presented undiscounted, and discounted at 3% and 7%. There are no low
or high estimates for welfare losses.
\c\ Nonuse values are not discounted. Values are based on nonuse values for SAV and wetland restoration for the
populations in counties abutting affected water bodies. Low values assume lower bound restoration acreage and
high values assume upper bound restoration acreage amounts (see Section X E d of this preamble).
\d\ Total monetary value based on total values associated with restoration is not discounted (see Section E.2
for detail).

b. Estimated Benefits and Costs of the Preferred Option

Table X-45 presents the total annual costs of the preferred
regulatory option for the North Atlantic region. The estimated pre-tax
cost for facilities located on estuaries or tidal rivers is $17.58
million and, for ocean-located facilities, $0.57 million. The total
annual cost is $18.15 million.

Table X-44.--Total Annual Costs for the North Atlantic Region (Pre-Tax) as of 2005 (in 2002$, millions)
----------------------------------------------------------------------------------------------------------------
Estuary/Tidal/
Total River Ocean Total
----------------------------------------------------------------------------------------------------------------
North Atlantic............................................... $17.58 $0.57 $18.15
----------------------------------------------------------------------------------------------------------------

Table X-46 presents EPA's estimates of the total benefits from
impingement and entrainment reduction in the North Atlantic region
under the preferred option. The estimated impingement and entrainment
reduction benefits under the preferred option range from $14.84 to
$28.57 million per year (2002$).
Combining the estimated cost and benefit values, the estimated net
benefits of installing the preferred option range from negative $3.31
million to positive $10.42 million (2002$).

[[Page 13578]]

Table X-46.--Analysis of Costs and Benefits of the Preferred Option for the North Atlantic Region (millions
2002$)
----------------------------------------------------------------------------------------------------------------
Before discounting Discounted using 3% Discounted using 7%
-------------------------- discount rate discount rate
---------------------------------------------------
Low High Low High Low High
----------------------------------------------------------------------------------------------------------------
Annual Use Benefits
----------------------------------------------------------------------------------------------------------------
Commercial \a,b\.................. $0.08 $0.08 $0.07 $0.07 $0.06 $0.06
Recreational \a,b\................ 0.88 0.88 0.76 0.76 0.65 0.65
Aggregate Use Benefits............ 0.96 0.96 0.83 0.83 0.71 0.71
-----------------------------------
Annual Nonuse Benefits \c\
----------------------------------------------------------------------------------------------------------------
Restoration-Based Nonuse Benfits 14.17 26.87 14.17 26.87 14.17 26.87
\d\..............................
-----------------------------------
Total Annual Benefits
----------------------------------------------------------------------------------------------------------------
Total Benefits (aggregate use + 15.13 27.83 15.00 27.70 14.88 27.58
restoration-based nonuse values).
Total Restoration-based Benefits 14.84 28.57 14.84 28.57 14.84 28.57
\d\..............................
-----------------------------------
Annualized Costs
----------------------------------------------------------------------------------------------------------------
Total Costs....................... 18.15 18.15 18.15 18.15 18.15 18.15
-----------------------------------
Net Annual Benefits (Benefits--Costs)
----------------------------------------------------------------------------------------------------------------
Net Benefits...................... (3.02) 9.68 (3.15) 9.55 (3.27) 9.43
Restoration-based Net Benefits.... (3.31) 10.42 (3.31) 10.42 (3.31) 10.42
----------------------------------------------------------------------------------------------------------------
Note: Sum of components may not equal totals due to rounding.
\a\ Welfare losses represent losses due to both impingement and entrainment because recreational estimates
cannot be presented separately for these categories. Commercial/recreational use values are annual values
derived in Section X C.
\b\ Commercial and recreational losses are presented undiscounted, and discounted at 3% and 7%. There are no low
or high estimates for welfare losses.
\c\ Nonuse values are not discounted. Values are based on nonuse values for SAV and wetland restoration for the
populations in counties abutting affected water bodies. Low values assume lower bound restoration acreage and
high values assume upper bound restoration acreage amounts (see Section X E d of this preamble).
\d\ Total monetary value based on total values associated with restoration is not discounted (see Section E.2
for detail).

2. Benefit-Cost Analysis of the Preferred Option for the Northern
California Region

a. Total Monetary Value of Baseline Impingement and Entrainment Losses
in the Northern California Region

Table X-47 presents EPA's estimates of the monetary value of
baseline impingement and entrainment losses at cooling water intake
structures in the Northern California region. As noted above, EPA did
not estimate nonuse values of impingement and entrainment losses for
the Northern California region analysis; data aren't available to
support use of the restoration-based approach for the North California
region. The estimated use value of fishery resources lost to
impingement and entrainment in the Northern California region ranges
from $1.1 million to $1.49 million per year (2002$).

Table X-47.--Annual Values of the Baseline Fishery Losses From
Impingement and Entrainment in the Northern California Region (millions
2002$)
------------------------------------------------------------------------
Discounted Discount
Before using 3% using 7%
discounted discount discount
rate rate
------------------------------------------------------------------------
Use Value of the Resources Lost
------------------------------------------------------------
Commercial Use ^a ^b............... $0.06 $0.05 $0.05
Recreational Use ^a ^b............. 1.43 1.22 1.05
Total Use Benefits............... 1.49 1.27 1.10
------------------------------------------------------------------------
Note: Sum of components may not equal totals due to rounding.
^a Welfare losses represent losses due to both impingement and
entrainment because recreational estimates cannot be presented
separately for these categories.
^b Commercial and recreational losses are presented undiscounted, and
discounted at 3% and 7%. There are no low or high estimates for
welfare losses.

[[Page 13579]]

b. Estimated Benefits and Costs of the Preferred Option for the
Northern California Region

Table X-48 presents the total annual costs of the preferred
regulatory option for the Northern California region. The estimated
pre-tax cost for facilities located on estuaries or tidal rivers is
$6.6 million and, for ocean-located facilities, $13.5 million. The
total annualized cost is $20.1 million.

Table X-48.--Total Annual Costs for the Northern California Region (Pre-
Tax) as of 2005 (in 2002$, millions)
------------------------------------------------------------------------
Estuary/
Tidal River Ocean Total
------------------------------------------------------------------------
Northern California........... $6.60 $13.50 $20.10
------------------------------------------------------------------------

Table X-49 presents EPA's estimates of the total use benefits from
impingement and entrainment reduction at cooling water intake
structures in the Northern California region under the preferred
option. The estimated use benefits of impingement and entrainment
reduction under the preferred option range from $0.62 to $0.81 million
per year (2002$), depending on the factor for discounting the use value
of lost resources. EPA did not estimate net benefits in CA due to the
lack of information on nonuse.

Table X-49.--Analysis of Costs and Benefits of the Preferred Option in
the Northern California Region (millions 2002$)
------------------------------------------------------------------------
Discounted Discounted
Before using 3% using 7%
discounting discount discounted
rate rate
------------------------------------------------------------------------
Annual Use Benefits
------------------------------------------------------------------------
Commercial ^a ^b................... $0.02 $0.02 $0.02
Recreational ^a ^b................. 0.79 0.66 0.60
Total Use Benefits............... 0.81 0.68 0.62
Nonuse Benefits.................. (^c) ........... ...........
----------------------------------
Annualized Costs
------------------------------------------------------------------------
Total Costs...................... 20.10 20.10 20.10
----------------------------------
Net Annual Benefits (Benefits--Costs)
------------------------------------------------------------------------
Total Net Benefits............... (^c) (^c) (^c)
------------------------------------------------------------------------
Note: Sum of components may not equal totals due to rounding.
^a Welfare losses represent losses due to both impingement and
entrainment because recreational estimates cannot be presented
separately for these categories.
^b Commercial and recreational losses are presented undiscounted, and
discounted at 3% and 7%. There are no low or high estimates for
welfare losses.
^c Not estimated.

G. Break-Even Analysis

Estimating nonuse values is an extremely challenging and uncertain
exercise, particularly when primary research using stated preference
methods is not a feasible option (as is the case for this rulemaking).
In the preceding section, EPA described possible alternative approaches
for developing nonuse benefit estimates based on benefits transfer and
associated methods. Due to the uncertainties of providing estimates of
the magnitude of nonuse values associated with the regulation, this
section provides an alternative context with which to consider the
potential magnitude of nonuse values. The approach used here applies a
``break-even'' analysis to identify what nonuse values would have to be
in order for the proposed option to have benefits that are equal to
costs.
The break-even approach uses EPA's estimated commercial and
recreational use benefits for the rule and subtracts them from the
estimated annual costs. The resulting ``net cost'' enables one to work
backwards to estimate what nonuse values would need to be (in terms of
willingness to pay per household per year) in order for total annual
benefits to equal annualized costs. Table X-50 provides such an
assessment for the marine resources impacted in the two regions for
which commercial and recreational benefit estimates are available to
date. The table shows the values using a seven percent discount rate.

[[Page 13580]]

Table VII-50.--Implicit Non-use Value--Break-even Points for Regional Benefit-Cost Analysis, Using a 7% Discount
Rate
----------------------------------------------------------------------------------------------------------------
Number of Break-even
Use Compliance Net costs households nonuse WTP
Study region benefits costs \1\ \2\ (millions) per
\1\ \3\ household
----------------------------------------------------------------------------------------------------------------
North Atlantic................................. $0.70 $18.15 $17.45
Abutting Counties.......................... ........... ........... ........... 3.65 $4.78
Within 32.4 Diles.......................... ........... ........... ........... 4.20 4.15
Statewide.................................. ........... ........... ........... 5.14 3.39
Northern California............................ 0.64 20.10 19.46
Abutting Counties.......................... ........... ........... ........... 2.38 8.18
Within 32.4 Miles.......................... ........... ........... ........... 2.50 7.78
All N. CA Counties......................... ........... ........... ........... 4.99 3.90
Statewide.................................. ........... ........... ........... 11.51 1.69
----------------------------------------------------------------------------------------------------------------
\1\ Millions of 2002$s per year, from 2/19/03 NODA: Tables X-53 and X-56
\2\ Annualized compliance costs minus annual use benefits only (millions 2002$s)
\3\ Millions of households:(a) in abutting counties only (b) within 32 miles of impacted marine resources, (c)
and (d) statewide (or, for northern half of CA). Sources: US Census 2000 (BLS): http://factfinder.census.gov
;

\4\ Dollars per household per year that, when added to use benefits, would yield a total annual benefit (use
plus nonuse) equal to the annualized costs.

As shown in Table X-50, nonuse values per household for the
affected marine resources in the region would have to amount to at
least $4.78 per year to residents in the North Atlantic region--if
assuming that only households in abutting counties have nonuse values
for the affected marine resources--in order for the proposed option to
have total benefits (annual use plus nonuse values) that would equal or
exceed the estimated annual compliance costs for the proposed option.
For households within 32.4 miles of the impacted resources, nonuse
values would have to equal $4.15 per year to have total benefits equal
the costs of the proposed option. If nonuse values are considered for
all households in the coastal states of the region (CT, ME, MA, NH, and
RI), then the break-even nonuse value would need to be only $3.39 per
household.
For the Northern California region, the ``break-even'' nonuse
willingness to pay (WTP) per household would need to be $8.18, based
solely on households in coast-abutting counties only. For households
within 32.4 miles of the impacted resources, nonuse values would have
to equal $7.78 per year to have total benefits equal the costs of the
proposed option. This level of break-even nonuse value would decline to
$3.90 if all households in the northern part of California are
considered, and declines further to $1.69 per household per year if the
costs are spread over all households statewide.
While this approach of backing out the ``breakeven'' nonuse value
per household does not directly answer the question of what nonuse
values might actually be worth for the 316b rulemaking, these results
do frame the question with a useful perspective that appeals to common
sense and facilitates policy-making decisions. The break-even approach
poses the question: ``are the implicit non-use WTP estimates per
household at plausible levels, given empirical evidence available from
the existing body of empirical research?''. EPA requests comment on
whether these values are plausible as an average across all households
in the target area, and data or research that addresses this question.

XI. Implementation and Other Regulatory Refinements

A. Definition and Methods for Determining the ``Calculation Baseline''

EPA received a number of comments on the definition and methods
associated with the calculation baseline during the comment period for
the proposed Phase II rule. This calculation baseline sets a
hypothetical baseline against which compliance with the proposed
technology-based performance standards in Sec. 125.94 is determined
(see 67 FR 17176). The calculation provides facilities a consistent
basis for determining compliance and allows them to take credit for
fish protection technologies already in place at their facility. EPA
proposed in Sec. 125.93 (see 67 FR 17221) that the ``calculation
baseline was an estimate of impingement mortality and entrainment that
would occur at your site assuming you had a shoreline cooling water
intake structure with an intake capacity commensurate with a once-
through cooling water system and with no impingement and/or entrainment
reduction controls.'' Some commenters stated that, in general, the
proposed definition was too vague. They added that the regulated
industry as well as the permitting authority would be better served if
there were more specific design criteria included in the definition. In
response to these comments, EPA is considering and is requesting
comments on adding the following specifications to the definition:
[sbull] Baseline cooling water intake structure is located at, and
the screen face is parallel to, the shoreline. EPA is considering that
it may be appropriate to allow credit in reducing impingement mortality
from screen configurations that employ angling of the screen face and
currents to guide organisms away from the structure before they are
impinged.
[sbull] Baseline cooling water intake structure opening is located
at or near the surface of the source waterbody. This may be appropriate
to allow credit in reducing impingement mortality or entrainment due to
placement of the opening in the water column.
[sbull] Baseline cooling water intake structure has a traveling
screen with the standard \3/8\ inch mesh size commonly used to keep
condensors free from debris. This would allow a more consistent
estimation of the organisms that are considered ``entrainable'' vs.
``impingeable'' by specifying a standard mesh size that can be related
to the size of the organism that may potentially come in contact with
the cooling water intake structure.
[sbull] Baseline practices and procedures are those that the
facility would maintain in the absence of any operational controls
implemented in whole or in part for the purpose of reducing impingement
mortality and entrainment. This would recognize and provide credit for
any operational measures, including flow or velocity

[[Page 13581]]

reductions, a facility had adopted that reduce impingement mortality or
entrainment.
If all of the above specifications are determined to be appropriate
for the baseline cooling water intake structure that is used to
determine the calculation baseline, EPA would modify the regulatory
definition at proposed Sec. 125.93 to read as follows:

Calculation baseline means an estimate of impingement mortality
and entrainment that would occur at your site assuming (1) the
cooling water system has been designed as a once-through system; (2)
the opening of the cooling water intake structure is located at, and
the face of the standard \3/8\-inch mesh traveling screen is
oriented parallel to, the shoreline near the surface of the source
waterbody; and (3) the baseline practices and procedures are those
that the facility would maintain in the absence of any operational
controls, including flow or velocity reductions, implemented in
whole or in part for the purposes of reducing impingement mortality
and entrainment.''

EPA also considered whether basing the calculation baseline on a
shoreline intake would penalize facilities with constructed waterways
such as intake canals or intake bays, if these configurations had a
higher potential for impingement and entrainment than a ``shoreline''
intake located on the open waterbody. Basing calculations on this
hypothetical open waterbody intake could potentially result in such
facilities having to reduce impingement and entrainment by more than
the specified performance ranges. This is not EPA's intent. Rather,
facilities should demonstrate they have (or will) reduce impingement
mortality or entrainment by the percentages established in the proposed
performance ranges when compared to an intake at which no measures have
been taken to reduce impingement mortality and entrainment. In the case
of an intake located on the ``shoreline'' of an intake canal or intake
bay, EPA would consider the intake's location on the constructed
waterway to be the shoreline for purposes of the calculation baseline.
EPA solicits comment on these design specifications for inclusion
or exclusion in the definition of the calculation baseline. In
particular, EPA is interested in whether it would be redundant to
include all of the hypothetical design criteria. EPA requests comments
on any other design criteria that may be appropriate to set a
consistent and reproducible baseline upon which to determine compliance
with the proposed performance standards. EPA also requests comment on
whether these design criteria will provide the intended credit in the
compliance analyses to those facilities which have implemented
technologies or operational measures that reduce impingement mortality
and/or entrainment, without creating unintended consequences such as
the opportunity to seek credit for hypothetical ``reductions'' from
unreasonable claims regarding baseline operational measures.
One commenter suggested that determination of the calculation
baseline for entrainment be supplemented with an optional alternative,
``As Built'' approach. Under this approach, a facility would determine
the baseline for calculating entrainment reduction by either: (1) Using
actual historical measurements of entrained organisms before
installation of the new intake technology; or (2) sampling immediately
in front of the new technology and enumerating organisms of a size that
will pass through a standard \3/8\-inch screen. To determine
entrainment reduction, the facility would then sample and enumerate
entrained organisms behind the new technology or at the outfall. This
second option would eliminate the need for predictive estimates of
baseline entrainment occurring at a facility and would not require
collection of historical data nor the use of estimations that may
increase uncertainty.
Potential benefits cited for using this alternative ``As Built''
approach for estimating compliance with performance included that (1)
the facility would demonstrate entrainment reductions directly in an
easily verifiable manner that does not rely on hypothetical
calculations; (2) facilities could install new technologies sooner than
they would under the other calculation baseline approach, because pre-
deployment studies would not be necessary; and (3) the baseline numbers
would be actual samples of entrained or entrainable organisms. EPA
requests comments on providing this approach as an optional alternative
for determining the calculation baseline for entrainment.
It should be noted that the commenter states that the ``As Built ''
approach for determining the calculation baseline would not be
appropriate for impingement as it is highly species-specific and life-
stage specific with no reliable way to measure ``impingeable''
organisms outside of the cooling water intake structure. The commenter
suggests that to determine the calculation baseline for impingement
mortality the only valid approach would be to collect samples before
the new intake technology is deployed so that the baseline impingement
(pre-deployment) can be compared to the post-deployment impingement to
estimate the percent reduction in impingement mortality attributable to
the technology. EPA requests additional comment on the applicability of
an ``As Built'' approach to estimate the calculation baseline for
impingement mortality.
The proposed Phase II preamble language (see 67 FR 17176) stated
that the calculation baseline could be estimated by evaluating existing
data from a nearby facility. Some commenters requested that the
calculation baseline be allowed to be estimated using data from
facilities that are not located nearby or that are located on another
waterbody as long as the two facilities had closely comparable
environmental conditions including similar locations and similar
species that would be impinged and entrained. These same commenters
also requested that the proposed rule retain flexibility for the
facility in choosing the location of the hypothetical shoreline intake
as long as the location is one where an intake might have been placed
in the exercise of sound engineering judgment, without regard for fish
protection. Another commenter stated that assessing the mere presence
or absence of organisms at a nearby facility or in the same waterbody
may not accurately characterize the potential for impingement and
entrainment at a future cooling water intake structure. This commenter
also indicated that site-specific interactions of organisms with the
hydrology of the source waterbody and the cooling water intake
structure configuration would confound the assessment and that
composition and abundance of impingement of organisms can be very
different for two cooling water intake structures located close to one
another.
EPA requests additional comment on the appropriateness of allowing
facilities to define the calculation baseline using data from other
facilities, what types of other facilities might be appropriate for
this purpose, and whether the variability introduced due to site-
specificity is greater than that due to normal fluctuations in natural
systems.

B. Options for Evaluating Compliance With Performance Standards

EPA received numerous comments requesting clarification on how
compliance with the proposed performance standards for reducing
impingement mortality by 80-95% and entrainment by 60-90% would be
determined. For both impingement mortality and entrainment, EPA is
evaluating two basic methods for

[[Page 13582]]

determining a percent reduction: (1) Consideration of all fish and
shellfish species that have the potential to be impinged or entrained,
or (2) consideration of fish and shellfish from only a subset of
species determined to be representative of all the species that have
the potential to be impinged or entrained. For either approach, species
impinged or entrained may be measured by counting the total number of
individual fish and shellfish, or by weighing the total wet or dry
biomass of the organisms. These approaches are described in more detail
below. EPA invites comments on these approaches and whether EPA should
require facilities to use a specific method or only provide guidance.
All Species Approach
For determining compliance with the impingement mortality and
entrainment standards, EPA is considering requiring that all species of
fish and shellfish present at the cooling water intake structure and
having the potential to be impinged be included in the measurement.
Under this approach, the permittee would measure either the total
number or the total biomass of the fish and shellfish impinged (without
regard to their taxonomic grouping) and use this number to compare to
the calculation baseline to determine compliance with the impingement
mortality reduction performance standards. This approach would be the
simplest conceptually to implement since only the total number or mass
of impinged organisms would need to be measured. However, this approach
would have the limitation that information on efficacy of the
technology related to each species would not be collected, and all
species would be treated as equivalent, without regard to their
relative ecological, economic, recreational, or cultural importance.
EPA is similarly considering requiring that entrainment losses also
be measured by counting the total numbers of organisms entrained. This
approach has been commonly used in freshwater rivers and streams and
produces either a total number of undifferentiated eggs and larvae
entrained, or an identification of the entrained eggs and larvae by
species or family. Several commenters emphasized that a permittee
should not be required to prove reduced entrainment of every entrained
species by at least 60 percent. These commenters also stated that the
difficulty and cost of taxonomic classifications makes species-specific
monitoring unreasonable, and that classification is not possible for
early life stages of some species.
If EPA were to require the use of an approach that considers the
total number of all fish and shellfish that have the potential to be
impinged or entrained, regardless of species, language similar to the
following would be added at proposed Sec. 125.94(b)(5):

(5) Compliance with impingement mortality and entrainment
performance standards in paragraphs (b)(1) through (4) above must be
determined based on a comparison of the enumeration of all fish and
shellfish impinged and killed and entrained with those estimated to
be impinged and killed and entrained at the calculation baseline.

EPA requests comment on the approach of enumerating all fish and
shellfish, regardless of their taxonomy in determining compliance with
the performance standards for impingement mortality and entrainment and
the regulatory language above. EPA is also accepting comment on the
advantages and disadvantages of using the absolute number of organisms
impinged or entrained as opposed to using wet or dry total weights of
biomass.
For measuring compliance with the entrainment reduction performance
standard, several commenters suggested that the entrained biomass could
be measured by collecting entrained organisms from the outfall or other
appropriate monitoring location where a representative sample can be
taken. This mass would then be compared to the mass of eggs and larvae
that would have been entrained at the calculation baseline to determine
if there is a 60 percent reduction or better. However, EPA is concerned
that if a facility uses biomass, the weights may not be substantial
enough to yield useable data since most entrained organisms are at the
egg or larval stage. EPA requests comment on the feasibility of using
biomass for measuring compliance with the entrainment reduction
standard.
Representative Species Approach
Another approach to determine compliance with the impingement
mortality and entrainment performance standard involves considering a
subset of the species that are representative of all species that are
susceptible to impingement or entrainment in the waterbody that needs
to be protected. This approach would require the permittee to identify
representative important/indicator species (RIS), as opposed to
considering all species present at the cooling water intake structure,
for use in calculating compliance with the performance standards. If
this approach were allowed, EPA is considering requiring that the list
of RIS be developed by the facility, in consultation with the Director
and Federal, State and Tribal fish and wildlife management agencies
using available data. EPA might also require the concurrence of the
Director.
Historically, the term RIS has been defined in different ways.
EPA's 1977 Draft Guidance for Evaluating the Adverse Impact of Cooling
Water Intake Structures on the Aquatic Environment: Section 316(b) P.L.
92-500 uses the concept of ``critical aquatic organisms.'' This term is
used in a manner similar to RIS. The 1977 Guidance states that
``critical aquatic organisms'' are ``those species which would be
involved with the intake structure and are: (1) Representative, in
terms of their biological requirements, of a balanced, indigenous
community of fish, shellfish, and wildlife; (2) commercially or
recreationally valuable (e.g., among the top ten species landed--by
dollar value); (3) threatened or endangered; (4) critical to the
structure and function of the ecological system (e.g., habitat
formers); (5) potentially capable of becoming localized nuisance
species; (6) necessary, in the food chain, for the well-being of
species determined in 1-4; (7) one of 1-6 and have high potential
susceptibility to entrapment-impingement and/or entrainment; and (8)
critical aquatic organisms based on 1-7, are suggested by the
applicant, and are approved by the appropriate regulatory agencies ``
(see DCN 4-0006).
In EPA's section 316(a) regulations, the term ``representative
important species (RIS)'' is used and defined as ``species which are
representative, in terms of their biological needs, of a balanced,
indigenous community of shellfish, fish and wildlife in the body of
water into which a discharge of heat is made'' (see 40 CFR 125.71).
Under these same regulations, the term ``balanced, indigenous
community'' is defined as ``a biotic community typically characterized
by diversity, the capacity to sustain itself through cyclic seasonal
changes, presence of necessary food chain species and by lack of
domination by pollutant tolerant species.''(See 40 CFR 125.71). The
section 316(a) regulations require that in selecting RIS, special
consideration be given to species mentioned in applicable water quality
standards. It further requires that after the discharger submits its
detailed plan of study, the Director either approve the plan or specify
any necessary revisions to the plan (see 40 CFR 125.72).
Other entities, including some States, use the concept of RIS
defined as those species selected by a discharger and

[[Page 13583]]

approved by the state that exhibit one or more of the following
characteristics: Species that are sensitive to adverse harm from
operations of the facility (for example, heat-sensitive species);
species that use the local area as spawning or nursery grounds, or
both, including those species that migrate past the facility to spawn;
species of commercial or recreational value or both; species that are
habitat formers and are critical to the functioning of the local
ecosystem; species that are important links in the local food web;
rare, threatened, or endangered species; or potential nuisance
organisms likely to be enhanced by plant operations. In some cases, the
permitting authority allows the permittee to identify RIS on a site-
specific basis (see State of Maryland comments on proposed Phase II
rule).
EPA is considering an approach that employs a RIS or ``critical
aquatic organisms'' approach to determine compliance with the
impingement mortality performance standards. Facilities would be
required to identify all species being impinged (or having the
potential to be impinged) by the cooling water intake structure. From
that total list of species, the facility would then choose a limited
number of organisms based on a definition of ``critical aquatic
organisms'' provided in the regulations. EPA requests comment on
whether 10 to 15 species might be an appropriate number to protect the
types of species and ecosystem functions discussed in the above
discussions of representative indicator species and critical aquatic
organisms. EPA is considering using the same term ``critical aquatic
organisms'' since it has been associated with section 316(b)
requirements in the past. EPA is concerned that the RIS term, which has
been used in other regulatory programs, may have conflicting
programmatic issues and definitions associated with it that could not
be anticipated. EPA would consider using the portions of the above
language from the definition provided in the 1977 Guidance as it
provides a reasonable, but flexible, framework for determining a list
of fish and shellfish that are representative of all the species that
have the potential to be impinged or entrained at cooling water intake
structures. Changes to the language above might include modifying
criteria number 8 to require the following:

(8) critical aquatic organisms based on 1-7, are developed by
the applicant, with the concurrence of the Director and in
consultation with Federal, State, and Tribal fish and wildlife
management agencies with responsibility for fisheries and wildlife.

The definition would be added to the proposed rule at Sec. 125.93. As
discussed above, EPA is also considering a consultation role for the
Director rather than one of concurrence.
Compliance with the impingement mortality and entrainment
performance standards could then be measured by either counting the
total number of individuals of all the critical aquatic organisms
impinged and killed or entrained, or by measuring the total biomass
(wet or dry) of the critical aquatic organisms impinged and killed or
entrained. This value would then be compared to the calculation
baseline to determine compliance with the performance standard.
EPA is also considering two options for making the compliance
determination using the critical aquatic organism approach. The first
option would be to determine compliance based on a total enumeration of
individuals from all of the listed critical aquatic organism species,
and the second option would be to base compliance on a separate
analysis to determine the reduction in impingement mortality and
entrainment for each species. If this critical aquatic organism
approach is used, EPA might adopt regulatory language at Sec.
125.94(b)(5) for Option 1 as follows:

(5) Compliance with the applicable impingement mortality and
entrainment performance standards in paragraphs (b)(1) through (4)
above must be determined based on a comparison of the enumeration of
individuals from all of the listed critical aquatic organism species
impinged and killed and entrained with the total number of listed
critical aquatic organism species estimated to be impinged and
killed and entrained at the calculation baseline.

If this critical aquatic organism approach is used for Option 2, EPA
might adopt regulatory language at Sec. 125.94(b)(5) for Option 2 as
follows:

(5) Compliance with the applicable impingement mortality and
entrainment performance standards in paragraphs (b)(1) through (4)
above must be determined based on a comparison of the enumeration of
individuals from each of the listed critical aquatic organism
species impinged and killed and entrained with each of those
estimated to be impinged and killed and entrained at the calculation
baseline.

EPA invites comments on the use of critical aquatic organism approach,
the above definition for critical aquatic organisms, the above
regulatory language above, and the two options (a total enumeration of
all organisms from the critical aquatic organism species or a separate
analysis for each species) for determining compliance with the
impingement mortality and entrainment performance standards. In
addition to the potential refinements discussed above EPA is also
considering and requests comment on whether the Agency should allow the
Director to determine how best to measure compliance, either
programmatically or as part of individual permit decisions.
EPA recognizes that a challenge in determining compliance with both
the impingement mortality and entrainment performance standards is how
to address the number of moribund or dead fish that wash up against the
intake structure or become entrained. Under ideal circumstances, fish
that were previously injured or killed from weather-related phenomena,
or other episodic fish kills, would be removed from the measurement in
order to more accurately determine the control technology performance.
To ensure consistency with the use of the term moribund among
permittees, EPA is considering adding the following definition of
moribund (A Dictionary of Ecology, Evolution, and Systematics,
Cambridge University Press, 1982) to Sec. 125.93:

Moribund means dying; close to death.

EPA is considering placing in the regulatory language the ability
for a facility to take into account moribund fish and shellfish for
determining compliance with the impingement mortality and entrainment
performance standard using actual or historical data (if representative
of current conditions). If EPA allowed the exclusion of already
moribund fish and shell fish in determining compliance with the
performance standards, the Agency might adopt regulatory language at
Sec. 125.94(b)(5) as follows:

(5) Compliance with the applicable impingement mortality and
entrainment performance standards in paragraphs (b)(1) through (4)
above must be determined based on a comparison of * * *. The number
of moribund organisms that were previously injured or killed prior
to encountering the intake structure must be removed from the
calculation if data are available.

EPA invites comments on including this regulatory language in the
regulation at Sec. 125.94 to allow facilities to exclude already
moribund fish and shellfish, if data are available. EPA also invites
comment on whether a facility should have the opportunity to remove the
number of moribund organisms from the calculation but not be required
to do so (as in the sample regulatory language above).
Other Issues
To calculate the mass of organisms entrained for the calculation
baseline

[[Page 13584]]

facility and the existing plant with new intake technology installed,
several commenters proposed the following approach: The entrained
biomass could be measured by sampling the waterbody near the intake
(the hypothetical shoreline intake for the baseline plant and the
existing or relocated intake for the future complying plant). To
calculate the mass of organisms that would be entrained both by the
hypothetical shoreline intake without any protective technology and by
whatever new proposed intake technologies are being assessed, the
density of entrainable organisms present in the samples would be used
(number/volume). An important consideration in evaluating entrainment
is the element of time, i.e., the density of entrainable organisms will
fluctuate. EPA is soliciting comment on the use of total biomass or
density in predicting or determining the entrainment reduction that
would occur at a cooling water intake structure.
EPA received numerous comments requesting clarification of the
averaging period for determining the percent reduction required by the
impingement mortality and entrainment performance standards. The
commenters stated that due to significant natural temporal and spatial
variability in fish abundance and distribution, a short-term averaging
period may not be appropriate. Entrainment may be near zero during
months when there are no entrainable organisms near the intake.
Additionally, the density of aquatic populations varies naturally over
the longer term. Some commenters suggested that the averaging period
for determining reductions should be two to five years to verify that
the technology is achieving reductions within the ranges specified for
the performance standards. This could involve measuring the percent
reductions over the entire monitoring period. EPA is considering
specifying an averaging time for determining compliance with
performance standards over 1 year, 3 years, or a running average over
the entire permit term (5 years). In addition, EPA is considering
requiring the use of basic arithmetic means as the averaging
methodology. EPA is requesting comment on the time frames and averaging
method discussed above. In addition, EPA requests comment on the
appropriate methodology for determining the averaging period. EPA is
also considering leaving it to the Director to determine appropriate
averaging periods and methodologies, either programmatically or on a
site-specific basis, and requests comment on this approach.

C. Compliance Timelines, Schedules, and Determination

The proposed rule states that Phase II existing facilities would
have to comply with the proposed rule requirements when a NPDES permit
containing requirements consistent with the proposed Subpart J
requirements is issued to the facility (see proposed Sec. 125.92).
Under existing NPDES program regulations, this would occur following
publication of the final rule when an existing NPDES permit is
reissued, or when an existing permit is modified, or revoked and
reissued. EPA is considering options that would require full compliance
with the rule after the effective date, similar to what EPA did in the
Concentrated Animal Feeding Operations Rule, to the extent the best
technologies will not be available immediately after promulgation of
the final rule. As discussed below, the nature of this regulation is
such that facilities may need to test and verify the efficacy of the
technology option that they choose. ( 68 FR 7176, 7214 Feb. 12, 2003).
EPA requests comment on this approach.
Commenters raised numerous issues regarding the proposed
implementation and compliance schedules. Key comments include concern
that the proposed rule does not provide sufficient time for permittees
to develop necessary information, prepare the permit application, and
come into compliance; suggestions that each permit renewal need not
encompass a complete re-application and re-development of the permit;
questions regarding how the proposed requirements will be enforced
(i.e., what constitutes compliance); and a general request for
additional clarification about implementation timing issues (e.g.,
effective date).
Several commenters indicated that the proposed requirement to
submit data associated with the Comprehensive Demonstration Study at
least 180 days prior to permit renewal is unrealistic. These commenters
indicated that sufficient time is needed to collect data and prepare
the permit application, as well as to design and test equipment.
Commenters suggested various means by which time could be built into
the implementation schedule, including allowing for the use of
compliance schedules, phased compliance requirements, and providing a
fixed period of time for facilities to evaluate how they will comply
and submit an application.
The proposed 180-day requirement is based on the existing NPDES
permit program requirement for renewal of existing permits (40 CFR
122.21(d)(2)). EPA proposed this time period, in part, to ensure
consistency with the existing NPDES program. The 180-day time period
ensures that permit writers have sufficient time to review NPDES permit
applications, which for Phase II existing facilities will often be
complex and include considerable amounts of information.
Some commenters have suggested EPA allow for the use of compliance
schedules for Phase II existing facilities to conform to newly
promulgated section 316(b) requirements. NPDES regulations at Sec.
122.47 allow for the use of compliance schedules in NPDES permits by
allowing permittees additional time to achieve compliance with the CWA
and applicable regulations. Examples of situations where compliance
schedules have been used include, but are not limited to, where new or
revised effluent limitations guidelines were promulgated prior to 1989,
or where new water quality standards are developed. EPA believes that
the use of compliance schedules in the context of section 316(b)
warrants consideration because such schedules are intended to allow
permittees additional time where it clearly is necessary to achieve
compliance. Compliance schedules, in association with the proposed
Phase II regulations, would allow facilities whose NPDES permit would
be reissued within the first few years after promulgation, additional
time during the term of the permit to collect the information needed
for the analyses required for the permit application, and/or to design,
install, and optimize technologies to meet the performance standards.
For example, facilities that would be issued a revised NPDES permit six
months after the Phase II rule was published may not have provided the
Director with information on their cooling water intake structure, and
even if they had, it may not have contained the regulation-specific
information such as the Impingement Mortality and Entrainment
Characterization Study, the Design and Construction Technology Plan, or
the Verification Monitoring Plan. In addition, the facility may not
have assessed feasibility and certainly would not have begun
construction of technologies. Use of compliance schedules under the
NPDES permit program would require that the permit writer develop a
schedule that is reasonable and that will ensure that the

[[Page 13585]]

facility is brought expeditiously towards compliance.
Some commenters suggested that EPA provide for a delayed or phased
compliance date that would allow Phase II existing facilities to have,
at least, a specified, minimum period of time to conduct their study
and implement appropriate technologies. Commenters questioned whether
facilities with permit renewal dates shortly after the Phase II rule
becomes final would have sufficient time to conduct the required
characterization studies and implement enhanced control technologies.
As a result, they suggested that some specified period of time be
provided to all Phase II existing facilities under the rule. Generally,
suggestions regarding the specific amount of time necessary ranged from
two or three years to a full 5-year permit term (i.e., allow applicants
to collect data and perform analyses within the term of the
permit).\27\
---------------------------------------------------------------------------

\27\ For example, one commenter suggested allowing two years for
baseline ecological studies and economic studies; one year to
proposed and install technologies; and two years to monitor
effectiveness of changes.
---------------------------------------------------------------------------

EPA is considering and requests comment on whether the final rule
should allow facilities required to apply for a permit renewal shortly
after promulgation of the Phase II rule additional time to complete the
studies associated with submitting a permit application. EPA is
considering the following options: (1) Allowing applicants whose
permits must be renewed in the first year after promulgation of the
Phase II rule to submit application materials required by the Phase II
rule one year after their current permit expires; and (2) allowing a
two-year extension in the deadline for submitting Phase II application
materials.
Commenters also questioned whether the study and data requirements
specified under the proposed Phase II rule will be fully applicable to
all subsequent 316(b) permit renewals for a given facility (i.e., the
second, third, or subsequent rounds of 316(b) permit renewals that take
place following publication of the final Phase II rule). Some suggested
that neither the preamble nor the proposed rule covering the
Comprehensive Demonstration Study make clear whether the information
required to be submitted is required with each NPDES permit renewal.
Generally, commenters asserted that detailed permit evaluations should
not be required every 5 years (i.e., with each renewal cycle). One
commenter suggested that a full re-assessment should only be required
every third permit term (every 15 years).
EPA did not discuss alternative permit application requirements for
permit renewals in the proposed Phase II rule. The proposed Phase II
rule specifies that with each permit renewal the Director must review
the application materials and monitoring data to determine whether
requirements, or additional requirements, for design and construction
technologies or operational measures should be included in the permit
(see proposed Sec. 125.98(a)(1)). EPA does not generally specify
reduced permit application requirements for permit renewals under the
NPDES program. Rather, permitted facilities and permit writers normally
exchange the information specified in the relevant permit application
requirements and the permit writer determines when the application is
complete (see 40 CFR 122.21(d)). It is not uncommon, however, that some
existing information (i.e., information submitted as part of an earlier
permit application) remains part of a renewal application. EPA expects
this to be true for Phase II existing facilities as well.
Under the proposed Phase II rule, EPA has identified several
categories of permit application data and information requirements.
These requirements, which are reasonably general in nature, provide
certain flexibility to applicants to update only the key parts of the
application that reflect changes in environmental conditions or
operations. For example, the proposed rule would allow Phase II
existing facilities to submit a proposal for information as the first
step in identifying the scope of the Comprehensive Demonstration Study
(see proposed Sec. 125.95(b)(1)). This proposed requirement would
provide applicants with an opportunity to identify the information in
the study that has changed and must be updated, as well as existing
information that remains representative of current conditions. In fact,
it specifically provides for inclusion of historical studies where
relevant. It also provides for the use of historical impingement and
entrainment data, provided they are representative of the current
operation and biological conditions. The proposed requirements do
ensure that the Director retains sufficient flexibility to require
Phase II existing facilities to submit data needed to assess source
waterbody conditions and design and operational conditions at the
facility. EPA is evaluating an additional option that it believes would
maintain the Director's ability to obtain the information needed to
make informed decisions when writing NPDES permits for existing
facilities with cooling water intake structures. The proposed rule
requires that facilities submit all of the information required in
Sec. 122.21(r) and Sec. 125.95 (as applicable). EPA is considering
whether to develop additional regulatory language that would allow the
Director to relax the application information requirements if
conditions at the facility and in the waterbody remain unchanged since
the facility submitted their previous NPDES permit application, such
that the information that they would submit would remain unchanged.
Should this new regulatory language be implemented, the facility would
be required to submit evidence that the conditions remain unchanged.
This would serve to lessen the burden for information collection
activities on the facility after the initial permit where section
316(b) requirements are placed in the NPDES permit as long as
conditions remain unchanged. To demonstrate that operational conditions
remain unchanged, the facility may rely upon data collected during the
permit term, including facility operational data, monitoring, design
information, and other data. To demonstrate that conditions in the
waterbody remain unchanged, the facility may rely on monitoring and
studies conducted by the facility, or data collected by other sources
such as universities, federal, State, or local environmental and
resource agencies, or other facilities located in close proximity.
Determinations of unchanged conditions may rely upon demonstrations
that there is no statistically significant changes in impingement and
entrainment at the facility or in the densities of organisms in the
vicinity of the cooling water intake structures, for example. If EPA
decides to relax application requirements for permit renewals after a
facility's initial permit implementing the Phase II regulations, the
regulatory language of Sec. 125.95(a) might be revised as follows:

(a)(1)You must submit to the Director the application
information required by 40 CFR 122.21(r)(2), (3) and (5) and the
Comprehensive Demonstration required by paragraph (b) of this
section at least 180 days before your existing permit expires, in
accordance with Sec. 122.21(d)(2).
(2) In subsequent permit terms, the Director may approve a
request to reduce the information required to be submitted in your
permit application on the cooling water intake structure and the
source waterbody, if conditions at your facility and in the
waterbody remain unchanged since your previous application. You
should submit your request for reduced cooling water intake
structure and waterbody application

[[Page 13586]]

information to the Director at least 1 year prior to the expiration
of the permit term. Your request must contain a list and
justification for each information item in Sec. 122.21(r) or Sec.
125.95 that you determine has not changed since the previous permit
application.

EPA requests comment on the two options described above. EPA
specifically requests comments on whether an option like that in the
suggested regulatory language above is appropriate to reduce the burden
for NPDES permit applicants in subsequent permit terms or whether the
option that would provide guidance and allow resubmittal of existing
data and hence a reconfirmation of the data through the application
process is needed to ensure accurate data for the Director. There would
be companion language in Sec. 125.98 requiring the Director to review
and approve, approve with comments, or disapprove the request within 60
days of submittal by the applicant. EPA also requests comment on the
specific time frames that would be appropriate for this option, and
whether they should be specified by EPA or left up to the discretion of
the Director.
In addition to the concerns discussed above regarding the timing
and content of application materials, some commenters also voiced
concerns regarding how Directors will determine if a facility is in
compliance with the requirements of the proposed rule. These commenters
expressed concern that, given the difficulty of predicting the
performance of distinct cooling water intake control technologies, it
is not reasonable to expect every Phase II existing facility to be able
to ensure that it will achieve reductions in impingement and
entrainment that are consistent with the proposed performance standards
within the first permit term and, therefore, it would be unfair to
enforce the proposed standards until each facility has had a reasonable
period to achieve compliance. One comment expressed by these groups is
that proper design, installation, operation, and maintenance of
technologies reasonably likely (based on appropriate characterization
and study) to meet the performance standards should satisfy the permit
terms and conditions (i.e., be deemed compliance), at least until the
second round of permitting occurs. Stated another way, commenters
maintain that Phase II existing facilities should not be subject to
immediate enforcement actions in the first permit term for failing to
meet the proposed performance ranges (i.e., a facility that properly
designs, installs, operates and maintains cooling water intake
structure control technologies but discovers, at or near the end of the
first permit term, that it has not achieved the requisite level of
impingement and entrainment reduction, should not be subject to
enforcement for violating the section 316(b) requirements). EPA
recognizes that significant variability in biological communities over
seasons and other time periods (for example, a period of peak larval
abundance that typically occurs in the spring months), may complicate
optimization of the performance of technologies for reducing
impingement mortality and entrainment. EPA is considering the need for
regulatory language that would allow facilities time to come into
compliance if they choose to install technologies to meet the
performance standards in proposed Sec. 125.94. This would allow
facilities a period of time to optimize technology(ies) so that they
operate to minimize impingement mortality and entrainment. EPA is
currently evaluating and considering allowing six months, one year, two
years, or five years (one permit term) for a facility to come into
compliance after issuance of its permit. Example regulatory language
for a new paragraph (e) in Sec. 125.94 might read as follows:

(e) If you propose to implement design and construction
technologies or operational measures to meet the performance
standards in Sec. 125.94(b) or (c), you will have an optimization
period of [six months/one year/two years/five years] from the
issuance of a permit requiring compliance with Sec. 125.94(b) or
(c) after which you must comply with the standards.

In this case, the proposed paragraphs Sec. 125.94(e) and (f) would
then become (f) and (g), respectively. EPA requests comments on these
time frames and the suggested regulatory language above. EPA also
requests comment on whether EPA should specify the length of the
optimization period or whether the Director should make this decision.

D. Determining Capacity Utilization Rates

At Sec. 125.94(b)(2), the proposed rule would require facilities
with a capacity utilization rate of less than 15 percent to meet
performance standards for reducing impingement mortality. Sec.
125.94(b)(3) would require facilities with a capacity utilization rate
of 15 percent or more to meet performance standards both for reducing
impingement mortality and for reducing entrainment. (See 67 FR 17221.)
As discussed in Section III above, the proposed Phase II rule defined
capacity utilization based on the generation and capacity of the entire
facility, including steam electric and non-steam generators. (See the
proposed definition of ``capacity utilization rate'' at Sec. 125.93,
67 FR 17220.) EPA is considering whether, for the purposes of
implementing Section 316(b), defining capacity utilization based on the
steam electric part of a facility better reflects a facility's
potential for adverse environmental impact because only the steam
electric generators use cooling water. Thus, EPA is considering
refining its regulatory definition for ``capacity utilization rate'' at
the proposed Sec. 125.93 to reflect use of the steam electric part of
a facility. If EPA were to make this change, the definition of
``capacity utilization rate'' in Sec. 125.93 might be revised as
follows (new language is underlined):

Capacity utilization rate means the ratio between the average
annual net generation of the steam electric part of a facility (in
MWh) and the total net capability of the steam electric part of a
facility (in MW) multiplied by the number of available hours during
a year. The average annual generation must be measured over a five
year period (if available) of representative operating conditions.

EPA requests comment on this suggested refinement.

E. Clarifications and Corrections

1. Implementation Burden for Studies and Biological Data Collection
EPA received comments concerning the information collection, study,
and monitoring costs presented in the supporting Information Collection
Request for Cooling Water Intake Structures for the Phase II Existing
Facility Proposed Rule (US EPA ICR No. 2060.01) (February 2002).
Commenters stated that the format was confusing and the detail provided
in the ICR was insufficient to enable them to review and comment on
these costs. To assist reviewers, EPA has placed additional information
into the record summarizing the general derivation of information
collection, study, and monitoring activity costs associated with the
Phase II rule. Labor categories, labor rates, monitoring components,
and associated costs are outlined and additional cost details are
presented in summary tables to facilitate ease of review and
understanding.
Commenters also pointed out that EPA had inadvertently transposed
the labor figures for statisticians and biological technicians when
putting together the summary tables of costs. EPA has recalculated the
ICR costs to rectify this error and has determined that costs will not
change substantially. Labor costs associated with monitoring activities
in the ICR were significantly higher than the labor for writing final
reports and studies. Therefore, when the

[[Page 13587]]

correction to the labor rates was made, the overall facility costs
decreased.
However, the decrease in facility costs due to the correction to
the labor rates was offset by other changes that EPA has made to the
ICR costs since proposal. Some commenters stated that the burdens for
impingement and entrainment monitoring were too low. EPA has reviewed
these burden estimates and has increased the burdens associated with
impingement and entrainment monitoring associated with the Impingement
Mortality and Entrainment Characterization Study. In addition, EPA has
revised capital and O&M costs associated with the pilot-scale studies
some facilities may perform to reflect the assumption that only
facilities which are projected to install new technologies will perform
pilot studies, and to be proportional to the projected capital costs
for installing these new technologies to comply with the rule. The
following provides a summary of the effects of these corrections and
updates on labor costs and overall costs for facilities, as well as
total combined costs for States and facilities.
[sbull] Facility labor costs increased by 65% from $66,399,819 to
$109,346,909 annually.
[sbull] Facility capital and O&M costs decreased by 61% from
$63,633,640 to $24,801,777 annually.
[sbull] Total costs for facilities increased by 3.2% from
$130,033,459 to $134,148,685 annually.
[sbull] Total facility and State costs increased by 2.8% from
$135,990,706 to $139,820,531 annually.
The effects of the recalculation are summarized in more detail in a
memorandum placed in the record (see ``Updated Information Collection
Costs for the 316(b) Phase II Notice of Data Availability, January 31,
2002).
2. San Onofre Impacts Discussion
In response to comments received about inaccuracies related to
facility-specific impacts caused by impingement and entrainment
discussed in EPA's Information Collection Request (ICR), EPA provides
the following clarification. Specifically, the ICR for the proposed
rule described entrainment losses at San Onofre Nuclear Generating
Station (SONGS). EPA received updated information from SONGS facility
scientists that clarified actual entrainment losses in normal (non-El
Nino) years and described trends in shallow-water and deepwater fish
species affected by entrainment. In addition, prior to publication of
the proposed rule, EPA concluded that kelp bed losses in proximity to
the SONGS intake were attributable to turbidity increases caused by
cooling water discharges, not cooling water withdrawals. The updated
information for SONGS was placed in the preamble to the proposal (see
67 FR 17138-17139), but was inadvertently omitted from the ICR. The
final ICR will reflect the changes described above.

XII. General Solicitation of Comments

EPA encourages public participation in this rulemaking and requests
comments on this notice of availability supporting the proposed rule
for cooling water intake structures for existing Phase II facilities.
As stated in section II of this NODA, EPA is also reopening the comment
period on all aspects of the proposal. EPA invites all parties to
coordinate their data collection activities with the Agency to
facilitate mutually beneficial and cost-effective data submissions.
Please refer to the FOR FURTHER INFORMATION CONTACT section at the
beginning of this preamble for technical contacts at EPA.

Dated: March 12, 2003.
G. Tracy Mehan,
Assistant Administrator, Office of Water.
[FR Doc. 03-6453 Filed 3-18-03; 8:45 am]

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