[Federal Register: January 3, 2001 (Volume 66, Number 2)]
[Proposed Rules]
[Page 473-522]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03ja01-30]
[[pp. 473-522]] Effluent Limitations Guidelines, Pretreatment Standards, and New
Source Performance Standards for the Metal Products and Machinery Point
Source Category; Proposed Rule
[[Continued from page 472]]
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limitation for total sulfide based on potential POTW interference or
upset associated with discharges of total sulfide from facilities in
this subcategory. EPA is proposing limitations for TOC and TOP as part
of a compliance alternative for organic pollutant discharges. (See
Section XXI.C for a discussion of monitoring flexibility.) The Agency
based these proposed limitations on the same four EPA sampling episodes
that EPA discussed in Section XIII.A.3.
4. PSNS Analysis
Like NSPS, the Agency determined that the cost of compliance with
PSNS based on Option 4 would make up 4.64 percent of a new facility's
projected revenues and expects that this would not create a barrier to
entry. EPA notes that this is a higher percentage than for other
subcategories and solicits comment on whether EPA should consider
Option 2 for these facilities.
E. NSPS for the Non-Chromium Anodizing Subcategory
1. Need for NSPS
EPA expects that new facilities in the Non-Chromium Anodizing
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge. EPA notes that it did not identify any
existing direct dischargers in this subcategory and that estimates of
costs and pollutant loadings were transferred from the best performing
indirect dischargers in this subcategory (see Section IX.C). Therefore,
the need for NSPS regulation is the same as the need for BPT
regulation. (See Section IX.C.1).
2. Selected NSPS Option
EPA is proposing New Source Performance Standards for this
subcategory based on BAT Option 2. As discussed in the BPT analysis for
this subcategory, non-chromium anodizers discharge large quantities of
aluminum but have very low levels of other metals in their wastewater.
EPA determined that Option 2 is capable of removing most of the
aluminum discharged by facilities in this subcategory and that any
additional removals achieved by Option 4 are not justified by the
additional cost.
The Agency also evaluated not proposing NSPS for facilities in this
subcategory and instead continuing to require compliance with NSPS
limitations established under 40 CFR part 433. However, the Agency has
tentatively rejected this option because these new proposed NSPS
limitations require an increased removal of TSS and the Agency feels
that the pollutants proposed for regulation here are more appropriate
for the non-chromium anodizing industry. The NSPS limitations
established in 40 CFR part 433 require facilities to meet an average
monthly discharge of 31 mg/L of TSS and allow for a maximum daily
discharge of 60 mg/L. These proposed MP&M limitations require non-
chromium anodizers to meet an average monthly discharge for TSS of 22
mg/L and allow for a monthly maximum discharge of 52 mg/L. EPA believes
that the costs associated with NSPS are justified by the additional
removal of TSS from this subcategory. In addition, 40 CFR part 433
requires non-chromium anodizers to meet effluent limitations for 7
metal pollutants. EPA's data show that these seven metals are present
only in very small quantities at non-chromium anodizing facilities. In
40 CFR part 433, EPA did not establish a limit for aluminum, the metal
found in the largest quantity in non-chromium anodizers' wastewater.
The Agency has determined that direct discharging facilities in the
Non-Chromium Anodizing subcategory should have a limit for aluminum and
thus is proposing to cover them here. The Agency notes that this will
reduce the number of pollutants that non-chromium anodizers would have
to monitor for.
3. Calculation of NSPS Limitations
The Agency is proposing NSPS limitations for all of the pollutants
that it proposed BPT and BAT limitations for in this subcategory. The
NSPS limitations for this subcategory can be found in the proposed rule
(which accompanies this preamble) at Sec. 438.36. (See Section XXI.C
for a discussion of monitoring flexibility.)
4. NSPS Analysis
A barrier to entry analysis is typically performed for new
facilities by using existing facilities as a model. However, there are
no existing direct dischargers in this subcategory. Therefore, the
Agency could not perform an economic analysis in order to determine if
Option 2 presented a barrier to entry for new facilities in the Non-
Chromium Anodizing subcategory.
F. PSNS for the Non-Chromium Anodizing Subcategory
1. Need for PSNS
EPA expects that new facilities in the Non-Chromium Anodizing
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge and therefore EPA is not proposing
pretreatment standards for new sources for this subcategory for the
same reasons it is not proposing PSES for this subcategory. See Section
XII.F and VI.C.3.
G. NSPS for the Printed Wiring Board Subcategory
1. Need for NSPS
EPA expects that new facilities in the Printed Wiring Board
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge. Therefore, the need for NSPS
regulation is the same as the need for BPT regulation. (See Section
IX.D.1).
2. Selected NSPS Option
EPA is proposing New Source Performance Standards for this
subcategory based on BAT Option 4. The Agency determined that Option 4
is the best available demonstrated technology for the removal of
pollutants in this subcategory. EPA's analytical data shows that Option
4 is capable of achieving much lower long term averages than Option 2
for several of the metal pollutants of concern. In addition, EPA's data
shows that microfiltration greatly reduces the variability in the
concentration of the metal pollutants in the treatment effluent.
Although Option 4 costs $162,000 more than Option 2 annually for a new
facility with a wastewater flow of 25.5 MGY (the wastewater flow for a
representative direct discharging facility in the Printed Wiring Board
subcategory), EPA is proposing Option 4 because of the lower levels of
metal pollutants in the wastewater effluent. EPA is not proposing
Option 4 for BPT/BAT because of the lack of significant overall
additional removals and the fact that it removes less COD, O&G, and
organic pollutants, relative to Option 2. EPA also requests comment on
basing NSPS on Option 2.
The Agency also strongly considered proposing NSPS based on
ultrafiltration for oil and grease removal and chemical precipitation
followed by sedimentation for TSS and metals removal. This option is
equivalent to BAT Option 2 with the oil/water separator replaced by an
ultrafilter. The Agency is soliciting comment and data on this NSPS
option for the final rule.
3. Calculation of NSPS Limitations
The Agency is proposing NSPS limitations for all of the pollutants
that it proposed BPT and BAT limitations for in this subcategory. The
NSPS limitations for this subcategory can be found in the proposed rule
(which accompanies this preamble) at Sec. 438.46.
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(See Section XXI.C for a discussion of monitoring flexibility.) EPA
based these proposed regulations on the same four EPA sampling episodes
that it used to calculate NSPS for the General Metals subcategory. (See
Section XIII.A.3). As mentioned above, EPA collected analytical
wastewater treatment data from a printed wiring board manufacturer that
employed this technology.
4. NSPS Analysis
The Agency also performed an economic analysis in order to
determine if Option 4 presented a barrier to entry for new facilities
in the Printed Wiring Board subcategory. EPA determined that the cost
of compliance with NSPS based on Option 4 would make up only 0.02
percent of a new facility's projected revenues. Therefore, EPA
concluded that NSPS based on Option 4 would not create a barrier to
entry.
H. PSNS for the Printed Wiring Board Subcategory
1. Need for PSNS
EPA expects that new facilities in the Printed Wiring Board
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge. Therefore, the need for PSNS
regulation is the same as the need for PSES regulation. (See Section
XII.G.1).
2. Selected PSNS Option
EPA is proposing Pretreatment Standards for New Sources for this
subcategory based on BAT Option 4 for the same reasons it is proposing
this option for NSPS. It is also requesting comment on PSNS based on
Option 2. As was the case for PSES, EPA is not proposing a flow cutoff
exclusion for this subcategory for the same reasons discussed in
Section XII.G.2, but is requesting comment on a flow cutoff of 1 MGY ,
as with PSES.
The Agency also strongly considered proposing PSNS based on
ultrafiltration for oil and grease removal and chemical precipitation
followed by sedimentation for TSS and metals removal. This option is
equivalent to BAT Option 2 with the oil/water separator replaced by an
ultrafilter. The Agency is soliciting comment and data on this PSNS
option for the final rule.
3. Calculation of PSNS Limitations
The Agency is proposing PSNS limitations for the same pollutants
that it proposed PSES regulations. The PSNS limitations for this
subcategory can be found in the proposed rule (which accompanies this
preamble) at Sec. 438.47. EPA determined that all of the pollutants
listed in Sec. 438.47 (except for Total Sulfide, TOC, and TOP) pass
through POTWs. EPA is proposing a limitation for total sulfide based on
potential POTW interference or upset associated with discharges of
total sulfide from facilities in this subcategory. EPA is proposing
limitations for TOC and TOP as part of a compliance alternative for
organic pollutant discharges. (See Section XXI.C for a discussion of
monitoring flexibility.) EPA determined that all of these pollutants
pass through POTWs. The Agency based these proposed limitations on the
same four EPA sampling episodes that EPA discussed in Section XIII.A.3.
As mentioned above, EPA collected analytical wastewater treatment data
from a printed wiring board manufacturer that employed this technology.
4. PSNS Analysis
Like NSPS, the Agency determined that the cost of compliance with
PSNS based on Option 4 would make up only 0.20 percent of a new
facility's projected revenues and concluded that this would not create
a barrier to entry.
I. NSPS for the Steel Forming and Finishing Subcategory
1. Need for NSPS
EPA expects that new facilities in the Steel Forming and Finishing
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge. Therefore, the need for NSPS
regulation is the same as the need for BPT regulation. (See Section
IX.E.1).
2. Selected NSPS Option
EPA is proposing New Source Performance Standards for this
subcategory based on BAT Option 4. The Agency determined that Option 4
is the best available demonstrated technology for the removal of
pollutants in this subcategory. EPA's analytical data shows that Option
4 is capable of achieving much lower long-term averages than Option 2
for several of the metal pollutants of concern. In addition, EPA's data
shows that microfiltration greatly reduces the variability in the
concentration of the metal pollutants in the treatment effluent.
Although Option 4 costs $42,400 more than Option 2 annually for a new
facility with a wastewater flow of 18.4 MGY (the wastewater flow for a
representative direct discharging facilities in the Steel Forming and
Finishing subcategory), EPA determined that the additional cost of
Option 4 are justified by the lower levels of metal pollutants in the
wastewater effluent.
The Agency also strongly considered proposing NSPS based on
ultrafiltration for oil and grease removal and chemical precipitation
followed by a clarifier for TSS and metals removal. This option is
equivalent to BAT Option 2 with the oil/water separator replaced by an
ultrafilter. The Agency is soliciting comment and data on this NSPS
option for the final rule.
3. Calculation of NSPS Limitations
The Agency is proposing NSPS limitations for all of the pollutants
that it proposed BPT and BAT limitations for in this subcategory. The
NSPS limitations for this subcategory can be found in the proposed rule
(which accompanies this preamble) at Sec. 438.56. (See Section XXI.C
for a discussion of monitoring flexibility.) The Agency based these
proposed limitations on the same four EPA sampling episodes that EPA
discussed in Section XIII.A.3.
4. NSPS Analysis
The Agency also performed an economic analysis in order to
determine if Option 4 presented a barrier to entry for new facilities
in the Steel Forming and Finishing subcategory. EPA determined that the
cost of compliance with NSPS based on Option 4 would make up only 0.14
percent of a new facility's projected revenues. Therefore, EPA
concluded that NSPS based on Option 4 would not create a barrier to
entry.
J. PSNS for the Steel Forming and Finishing Subcategory
1. Need for PSNS
EPA expects that new facilities in the Steel Forming and Finishing
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge. Therefore, the need for PSNS
regulation is the same as the need for PSES regulation. (See Section
XII.H.1).
2. Selected PSNS Option
EPA is proposing Pretreatment Standards for New Sources for this
subcategory based on BAT Option 4 for the same reasons it is proposing
this option for NSPS. In addition, EPA is not proposing a flow cutoff
exclusion for PSNS for this subcategory for the same reasons that it
did not propose a flow cutoff for PSES, but is requesting comment on
flow cutoffs of 1, 2, and 3 MGY as with PSES. (See Section XII.H.)
The Agency also strongly considered proposing PSNS based on
ultrafiltration for oil and grease removal and chemical precipitation
followed by sedimentation for TSS and metals removal. This option is
equivalent to BAT Option 2 with the
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oil/water separator replaced by an ultrafilter. The Agency is
soliciting comment and data on this PSNS option for the final rule.
3. Calculation of PSNS Limitations
The Agency is proposing PSNS limitations for the same pollutants
that it proposed PSES regulations. The PSNS limitations for this
subcategory can be found in the proposed rule (which accompanies this
preamble) at Sec. 438.57. EPA determined that all of the pollutants
listed in Sec. 438.57 (except for Total Sulfide, TOC, and TOP) pass
through POTWs. EPA is proposing a limitation for total sulfide based on
potential POTW interference or upset associated with discharges of
total sulfide from facilities in this subcategory. EPA is proposing
limitations for TOC and TOP as part of a compliance alternative for
organic pollutant discharges. (See Section XXI.C for a discussion of
monitoring flexibility.) The Agency based these proposed limitations on
the same four EPA sampling episodes that EPA discussed in Section
XIII.A.3.
4. PSNS Analysis
Like NSPS, the Agency determined that the cost of compliance with
PSNS based on Option 4 would make up only 0.17 percent of a new
facility's projected revenues and concluded that this would not create
a barrier to entry.
K. NSPS for the Oily Wastes Subcategory
1. Need for NSPS
EPA expects that new facilities in the Oily Wastes subcategory will
discharge similar quantities of the same pollutants that existing
sources discharge. Therefore, the need for NSPS regulation is the same
as the need for BPT regulation. (See Section IX.F.1).
2. Selected NSPS Option
EPA is proposing New Source Performance Standards for this
subcategory based on BAT Option 6, oil-water separation by chemical
emulsion breaking, gravity separation, and oil skimming. The Agency
determined that Option 6 is the best available demonstrated technology
for the removal of pollutants in this subcategory and is proposing this
option for the same reasons it selected this option for BPT and BAT.
(See Section IX.F.2).
3. Calculation of NSPS Limitations
The Agency is proposing NSPS limitations equivalent to those
proposed for BPT for this subcategory. The NSPS limitations for this
subcategory can be found in the proposed rule (which accompanies this
preamble) at Sec. 438.66. (See Section XXI.C for a discussion of
monitoring flexibility.)
4. NSPS Analysis
Since EPA is proposing to set NSPS equal to BAT (Option 6) and this
option is determined to be economically-achievable for these facilities
under BAT, EPA concluded that NSPS based on Option 6 would not create a
barrier to entry.
L. PSNS for the Oily Wastes Subcategory
1. Need for PSNS
EPA expects that new facilities in the Oily Wastes subcategory will
discharge similar quantities of the same pollutants that existing
sources discharge. Therefore, the need for PSNS regulation is the same
as the need for PSES regulation. (See Section XII.I.1).
2. Selected PSNS Option
EPA is proposing Pretreatment Standards for New Sources for this
subcategory based on BAT Option 6 for the same reasons it is proposing
this option for NSPS. In addition, EPA is proposing a 2 MGY flow cutoff
exclusion for PSNS with serious consideration of a 3 MGY flow cutoff as
well. This is the same flow cutoff level that EPA is proposing for PSES
for the existing indirect discharging facilities in the Oily Wastes
subcategory. The Agency is proposing a 2 MGY flow cutoff for new
indirect discharging facilities in the Oily Wastes subcategory based on
the potential POTW permitting burden that would be associated with
developing and then maintaining permits for new sources with low flows
and the likelihood that these facilities discharge a small amount of
pound-equivalents at these low flow rates. The Agency assumes that the
pound-equivalents per facility for new facilities with flows below or
equal to 2 MGY would be even lower than the 2 pound-equivalents per
facility for similarly sized existing sources in this subcategory. The
Agency concluded that a similar (or even smaller) amount of pollutant
removal is not justified by the cost of the regulation for new indirect
Oily Waste facilities discharging less than or equal to 2 MGY.
3. Calculation of PSNS Limitations
The Agency is proposing PSNS limitations equivalent to PSES for the
same pollutants that it proposed PSES regulations. The PSNS limitations
for this subcategory can be found in the proposed rule (which
accompanies this preamble) at Sec. 438.67. (See Section XII.I.3. for
PSES discussion and see Section XXI.C for a discussion of monitoring
flexibility.)
4. PSNS Analysis
Since EPA is proposing to set PSNS equal to PSES (Option 6) and
this option is determined to be economically achievable for these
facilities under PSES, the Agency concluded that this would not create
a barrier to entry.
M. NSPS for the Railroad Line Maintenance Subcategory
1. Need for NSPS
EPA expects that new facilities in the Railroad Line Maintenance
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge. Therefore, the need for NSPS
regulation is the same as the need for BPT regulation. (See Section
IX.G.1.)
2. Selected NSPS Option
EPA is proposing New Source Performance Standards for this
subcategory based on BAT Option 10, dissolved air flotation plus in-
process flow control and pollution prevention. The Agency determined
that Option 10 is the best available demonstrated technology for the
removal of pollutants in this subcategory and is proposing this option
for the same reasons it selected this option for BPT and BAT. (See
Section IX.G.2).
3. Calculation of NSPS Limitations
The Agency is proposing NSPS limitations equivalent to those
proposed for BPT for this subcategory. The NSPS limitations for this
subcategory can be found in the proposed rule (which accompanies this
preamble) at Sec. 438.76. (See Section XXI.C for a discussion of
monitoring flexibility.)
4. NSPS Analysis
EPA notes that railroad line maintenance facilities do not have
revenue reported at the facility level, and it is therefore not
possible to compare costs as a percent of facility revenue for new and
existing facilities in this subcategory. In addition, EPA is proposing
to set NSPS equal to BAT (Option 10) and has determined this option is
economically achievable for these facilities under BAT, therefore, EPA
concluded that NSPS based on Option 10 would not create a barrier to
entry.
N. PSNS for the Railroad Line Maintenance Subcategory
1. Rationale for Not Proposing PSNS
EPA expects that new facilities in the Railroad Line Maintenance
subcategory will discharge similar quantities of the
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same pollutants that existing sources discharge. Therefore, EPA is
proposing to not establish PSNS for this subcategory for the same
reasons that it did not propose PSES. (See Section XII.J.1).
O. NSPS for the Shipbuilding Dry Dock Subcategory
1. Need for NSPS
EPA expects that new facilities in the Shipbuilding Dry Dock
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge. Therefore, the need for NSPS
regulation is the same as the need for BPT regulation. (See Section
IX.H.1).
2. Selected NSPS Option
EPA is proposing New Source Performance Standards for this
subcategory based on BAT Option 10, dissolved air flotation plus in-
process flow control and pollution prevention. The Agency determined
that Option 10 is the best available demonstrated technology for the
removal of pollutants in this subcategory and is proposing this option
for the same reasons it selected this option for BPT. (See Section
IX.H.2).
3. Calculation of NSPS Limitations
The Agency is proposing NSPS limitations equivalent to those
proposed for BPT for this subcategory. The NSPS limitations for this
subcategory can be found in the proposed rule (which accompanies this
preamble) at Sec. 438.76. (See Section XXI.C for a discussion of
monitoring flexibility.)
4. NSPS Analysis
Since EPA is proposing to set NSPS equal to BAT (Option 10) and has
determined that this option is economically achievable for these
facilities under BAT, EPA concluded that NSPS based on Option 10 would
not create a barrier to entry.
P. PSNS for the Shipbuilding Dry Dock Subcategory
1. Rationale for Not Proposing PSNS
EPA expects that new facilities in the Shipbuilding Dry Dock
subcategory will discharge similar quantities of the same pollutants
that existing sources discharge. Therefore, EPA is proposing to not
establish PSNS for this subcategory for the same reasons that it did
not propose PSES. (See Section XII.K.1)
XIV. Issues Related to the Methodology Used to Determine POTW
Performance
For today's proposal, EPA used its traditional methodology to
determine POTW performance (percent removal) for toxic and non-
conventional pollutants. POTW performance is a component of the pass-
through methodology used to identify the pollutants to be regulated for
PSES and PSNS. It is also a component of the analysis to determine net
pollutant reductions (for both total pounds and toxic pound-
equivalents) for various indirect discharge technology options.
However, as discussed in more detail below, EPA is evaluating several
issues related to its traditional methodology for determining POTW
performance and solicits comments a variety of methodological changes.
A. Assessment of Acceptable POTWs
EPA developed the principal pass-through analysis for today's MP&M
proposal by using data from all 50 POTWs that were part of the 50 POTW
Study data base. Some of these POTWs were not operated to meet the
secondary treatment requirements at 40 CFR part 133 for all portions of
their wastestream. Most POTWs today have secondary treatment or better
in place. EPA estimates that as of 1996, POTWs with at least secondary
treatment in place service greater than 90 percent of the indirect
discharging population. If the POTW removal calculations do not reflect
the upgrades and system improvements that have occurred since the time
of the 50 POTW Study, they would tend to under-estimate POTW removals.
This would result in overestimating the pollutant reductions that are
achieved through the regulation of indirect dischargers, thereby making
the regulation appear more cost-effective for indirect dischargers than
it is.
One partial solution to this methodological issue would be to
evaluate individual treatment trains in the 50 POTW Study data base,
and include only those treatment trains that achieved compliance with
40 CFR part 133 in the analysis of POTW pollutant removal rates. There
were 29 treatment trains that achieved BOD5 and TSS effluent
concentrations between 15 mg/l and 45 mg/l during the sampling and
could potentially be considered reflective of secondary treatment
(based on 40 CFR 133.102 limitations of 30 mg/l monthly average and 45
mg/l weekly max for secondary treatment), and an additional 2 treatment
trains were either trickling filters or waste stabilization ponds that
achieved BOD5 and TSS effluent concentrations between 40 mg/
l and 65 mg/l and could potentially be considered equivalent to
secondary treatment pursuant to 40 CFR 133.101(g) (based on 40 CFR
133.105 limitations of 45 mg/l monthly average and 65 mg/l weekly
maximum). In addition, 15 treatment trains achieved BOD5 and
TSS effluent concentrations below 15 mg/l each, and could potentially
be considered greater than secondary treatment.
Using data from these 46 treatment trains only would omit the worst
performers in the 50 POTW Study that are probably not reflective of
current performance. It might not fully correct, however, for
additional upgrades and optimization that may have occurred over the
past two decades.
B. Assessment of Acceptable Data
EPA developed the pass-through analysis that is the basis for
today's proposal using POTW data editing criteria that are generally
consistent with those used for the industry data. Specifically, EPA
included only data from POTWs for which influent concentrations were 10
times the analytical minimum (quantitation) level (10xML) if available.
If none of the average pollutant influent concentrations are at least
10 times the ML, then EPA retained only data from POTWs for which
influent concentrations were 2 times the analytical minimum level.
Because it is difficult to achieve the same pollutant reduction (in
terms of percent) in a dilute wastestream as in a more concentrated
wastestream, EPA believes that a 10 X ML editing criteria may
overestimate the percent removals that are calculated for both industry
and POTWs in the pass-through analysis.
As a general rule, more POTW data than industry data is eliminated
through this editing criteria for the specific pollutants that are
being examined. This is not surprising since the pass-through analysis
would not even be performed on pollutants generally found at less than
10 times the method minimum level in industry since EPA would, in many
cases, not require pretreatment for such low levels of a pollutant. As
a result of this imbalance (pollutant influent levels at POTWs being
less than pollutant influent levels to industrial pretreatment), EPA
believes that it is possible that this editing criteria may bias the
pass-through results by over-estimating POTW removals where influent
concentrations are generally lower. This would result in
underestimating the pollutant reductions that are achieved through the
regulation of indirect dischargers thereby making the rule appear less
cost-effective than it is. On the other hand, there may be little
difference in percent removals across the range of
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influent concentrations generally experienced by POTWs.
One potential solution to this methodological question would be to
include data (for both indirect dischargers and POTWs) even if the
influent concentration is not 10 times the analytical minimum level.
This solution needs to be considered in context, however, with data
handling criteria for effluent measurements of ``non-detect'' discussed
below.
C. Assessment of Removals When Effluent Is Below the Analytical Method
Minimum Level
EPA developed the pass-through analysis that is the basis for
today's proposal using the analytical method minimum level as the
effluent value when the pollutant was not detected in the effluent.
This is the approach that is generally used when developing pollutant
reduction estimates for the regulation, performing cost-effectiveness
calculations, and developing effluent limitations. EPA believes that
this methodology may underestimate the performance of the selected
technology option for both directs and indirects. Once again, this
would result in underestimating the removals estimated for direct
dischargers, and thereby making the rule appear less cost-effective
than it is. For indirect dischargers, EPA believes that the overall
effect of using the minimum level for non-detect values for both
industry and POTW data creates a bias for underestimating POTW removals
in comparison to industry removals. This may result in an
overestimation of pollutant removals by indirect dischargers, and may
make the rule appear more cost-effective than it is. [Note that this
problem is minimized by only using data with influent levels exceeding
10 X ML, because a non-detect assures that at least 90 percent of the
pollutant has been removed. It is arguably less important that the true
removal may be greater than 90 percent, rather than exactly 90 percent.
Using a less stringent editing criteria of 2 X ML as discussed above
would exacerbate this problem. If the influent were only 2 X ML, then
removals greater than 50 percent could never be measured.]
One potential alternative would be to assume a value of one half of
the minimum level for effluent values of non-detect. This approach
would have to be applied uniformly for the indirect dischargers as well
as the POTWs in order for the percent removal calculations to be
reasonable.
For a more detailed discussion of alternative approaches to the
POTW pass-through analysis, see the Appendix to Section 7 of the
Technical Development Document. EPA solicits comment on the
significance of each of these methodological issues and the potential
alternatives.
XV. Methodology for Estimating Costs and Pollutant Reductions
EPA estimated industry-wide compliance costs and pollutant loadings
using model sites based on technical questionnaire respondents and a
computerized design and cost model for the MP&M technology options (see
Sections 11 and 12 of the Technical Development Document for a detailed
discussion of EPA's MP&M Design & Cost Model). The Agency estimated
industry-wide costs and pollutant loadings for several technology
options based on technologies designed for each subcategory of model
sites. EPA used these model sites to estimate costs for 63,000 MP&M
wastewater-discharging sites nationwide using statistically calculated
industry weights (i.e., survey sample weights). EPA notes that once the
low flow exclusion is applied, the number of sites expected to incur
costs under the MP&M regulation is 10,300.
There are 890 sites which indicated that they were water
dischargers on their technical questionnaire and provided EPA with
enough data to include them in the cost model. EPA assessed each of the
890 sites selected to determine the unit operations, wastewater
characteristics and treatment technologies currently in place at the
sites.
Based on the information provided by the sites in their
questionnaire responses, follow-up letters, and phone calls, EPA
classified each wastewater stream by the type of unit operation (e.g.,
machining, electroplating, acid treatment, etc.) and base metal type
(e.g., steel, aluminum, zinc, etc.). The Agency used the following
additional questionnaire data to characterize process wastewater
streams: wastewater discharge flow rate, production rate, operating
schedule, and discharge destination. Many of the sites provided these
data for all wastewater streams generated on site. For sites that did
not provide complete data, EPA either estimated the missing data based
on technical considerations specific to the site, or statistically
imputed the data. The Agency modeled the concentration of each
pollutant in each wastewater stream from field sampling of wastewater
discharges from the unit operations at MP&M sites. EPA used
questionnaire responses to identify the following information about
end-of-pipe technologies in place at MP&M sites: the types of treatment
units in place; the unit operations discharging process wastewater to
each treatment unit; and the operating schedule of each treatment unit.
EPA developed a computerized design and cost model to estimate
compliance costs and pollutant loadings for the MP&M technology
options, taking into account each site's level of treatment in place.
As a conservative estimate for estimating baseline (prior to compliance
with these proposed regulations) pollutant loadings, EPA assumed that
all sites with treatment currently in place (including those sites not
currently covered by the Metal Finishing regulations) were currently
meeting the long-term average (LTA) concentrations (i.e., design
concentrations) for the pollutants limited under the Metal Finishing
effluent guidelines (40 CFR part 433) with the exception of cyanide and
were meeting the LTA concentrations achieved by EPA's sampled MP&M BAT
facilities for cyanide and other pollutants of concern. For sites that
did not report treatment in place, EPA based baseline pollutant
loadings on EPA's unit operation-by-unit operation sampling data for
raw wastewater. The Agency programmed the model with technology-
specific modules which calculated the costs for various combinations of
technologies included in the technology options for each subcategory.
EPA based design and cost data on MP&M site data, literature data, and
vendor data. The Agency developed technology-specific cost modules for
the in-process pollution prevention and water use reduction
technologies and end-of-pipe treatment technologies discussed in
Section VII.A of this notice.
The model provided the following types of information for each
technology designed for a model site: capital costs; operating and
maintenance costs; electricity used and associated cost; sludge
generation and associated disposal costs; waste oil generation and
associated disposal costs; water use reduction and associated cost
credit; chemical usage reduction and associated cost credit; effluent
flow rate; and effluent pollutant concentrations. This data enabled EPA
to develop site by site compliance costs and pollutant reductions for
the costed sites.
If contract hauling of wastewater for off-site treatment and
disposal was less costly than on-site treatment, EPA estimated costs
assuming the model site would contract haul the wastewater. EPA made
this assessment on a technology-specific basis. When estimating costs
for sludge disposal, EPA assumed all sludge to be F006
[[Page 478]]
listed (or other F-listed hazardous waste) hazardous waste under RCRA
(40 CFR 261.31) and would, therefore, be disposed of off-site as
hazardous waste. As a conservative estimate for the model, EPA did not
allow the time for storage of the sludge prior to disposal to exceed 90
days, regardless of the facilities RCRA generator status (i.e., exempt,
small, large). EPA notes that on March 8, 2000 (65 FR 12377), the
Agency published a final regulation in the Federal Register extending
the accumulation time, under RCRA, for certain wastewater treatment
sludges from electroplating processes to be held on-site without
requiring a hazardous waste storage permit. Facilities implementing
pollution prevention, recycling and metals recovery meeting certain
requirements can accumulate F006 sludge for up to 180 days for large
quantity generators (or 270 days for small quantity generators).
After estimation of capital and operating and maintenance costs,
EPA calculated the total capital investment (TCI), and the total
annualized cost (TAC). The Agency assumed that facilities meeting local
limitations or national effluent limitation guidelines and pretreatment
standards will already incur monitoring costs. EPA solicits comment on
the whether facilities will incur additional monitoring costs to comply
with today's proposal (and how much that monitoring would cost). EPA
has incorporated several options for adding additional flexibility in
regards to monitoring (See Section XXI.C for a discussion on monitoring
flexibility). EPA expects that these proposed flexibilities will
decrease the overall burden and costs of analytical wastewater
monitoring for facilities within the scope of this rule.
XVI. Economic Impact and Social Cost Analysis
A. Introduction
EPA's economic analyses are presented in the report titled
``Economic, Environmental, & Benefit Analysis of the Proposed Metal
Products & Machinery Rule [EPA-821-B-00-008] (hereafter referred to as
the ``EEBA''). This report presents the social costs and benefits of
the proposed rule and alternatives, and estimates the expected economic
impacts of compliance with the proposed rule in terms of facility
closures and associated losses in employment. Other measures of
economic impact include firm-level impacts, local community impacts,
international trade effects, employment effects, and effects on new
MP&M facilities. An analysis of impacts on small businesses supports
EPA's compliance with the Regulatory Flexibility Act (RFA) as amended
by the Small Business Regulatory Enforcement Fairness Act (SBREFA).
This section of the preamble summarizes the economic impact and social
cost findings from the EEBA. The reader is referred to the full report
for the details of these analyses.
EPA's determination of economic achievability are based on the
findings reported in the EEBA and discussed below. The options analyzed
consist of combinations of comparable technology options for the
different subcategories. The three options analyzed in the economic
analyses are defined as follows:
Table XVI-1.--Regulatory Options Considered in the Economic Analyses
----------------------------------------------------------------------------------------------------------------
Subcategory Proposed rule Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
General Metals....................... Technology option 2; 1 Technology option 2.... Technology option 4.
mgy flow cutoff for
indirect dischargers.
Metal Finishing Job Shop............. Technology option 2.... Technology option 2.... Technology option 4.
Non-Chromium Anodizing............... Technology option 2; no Technology option 2.... Technology option 4.
PSES/PSNS for indirect
dischargers.
Printed Wiring Board................. Technology option 2.... Technology option 2.... Technology option 4.
Steel Forming & Finishing............ Technology option 2.... Technology option 2.... Technology option 4.
Oily Wastes.......................... Technology option 6; 2 Technology option 6.... Technology option 8.
mgy flow cutoff for
indirect dischargers.
Railroad Line Maintenance............ Technology option 10; Technology option 10... Technology option 8.
no PSES/PSNS for
indirect dischargers.
Shipbuilding Dry Dock................ Technology option 10; Technology option 10... Technology option 8.
no PSES/PSNS for
indirect dischargers.
----------------------------------------------------------------------------------------------------------------
Technology options 1 through 10 are described in Section VIII.A. of the preamble.
Technology options 1, 3, 5, 7 and 9 (without pollution prevention) were
not further analyzed, because they remove fewer pollutants and cost
more than the comparable technology options with pollution prevention.
The economic impact analyses assess how facilities will be affected
financially by the proposed rule. Key outputs of the facility impact
analysis include expected facility closures in the MP&M industries,
associated losses in employment, and the number of facilities
experiencing financial stress short of closure (``moderate impacts'').
The findings from the facility impact analysis also provide the basis
for the following analyses:
A firm-level analysis, which assesses the impact on the
financial performance and condition of firms owning MP&M facilities;
An employment effects analysis, which assesses the
increase in employment associated with compliance activities, the loss
of employment due to facility closures, and the net effect on overall
employment;
A community impact analysis, which assesses the job losses
caused by facility closures and job gains associated with compliance;
A foreign trade analysis, which assesses the effect of the
proposed rule on the U.S. balance of trade;
A new source impact analysis, which assesses the effect of
effluent guidelines on the costs and financial viability of new
facilities in the MP&M industries; and
The Initial Regulatory Flexibility Analysis (IFRA), which
assesses the economic and financial impacts of the proposed rule on
small entities.
B. Facility Level Impacts
1. Facility Categories Analyzed
EPA performed economic impact analyses for three categories of
facilities, using different methodologies to evaluate each of the
groups. The three groups are:
Private MP&M Facilities. This group includes privately-
owned facilities that do not perform railroad line maintenance and are
not owned by governments. This major category
[[Page 479]]
includes private businesses in a wide range of sectors or industries,
including. This segment includes facilities that manufacture and
rebuild railroad equipment. Only facilities that repair railroad track
and equipment along the railroad line are not included.
Railroad line maintenance facilities maintain and repair
railroad track, equipment and vehicles.
Government-owned facilities include MP&M facilities
operated by municipalities, State agencies and other public sector
entities such as State universities. Many of these facilities repair,
rebuild, and maintain buses, trucks, cars, utility vehicles (e.g., snow
plows and street cleaners), and light machinery.
The specific methodology used to assess impacts differs for each of
the three types of MP&M facilities. In each case, EPA established
thresholds for measures of financial performance and compared the
facilities' performance before and after compliance with each
regulatory option with these thresholds.
2. Data Sources for the Facility Impact Analysis
The economic analyses rely on data provided by the financial
portion of the detailed questionnaire distributed to MP&M facilities by
EPA under the authority of Section 308 of the Clean Water Act
(``Section 308 Survey''). (See Section V.B for information on the MP&M
survey questionnaires). The survey was conducted in two phases,
covering different MP&M industries in each phase. The Phase I survey
covered seven industry sectors and reported data for fiscal years 1987
to 1989. The Phase II survey covered an additional ten industry sectors
(all remaining MP&M sectors except Steel Forming and Finishing, which
was the subject of a separate survey) and reported data for fiscal
years 1994 to 1996. The survey financial data were extrapolated to 1999
dollars using the Producer Price Index. The survey financial data
included three years of income statements and balance sheets for the
facility; the composition of revenues by customer type and MP&M
business sector; estimated value of facility assets and liabilities in
liquidation; borrowing costs; ownership of the facility; and total
revenues and employment of the owning entity (if separate from the
facility). The impacts assessed for these sample facilities were
extrapolated to the national level using facility sample weights that
are based on the sample design for the industrial detailed surveys.
Data for facilities in the railroad line maintenance subcategory
came from a modified version of the Phase II survey administered to
railroad operating companies. The questionnaire was modified because
railroad operating companies generally do not monitor financial
performance or collect financial data at the facility level for line
maintenance facilities. The railroad operating companies reported the
number of MP&M facilities in each operating unit, and provided detailed
operating company financial data and technical data for each line
maintenance facility.
Data for the Steel Forming and Finishing Subcategory came from a
1997 Section 308 survey of iron and steel facilities. This survey
requested financial data generally similar to that collected by the
MP&M surveys, including income statements and balance sheets for Fiscal
Years 1995-1997 for the facility and the parent firm.
Government-owned MP&M facilities provided data in response to a
Phase II Section 308 survey of municipal and other government agency
facilities. This survey requested information on fiscal year 1996
sources and amounts of revenue and debt levels for both the government
entity and the MP&M facilities; and demographic data for the population
served by the government entity.
In addition to the survey data, a number of secondary sources
provided data for the analysis. Secondary source data were used to
characterize background economic and financial conditions in the
industries subject to the MP&M effluent guideline. Secondary sources
used in the analysis include:
Department of Commerce economic census and survey data,
including the Censuses of Manufactures, Annual Surveys of Manufactures,
and international trade data;
The Benchmark Input-Output Tables of the United States,
published by the Bureau of Economic Analysis in the Department of
Commerce;
Price index series from the Bureau of Labor Statistics,
Department of Labor;
U.S. Industry and Trade Outlook, published by McGraw-Hill
and the U.S. Department of Commerce;
Industry trade publications; and
Financial publications, including the Value Line
Investment Survey and Robert Morris Associates annual data summaries.
3. Methodology and Impact Measures for the Facility Level Analysis
a. Private MP&M Facilities
EPA performed two categories of financial analysis, one to assess
the potential for facility closures and the other to assess the
potential for moderate financial impacts on MP&M facilities. These
analyses considered facility financial condition in the absence of the
rule (under baseline conditions) and changes in financial condition
that would result from the proposed rule.
EPA used two financial tests to estimate closures among general
MP&M facilities:
After-Tax Cash Flow: EPA examined after-tax cash flow
(ATCF) over a three year period to determine the financial condition of
general MP&M facilities.
Net Present Value: EPA also performed a net present value
(NPV) test, which compared the liquidation value of each facility to
the present value of expected future earnings. A business may close if
the value of closing (its liquidation value) exceeds its value as an
ongoing business (calculated as the present value of expected future
earnings).
EPA determined that a facility is subject to severe financial
stress and is a potential closure if ATCF is negative, since businesses
generally cannot sustain negative cash flows for long periods of time.
This test used the average of reported financial data over three fiscal
years. Baseline cash flow is defined as the sum of reported net income
and depreciation. The measure is widely used within industry in
evaluating capital investment decisions because both net income and
depreciation (which is an accounting offset against income, but not an
actual cash expenditure) are potentially available to finance future
investment. However, assuming that total baseline cash flow is
available over an extended time horizon (for example, 15 years) to
finance investments related to environmental compliance could overstate
a site's ability to comply. In particular, the cost of existing capital
equipment (not associated with regulatory compliance) is not netted out
of cash flow, as it is of income through the subtraction of
depreciation. Thus, any costs associated with either replacing existing
capital equipment, or repaying money that was previously borrowed to
pay for it, are omitted from the facility analysis. EPA requests
comment on its use of cash flow as a measure of resources available to
finance environmental compliance and suggestions for alternative
methodologies. (See Section XXII of today's notice.)
Where estimates of liquidation values were available, EPA also
conducted the NPV test. NPV is the present value of expected future
earnings less the
[[Page 480]]
liquidation value (including closure and post-closure costs) of the
facility. If NPV is negative, then a business owner is financially
better off closing the facility and liquidating its assets, rather than
keeping the facility open. EPA estimated the present value of the
facility's expected future earnings by discounting its annual after-tax
cash flow over a fifteen-year period using a 7 percent discount rate.
EPA presumed that a facility was a potential closure if the facility
had an NPV less than zero.
Where liquidation values were available, facilities that failed
both tests under baseline conditions are baseline closures. Facilities
that pass at least one of the two tests in the baseline case but then
fail both tests post-compliance were considered closures due to the
rule. Where liquidation values were not provided by the survey, EPA
applied only the ATCF test to identify baseline and regulatory
closures.
In many past rules, EPA has used only the cash flow test to predict
both baseline and regulatory closures. Using both tests presents a
higher hurdle and thus makes it less likely that a facility
experiencing stress will be projected to close. Due to data
limitations, both tests were used for only 18,913 (approximately a
third) of the 58,421 private MP&M facilities considered in the
analysis. For the remaining two-thirds of the facilities, only the
after-tax cash flow test was used. Table XVI-2 shows the impacts on
estimated closures of using both tests, rather than the cash flow test
alone, to predict closures.
Table XVI-2.--Baseline Closures, Regulatory Closures, and National Estimates of Compliance Costs for Private
MP&M Facilities by Status under Tests for Closures: 18,913 Facilities for Which Both Tests Were Used
----------------------------------------------------------------------------------------------------------------
Status under proposed option
Facilities -------------------------------
Baseline remaining open Pre-tax
Closure test closures in the Regulatory compliance
baseline closures costs ($1999
million)
----------------------------------------------------------------------------------------------------------------
Fail ATCF Only.................................. 3,211 15,766 225 $1,782.6
Fail NPV Only................................... 4,243 14,734 244 1,657.2
Double Test: Fail ATCF and NPV Text............. 2,711 16,266 169 1,793.4
----------------------------------------------------------------------------------------------------------------
If the cash test alone had been used, about 500 additional baseline
closures and 56 additional regulatory closures would have been
projected for the proposed rule. Depending on the subcategories in
which these facilities were located, this could have affected EPA's
achievability determinations in some cases. EPA requests comment on its
methodology for estimating facility closures for this rule.
All sellers in an affected market may benefit from higher prices
when prices rise in response to compliance costs, whether or not they
incur compliance costs under the rule. Some facilities that have very
low compliance costs may even gain more from increased prices than they
lose due to increased costs associated with the rule. The analysis
takes into account the effect of price increases that are attributable
to the regulation. The estimated price increases were generally less
than 1 percent and in no case exceeded 2 percent.
EPA also identified private MP&M facilities that are not expected
to close but that might nonetheless experience moderate financial
impacts as a result of the rule. The analysis of moderate financial
impacts examined two financial indicators:
Pre-Tax Return on Assets (PTRA): The ratio of cash
operating income to total assets measures the facility's profitability.
Interest Coverage Ratio (ICR): The ratio of cash operating
income to interest expenses measures the facility's ability to service
its debt and borrow for capital investments.
These two measures are among the criteria that creditors and equity
investors use to determine whether and under what terms to provide
financing to a business. The PTRA and ICR also provide insight into the
ability of a business to generate funds for compliance investments
internally. A business may have some trouble obtaining financing if its
profitability is low and its ability to pay its continuing interest
expenses is uncertain. EPA compared baseline and post-compliance PTRA
to an 8 percent threshold and ICR to a threshold of 4. A facility is
considered subject to incremental moderate impacts attributable to the
proposed regulation if its PTRA and its ICR both pass these thresholds
in the baseline but it fails one or both of the tests after compliance
with the rule. Facilities failing one of the tests in the baseline and
both tests post-compliance were not counted as experiencing moderate
impacts, but this may in some cases be indicative of moderate rule-
related impacts as well.
EPA assumed that MP&M facilities would be able to recover some of
their regulatory costs by raising prices to their customers. An
analysis of the potential for cost recovery considered conditions in
each individual MP&M industrial sector industry (e.g. aircraft,
aerospace, electronic equipment, etc.) Cost pass-through factors were
estimated for each sector. The cost pass-through factor blends findings
from two separate analyses to estimate a composite measure of pass-
through potential:
An econometric analysis of the historical relationship
between output prices and changes in input costs; and
An analysis of indicators of pass-through potential based
on market structure and performance.
Market structure factors include:
Market power based on the degree of horizontal and
vertical integration;
Extent of competition from foreign suppliers (in both
domestic and export markets);
Barriers to competition as indicated by above normal,
risk-adjusted profitability; and
Long term growth trends in the industry.
The analysis of pass-through potential indicates the percentage of
compliance costs that EPA expects firms subject to regulation to
recover from customers through increased prices. The estimated
percentage price increases were very small for the proposed rule,
ranging from 0.02 percent to less than two percent in different
sectors. This analysis can be found in Appendix B of the EEBA.
Table XVI-3 summarizes the measures used to assess impacts for
private MP&M facilities.
[[Page 481]]
Table XVI-3.--Summary of Facility Impact Methodology for Private MP&M Facilities
----------------------------------------------------------------------------------------------------------------
Significance of
Impact category Description Criteria negative finding
----------------------------------------------------------------------------------------------------------------
Baseline Closure..................... Identifies facilities 1. After-tax cash flow Facilities failing both
that are in jeopardy (ATCF) negative? and tests are considered
of financial failure 2. Liquidation value baseline closures and
independent of the exceed going concern excluded from
proposed regulation. value (NPV test)?. subsequent analyses.
Post-Compliance Closure.............. Identifies facilities 1. Post-compliance Facilities failing both
that are likely to after-tax cash flow tests are projected to
close instead of (ATCF) negative? and close as the result of
implementing the 2. Liquidation value regulation--an
pollution prevention exceed post-compliance incremental severe
and treatment systems going concern value?. economic impact.
required to comply
with the rule.
Moderate Financial Impacts........... Identifies facilities 1. Decline in pre-tax Facilities passing both
that may have return on assets tests in the baseline
difficult financing (PTRA) to a level that but failing one or
compliance investments jeopardizes access to both tests post-
or on-going business financing? or compliance are
investments as a 2. Decline in interest considered to
result of the rule. coverage ratio (ICR) experience incremental
to a level that moderate economic
jeopardizes access to impacts attributable
financing?. to the regulation.
----------------------------------------------------------------------------------------------------------------
b. Railroad Line Maintenance Facilities
Railroad operators are unlikely to evaluate the financial
performance of repair and maintenance facilities as separate profit
centers, and are therefore not likely to estimate revenues at the
facility level. EPA conducted an analysis of impacts of these
facilities at the railroad operating company level, and assessed
whether the combined impact of compliance costs for the regulated
facilities owned by each operating company would cause a deterioration
in the company's financial performance. The analysis predicted that
railroad line maintenance facilities would close only if the railroad
operating company as a whole was predicted to close, based on the same
closure tests described above for other private MP&M facilities.
Railroad facilities other than the line maintenance facilities perform
the same type of operations as other MP&M facilities and are included
in the General Metals and Oily Wastes subcategories, depending on their
MP&M activities.
c. Government-Owned Facilities
Governments with facilities affected by the proposed rule may take
one of three actions in response to the rule:
Replace one or more MP&M municipal facilities with a non-
municipal provider for services;
Discontinue these services altogether; or
Pay for compliance and continue operations.
EPA assumed that all government-owned facilities would continue
operating under the proposed rule. The economic impact analysis for
these facilities evaluates whether a government entity would incur a
major budgetary burden as a result of complying with the proposed rule.
Like private firms, governments could in some cases minimize the impact
of the proposed rule on their budgets by discontinuing operations at
the regulated facility, rather than paying the costs of compliance.
Unlike the analysis for private sector MP&M facilities, the analysis of
government impacts did not consider potential closures and therefore
may overstate the impacts of the rule on governments that own MP&M
facilities.
EPA evaluated impacts for government-owned facilities by performing
three tests.
Impacts on site-level cost of service: This test assesses
whether facility compliance costs would exceed one or more percent of
the total baseline cost of service at that facility. EPA assumed that
facilities can absorb compliance costs within their current budget if
the costs do not exceed one percent of total costs in the baseline.
Impacts on taxpayers: This test compared compliance costs
to the income of households that are served by the relevant government,
and that may support the government through taxes and fees. (If the
government is a regional transit authority, for example, then the
households included in this analysis are all households in the region
that provides funding for the transit authority, as reported in the
Phase II Section 308 survey.) A government might be expected to
experience impacts if the ratio of total annualized pollution control
costs per household to median household income exceeds one percent
post-compliance. This comparison considered the government entity's
existing pollution control costs plus the compliance costs incurred by
all of its MP&M facilities under this rule. EPA uses this test in its
Economic Guidance for Water Quality Standards as a screening measure to
determine when communities would incur ``little economic impact'' from
total pollution control costs. EPA recognizes that most local
governments receive at most a few percent of the income of their tax or
fee base (and some receive much less). Thus, one percent of median
income for pollution control costs alone may be a very significant
share of the local government's total budget.
Impact on government debt levels: This test assessed the
impact of financing the capital costs of compliance on the government's
overall debt burden. The government might be expected to experience
impacts if financing all of the compliance capital investments would
increase its total debt service payments to more than 25 percent of
baseline revenue. This criterion is used in EPA's MUNIPAY model as a
level beyond which debt service costs might adversely affect a
community's credit-worthiness. EPA determined that a government
facility that failed all three tests is likely to suffer severe adverse
impacts as a result of the rule. As shown in Table XVI-12 below, no
governments fail the latter two tests. However, 215 facilities failed
the site-level cost of service test. The governments operating these
facilities could experience some level of impacts as a result of the
rule, if these facilities represent a significant cost to their
budgets. Government owned facilities perform the same type of
operations as other MP&M facilities and are included in the General
Metals and Oily Wastes subcategories, depending on their MP&M
activities.
4. Baseline Closure Analysis
The estimated baseline closures for both indirect and direct
discharge facilities are summarized in Table XVI-4. Of the estimated
62,752 discharging facilities, 6.1 percent or 3,829 facilities
[[Page 482]]
were assessed as baseline closures. The 3,829 baseline closures include
3,678 indirect dischargers, or 6.3 percent of indirect dischargers, and
151 direct dischargers, or 3.1 percent of direct dischargers. The
facilities estimated to close in the baseline analysis are in jeopardy
of financial failure independent of the proposed rule. These facilities
were excluded from the post-compliance analysis of regulatory impacts.
Data on facility start-ups and closures from the Census Statistics of
U.S. Businesses indicate that between 6 and 12 percent of facilities in
the major metal products manufacturing industries close in any given
year. EPA's estimate may therefore understate actual baseline closures
somewhat.
Table XVI-4.--Summary of Baseline Closures
----------------------------------------------------------------------------------------------------------------
Number of Percent of
Subcategory Total number baseline baseline Operating in
of dischargers closures closures baseline
----------------------------------------------------------------------------------------------------------------
General Metals.................................. 29,975 3,199 10.7 * 26,776
Metal Finishing Job Shop........................ 1,530 286 18.7 1,244
Non-Chromium Anodizing.......................... 190 40 21.1 150
Printed Wiring Board............................ 635 3 0.5 632
Steel Forming & Finishing....................... 153 6 3.9 147
Oily Wastes..................................... 29,425 295 1.0 29,130
Railroad Line Maintenance....................... 832 0 0.0 832
Shipbuilding Dry Dock........................... 11 0 0.0 11
---------------------------------------------------------------
All Categories.............................. 62,752 3,829 6.1 * 58,922
----------------------------------------------------------------------------------------------------------------
* Excludes 64 facilities that close under baseline conditions but that are expected to continue operating under
the proposed rule.
Note: may not sum to totals due to independent rounding.
Of the facilities closing in the baseline, 64 are projected to
continue operating under the proposed rule because they qualify for the
low flow cutoff (and therefore incur no compliance costs) but benefit
from price increases caused by the rule. These 64 facilities are not
considered in the remainder of the economic impact analysis.
5. Facility Level Costs by Subcategory
The Technical Development Document presents EPA's engineering
estimates of costs that will be incurred by facilities to comply with
the proposed rule and other regulatory options. EPA adjusted the
engineering costs from 1996 to 1999 dollars using the Engineering News-
Record Construction Cost Index (CCI), and adjusted the costs to reflect
the effect of taxes using the maximum Federal income tax rate of 34
percent. The annual equivalent of capital and other one-time costs is
calculated by annualizing costs at a seven percent discount rate over
an estimated 15 year equipment life.
The compliance costs of the rule are the costs paid by those
facilities that continue to operate in compliance with the rule.
Aggregate compliance costs presented in this section differ from the
costs presented in Section IX because they exclude costs for facilities
that are baseline closures or that close due to regulatory
requirements. They therefore represent only the compliance outlays of
facilities that continue to operate. Section H presents EPA's estimates
of social costs, which include costs for regulatory closures. Table
XVI-5 shows the total annualized compliance costs by subcategory for
the 9,577 dischargers (direct and indirect) that are subject to
requirements, make the necessary investments to meet the requirements,
and continue operating under the proposed rule. The table also presents
costs for Option 2/6/10 and Option 4/8, but results are discussed for
only the proposed option to reduce the length of this document.
Total annualized costs are the sum of the annual operating and
maintenance costs and the annualized equivalent of capital and other
one-time costs. Annualized after-tax compliance costs are estimated to
be $1,328.9 million ($1.33 billion) \3\ per year under the proposed
rule, of which 13 percent is paid by direct dischargers and 87 percent
is paid by indirect dischargers. A total of 49,147 indirect dischargers
are excluded from regulation by the proposed exclusions and low flow
cutoffs. Total compliance costs would be 36 percent higher under Option
2/6/10 ($1,812 million per year paid by 57,641 facilities) and 120
percent higher under Option 4/8 ($2,918 million per year paid by 55,959
facilities) than under the proposed rule.
---------------------------------------------------------------------------
\3\ EPA notes that pre-tax annualized compliance costs are
estimated to be $1.98 billion (in 1999 dollars).
Table XVI-5.--Total Annualized Facility * Compliance Costs by Subcategory, Discharge Status and Regulatory Option
[After-tax, million $1999]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed rule Option 2/6/10 Option 4/8
Subcategory -----------------------------------------------------------------------------------------------
Direct Indirect Direct Indirect Direct Indirect
--------------------------------------------------------------------------------------------------------------------------------------------------------
General Metals.......................................... $132.3 $969.9 $132.3 $1,295.8 $195.1 $1,885.5
Metal Finishing Job Shop................................ 0.8 80.1 0.8 80.1 1.5 112.1
Non-Chromium Anodizing.................................. .............. 0.0 .............. 17.5 .............. 26.0
Printed Wiring Board.................................... 1.7 93.4 1.7 93.4 3.0 141.2
Steel Forming & Finishing............................... 20.9 14.0 20.9 14.0 22.7 21.8
Oily Wastes............................................. 9.3 4.3 9.3 143.8 50.0 457.4
Railroad Line Maintenance............................... 0.8 0.0 0.8 0.2 0.9 0.4
[[Page 483]]
Shipbuilding Dry Dock................................... 1.4 0.0 1.4 0.1 0.4 0.1
All Categories: Annual Costs............................ 167.2 1,161.7 167.2 1,644.9 273.6 2,644.5
All Categories: Number of Regulated Facilities 4,633 4,944 4,633 53,008 4,615 51,344
Continuing to Operate Post-Regulation..................
-----------------------------------------------------------------------------------------------
Total Costs to Industry by Option, Directs + Indirects.. $1,328.9
$1,812.1
$2,918.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table includes facility compliance costs only. Section XVI.H. discusses the social costs of the rule. The estimates in this table exclude
baseline and regulatory closures.
Note: May not sum to totals due to independent rounding.
6. Facility Level Impacts by Subcategory
The findings from the post-compliance impact analyses are
summarized below, first for the PSES requirements considered for
indirect discharging facilities, and then for the BAT/BPT options
considered for direct discharging facilities. A third section
summarizes the findings for both discharger classes. Impacts are
discussed for only the proposed option, to reduce the length of the
document; however, the tables present the results for Option 2/6/10 and
Option 4/8. Impacts are not presented for Options 1, 3, 5, 7, and 9
(without pollution prevention) because these options remove fewer
pollutants and cost more than the comparable Options 2, 4, 6, 8, and
10.
a. Indirect Dischargers
Of the 54,270 indirect discharging facilities subject to regulation
after baseline closures, EPA estimates that 179 facilities or 0.3
percent could be expected to close as the result of the proposed rule,
as shown in Table XVI-6. More than 90 percent of the indirect
dischargers are excluded from the regulation by the low-flow cutoffs
for the General Metals and Oily Wastes subcategories, and the
exclusions for Non-Chromium Anodizers, Railroad Line Maintenance and
Shipbuilding Dry Docks. The employment losses associated with the
facility closures are estimated at 5,738 full-time equivalent (FTE)
positions. The estimated losses in employment are probably substantial
overestimates because the analysis does not account for the likelihood
that non-closing facilities will absorb some of the employment lost
from closing facilities. The proposed rule also creates new employment
demand to build, install, maintain and operate compliance equipment,
which offset these job losses. These job gains are discussed in Section
XVI-H.4.
Another 575 facilities, or one percent of the indirect dischargers
operating in the baseline, are expected to experience moderate economic
impacts under the proposed rule, as shown in Table XVI-7. Both closures
and moderate impacts increase substantially for Option 2/6/10 and
Option 4/8, compared to the proposed rule.
Table XVI-6.--Incremental Severe Impacts (Facility Closures) on Indirect Dischargers
----------------------------------------------------------------------------------------------------------------
Number of facility closures due to the rule
Subcategory Total operating --------------------------------------------------------
in baseline Proposed rule Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
General Metals...................... 23,140 24 1,017 2,140
Metal Finishing Job Shops........... 1,231 128 128 393
Non-Chromium Anodizing.............. 150 0 91 91
Printed Wiring Board................ 620 7 7 25
Steel Forming & Finishing........... 105 6 6 6
Oily Wastes......................... 28,219 14 14 271
Railroad Line Maintenance........... 799 0 0 0
Shipbuilding Dry Dock............... 6 0 0 0
---------------------------------------------------------------------------
All Categories.................. 54,270 179 1,262 2,925
----------------------------------------------------------------------------------------------------------------
Note: May not sum to totals due to independent rounding.
Table XVI-7.--Incremental Moderate Impacts on Indirect Dischargers
----------------------------------------------------------------------------------------------------------------
Number of facilities experiencing moderate impacts due
Total operating to the rule
Subcategory in baseline --------------------------------------------------------
Proposed rule Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
General Metals...................... 23,140 153 1,753 1,737
Metal Finishing Job Shops........... 1,231 117 117 117
Non-Chromium Anodizing.............. 150 0 0 0
Printed Wiring Board................ 620 301 301 315
Steel Forming & Finishing........... 105 4 4 4
Oily Wastes......................... 28,219 0 0 26
Railroad Line Maintenance........... 799 0 0 0
Shipbuilding Dry Dock............... 6 0 0 0
---------------------------------------------------------------------------
[[Page 484]]
All Categories.................. 54,270 575 2,175 2,199
----------------------------------------------------------------------------------------------------------------
Note: May not sum to totals due to independent rounding.
Another 575 facilities, or one percent of the indirect dischargers
operating in the baseline, are expected to experience moderate economic
impacts under the proposed rule, as shown in Table XVI-7. Both closures
and moderate impacts increase substantially for Option 2/6/10 and
Option 4/8, compared to the proposed rule.
b. Direct Dischargers
Of the 4,653 direct discharging facilities subject to regulation
after baseline closures, EPA estimates that 20 facilities or 0.4
percent could be expected to close as the result of the proposed rule.
These 20 are all General Metals facilities, and represent 0.6 percent
of the 3,636 General Metals Direct Dischargers operating in the
baseline. The employment losses associated with these facility closures
are estimated at 178 FTEs. Again, estimated losses in employment
associated with closures are likely to be overstated, because the
analysis does not account for the likelihood that non-closing
facilities will absorb some of the employment from closing facilities.
In addition, compliance requirements at facilities that continue to
operate will lead to off-setting increases in employment.
Another 41 facilities, or 0.9 percent of the 4,653 direct
dischargers operating in the baseline, would be expected to experience
moderate financial impacts due to the rule, as shown in Table XVI-9.
Table XVI-8.--Incremental Severe Impacts (Facility Closures) on Direct Dischargers
----------------------------------------------------------------------------------------------------------------
Number of facility closures due to the rule
Subcategory Total in baseline --------------------------------------------------------
operating Proposed rule Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
General Metals...................... 3,636 20 20 35
Metal Finishing Job Shops........... 12 0 0 0
Non-Chromium Anodizing *............ ................. ................. ................. .................
Printed Wiring Board................ 11 0 0 0
Steel Forming & Finishing........... 43 0 0 2
Oily Wastes......................... 911 0 0 0
Railroad Line Maintenance........... 34 0 0 0
Shipbuilding Dry Dock............... 6 0 0 0
---------------------------------------------------------------------------
All Categories.................. 4,653 20 20 37
----------------------------------------------------------------------------------------------------------------
* EPA estimates that there are no facilities in the Non-Chromium Anodizing subcategory that discharge directly
to surface waters.
Note: May not sum to totals due to independent rounding.
Table XVI-9.--Incremental Moderate Impacts on Direct Dischargers
----------------------------------------------------------------------------------------------------------------
Number of facilities experiencing moderate impacts due
Total operating to the rule
Subcategory in the baseline --------------------------------------------------------
Proposed rule Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
General Metals...................... 3,636 34 34 103
Metal Finishing Job Shops........... 12 0 0 0
Non-Chromium Anodizing *............ ................. ................. ................. .................
Printed Wiring Board................ 11 0 0 0
Steel Forming & Finishing........... 43 7 7 7
Oily Wastes......................... 911 0 0 0
Railroad Line Maintenance........... 34 0 0 0
Shipbuilding Dry Dock............... 6 0 0 0
---------------------------------------------------------------------------
All Categories.................. 4,653 41 41 110
----------------------------------------------------------------------------------------------------------------
* EPA estimates that there are no facilities in the Non-Chromium Anodizing subcategory that discharge directly
to surface waters.
Note: May not sum to totals due to independent rounding.
c. Summary of Facility Impacts
Table XVI-10 summarizes the results of the economic impact analysis
for all facilities and for all regulatory options analyzed. Closures
and moderate impacts under the proposed option are substantially lower
than in Option 2/6/10 and Option 4/8. Of the 616 facilities
experiencing moderate impacts due to the proposed rule, 137 facilities
fell below the threshold for pre-tax return on assets only, 38 fell
below the interest coverage ratio threshold only, and 441 fell below
both thresholds due to the rule. Job losses due to closures are more
than off-set by job gains associated with compliance requirements under
the proposed option. (See Section XVI-H.4 for a discussion of
employment impacts.)
[[Page 485]]
Table XVI-10.--Summary of Incremental Facility Impacts for All Facilities
----------------------------------------------------------------------------------------------------------------
Regulatory option
Subcategory --------------------------------------------------------------------------
Proposed rule Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
Number of Facilities Operating in 58,922................. 58,922................. 58,922.
Baseline.
Number of Closures (severe impacts).. 199.................... 1,282.................. 2,963.
Percent Closing...................... 0.3.................... 2.2.................... 5.0.
Job losses due to closures (FTE- 5,916 (over 3 years)... 16,834 (over 3 years).. 48,070 (over 3 years).
years).
Job gains due to compliance 8,487 (over 15 years).. 12,023 (over 15 years). 27,535 (over 15 years).
requirements (FTE-years).
Number of Additional Facilities with 616.................... 2,216.................. 2,309.
Moderate Impacts.
Percent with Moderate Impacts........ 1.0.................... 3.8.................... 3.9.
Annualized Compliance Costs (pre-tax, $1.98.................. $2.67.................. $4.18.
billion $1999).
Annualized Compliance Costs (after- $1.33.................. $1.81.................. $2.92.
tax, billion $1999).
----------------------------------------------------------------------------------------------------------------
C. Firm Level Impacts
EPA examined the impacts of the proposed rule on firms that own
MP&M facilities, as well as on the financial condition of the
facilities themselves. A firm that owns multiple MP&M facilities could
experience adverse financial impacts at the firm level if its
facilities are among those that incur significant impacts at the
facility level. The firm-level analysis is also used to compare impacts
on small versus large firms, as required by the Regulatory Flexibility
Act and the Small Business Regulatory Enforcement Fairness Act. (RFA/
SBREFA issues are discussed in Section XX.C of this preamble.)
EPA compared compliance costs with revenue at the firm level as a
measure of the relative burden of compliance costs. EPA applied this
analysis only to MP&M facilities owned by private entities. (Section
XVI.D discusses impacts on governments that own MP&M facilities). The
Phase I, Phase II industrial detailed, and Iron & Steel surveys
identified the parent firm that owns each facility that responded to
the survey. In addition, the Phase II industrial detailed survey
requested that respondents provide information on other MP&M facilities
owned by the same firm, on a voluntary basis. EPA estimated firm-level
compliance costs by summing costs for all facilities owned by the same
firm that responded to the survey plus estimated compliance costs for
additional facilities for which respondents submitted information.
The Agency was not able to estimate the national numbers of firms
that own MP&M facilities precisely, because the sample weights based on
the survey design represent numbers of facilities rather than firms.
Most MP&M facilities (43,118 of 54,590, or 80 percent) are single-
facility firms, however. These firms can be analyzed using the survey
weights. In addition, there are 289 firms that own more than one sample
facility. These firms are included in the analysis with a sample weight
of one, since it is not known how many firms these 289 sample firms
represent. EPA's analysis of firm-level impacts is presented in Chapter
9 of the EEBA.
Table XVI-11 shows the results of the firm-level analysis. The
results represent a total of 43,407 MP&M firms (43,118 + 289), owning
54,590 facilities (43,118 owned by single-facility firms + 11,473 owned
by multi-facility firms).
Table XVI-11.--Firm Level Before-Tax Annual Compliance Costs as a Percent of Annual Revenues for Private Small
Businesses: Proposed Rule
----------------------------------------------------------------------------------------------------------------
Number and percent with before-tax annual compliance costs/
annual revenues equal to:
-----------------------------------------------------------------
Number of firms in the analysis* Less than 1% 1-3% Over 3%
-----------------------------------------------------------------
Number Percent Number Percent Number Percent
----------------------------------------------------------------------------------------------------------------
43,407........................................ 41,236 95 1,070 2.5 1,101 2.5
----------------------------------------------------------------------------------------------------------------
*Firms whose only MP&M facilities close in the baseline are excluded.
A small percentage (2.5 percent) of the firms in the analysis incur
before-tax compliance costs equal to 3 percent or more of annual
revenues. Ninety-five percent incur compliance costs less than 1
percent of annual revenues, and the remaining 2.5 percent incur costs
between 1 and 3 percent of revenues. Of 2,171 firms in the analysis
that incur costs greater than 1 percent of revenues, 636 are single-
facility small firms that were reported in the facility impact analysis
to close (161 firms) or experience moderate impacts (475 firms) due to
the rule.
This analysis is likely to overstate costs at the firm level for
two reasons. First, it includes compliance costs for facilities that
are projected to close due to the rule. The estimated compliance costs
for these facilities are higher than the true cost to the firm of
shutting down the facility, as illustrated by the detailed facility
impact analysis that projects closures. Second, the analysis does not
take account of actions a multi-facility firm might take to reduce its
compliance costs under the proposed rule. These include transferring
functions among facilities to consolidate wet processes and take
advantage of scale economies in wastewater treatment.
D. Impacts on Governments
The proposed MP&M rule will affect governments in two ways:
Government-owned MP&M facilities may be directly affected
by the MP&M regulation and therefore incur compliance costs; and
[[Page 486]]
Municipalities that own Publically Owned Treatment Works
(POTWs) that receive influent from MP&M facilities subject to the
regulation may incur additional costs to implement the proposed rule.
These include costs associated with permitting MP&M facilities that
have not been previously permitted, and with repermitting some MP&M
facilities with existing control mechanisms (e.g., permits) earlier
than would otherwise be required. In addition, POTWs may elect to issue
mass-based control mechanisms to some MP&M facilities that currently
have concentration-based control mechanisms, at an additional cost.
1. Impacts on Government-Owned Facilities
EPA administered a survey (the ``Municipal Survey'') to government-
owned facilities to assess the cost of the regulation on these
facilities and the government entities that own them. (See Section V.B
for a discussion of EPA's data collection efforts.) The survey
requested information that provides the basis for EPA's analysis of the
budgetary impacts of the proposed regulation, including the size and
income of the populations served by the affected government entities;
the government's current revenues by source, taxable property, debt,
pollution control spending and bond rating; and the costs, funding
sources and other characteristics of the MP&M facilities owned by each
government entity.
EPA discusses the methodology for assessing impacts on government-
owned facilities in more detail in Section XVI.B.3.c. In summary, EPA
used three tests to assess whether MP&M facility compliance costs would
impose major budgetary impacts on the governments that own the
facilities: impacts on site-level cost of service, impacts on
taxpayers, and impacts on government debt. The first test assesses
impacts at the facility level and the second two tests assess impacts
at the government level. The Agency judged that a government would
incur major budgetary impacts due to the rule if it failed all three
tests.
The two government-level tests are applied incrementally.
Governments that fail the test in the baseline are not considered to
experience budgetary impacts attributable to the rule.
Table XVI-12 provides national estimates of the number of MP&M
facilities operated by governments that are potentially subject to the
proposed rule, by type and size of government.
Table XVI-12.--Number of Government-Owned Facilities by Type and Size of Government Entity
--------------------------------------------------------------------------------------------------------------------------------------------------------
Regional
Size of government and status under proposed option Municipal State government County governmental Total
government government authority
--------------------------------------------------------------------------------------------------------------------------------------------------------
Large Governments (population> 50,000)................... 572 366 686 36 1,660
Small Governments (population =50,000)................... 2,191 ................. 481 ................. 2,672
----------------------------------------------------------------------------------------------
All Governments...................................... 2,763 366 1,167 36 4,332
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table XVI-13 summarizes the status of government-owned facilities
under the various regulatory options, their compliance costs and
measures of impacts on government that own MP&M facilities.
Table XVI-13.--Number of Regulated Government-Owned Facilities, Compliance Costs and Budgetary Impacts by
Regulatory Option
----------------------------------------------------------------------------------------------------------------
Proposed option Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
Total Number of Government-Owned Facilities............ 4,332 4,332 4,332
Number of facilities exempted by low-flow cutoff....... 3,603 ................. .................
Number of facilities subject to regulation............. 729 4,332 4,332
Compliance costs ($1999 million)....................... $14.1 $64.8 $224.7
Number of facilities with compliance costs > one 215
percent of baseline cost of service*..................
Number of governments failing the ``impact on 0
taxpayers'' criterion**...............................
Number of governments failing the ``impacts on 0
government debt'' criterion***........................
Number of governments failing all three impacts 0
criteria +............................................
----------------------------------------------------------------------------------------------------------------
* Annualized compliance costs as a percent of total facility costs and expenditures, including operating,
overhead and debt service costs and expenses.
** Based on comparison of compliance costs for all facilities owned by the government to the income of
households that are served by the relevant government. A government is judged to experience impacts if the
proposed rule results in a ratio of total annualized pollution control costs per household to median household
income that exceeds one percent post-compliance. Includes existing pollution control costs plus the compliance
costs due to the MP&M rule.
*** Based on comparison of total debt service costs (including costs to finance MP&M capital costs entirely with
debt) with baseline government revenue. A government is judged to experience impacts if the rule causes its
total debt service payments to exceed 25% of baseline revenue.
+ A government is judged to experience major budgetary impacts if it has one or more facilities with costs of
compliance above 1% of baseline cost of service and fails both the taxpayers impact and government debt impact
tests.
Table XVI-13 shows that the proposed rule substantially reduces
costs and impacts relative to the other options considered for
government-owned facilities, because 3,603 (83 percent) of the
facilities are exempted under the low flow cutoffs (110 General Metals
facilities and 3,492 Oily Wastes facilities.) Compliance costs would be
more than 4\1/2\ times higher under Option 2/6/10 and 16 times higher
under Option 4.
An estimated 215 government-owned facilities (5 percent of the
total) would incur costs under the proposed rule exceeding one percent
of their baseline cost of service. Therefore, 95 percent of the
government-owned facilities either incur no costs or are likely to be
able to absorb the added costs within their existing budgets. None of
the
[[Page 487]]
governments incur costs that cause them to exceed the thresholds for
impacts on taxpayers or for government debt burden. EPA therefore
concludes that the proposed rule will not impose major budgetary
burdens on any of the governments that own MP&M facilities.
2. POTW Administrative Costs
EPA also evaluated the costs incurred by governments to administer
the rule. The rule is not expected to impose any new administrative
costs associated with direct dischargers, which are already permitted
by States. However, control authorities will have to issue control
mechanisms (e.g., permits) for the first time to some indirect
discharging facilities and will have to accelerate repermitting for
some indirect dischargers that currently hold control mechanisms.
The costs of issuing and enforcing permits and control mechanisms
associated with the proposed rule are discussed in Section XVI.H.3 of
this preamble. EPA is able to estimate total costs to POTWs, but is not
able to estimate the costs to any one POTW, since it is not possible to
determine what POTWs receive discharges from MP&M facilities except for
those that responded to the surveys.
EPA estimates that POTWs as a whole will incur incremental average
annualized costs over 15 years of between $115,000 and $912,000 under
the proposed rule. The maximum expenditures by all affected POTWs in
any one year will be between $186,000 and $1,607,000. These costs
include issuing new control mechanisms (e.g., permits) to facilities
that do not currently have permits, issuing mass-based permits to some
facilities that currently have concentration-based permits, and
repermitting some facilities sooner than would otherwise be required to
meet the three-year compliance schedule. On average, a POTW's costs for
the incremental permitting are only $23 to $184 per permitted MP&M
indirect discharger under the proposed rule.
EPA is requiring mass-based permits/control mechanisms only for the
Steel Forming & Finishing subcategory; permits/control mechanisms for
other subcategories may be concentration-based. EPA is encouraging
permit writers and control authorities to issue mass-based permits and
control mechanisms, however, where appropriate and feasible. The
analysis of permitting costs assumes for costing purposes that one-
third of the new or reissued permits/control mechanisms in
subcategories other than Steel Forming & Finishing will be mass-based.
EPA expects that these increases in costs will be partially offset
by reductions in government administrative costs for facilities that
are already permitted under local limits and that will be repermitted
under this rule. The proposed technical guidance provided by EPA as a
part of this rulemaking may reduce the research required by permit
writers/control authorities in developing permits and control
mechanisms based on Best Professional Judgement (BPJ) for industrial
dischargers not previously covered by a categorical standard or a water
quality standard. Further, the establishment of discharge standards may
reduce the frequency of evidentiary hearings. The promulgation of
limitations may also enable EPA and the authorized States to cover more
facilities under general permits. EPA did not estimate these cost
savings to permitting authorities that may result from the rule.
E. Community Level Impacts
EPA considered the potential impacts of changes in employment due
to the proposed rule on the communities where MP&M facilities are
located. Changes in employment due to the rule include both job losses
that occur when facilities close and job gains associated with
facilities' compliance activities. EPA estimated that a total of 5,916
jobs would be lost at the 199 facilities projected to close under the
proposed rule. At the same time, EPA estimated that manufacturing and
installing compliance equipment would lead to 4,488 full-time
equivalent (FTE) positions, and that operating and maintaining
compliance systems would result in another 286 FTEs per year. Over a 15
year analysis period, the net effect of job gains and losses caused by
the rule is an increase of 2,575 FTE-years or an average of 172 FTEs
per year. This estimate assumes that workers that lose their job are
unemployed for an average of one year, and that compliance investments
and closures occur evenly over the first three years after
promulgation. This estimate of employment impacts is likely to
understate the net increase, because it ignores the fact that some
production and employment lost at closing plants is likely to result in
increased production and employment at other MP&M facilities. (EPA's
analysis of employment impacts is discussed in more detail in Section
XVI-H.4 below and in Chapter 6 of the EEBA.)
Given the projected overall increase in employment due to the
proposed rule, EPA does not expect the rule to have significant impacts
at the community level. It is not possible to predict precisely where
the job gains and losses will occur. However, facilities that are
projected to close due to the rule have employment ranging from 2 to
205 FTEs. MP&M facilities tend to be located in industrialized urban
areas, and closures of this size are not likely to have a major impact
on a local economy.
F. Foreign Trade Impacts
U.S. MP&M producers as a group exported products with a value of
$380.3 billion in 1999. Imports to the U.S. of the same products in
1999 totaled $539.1 billion, resulting in an overall net MP&M commodity
trade deficit of $153.8 billion. Some MP&M sectors contribute to a
positive commodity trade balance (e.g. aircraft, with a $37.0 billion
positive balance in 1999). In other sectors, substantially more
products are imported than exported (e.g. motor vehicles, with a net
negative balance of $96.8 billion.) Exports and imports by MP&M sector
are discussed in Chapter 3 of the EEBA.
The proposed rule will have an impact on the balance of trade in
MP&M products to the extent that prices for MP&M products increase and
MP&M facilities reduce production. Imports may increase if domestic
customers switch from domestic suppliers to foreign suppliers of MP&M
products, and exports may decrease if foreign customers switch from
purchasing U.S. exports to other suppliers. On the other hand, business
lost by the regulated MP&M facilities due to their increased costs may
be captured by other domestic producers.
Section XVI.B of this preamble and Chapter 5 of the EEBA describe
EPA's analysis of changes in output that are expected to result from
the proposed rule. EPA assessed the impact of these market-level
changes on the U.S. balance of trade using information provided by the
industrial general surveys on the source of competition in domestic and
foreign markets. This analysis allocates the value of changes in output
for each facility that is projected to close due to the rule to
exports, imports or domestic sales, based on the predominant source of
competition in each market reported in the surveys.
Table XVI-14 shows the results of this analysis. The table compares
the projected changes in exports, imports and balance of trade
(expressed in $1999) to baseline 1999 values for both the MP&M
industries and for the U.S. balance of trade in commodities as a whole.
The projected changes in trade under the proposed rule have a very
[[Page 488]]
small impact on the balance of trade. The total U.S. balance of trade
in commodities would decline by less than 0.01 percent and the balance
of trade in the MP&M industries would decline by 0.01 percent.
Table XVI-14.--Proposed Rule Impacts on Foreign Trade
[Million $1999]
----------------------------------------------------------------------------------------------------------------
1999 value of 1999 value of Balance of
exports imports Trade
----------------------------------------------------------------------------------------------------------------
Baseline
----------------------------------------------------------------------------------------------------------------
U.S. Commodity Trade............................................ 695,797 1,024,618 (328,821)
MP&M Industries................................................. 380,305 534,141 (153,836)
----------------------------------------------------------------------------------------------------------------
Post-Compliance
----------------------------------------------------------------------------------------------------------------
Change Due to the Proposed Rule................................. 0 21.1 (21.1)
Percent Change In U.S. Commodity Trade Balance.................. 0% 0.01% 0.01%
Percent Change in MP&M Industries Trade Balance................. 0% 0.01% 0.01%
----------------------------------------------------------------------------------------------------------------
Source: U.S. Census and U.S. Environmental Protection Agency.
G. Impacts on New Facilities
EPA assessed the impacts of the proposed rule on new facilities
based on the characteristics of a model facility in each subcategory
and (in some cases) discharge category (direct and indirect).
Engineering estimates of compliance costs for Option 2/6/10 and Option
4/8 for a representative facility reflect the typical flow size and
other technical characteristics of facilities in each category. (See
the Technical Development Document.) Table XVI-15 lists the compliance
costs and flow size for a representative model facility in each
category, along with the regulatory option considered for each
subcategory.
In absence of the MP&M rule, new sources in the Metal Finishing Job
Shop and Printed Wiring Board subcategories would comply with 40 CFR
part 433 new source requirements, and Steel Forming & Finishing new
sources would comply with 40 CFR part 420 new source requirements.
Therefore, the analysis considers only the incremental costs of
proposed MP&M new source requirements beyond those baseline
requirements.
EPA estimated facility revenues for the model facilities based on
the revenues reported for existing facilities in the Section 308
surveys. The analysis excludes facilities that are projected to close
or to experience moderate economic impacts in the baseline, since the
economic characteristics of these financially-weak facilities are
unlikely to be representative of new facilities. EPA sorted the
existing financially-sound facilities in each subcategory/discharge
status by flow size, and identified facilities in each quartile based
on flow size. The Agency then identified the flow size quartile that
the hypothetical facility would fall into. Finally, EPA calculated the
average revenue for the existing facilities in that same flow size
quartile, and assumed that the hypothetical new facility would have
revenues equal to that average. Table XVI-15 shows the facility revenue
estimated for each model facility.
EPA calculated compliance costs as a percentage of post-compliance
revenues as a measure of impacts. The projected revenues include
estimated prices increases due to the rule. The analysis assumes that
new sources would benefit from the small price increases resulting from
the proposed rule for existing sources, and applies the same percentage
price increase to calculate post-regulation revenues for the new
sources. Table XVI-15 shows before-tax annual compliance costs as a
percent of facility post-regulation revenues.
Finally, Table XVI-15 presents the cost-to-revenue percentage
estimated for new facilities in each subcategory.
Table XVI-15.--New Source Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
New source Annualized Facility Revenue
Subcategory Discharge status Existing source options compliance costs \c\ ($1999) New Source ACC as
options proposed considered \a\ \b\ ($1999) % of Revenue
--------------------------------------------------------------------------------------------------------------------------------------------------------
General Metals........................ I 2 4 $393,220 $417,071,318 0.09
General Metals........................ D 2 4 167,342 398,818,659 0.04
Metal Finishing Job Shops............. I 2 4 65,369 1,428,443 4.64
Metal Finishing Job Shops............. D 2 4 70,735 5,089,823 1.41
Non-Chromium Anodizing................ I 2 4 97,108 24,201,166 0.40
Oily Wastes........................... I 6 8 355,874 474,228,616 0.08
Oily Wastes........................... D 6 8 37,815 116,772,943 0.03
Printed Wiring Board.................. I 2 4 70,563 35,930,097 0.20
Printed Wiring Board.................. D 2 4 160,184 1,029,783,596 0.02
Railroad Line Maintenance............. I&D 10 8 184,261 n.a. n.a.
Shipbuilding Dry Dock................. I&D 10 8 220,492 192,018,827 0.11
Steel Forming & Finishing............. I 2 4 114,851 69,640,244 0.17
Steel Forming & Finishing............. D 2 4 46,945 32,759,295 0.14
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Technology Options 1 through 10 are described in Section VIII.A of the preamble.
a EPA is not proposing the new source option considered in this analysis for the Non-Chromium Anodizing, Oily Wastes, Railroad Line Maintenance, and
Shipbuilding Dry Dock subcategories. See Section XIII for a discussion on new source options selection.
b Incremental to baseline new source requirements (found in 40 CFR 433 and 420, as applicable) for Metal Finishing Job Shop, Printed Wiring Board and
Steel Forming & Finishing new sources.
c Equal to the average revenues of existing facilities in the same quartile based on flow size of the new source model facility, excluding existing
facilities that close or experience moderate impacts in the baseline. Assumes the same percentage price increases for new as for existing sources
under the proposed option.
d Includes existing facilities in all flow categories that continue operating post-compliance.
[[Page 489]]
New sources in all but the Metal Finishing Job Shop direct
discharger subcategory incur costs that are below one percent of post-
regulation revenues. Cost increases of this magnitude are unlikely to
place new facilities at a competitive disadvantage relative to existing
sources. Moreover, costs as a percentage of revenues are generally
comparable for new sources and existing sources with which they will
compete.
Railroad line maintenance facilities do not have revenue reported
at the facility level, and it is therefore not possible to compare
costs as a percent of facility revenue for new and existing facilities
in this subcategory. The representative new source railroad line
maintenance facility would incur annualized costs ($184,261) that are
somewhat higher than those incurred by existing facilities in this
subcategory (which range from zero to $122,042.)
See Section XIII for a discussion of new source options selection.
EPA notes that it did not select the ``New Source Option Considered''
in Table XVI-15, above, for the Non-Chromium Anodizing, Oily Wastes,
Railroad Line Maintenance, and Shipbuilding Dry Dock subcategories, but
rather selected a lower cost option for new sources.
H. Social Costs
1. Components of Social Costs
The social costs of regulatory actions are the opportunity costs to
society of employing scarce resources in pollution control activity.
The largest component of economic costs to society is the cost incurred
by MP&M facilities for the labor, equipment, material, and other
economic resources needed to comply with the proposed rule.
The social costs associated with the proposed MP&M regulation
differ from the compliance costs estimated to assess impacts on the
regulated facilities and firms, because of different treatment of
taxes. Social costs include compliance costs that are considered on a
before-tax basis. Privately-owned facilities are able to deduct the
costs of compliance as business expenses, reduce their tax liability
for a given level of revenue, and thereby share the burden of the costs
with other taxpayers. The burden is shared with other taxpayers because
the Federal government loses the money saved by industry through tax
shields. The cost to society includes the costs borne by industry, as
well as the cost borne by the Federal government through lost tax
revenues. The cost to society, therefore, is higher than the cost to
industry. The annualized lost Federal tax revenues can be calculated as
the difference between the annualized cost before and after tax
shields.
Social costs also include lost producers' and consumers' surplus
that result when the quantity of goods and services produced decreases
as a result of the rule. Lost producers' surplus is measured as the
difference between revenues earned and the cost of production for the
lost production. Lost consumers' surplus is the difference between the
price paid by consumers for the lost production and the maximum amount
they would have been willing to pay for those goods and services.
Calculating lost producers' and consumers' surplus accurately requires
knowledge of the characteristics of market supply and demand for each
affected industry. EPA instead calculated an upper-bound estimate of
social compliance costs using the simplifying assumption that all
facilities continue operating in compliance with the rule, and pay the
associated compliance costs (i.e., assuming that there are no
regulation-related closures.) This provides an upper-bound estimate of
social costs because, for facilities predicted to close, continuing to
operate and incurring compliance costs is more costly than closing the
facility with the lost producers' and consumers' surplus associated
with the closure.
In addition to the resource costs to society associated with
compliance, the estimated social cost includes two other cost elements:
the cost to local governments of implementing the rule and the costs
associated with unemployment that may result from the proposed
regulation. The government administration costs include the costs to
POTWs of permitting and compliance monitoring and enforcement
activities. The unemployment-related costs include the cost of
administering unemployment programs for workers who would lose
employment, and an estimate of the amount that workers would be willing
to pay to avoid involuntary unemployment.
2. Resource Cost of Compliance
The resource costs of compliance are the value of society's
productive resources--including labor, equipment, and materials--
expended to achieve the reductions in effluent discharges required by
the proposed rule. The social costs of these resources are higher than
the costs incurred by facilities because facilities are able to deduct
the costs from their taxable income. The costs to society, however, are
the full value of the resources used, whether they are paid for by the
regulated facilities or by all taxpayers in the form of lost tax
revenues. EPA calculated costs at a 7 percent rate. EPA included
facilities predicted to close due to the rule when calculating social
costs.
The estimated after-tax private compliance costs incurred by
facilities, excluding costs for facilities that close, are $1.3
billion. The estimated social value of these compliance costs,
calculated before-tax assuming no regulatory closures, is $2.0 billion.
This represents the value to society of the resources that would be
used to comply with the proposed rule if all facilities continued to
operate rather than some closing due to the rule. This estimate
represents an upper-bound social value of the compliance resources
associated with the proposed rule.
3. Cost of Administering the Proposed Regulation
EPA estimated the cost to governments of administering the proposed
regulation, including the use of labor and material resources to write
permits/control mechanisms under the regulation and to conduct
compliance monitoring and enforcement activities.
EPA does not expect increases in administrative costs for
facilities that discharge their wastewater directly to surface water,
because the National Pollution Discharge Elimination System (NPDES)
permit program requires that these facilities hold permits. POTWs will
incur additional permitting costs for indirect dischargers that do not
already have a control mechanism (e.g., permit) prior to implementation
of the proposed rule.
Information on the baseline number of indirect dischargers with
control mechanisms comes from the industrial detailed facility surveys,
which reported the baseline permit status of each MP&M facility. (See
Section V.B for a description of EPA's survey questionnaires.) EPA
estimated costs and impacts for these facilities. Results of the impact
analysis indicate that of the 58,922 MP&M facilities continuing to
operate in the baseline (including 64 avoided baseline closures), 199
facilities are expected to close rather than comply with the
regulation. Another 49,147 are excluded or fall below the proposed low
flow cut-offs. Of the 9,577 facilities that are expected to continue
operating and comply with the regulation, 4,633 facilities are direct
dischargers and 4,944 are indirect dischargers. EPA estimates that
4,296 of the indirect dischargers already have permits or other control
mechanisms (629 with concentration-based permits and 3,667 with mass-
based permits) and that 648 indirect discharging facilities will be
required to get a permit/control mechanism for the first time.
[[Page 490]]
EPA conducted the POTW survey of 150 POTWs to support analysis of
the administrative burdens imposed by the proposed rule on POTWs that
receive discharges from MP&M facilities. The questionnaire requested
detailed information on the costs of various activities per facility
permitted, including estimated hours required to develop and issue
permits/control mechanisms, provide technical guidance, inspect
facilities, conduct sampling, review compliance reports, take
enforcement actions, and repermit facilities. The survey requested this
information for facilities of different sizes (based on flow). In
addition, the survey requested information on the frequency with which
specific administrative activities are required for activities that are
not required for every permitted facility (such as conducting a public
hearing). EPA used the POTW survey responses to estimate a range of
permitting labor hour burdens and costs per MP&M facility permitted,
with separate estimates for concentration- and mass-based permits/
control mechanisms. This analysis is presented in Appendix C of the
EEBA.
Estimated annualized POTW administrative costs for each facility
issued a new concentration-based control mechanism range from $236 to
$1,890, and from $240 to $1,924 for each facility issued a new mass-
based control mechanism, with the range depending on the complexity of
the facility being permitted. EPA applied these costs per facility to
the estimated number of facilities requiring new control mechanisms or
conversion of a concentration-based to a mass-based control mechanism
each year, to estimate the total administrative cost to permitting
authorities. (See Section XXI.B for a discussion on implementation of
the MP&M limitations and standards.)
EPA is requiring mass-based permits/control mechanisms only for the
Steel Forming and Finishing subcategory. For other subcategories,
permit writers and control authorities can determine what type of
permit/control mechanism to issue. EPA is encouraging POTWs to
institute mass-based limits where possible, however. (See Section
XXII.B.) For purposes of estimating costs, EPA assumed that all Steel
Forming and Finishing and one-third of the permits/control mechanisms
issued in other subcategories will be mass-based.
Table XVI-16 summarizes the estimated range of administrative costs
that will be incurred by POTWs under the proposed rule. The estimates
reflect the low and high estimates of permitting cost per facility, and
take account of the need to repermit indirect dischargers with existing
control mechanisms (e.g., permits) within the three year compliance
period rather than on the normal five-year permitting schedule. These
estimates are described in detail in Chapter 7 of the EEBA.
Table XVI-16.--POTW Administrative Costs: Proposed Rule
------------------------------------------------------------------------
------------------------------------------------------------------------
Number of facilities permitted:
Converted from existing concentration-based to * 223
mass-based......................................
Issued new concentration-based permit............ * 432
Issued new mass-based permit..................... * 216
Repermitted 1-2 years earlier.................... 4,073
Number of closing facilities with existing permits 143
not requiring repermitting under the proposed rule..
Total POTW Administrative Costs (net present value of $1.407-$8.311
incremental costs over 15 years) (million $1999)....
Total POTW Administrative Costs (annualized over 15 $0.115-$0.912
years @ 7% (million $1999)..........................
------------------------------------------------------------------------
* Assumes that permitting authorities will chose to issue mass-based
control mechanisms (e.g., permits) to \1/3\ of the facilities
requiring new permits, and \1/3\ of the facilities with existing
concentration-based permits, other than Steel Forming & Finishing.
Mass-based permits are assumed for all 20 Steel Forming & Finishing
facilities that currently have a concentration-based permit.
Total estimated government administration costs therefore range
from $0.1 to $0.9 million ($1999) annually. EPA expects that this
increase in costs will be partially offset by reductions in government
administrative costs for facilities that are already permitted under
local limits and that will be repermitted under this rule. The
technical guidance provided by EPA as a part of this rulemaking may
reduce the research required by permit writers and control authorities
in developing Best Professional Judgement (BPJ) permits/control
mechanisms for industrial dischargers not previously covered by a
categorical standard or a water quality standard. Further, the
establishment of discharge standards may reduce the frequency of
evidentiary hearings. The promulgation of limitations may also enable
EPA and the authorized States to cover more facilities under general
permits. EPA did not estimate these cost savings to permitting
authorities that may result from the rule.
4. Social Cost of Unemployment
The loss of jobs associated with facility closures represent a
social cost of the proposed rule. The social cost of unemployment
includes two components: the losses suffered by the workers that
experience involuntary loss of employment, and the cost to the
government of administering the unemployment compensation program for
these workers.
EPA calculated the first cost of worker dislocation based on an
estimate of the value that workers would pay to avoid an involuntary
job loss. The estimate of the amount that workers would pay to avoid
job losses was derived from hedonic studies of the compensation premium
required by workers to accept jobs with a higher probability of
unemployment. This framework has been used in the past to impute a
trade-off between wages and job security (Topel, 1984; Adams, 1985).
This estimate approximates a one-time willingness-to-pay to avoid an
involuntary episode of unemployment and reflects all monetary and non-
monetary impacts of involuntary unemployment incurred by the worker. It
does not include any offsets to the cost of unemployment such as
unemployment compensation or the value of increased leisure time. EPA
estimates that workers would be willing to pay between $90,840 and
$119,900 ($1999) to avoid a case of involuntary employment. Annualized
over 15 years at a discount rate of 7 percent, this willingness to pay
is between $9,974 and $13,164 per lost job. The cost associated with a
projected loss of 5,916 jobs due to facility closures under the
proposed rule therefore has an estimated annual social cost of $59.0
million and $77.9 million.
Unemployment as the result of regulation also imposes costs on
society through the additional administrative burdens placed on the
unemployment system. The cost of unemployment benefits themselves is
not a social cost but instead a transfer payment within society from
taxpayers to unemployed
[[Page 491]]
workers. Administrative costs include the cost of processing
unemployment claims, retraining workers, and placing workers in new
jobs. Data obtained from the Interstate Conference of Employment
Security Agencies indicated that the cost of administering an initial
unemployment claim over the period averaged $119 ($1999). This cost
includes total Federal and State funding for administering unemployment
benefit programs but excludes the value of benefits. Based on these
data, EPA assumed that the cost of administering unemployment programs
for job losses caused by the MP&M regulation would amount to
approximately $120 per job loss. Multiplying this figure by estimated
loss of 5,916 jobs due to facility closures under the proposed
regulation yields an additional $709,920 in social costs. EPA
annualized this value over the 15-year analysis period at the 3 percent
social discount rate to yield an annual cost of $77,945 ($1999).
This estimate of social costs does not take into account the
increased production and employment at MP&M facilities that continue to
operate under the proposed rule. These facilities are likely to gain
business when some facilities close due to the rule. In addition, the
analysis does not reflect the jobs created by facilities' actions to
comply with the rule. The net effect of job losses due to facility
closures and job gains associated with compliance activities is an
increase of 2,575 FTE-years over 15 years. This estimate assumes that
displaced workers remain unemployed for one year on average, and that
all layoffs and compliance related investments occur over the first
three years after promulgation. Table XVI-17 shows the timing of
projected employment impacts, and the net effect on employment over 15
years. (EPA's estimates of the employment effects of the proposed rule
are presented in Chapter 6 of the EEBA.)
Table XVI-17.--Estimated Direct Net Impacts on Employment Over 15 Years, Proposed Rule
[Number of FTEs per year and total FTE-years]
----------------------------------------------------------------------------------------------------------------
One-time
manufacturing Net change in
Year and Annual O&M a Closures b employment
installation a
----------------------------------------------------------------------------------------------------------------
1............................................... 1,496 95 1,972 (381)
2............................................... 1,496 190 1,972 (286)
3............................................... 1,496 286 1,972 (190)
4............................................... .............. 286 .............. 286
5............................................... .............. 286 .............. 286
6............................................... .............. 286 .............. 286
7............................................... .............. 286 .............. 286
8............................................... .............. 286 .............. 286
9............................................... .............. 286 .............. 286
10.............................................. .............. 286 .............. 286
11.............................................. .............. 286 .............. 286
12.............................................. .............. 286 .............. 286
13.............................................. .............. 286 .............. 286
14.............................................. .............. 286 .............. 286
15.............................................. .............. 286 .............. 286
---------------------------------------------------------------
Total FTE-years over 15 years............... 4,488 4,003 5,916 2,575
----------------------------------------------------------------------------------------------------------------
a Assumes that one-third of facilities come into compliance in each of 3 years.
b Assumes that one-third of the facilities projected to close do so in each of the first 3 years.
EPA calculated a range of social costs of changes in employment
under the proposed rule, with the lower bound reflecting no net loss of
employment and the upper bound considering only the 5,916 job losses
resulting from closures. The social costs associated with unemployment
were therefore estimated to range from zero to $78.0 million, including
an upper-bound $77.9 million in worker's willingness to pay to avoid
involuntary unemployment and less than $0.1 million in the additional
costs of administering unemployment benefits. The estimated upper-bound
employment-related social cost is likely to be substantially
overstated, since it does not consider the social value of net
increases in employment due to compliance activities and the increases
in production that may occur at MP&M facilities that continue to
operate post-compliance.
5. Total Social Costs
Summing across all social costs results in a total social cost
estimate of $2.0 to $2.1 billion annually ($1999), as shown in Table
XVI-18. This estimate represents an upper bound value of social costs,
since it assumes that all facilities remain open and incur compliance
costs rather than closing in some cases. This assumption is made only
to calculate the resource value of compliance expenditures; closures
are considered in calculating the social cost of unemployment.
Table XVI-18.--Annual Social Costs of the Proposed Rule
[Million $1999, annualized @ 7%]
------------------------------------------------------------------------
Lower bound Upper bound
Social cost category estimate estimate
------------------------------------------------------------------------
Resource Value of Compliance Costs (before-
tax)....................................... $2,033.7
---------------------------
Government Administrative Costs............. $0.1 $0.9
Social Costs of Unemployment................ 0 $78.0
[[Page 492]]
Total Social Costs.......................... $2,033.8 $2,122.6
------------------------------------------------------------------------
XVII. Cost-Effectiveness Analysis
A. Methodology
EPA performed a cost-effectiveness analysis of the alternative
regulatory options for indirect dischargers (PSES) and direct
dischargers (BAT). Cost-effectiveness analysis is used in the
development of effluent limitations guidelines to evaluate the relative
efficiency of alternative regulatory options in removing toxic
pollutants from the effluent discharges to the nation's waters.
The cost-effectiveness of a regulatory option is defined as the
incremental annual cost (in 1981 constant dollars) per incremental
toxic-weighted pollutant removals for that option. This definition
includes the following concepts:
Toxic-weighted removals. Pollutants differ in their
toxicity. Therefore, the estimated reductions in pollution discharges,
or pollutant removals, are adjusted for toxicity by multiplying the
estimated removal quantity for each pollutant by a normalizing toxic
weight (Toxic Weighting Factors). The toxic weight for each pollutant
measures its toxicity relative to copper, with more toxic pollutants
having higher toxic weights. The use of toxic weights allows the
removals of different pollutants to be expressed on a constant toxicity
basis as toxic pound-equivalents (lb-eq). The removal quantities for
the different pollutants may then be summed to yield an aggregate
measure of the reduction in toxicity-normalized pollutant discharges
that is achieved by a regulatory option. The cost-effectiveness
analysis does not address the removal of conventional pollutants (oil
and grease, biochemical oxygen demand, and total suspended solids), nor
does it address the removal of bulk parameters, such as COD.
Annual costs. The costs used in the cost-effectiveness
analysis are the estimated annualized before-tax costs to comply with
the alternative regulatory options. The cost to facilities to remove
these pollutants will be less because the costs are tax deductible. The
annual costs include the annual expenses for operating and maintaining
compliance equipment, meeting monitoring requirements, and some
pollution prevention activities. Annualized components include capital
outlays for treatment systems.
Incremental calculations. The incremental values are the
changes in total annual compliance costs and changes in removals from
the next less stringent option, or from the baseline if there is no
less stringent option, where regulatory options are ranked by
increasing levels of toxic-weighted removals. The resulting cost-
effectiveness values for a given option are therefore expressed
relative to another option or, for the least stringent option
considered, relative to the baseline.
The result of the cost-effectiveness calculation represents the
unit cost of removing the next pound-equivalent of pollutants and is
expressed in constant 1981 dollars per toxic pound-equivalent removed
($/lb-eq) to allow comparisons with other options being considered.
Although not required by the Clean Water Act, cost-effectiveness
analysis is a useful tool for evaluating regulatory options that
address toxic pollutants.
EPA performed the cost-effectiveness analysis for the MP&M
regulation separately for indirect dischargers (subject to PSES) and
direct dischargers (subject to BAT). The following sections summarize
the results for the two classes of facilities. EPA notes that for all
subcategories, it is proposing options only BPT or is setting BAT equal
to BPT, as there is no additional technology used at BAT. The Agency
does not use C-E analysis to assess options for BPT. Therefore, the C-E
analysis for direct dischargers is presented only for informational
purposes. See Section IX for a discussion of BPT cost-reasonableness.
B. Cost-Effectiveness Analysis for Indirect Dischargers
Table XVII-1 summarizes the cost-effectiveness analysis for the
PSES regulatory options applicable to indirect dischargers. Annual
compliance costs are shown in 1999 dollars and also in 1981 dollars.
The regulatory options are listed in order of increasing stringency on
the basis of the estimated toxic-weighted pollutant removals. Estimates
of costs and pollutant removals do not include facilities that close in
the baseline. (See Section XVI.B.4 for a discussion on the baseline
closure analysis.)
Table XVII-1.--Cost-Effectiveness for Indirect Dischargers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual before-tax compliance costs (excluding Weighted pollutant removals
regulatory closures) -------------------------------- Cost-
------------------------------------------------ effectiveness
Regulatory option Total cost Total cost Incremental Total Incremental ratio ($1981/
(million (million cost (million removals (000 removals (000 lb-eq)
$1999) $1981) $1981) lbs-eq) lbs-eq)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Option......................................... 1,730.1 1,009.2 1,009.2 9,372.3 9,372.3 108
Option 2/6/10........................................... 2,421.9 1,412.8 403.6 9,755.5 383.2 1,053
Option 4/8.............................................. 3,795.1 2,213.8 801.0 9,936.9 181.4 4,416
--------------------------------------------------------------------------------------------------------------------------------------------------------
As shown in Table XVII-1, the proposed option removes 9.4 million
toxic-weighted pounds. The proposed option is the least stringent of
those considered, and the incremental and average cost-effectiveness is
$108 per pound-equivalent removed.
Option 2/6/10 would remove an additional 0.4 million toxic weighted
pounds, at an incremental cost of $0.38 billion ($1981), for an
incremental cost-effectiveness ratio of $1,053 per pound-equivalent
removed. The differences between the proposed option and Option 2/6/10
for indirect dischargers
[[Page 493]]
include the proposed option's one million gallon per year cutoff for
the General Metals subcategory, two million gallon per year cutoff for
the Oily Wastes subcategory, and exclusion of new pretreatment
standards for the Non-Chromium Anodizing, Railroad Line Maintenance and
Shipbuilding Dry Dock subcategories. These provisions of the proposed
rule reduce before-tax compliance costs by 40 percent compared with
Option 2/6/10, while losing 4 percent of the pound-equivalents removed.
EPA discussed the rationale for the selected flow cutoffs for each
subcategory in Section XII of today's proposal.
Option 4/8 would remove an additional 0.18 million pound-
equivalents, as compared with Option 2/6/10, at an additional cost of
$0.8 billion ($1981), or $4,416 per pound-equivalent.
Table XVII-2 presents the results of the cost-effectiveness
analysis for indirect dischargers by subcategory.
Table XVII-2.--Cost-Effectiveness for Indirect Dischargers by Subcategory
----------------------------------------------------------------------------------------------------------------
Incremental
before-tax Incremental Cost-
Subcategory and regulatory option compliance removals (lbs- effectiveness
cost (million eq) ratio ($1981/
$1981) lb-eq)
----------------------------------------------------------------------------------------------------------------
Printed Wiring Boards
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 81.17 1,195,260 68
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... 40.87 8,010 5,103
----------------------------------------------------------------------------------------------------------------
Metal Finishing Job Shops
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 68.82 1,766,063 39
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... 26.54 62,554 424
----------------------------------------------------------------------------------------------------------------
General Metals
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 844.52 6,216,887 136
Option 2/6/10................................................... 279.12 318,594 876
Option 4/8...................................................... 487.21 103,514 4,707
----------------------------------------------------------------------------------------------------------------
Non-Chromium Anodizing
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. .............. .............. ..............
Option 2/6/10................................................... 15.23 13,598 1,120
Option 4/8...................................................... 7.27 434 16,756
----------------------------------------------------------------------------------------------------------------
Oily Wastes
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 2.52 14,140 178
Option 2/6/10................................................... 109.04 51,008 2,138
Option 4/8...................................................... 232.35 5,885 39,484
----------------------------------------------------------------------------------------------------------------
Railroad Line Maintenance
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. .............. .............. ..............
Option 2/6/10................................................... 0.15 17 8,560
Option 4/8...................................................... 0.13 132 995
----------------------------------------------------------------------------------------------------------------
Shipbuilding Dry Dock
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. .............. .............. ..............
Option 2/6/10................................................... 0.10 0 767,794
Option 4/8...................................................... 0.00 26 0
----------------------------------------------------------------------------------------------------------------
Steel Forming and Finishing
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 12.19 179,900 68
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... 6.63 865 7,659
----------------------------------------------------------------------------------------------------------------
The proposed option for indirect dischargers in the Printed Wiring
Board, Metal Finishing Job Shops, and Steel Forming and Finishing
subcategories is the same as Option 2/6/10. The proposed option
includes a flow cutoff of one million and two million gallons per year
for General Metals and Oily Wastes, respectively. Therefore, there are
no proposed pretreatment standards for all indirect dischargers that
fall below those cutoffs. There are also no proposed pretreatment
standards for indirect dischargers in the Non-Chromium Anodizing,
Railroad Line Maintenance and Shipbuilding Dry Dock subcategories. In
developing regulatory options for indirect dischargers, EPA considered
a range of possible exclusions from 1 mgy to 6.25 mgy for all
subcategories. Information of
[[Page 494]]
the cost-effectiveness for each regulatory option under each flow
cutoff by subcategory can be found in ``Analysis of Cost-Effectiveness
by Flow Category'', which is available in the rulemaking docket.
C. Cost-Effectiveness Analysis for Direct Dischargers
Table XVII-3 summarizes the cost-effectiveness analysis for the BAT
regulatory options applicable to direct dischargers and Table XVII-4
presents the analysis by subcategory. As before, regulatory options are
ranked in order of increasing stringency.
Table XVII-3.--Cost Effectiveness For Direct Dischargers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual before-tax compliance costs (excluding Weighted pollutant removals
regulatory closures) -------------------------------- Cost-
------------------------------------------------ effectiveness
Regulatory option Total cost Total cost Incremental Total Incremental ratio ($1981/
(million (million cost (million removals (000 removals (000 lb-eq)
$1999) $1981) $1981) lbs-eq) lbs-eq)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Option......................................... 245.8 143.4 143.4 $1,333.6 1,333.6 107
Option 2/6/10........................................... 245.8 143.4 0.0 1,333.6 0.0 ..............
Option 4/8.............................................. 381.6 222.6 79.2 1366.7 33.1 2,391
--------------------------------------------------------------------------------------------------------------------------------------------------------
The proposed BAT option for direct dischargers achieves removal of
1.3 million pounds on a toxic-weighted basis, with a cost-effectiveness
of $107 ($1981). Because the only differences between Option 2/6/10 and
the proposed option occur for indirects (i.e. flow cutoffs and no
regulation options), Option 2/6/10 is the same as the proposed option
for direct dischargers.
Option 4/8 would remove an additional 33,000 pound-equivalents, as
compared with the proposed option, at an additional cost of $80 million
($1981), or $2,391 per pound-equivalent.
Table XVII-4 presents the results of the cost-effectiveness
analysis for direct dischargers by subcategory.
Table XVII-4.--Cost-Effectiveness for Direct Dischargers by Subcategory
----------------------------------------------------------------------------------------------------------------
Incremental
before-tax Incremental Cost-
Subcategory and regulatory option compliance removals (lbs- effectiveness
cost (million eq) ratio ($1981/
$1981) lb-eq)
----------------------------------------------------------------------------------------------------------------
Printed Wiring Boards
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 1.42 64,573 22
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... 1.14 2,270 501
----------------------------------------------------------------------------------------------------------------
Metal Finishing Job Shops
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 0.69 14,194 49
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... 0.52 265 1,968
----------------------------------------------------------------------------------------------------------------
General Metals
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 114.54 899,372 127
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... 52.20 21,620 2,414
----------------------------------------------------------------------------------------------------------------
Non-Chromium Anodizing *
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. NA NA ..............
Option 2/6/10................................................... NA NA ..............
Option 4/8...................................................... NA NA ..............
----------------------------------------------------------------------------------------------------------------
Oily Wastes
----------------------------------------------------------------------------------------------------------------
Option 4/8...................................................... ** ** **
Proposed Option................................................. 6.42 16,069 399
Option 2/6/10................................................... 0.00 0 ..............
----------------------------------------------------------------------------------------------------------------
Railroad Line Maintenance
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 0.67 174 3,831
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... 0.05 23 2,181
----------------------------------------------------------------------------------------------------------------
Shipbuilding Dry Dock
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 1.24 111 11,179
[[Page 495]]
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... *** -0.91 *** 335 *** -2,728
----------------------------------------------------------------------------------------------------------------
Steeling Forming and Finishing
----------------------------------------------------------------------------------------------------------------
Proposed Option................................................. 18.39 339,147 54
Option 2/6/10................................................... .............. .............. ..............
Option 4/8...................................................... 1.28 8,977 143
----------------------------------------------------------------------------------------------------------------
* EPA estimates that there are no direct discharging Non-Chromium Anodizing facilities.
** Option 4/8 removes 15,703 lbs equivalent at a cost of $31.34 million. The proposed option removes more lbs
equivalent at a lower cost. The proposed option therefore dominates Option 4/8, and results are not shown here
for Option 4/8.
*** Option 4/8 removes more lb-eq. than the proposed option at a lower cost. See Section XVII-D for a discussion
of the impacts of the proposed option on conventional pollutant removals. Option 4/8 removes 446 lbs-
equivalent at a cost of $0.33 million at an average cost-effectiveness incremental to baseline of $740/lb-eq.
The proposed option is more stringent than Option 4/8 for the Oily
Wastes subcategory, in that it removes more toxic-weighted pounds of
pollutants and costs less than Option 4/8. It therefore dominates
Option 4/8 from the perspective of toxic pollutant removals, and has an
average cost per pound-equivalent removed of $399 ($1981). Again, EPA
is proposing options only for BPT or is setting BAT equal to BPT for
all subcategories, as there is no additional technology used at BAT.
The Agency does not use C-E analysis to assess options for BPT.
Therefore, the C-E analysis for direct dischargers is presented only
for informational purposes.
Table XVII-4 shows a high cost-effectiveness for the Railroad Line
Maintenance and the Shipbuilding Dry Dock subcategories. EPA is not
proposing BAT limitations for these subcategories because of the small
quantities of toxic pollutants in the wastewater from facilities in
these subcategories. (See Section XI.) However, EPA is proposing BPT
limitations for these subcategories in order to control the discharge
of conventional pollutants. See Section IX for a discussion of BPT
options selection and the results of the BPT cost-reasonableness
analysis.
XVIII. Non-Water Quality Environmental Impacts
Sections 304(b) and 306 of the Act require EPA to consider non-
water quality environmental impacts (including energy requirements)
associated with effluent limitations guidelines and standards. In
accordance with these requirements, EPA has considered the potential
impact of the proposed regulation on energy consumption, air emissions,
and solid waste generation.
While it is difficult to balance environmental impacts across all
media and energy use, the Agency has determined that the impacts
identified below are justified by the benefits associated with
compliance with the limitations and standards (see Sections XIX and XX
for a discussion on the environmental benefits associated with this
proposed regulation).
A. Air Pollution
The Agency believes that the in-process and end-of-pipe
technologies included in the technology options for this regulation do
not generate air emissions. (See Section VIII for a discussion of the
technology options.)
The use of halogenated hazardous air pollutant solvent (methylene
chloride, perchloroethylene, trichloroethylene, 1,1,1 trichloroethane,
carbon tetrachloride and chloroform) for cleaning in the MP&M industry
can create hazardous air pollutant emissions. The Agency believes this
regulation will not affect the use of halogenated hazardous air
pollutant solvent in the MP&M industry. This regulation neither
requires nor discourages the use of aqueous cleaners in lieu of
halogenated hazardous air pollutant solvent.
The Agency is developing National Emission Standards for Hazardous
Air Pollutants (NESHAPs) under section 112 of the Clean Air Act (CAA)
to address air emissions of the hazardous air pollutants (HAPs) listed
in Title III of the CAA Amendments of 1990. Below, EPA lists the
current and upcoming NESHAPs that may potentially affect HAP emitting
activities at MP&M facilities:
Chromium Emissions from Hard and Decorative Chromium
Electroplating and Chromium Anodizing Tanks;
Halogenated Solvent Cleaning;
Aerospace Manufacturing;
Shipbuilding and ship repair (Surface Coating);
Large appliances (Surface Coating);
Metal Furniture (Surface Coating);
Automobile and light-duty truck manufacturing (Surface
Coating); and
Miscellaneous Metal Parts and Products (Surface Coating).
B. Solid Waste
Solid waste generation includes hazardous and nonhazardous
wastewater treatment sludge as well as waste oil removed in wastewater
treatment. EPA estimates that compliance with this regulation will
result in a decrease in wastewater treatment sludge and an increase in
waste oil generated at MP&M facilities.
According to EPA's detailed questionnaires, the Agency estimates
that MP&M facilities generate 267 million gallons (4 million cubic
yards) of wastewater treatment sludge and 805 million gallons of waste
oil from the treatment of wastewater. In Table XVIII.B-1, EPA presents
the amount of wastewater treatment sludge and waste oil expected to be
generated at the selected technology option. The table also shows the
amount of wastewater treatment sludge and waste oil that would be
generated by the selected technology option if EPA had not included
pollution prevention as part of its selected technology option.
[[Page 496]]
Table XVIII.B-1.--Waste Treatment Sludge and Oil Generation by Option
------------------------------------------------------------------------
Wastewater
treatment Waste oil
sludge generated
Option generated (million
(million gallons/
gallons/ year)
year)
------------------------------------------------------------------------
Baseline\1\................................... 267 805
Proposed Options without water conservation 207 2,000
and P2.......................................
Proposed Options with water conservation and 206 1,600
P2...........................................
------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
\1\ EPA calculated the baseline sludge and waste oil generation using
responses to the 1989 MP&M Phase I Questionnaire and the 1996 MP&M
Phase II Detailed Questionnaires.
As shown in Table XVII.B-1, wastewater treatment sludge generation
decreased from baseline to the selected option without in-process flow
control. EPA attributes the net decrease to the fact that this option
includes sludge dewatering, which may result in a significant decrease
in sludge generation for sites that have chemical precipitation and
settling technologies without sludge dewatering in place at baseline.
The Agency did not estimate additional sludge reduction at facilities
which already have sludge dewatering in place at baseline. EPA does
expect an increase of sludge production at MP&M facilities which do not
have treatment in place and must install treatment as a result of the
MP&M rule.
Table XVIII.B-1 shows that the water conservation and pollution
prevention technologies included in the proposed options further reduce
the amount of sludge generated. EPA expects these technologies to
result in sludge reduction for the following reasons:
--Recycling of coolants and recycling of paint curtains reduce the mass
of pollutants in treatment system influent streams, which in turn
reduces the amount of sludge generated during metals removal;
--Bath maintenance practices, including good operational practices
regarding drag out in plating processes, included in the proposed
options, reduce the mass of metal pollutants discharged to treatment,
which in turn reduces the amount of sludge generated during metals
removal; and
--Water conservation technologies included in the proposed options
reduces the discharge mass of metals present in the source water to a
site (e.g., calcium, sodium), which in turn reduces the amount of
sludge generated during removal of these metals.
EPA classifies many of the sludges generated at MP&M facilities as
either a listed or characteristic hazardous waste under the Resource
Conservation and Recovery Act (RCRA) based on the following
information:
--If the facility performs electroplating operations, EPA classifies
the resulting sludge as an EPA hazardous waste number F006 (40 CFR
261.31). If the facility mixes the wastewater from these electroplating
operations with other non-electroplating wastewater for treatment, then
EPA still considers all of the sludge generated from the treatment of
this commingled wastestream to be a listed hazardous waste F006, or
--If the sludge or waste oil from wastewater treatment exceeds the
standards for the Toxicity Characteristic (i.e., is hazardous), or
exhibits other RCRA-defined hazardous characteristics (i.e., reactive,
corrosive, or flammable), EPA considers it a characteristic hazardous
waste (40 CFR 261.24.)
It is also important to note that EPA does not include chemical
conversion coating, electroless plating, and printing circuit board
manufacturing under the F006 listing (51 FR 43351, December 2, 1986).
And if the facility performs certain chemical conversion coating
operations on aluminum, EPA classifies the resulting sludge as EPA
hazardous waste number F019.
Additional federal, state, and local regulations may result in MP&M
sludges being classified as hazardous wastes. Facilities should check
with the applicable authorized (State or EPA Regional) authority to
determine if other regulations apply.
Based on information collected during site visits and sampling
episodes, the Agency believes that some of the solid waste generated
would not be classified as hazardous. However, for purposes of
compliance cost estimation, the Agency assumed that all solid waste
generated as a result of the technology options would be hazardous.
As stated above in Section XV, EPA expects that the rule will
reduce metal contaminants in the sludges generated by POTWs and will
allow POTWs to dispense of the lower metal content sludge by more
environmentally beneficial methods.
EPA attributes the increase in waste oil generation from baseline
to the proposed option to the removal of oil from MP&M wastewater prior
to discharge to POTWs or surface waters. MP&M facilities usually either
recycle waste oil on site or off site, or contract haul it for disposal
as either a hazardous or nonhazardous waste. The estimated increase of
waste oil generation as a result of the MP&M proposed rule reflects a
better removal of oil and grease by the proposed technology options
than that being achieved at baseline and does not reflect an increase
in overall oil generation at MP&M facilities. For the purpose of
compliance cost estimation, EPA assumed that all MP&M facilities
contract hauled waste oil for disposal; however, EPA expects that some
facilities may recycle waste oil either on site or off site.
Table XVIII.B-1 shows that the inclusion of water conservation and
pollution prevention in the proposed option results in the generation
of less waste oil. EPA attributes this decrease in waste oil generation
to the 80 percent reduction of coolant discharge using the recycling
technology included in the proposed technology train. This system
recovers and recycles oil-bearing machining coolants at the source,
reducing the generation of spent coolant.
C. Energy Requirements
EPA estimates that compliance with this regulation will result in a
net increase in energy consumption at MP&M facilities. EPA presents the
estimates of increased energy usage for the selected option in Table
XVIII.C-1. The table also shows the amount of energy that would be
required by the selected technology option if EPA had not included
pollution prevention as part of its selected technology option. The in-
process flow control and recycling technologies included in
[[Page 497]]
EPA's proposed options reduce the amount of water use and in doing so
also require energy. Therefore, the amount of energy required for the
selected option incorporating pollution prevention and water
conservation was slightly greater than the proposed option without
pollution prevention and water conservation techniques.
Table XVIII.C-1.--Energy Requirements by Option
------------------------------------------------------------------------
Energy
required
Option (million
kilowatt
hrs/yr)
------------------------------------------------------------------------
Baseline \1\............................................... 248
Proposed Options without water conservation and P2......... 347
Proposed Options without water conservation and P2......... 364
------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
\1\ EPA calculated the baseline sludge and waste oil generation using
responses to the 1989 MP&M Phase I Questionnaire and the 1996 MP&M
Phase II Detailed Questionnaires.
By comparison, electric power generation facilities generated 3,123
billion kilowatt hours of electric power in the United States in 1997
(The Energy Information Administration, Electric Power Annual 1998
Volume 1, Table A1). Additional energy requirements for EPA's proposed
options correspond to approximately 0.01 percent of national
requirements. The increase in energy requirements due to the
implementation of MP&M technologies will in turn cause an air emissions
impact from the electric power generation facilities. The increase in
air emissions is expected to be proportional to the increase in energy
requirements or approximately 0.01 percent.
Table XVIII.C-1.--Energy Requirements by Option
------------------------------------------------------------------------
Energy
required
Option (million
kilowatt
hrs/yr)
------------------------------------------------------------------------
Baseline \1\............................................... 248
Proposed Options without water conservation and P2......... 347
Proposed Options without water conservation and P2......... 364
------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
\1\ EPA calculated the baseline sludge and waste oil generation using
responses to the 1989 MP&M Phase I Questionnaire and the 1996 MP&M
Phase II Detailed Questionnaires.
By comparison, electric power generation facilities generated 3123
billion kilowatt hours of electric power in the United States in 1997
(The Energy Information Administration, Electric Power Annual 1998
Volume 1, Table A1). Additional energy requirements for EPA's proposed
options correspond to approximately 0.01 percent of national
requirements. The increase in energy requirements due to the
implementation of MP&M technologies will in turn cause an air emissions
impact from the electric power generation facilities. The increase in
air emissions is expected to be proportional to the increase in energy
requirements or approximately 0.01 percent.
XIX. Water Quality, Sewage Sludge, and Other Environmental Impacts
A. Introduction
MP&M facilities nationwide currently discharge an estimated 5,025
million pounds of pollutants per year to publicly-owned treatment works
(POTWs) and approximately 410 million pounds of pollutants directly to
surface waters. MP&M facility effluents contain 42 priority or toxic
pollutants, 86 nonconventional pollutants, and three conventional
pollutants (biological oxygen demand (BOD), total suspended solids
(TSS), and oil and grease (O&G)).
The release of these pollutants to our nation's surface water
degrades aquatic environments, alters aquatic habitats, and affects the
diversity and abundance of aquatic life. It can also increase the risks
to the health of humans who ingest contaminated surface waters or eat
contaminated fish and shellfish. A number of the pollutants commonly
found in MP&M effluents also inhibit biological wastewater treatment
systems or accumulate in sewage sludge.
Metals are a particular concern because of their prevalence in MP&M
effluents. Metals are inorganic compounds that are generally non-
volatile (with the notable exception of mercury) and are not broken
down by biodegradation processes. Metals can accumulate in biological
tissues, sequester into POTW sewage sludge, and contaminate soils and
sediments when released to the environment. Some metals are quite toxic
even when present at relatively low levels.
Of the 131 MP&M pollutants of concern for which loadings were
estimated, 35 exhibit moderate to high toxicity to aquatic life; 77 are
human non-cancer toxicants; 13 are classified as known or probable
human carcinogens; 46 bioaccumulate in aquatic organisms and persist in
the environment, and 35 are hazardous air pollutants (HAPs). HAPs are
compounds which EPA believes may represent an unacceptable risk to
human health if present in the air.
B. Beneficial Impacts of the MP&M Proposed Rule
Changes under the proposed rule include:
Water quality changes;
Reduced aquatic life impacts;
Reduced POTW inhibitions;
Reduced costs for sewage sludge disposal; and
Reduced human health impacts.
The first three changes due to the proposed rule are discussed in
this section, and the last two are discussed in Section XX. EPA
estimated these changes for three options. This section presents
results for the proposed option, Option 2/6/10 and Option 4/8. See
Section VIII for a description of the options. Results are discussed
for only the proposed option, however, to reduce the length of the
document. Benefits were not estimated for Options 1, 3, 5, 7, and 9
(options without pollution prevention) because these options remove
fewer pollutants and cost more than Option 2/6/10 and Option 4/8.
1. Water Quality Changes
EPA estimates that the proposed rule would substantially reduce
pollutant discharges to the waters of the U.S. as shown by the loadings
estimates in Table XIX-1 for five categories of pollutants. The
regulation would result in total pollutant removals of 3,872 million
pounds per year. These removals include a 30 million pound per-year
reduction in eight sewage sludge contaminants and a 703 million pound
per-year reduction in 89 pollutants causing inhibition of biological
activity of sewage sludge. The regulation would reduce discharges of 35
HAPs by about one million pounds per-year. Discharges of pollutants
that are known to be related to adverse acute and chronic effects on
aquatic life would be reduced by 823 and 1,035 million pounds per year,
respectively. These reductions result from increased wastewater
treatment, pollution prevention, and regulatory closures. EPA estimated
impacts of MP&M discharges on the quality of receiving waters using a
model of the in-stream pollutant mixing and dilution process. A first
order pollutant degradation model was used in the analysis of source
water concentrations at the drinking water intake points. This model
estimates in-stream concentrations for the initial discharge reach
(i.e., waterway) and for downstream reaches, taking into account
dilution, adsorption, volatilization, and hydrolysis.
This analysis uses discharge information from 885 sample MP&M
[[Page 498]]
facilities (excluding two sample facilities in Puerto Rico) that
discharge directly or indirectly to 627 receiving waterways (544
rivers/streams, 55 bays/estuaries, and 28 lakes). Four of the 55 marine
reaches were excluded from the in-stream water quality analysis due to
data limitations.
EPA extrapolated the environmental assessment results for the
sample facilities to the entire population of MP&M facilities
nationwide. This extrapolation uses sample facility weights developed
as part of the sampling plan. For additional information on sample
weights see the Statistical Summary for the Metal Products & Machinery
Industry Surveys in the Administrative record for today's rule.
EPA evaluated the national environmental impacts of reducing
pollutant discharges from MP&M facilities to the nation's waterbodies
for the proposed rule and for two alternative regulatory options. EPA
considered only pollutant loadings from MP&M facilities to particular
waterbodies and did not take background loadings from other sources
into account, with one exception. The analysis of sewage sludge
(biosolids) quality took background metal loadings into account. EPA
used information from the POTW survey to estimate total metal loadings
to a POTW of a given size (i.e., small, medium, and large). See Section
V.B for a description of the POTW survey. This estimate was based on
the average number of small, medium, and large MP&M facilities
discharging to a POTW in each size category and the percent
contribution of total metal loadings discharged from MP&M facilities.
2. Reduced POTW Impacts
EPA evaluated whether MP&M pollutants may interfere with publicly-
owned treatment works (POTWs). Pollutants may impair POTW treatment
effectiveness by inhibiting the biological activity of activated
sludge. POTW inhibition and sludge values come from guidance published
by EPA and other sources. The Agency also evaluated the reduced costs
for managing and disposing of sewage sludge containing fewer pollutants
or lower concentrations of pollutants. This is discussed in Section
XX.D of today's proposal.
EPA estimated inhibition of POTW operations by comparing predicted
POTW influent concentrations to available inhibition levels for 89
pollutants. At baseline discharge levels, EPA estimates that
concentrations of 18 pollutants discharged from MP&M facilities exceed
biological inhibition criteria at 515 POTWs nationwide. The proposed
regulation would eliminate potential inhibition problems at 306 POTWs
and reduce occurrence of pollutant concentrations in excess of
inhibition criteria at 82 POTWs. POTWs may impose local limits to
prevent inhibitions. If local limits are in place, the estimated
reduction in potential inhibition problems at the affected POTWs is
overstated. In this case, however, the estimated social cost of the
MP&M regulation is also overstated.
3. Reduced Aquatic Life Impacts
EPA assessed the effect of baseline and post-compliance MP&M
facility discharges on affected waterways by estimating the cases in
which in-waterway pollutant concentrations resulting from those
discharges would exceed recommended acute and chronic Ambient Water
Quality Criteria (AWQC) that protect aquatic life. Acute toxicity
assesses the impacts of a pollutant from relatively short exposures,
typically 48 and 96 hours for invertebrates and fish, respectively.
Mortality is the endpoint of concern. Chronic toxicity assesses the
impact of a pollutant after a longer exposure, typically from one week
to several months. The endpoints of concern are one or more sublethal
responses, such as changes in reproduction or growth in the affected
organisms. Pollutant concentrations in excess of acute and chronic AWQC
values indicate potential impacts to aquatic life.
The analysis compared baseline and post-compliance exceedences of
aquatic life AWQC to determine the effects of the rule. These
exceedences were modeled based on the estimated discharges from MP&M
facilities and 7Q10 stream flow rates (7Q10 refers to the lowest
consecutive seven day average with a recurrence interval of 10 years).
Results show that baseline pollutant concentrations exceed acute AWQC
in 878 reaches and chronic AWQC in 2,466 reaches nationally at baseline
discharge levels. EPA estimates that the proposed option will eliminate
concentrations in excess of acute and chronic criteria in 775 and 1,029
reaches, respectively. Results also show that an additional 903
receiving reaches will experience partial water quality improvements
from reduced occurrence of some pollutant concentrations in excess of
acute and/or chronic AWQC limits for protection of aquatic life.
Table XIX.1.--National Estimates of MP&M Facility Discharges
----------------------------------------------------------------------------------------------------------------
MP&M discharges with potential POTW MP&M discharges
impacts exhibiting toxicity
----------------------------------------- Aquatic Life
Category Activated -------------------------
sludge Biosolids HAP
inhibition contaminants Acute Chronic
----------------------------------------------------------------------------------------------------------------
Baseline Loadings
----------------------------------------------------------------------------------------------------------------
Number of Pollutants......................... 89 8 35 107 116
Million lbs/yr............................... 1,031 31.7 2.1 1,252 1,759
----------------------------------------------------------------------------------------------------------------
Remaining With the Proposed Option
----------------------------------------------------------------------------------------------------------------
Million lbs/yr............................... 328 1.61 1.11 430 723
----------------------------------------------------------------------------------------------------------------
Remaining With Option 2/6/10
----------------------------------------------------------------------------------------------------------------
Million lbs/yr............................... 266 0.54 0.89 364 647
----------------------------------------------------------------------------------------------------------------
Remaining With Option 4/8
----------------------------------------------------------------------------------------------------------------
Million lbs/yr............................... 484 0.43 1.05 595 895
----------------------------------------------------------------------------------------------------------------
[[Page 499]]
Table XIX-2.--National Estimates of MP&M Pollutants, Exceedences & Reductions
----------------------------------------------------------------------------------------------------------------
Proposed Option 2/6/
Baseline option 10 Option 4/8
----------------------------------------------------------------------------------------------------------------
POTW Impacts
----------------------------------------------------------------------------------------------------------------
Number of POTWs with Inhibition Problems (18 pollutants > 515 209 123 123
inhibition criteria).......................................
Biosolids Contamination (8 pollutants):
Number of POTWs......................................... 6,953 6,889 5,575 5,575
Non-qualifying Sewage Sludge (mill. of dry metric tons). 53.7 52.5 47.6 47.6
----------------------------------------------------------------------------------------------------------------
Receiving Water Impacts
----------------------------------------------------------------------------------------------------------------
Number of Streams with Human Health AWQC Exceedences
----------------------------------------------------------------------------------------------------------------
Number of pollutants:
----------------------------------------------------------------------------------------------------------------
Water and organisms a................................... 18 11 11 13
Organisms only b........................................ 6 5 5 5
Number of streams > AWQC for water and organisms............ 10,310 9,205 4,151 4,160
Number of streams > AWQC for organisms only................. 192 71 71 65
----------------------------------------------------------------------------------------------------------------
Number of Streams with Aquatic Life AWQC Exceedences
----------------------------------------------------------------------------------------------------------------
Number of pollutants:
Chronic................................................. 31 25 21 17
Acute................................................... 10 11 8 6
Number of streams > AWQC chronic............................ 2,466 1,437 1,394 1,310
Number of streams > AWQC acute.............................. 878 103 61 52
----------------------------------------------------------------------------------------------------------------
a Both drinking water and organism consumption are considered in developing these AWQC exceedences.
b Only consumption of aquatic organisms is considered in these AWQC exceedences.
XX. Benefit Analysis
A. Overview of Benefits
This section presents EPA's estimates of the national environmental
benefits of the proposed MP&M effluent guidelines. The benefits occur
due to the reduction in facility discharges described in the preceding
section. EPA's complete benefit assessment can be found in ``Economic,
Environmental, and Benefit Assessment of Proposed Metal Products and
Machinery (MP&M) Rule.''
Benefits analyses for past effluent guidelines have been limited in
the range of benefits addressed, which has hindered EPA's ability to
compare the benefits and costs of rules comprehensively. The Agency is
working to improve its benefits analyses, including applying
methodologies that have now become well established in the natural
resources valuation field, but have not been used previously in the
effluent guidelines program. EPA was particularly interested in
expanding its benefits analyses for this rule to include water-based
recreational activities other than fishing. The proposed MP&M rule
addresses an industry with a large number of facilities located
throughout the United States. These facilities are largely concentrated
near large population centers and recreational sites.
Individuals in the U.S. are known to participate in a wide range of
water-based recreational activities including fishing, swimming,
boating, and near water activities such as wildlife viewing.
Participation rates in each activity vary significantly from state to
state depending on the availability and quality of water resources
suitable for recreation, climate, and demographic characteristics of
the user population. Wildlife viewing is most popular type of water-
based recreation followed by fishing and swimming. The 1996 U.S. Fish
and Wildlife Service survey showed that 62 million Americans enjoy
wildlife viewing nationwide. In addition, 35 to 43 million people
participate in recreational fishing and 34 million people take boating
trips.
EPA has therefore expanded upon its traditional methodologies in
the benefits analyses for the proposed MP&M rule. Past effluent
guidelines analyses have included human health benefits, economic
productivity benefits such as reduced costs for POTW sludge disposal,
recreational benefits for fishing, and nonuse values. The additional
analyses expands on the traditional analyses by estimating benefits to
participants in boating, swimming and viewing (i.e., near-water
recreation.) EPA used a benefit transfer approach based on four studies
to estimate the increase in value to individuals who boat and
participate in viewing or near-water recreation at the national level.
Three of these studies have been published in established economic
journals, the other study is new and specific to the MP&M guideline.
For this rule, EPA also conducted an original travel cost study in the
State of Ohio, using the National Recreational Demand Survey (NDS) and
a Random Utility Model (RUM) of recreational behavior, to estimate the
changes in consumer valuation of water resources that would result from
improvements in water quality. This study is presented in detail in
Chapter 21 of the EEBA. A preliminary application of the travel cost
study was reviewed by experts in the field of natural resource
valuation, and the study has been presented at two professional
meetings and will be subjected to a formal peer review in the coming
year. The results of the previous review are available in the docket.
Because EPA has not yet resolved some anomalies in the
extrapolation of these analyses to the national level, the monetized
benefits for these new categories are not included in the summary
statements of benefits for the proposed rule. EPA is including these
analyses in the EEBA, however, to present the new methodologies and
their results as applied to the MP&M rule for public comment,
concurrent with seeking peer review of the travel cost study.
[[Page 500]]
The new analyses projects benefits of $500-$900 million for
enhanced wildlife viewing, $265-$672 million for recreational boating,
and $191 to $1,066 million in additional non-use benefits (calculated
as \1/4\ to \2/3\ of the additional recreational use benefits.) EPA
notes that the methodology used results in projected benefits for 57
million wildlife viewers taking an average of 10 trips per year. This
estimate (567 viewing days) is essentially the total number of single
day trips as estimated by the national recreational demand survey
(NDS). The methodology also predicts that 33 million individuals will
each take an average 9 boating trips per year to sites benefiting from
the rule. This amounts to 296 million boating days which is essentially
all of the single day boating days nationally estimated from the NDS.
Even though only about 5% of total reaches nationally are projected to
benefit from the rule, 90% of the benefitting reaches are located in
densely populated areas in the U..S, which is where the majority of the
U.S. population and recreational users are located, though not
necessarily where they recreate. Although EPA is confident in the
sample based results, EPA believes that the large numbers of viewers
and boaters projected to benefit from the rule at the national level
may indicate a need to revise its procedures for scaling up from
sampled facilities to the national level. The simple extrapolation
technique used in both the cost and benefit analyses, may have the
unintended effect of overcounting the number of benefitting boaters and
wildlife viewers. EPA is also specifically soliciting comment on
several other methodological approaches used in new analyses including
the benefits transfer of values from studies that did not specifically
address boating and wildlife viewing to these activities, the extent to
which activities such as recreational boating, and wildlife viewing are
applicable to children, and the effect of omitting other non-MP&M
sources of impairment on affected reaches from the analyses.
EPA may include additional categories of monetized benefits
estimates based on these new methodologies, as revised based on comment
and peer review, in its economic analyses of the final rule.
Table XX.1 summarizes the benefits categories associated with the
regulation and notes which categories EPA was able to quantify and
monetize. The benefits include three broad classes: Human health,
ecological, and economic productivity benefits. Within these three
broad classes, EPA was able to assess benefits with varying degrees of
completeness and rigor. Where possible, EPA quantified the expected
effects and estimated monetary values. Data limitations and limited
understanding of how society values certain water quality changes
prevented monetizing some benefit categories. This section also
presents a case study for the State of Ohio which provides more
detailed analyses of the regulation's expected benefits.
Table XX-1.--Benefit Categories Associated With Water Quality Improvements Resulting From the Metal Products and
Machinery Effluent Guideline
----------------------------------------------------------------------------------------------------------------
Nonquantified
Benefit category Quantified and Quantified and and
monetized nonmonetized nonmonetized
----------------------------------------------------------------------------------------------------------------
Human Health Benefits
----------------------------------------------------------------------------------------------------------------
Reduced cancer risk due to ingestion of chemically- X
contaminated fish and unregulated pollutants in drinking
water.......................................................
Reduced systemic health hazards (e.g., reproductive, ............... X
immunological, neurological, circulatory, or respiratory
toxicity) due to ingestion of chemically-contaminated fish
and unregulated pollutants in drinking water................
Reduced systemic health hazards from exposure to lead from X
consumption of chemically-contaminated fish.................
Reduced cancer risk and health hazards from exposure to ............... ............... X
unregulated pollutants in chemically-contaminated sewage
sludge......................................................
Reduced health hazards from exposure to contaminants in ............... ............... X
waters used recreationally (e.g., swimming).................
----------------------------------------------------------------------------------------------------------------
Ecological Benefits
----------------------------------------------------------------------------------------------------------------
Reduced risk to aquatic life................................. ............... X
Enhanced water-based recreation including fishing............ X
Enhanced water-based recreation including near-water or X
viewing and boating......................................... In expanded
analyses
Other enhanced water-based recreation such as swimming, ............... ............... X
waterskiing and white water rafting.........................
Increased aesthetic benefits such as enhancement of adjoining ............... ............... X
site amenities (e.g. residing, working, traveling, and
owning property near the water).............................
Nonuser value (i.e., existence, option, and bequest value)... X
Reduced contamination of sediments........................... ............... ............... X
Reduced non-point source nitrogen contamination of water if ............... ............... X
sewage sludge is used as a substitute for chemical
fertilizer on agricultural land.............................
Satisfaction of a public preference for beneficial use of ............... ............... X
sewage sludge *.............................................
----------------------------------------------------------------------------------------------------------------
Economic Productivity Benefits
----------------------------------------------------------------------------------------------------------------
Reduced sewage sludge disposal costs......................... X
Reduced management practice and record-keeping costs for ............... ............... X
users of sewage sludge that meets exceptional quality
criteria....................................................
Reduced interference with POTW operations.................... ............... X
Benefits to tourism industries from increased participation ............... ............... X
in water-based recreation...................................
[[Page 501]]
Improved commercial fisheries yields......................... ............... ............... X
Addition of fertilizer to crops (nitrogen content of sewage ............... ............... X
sludge is available as a fertilizer when sludge is land
applied) *..................................................
Improved crop yield (the organic matter in land-applied ............... ............... X
sewage sludge increases soil's water retention) *...........
Avoidance of costly siting processes for more controversial ............... ............... X
sewage sludge disposal methods (e.g., incinerators) because
of greater use of land application..........................
Reduced water treatment costs for municipal drinking water, ............... ............... X
irrigation water, and industrial process and cooling water..
----------------------------------------------------------------------------------------------------------------
* Some of these benefit categories are accounted for and quantified under the ``reduced sewage sludge disposal
costs.''
B. Reduced Human Health Risk
Reduced pollutant discharges from MP&M facilities generate human
health benefits by a number of pathways. The most important human
health benefits stem from reduced risk of illness from consumption of
contaminated fish, aquatic organisms other than fish, and water. EPA
analyzed human health benefits by estimating the change in the expected
number of adverse human health events in the populations exposed to
MP&M discharges. While some health effects such as cancer are
relatively well understood and can be quantified and monetized in a
benefits analyses, others such as systemic health effects are less well
understood and may not be assessed with the same rigor or at all. (See
Table XX-1.)
EPA analyzed the following measures of health-related benefits:
reduced cancer risk from fish and water consumption; reduced risk of
non-cancer toxic effects from fish and water consumption; lead-related
health effects to children and adults; and reduced occurrence of in-
waterway pollutant concentrations in excess of levels of concern. The
levels of concern include human health-based ambient water quality
criteria (AWQC) or documented toxic effect levels for those chemicals
not covered by water quality criteria. The Agency monetized only two of
these health benefits: (1) Changes in the incidence of cancer from fish
and water consumption, and (2) changes in adverse health effects to
children and adults from reduced lead exposure. The following
discussion includes results only for the proposed option; however, the
tables present the results for all options evaluated.
EPA estimates that the proposed option would eliminate
approximately 2.29 cancer cases associated with consumption of MP&M
pollutants in fish tissue and drinking water. The regulation would also
result in the removal of 0.86 million pounds (1.9 toxic lb-eq.) per
year of lead. In addition, there will be a 142 million pound reduction
in 77 pollutants that are known to be related to a wide range of human
health endpoints not quantified or monetized for this benefits
analyses. Monetized health benefits are expected to result in $41.3
million (1999 $) in benefits due to decreased human health risks under
the proposed option.
The analyses of changes in human health risk described in this and
the following sections ignore the potential for joint effects of more
than one pollutant. Each pollutant is dealt with in isolation and the
individual effects are summed. Therefore, this approach does not
account for the possibility that several pollutants may combine in a
synergistic fashion to yield more or less adverse effects to human
health than indicated by the simple sum of their individual effects.
1. Benefits from Reduced Incidence of Cancer Cases
EPA estimated aggregate cancer risk from contaminated drinking
water for populations served by drinking water intakes on waterbodies
to which MP&M facilities discharge. This analyses is based on seven
carcinogenic pollutants for which no published drinking water criteria
are currently available. This analyses excludes six carcinogens for
which drinking water criteria are available. EPA assumed that public
drinking water treatment systems will remove these pollutants from the
public water supply. To the extent that treatment for these six
pollutants may cause incidental removals of the chemicals without
criteria, the analyses may overstate cancer related benefits.
Calculated in-stream concentrations serve as a basis for estimating
changes in cancer risk for populations served by affected drinking
water intakes. EPA estimates that the proposed regulation would
eliminate annually 2.24 cancer cases associated with consumption of
contaminated drinking water, or 44 percent of the cancer cases
associated with baseline MP&M discharges.
EPA valued the reduced cancer cases using estimated willingness-to-
pay values for avoiding premature mortality. The values used in this
analyses are based on a range of values identified in the EPA Office of
Policy Analysis' review of available studies. The mean value of
avoiding one statistical death is estimated to be $5.8 million. This
estimate does not include estimates of morbidity prior to death.
EPA also estimated aggregate cancer risk from consuming
contaminated fish for recreational and subsistence anglers and their
families. This analyses is based on thirteen carcinogenic pollutants
found in MP&M effluent discharges. Estimated contaminants in fish
tissue reflect predicted in-stream pollutant concentrations and
biological uptake factors. EPA used data on numbers of licensed
fishermen by State and county, presence of fish consumption advisories,
fishing activity rates, and average household size to estimate the
affected population of recreational and subsistence anglers and their
families. The analyses uses different fish consumption rates for
recreational and subsistence anglers to estimate the change in cancer
risk among these populations.
The proposed rule eliminates an estimated 0.05 cancer cases per
year for combined recreational and subsistence angler populations,
representing a reduction of about 36 percent from a baseline of about
0.13 cases. This translates into $0.3 million (1999$) in annual
benefits due to reduced cancer risk from consumption of contaminated
fish by these populations.
Total benefits from reduced incidence of cancer cases, including
both drinking water and fish exposures are $13.3 million (1999$)
annually (see Table XX-2).
[[Page 502]]
Table XX-2.--Estimated Annual Benefits from Avoided Cancer Cases from Fish and Drinking Water Consumption
----------------------------------------------------------------------------------------------------------------
Drinking Water Fish Consumption Total
-----------------------------------------------------------------------------
Benefit Benefit Benefit
Regulatory status Annual value Annual value Annual value
cancer (million cancer (million cancer (million
cases 1999$) cases 1999$) cases 1999$)
----------------------------------------------------------------------------------------------------------------
Baseline
----------------------------------------------------------------------------------------------------------------
Baseline.......................... 5.10 1 N/A 0.126 N/A 5.23 N/A
----------------------------------------------------------------------------------------------------------------
Proposed Option
----------------------------------------------------------------------------------------------------------------
Number of Cases/Value............. 2.86 $13.0 0.081 $0.3 2.94 $13.3
Percent Reduction................. 43.9% N/A 35.7% N/A 43.9% N/A
----------------------------------------------------------------------------------------------------------------
Option 2/6/10
----------------------------------------------------------------------------------------------------------------
Number of Cases/Value............. 2.73 $13.7 0.081 $0.3 2.81 $14.0
Percent Reduction................. 46.5% N/A 35.7% N/A 46.1% N/A
----------------------------------------------------------------------------------------------------------------
Option 4/8
----------------------------------------------------------------------------------------------------------------
Number of Cases/Value............. 2.73 $13.8 0.062 $0.4 2.79 $14.2
Percent Reduction................. 46.5% N/A 49.2% N/A 46.5% N/A
----------------------------------------------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
\1\ Not Applicable.
2. Reductions in Systemic Health Effects
EPA expects that the proposed rule would also generate a wide range
of non-cancer health benefits (e.g., systemic effects, reproductive
toxicity, and developmental toxicity) from reduced contamination of
fish tissue and drinking water sources. The change in exposure to
pollutants through fish and water consumption relative to pollutant-
specific health effects thresholds yields an additional measure of the
human health benefits that are likely to result from the proposed
regulation. EPA compared estimated in-stream pollutant concentrations
for 77 systemic toxicants with risk reference doses to calculate a
hazard score. The systemic hazard score is the sum of the ratios of
pollutant quantities ingested to the daily reference dose for each
pollutant. Values above or near one indicate the potential for health
non-cancer hazards. The hazard score assumes that the combined effect
of ingesting multiple pollutants is proportional to the sum of their
effects individually.
The distribution of hazard scores was calculated for drinking water
and fish consumption populations for baseline and post-compliance
exposures. The results show movement in populations from higher risk
values to lower risk values for both the fish and drinking water
analyses. Substantial increases in the percentage of the exposed
populations that would be exposed to no risk of systemic health hazards
occur in both analyses.
3. Benefits from Reduced Exposure to Lead
EPA performed a separate analyses of benefits from reduced exposure
to lead. This analyses differs from the analyses of systemic health
risk from exposure to other MP&M pollutants because it is based on
dose-response functions tied to specific health endpoints to which
monetary values can be applied.
Many lead-related adverse health effects are relatively common and
are chronic in nature. These effects include but are not limited to
hypertension, coronary heart disease, and impaired cognitive function.
Lead is harmful to any exposed individual, and the effects of lead on
children are of particular concern. Children's rapid rate of
development makes them more susceptible to neurobehavioral deficits
resulting from lead exposure. The neurobehavioral effects on children
from lead exposure include hyperactivity, behavioral and attention
difficulties, delayed mental development, and motor and perceptual
skill deficits.
This analyses assessed benefits of reduced lead exposure from
consumption of contaminated fish tissue to three sensitive populations:
(1) Preschool age children, (2) pregnant women, and (3) adult men and
women. This analyses uses blood-lead levels as a biomarker of lead
exposure. EPA estimated baseline and post-compliance blood lead levels
in the exposed populations and then used changes in these levels to
estimate benefits in the form of avoided health damages.
EPA assessed neurobehavioral effects on children based on a dose-
response relationship for IQ decrements. Avoided neurological and
cognitive damages are expressed as changes in overall IQ levels,
including reduced incidence of extremely low IQ scores (70, or two
standard deviations below the mean) and reduced incidence of blood-lead
levels above 20 mg/dL. The analyses uses the value of compensatory
education that an individual would otherwise need and the impact an
additional IQ point on individuals' future earnings to value the
avoided neurological and cognitive damages. EPA estimated that
implementation of the proposed rule would result in avoided IQ loss of
489 points across all exposed children. The estimated monetary value of
avoided IQ loss is $4.9 million (1999$). In addition, reduced
occurrences of extremely low IQ scores (70) and reduced incidence of
blood-lead levels above 20 mg/dL would result in a decrease in the
annual cost of compensatory education for children with learning
disabilities of $0.1 million (1999$).
Prenatal exposure to lead is an important route of exposure. Fetal
exposure to lead in utero due to maternal blood-lead levels may result
in several adverse health effects, including
[[Page 503]]
decreased gestational age, reduced birth weight, late fetal death,
neurobehavioral deficits in infants, and increased infant mortality. To
assess benefits to pregnant women, EPA estimated changes in the risk of
infant mortality due to changes in maternal blood-lead levels during
pregnancy. This analyses used the estimated willingness-to-pay (WTP) to
avoid a mortality to estimate the monetary benefit associated with
reducing risks of neonatal mortality. The estimated monetary value of
benefits from reduced neonatal mortality is $9.33 million (1999$).
Lead exposure has been shown to have adverse effects on the health
of adults as well as children. The health effects in adults that EPA
was able to quantify all relate to lead's effects on blood pressure.
Quantified health effects include increased incidence of hypertension
(estimated for males only), initial coronary heart disease (CHD),
strokes (initial cerebrovascular accidents and atherothrombotic brain
infarctions), and premature mortality. This analyses does not include
other health effects associated with elevated blood pressure, and other
adult health effects of lead including nervous system disorders in
adults, anemia, and possible cancer effects. EPA used cost of illness
estimates (i.e., medical costs and lost work time) to estimate monetary
value of reduced incidence of hypertension, initial CHD, and strokes.
EPA then used the value of a statistical life saved to estimate changes
in risk of premature mortality. The estimated monetary value of health
benefits to adults is $13.6 million (1999$) (see Table XX-3).
Total benefits from reduced exposure to lead, including both
children and adults are $28.0 million (1999$) annually under the
proposed option.
Table XX-3.--National Adult Lead Benefits
[Millions of 1999$ per year]
----------------------------------------------------------------------------------------------------------------
Proposed option Option 2/6/10 Option 4/8
-----------------------------------------------------------------------------
Category Reduced Monetary Reduced Monetary Reduced Monetary
cases value cases value Cases value
----------------------------------------------------------------------------------------------------------------
Men
----------------------------------------------------------------------------------------------------------------
Hypertension...................... 959.85 $1.00 991.41 $1.04 992.20 $1.04
CHD............................... 1.24 $0.09 1.29 $0.09 1.29 $0.09
CBA............................... 0.52 $0.14 0.53 $0.14 0.53 $0.14
BI................................ 0.29 $0.08 0.30 $0.08 0.30 $0.08
Mortality......................... 1.7 $9.85 1.76 $10.19 1.76 $10.20
----------------------------------------------------------------------------------------------------------------
Women
----------------------------------------------------------------------------------------------------------------
CHD............................... 0.39 $0.03 0.40 $0.03 0.40 $0.03
CBA............................... 0.17 $0.03 0.18 $0.04 0.18 $0.04
BI................................ 0.10 $0.02 0.11 $0.02 0.11 $0.02
Mortality......................... 0.41 $2.38 0.42 $2.46 0.42 $2.46
----------------------------------------------------------------------------------------------------------------
Total Benefits................ ........... $13.6 ........... $14.08 ........... $14.09
----------------------------------------------------------------------------------------------------------------
National Level Exposed Population:
(1) Hypertension: 428,363 men ages 20 to 74;
(2) Coronary heart disease, cerebrovascular accidents, brain infarction, and mortality: 173,386 men and
192,091 women ages 45-74.
----------------------------------------------------------------------------------------------------------------
4. Exceedences of Health-Based AWQC
EPA also estimated the effect of MP&M facility discharges by
comparing pollutant concentrations in affected waterways to ambient
water criteria for protection of human health. This analysis compares
the estimated baseline and post-compliance in-stream pollutant
concentrations with ambient water quality criteria (AWQC). The
comparison included AWQC for protection of human health through
consumption of organisms and for consumption of organisms and water.
Pollutant concentrations in excess of these values indicate potential
risks to human health. EPA modeling results show that baseline in-
stream concentrations of 18 pollutants are estimated to exceed human
health criteria for consumption of water and organisms in 10,310
receiving reaches nationwide. The proposed rule eliminates
concentrations in excess of the criteria for consumption of water and
organisms on 1,105 of these reaches. EPA also estimates that the
proposed rule eliminates the occurrence of concentrations in excess of
human health criteria for consumption of organisms only on 121 of the
192 reaches on which baseline discharges are estimated to cause
concentrations in excess of AWQC values. Results also show that 382
receiving reaches will experience partial water quality improvements
from reduced occurrence of some pollutant concentrations in excess of
AWQC limits for consumption of water and organisms.
C. Ecological, Recreational and Nonuser Benefits
EPA expects the proposed regulation to provide ecological benefits
by improving the habitats or ecosystems (aquatic and terrestrial)
affected by the MP&M industry's effluent discharges. Benefits
associated with changes in aquatic life include: restoration of
sensitive species: Recovery of diseased species: changes in taste- and
odor-producing algae; changes in dissolved oxygen (DO); increased
assimilative capacity of affected waterways; and improved related
recreational activities. These activities include swimming, fishing,
boating and wildlife observation that may be enhanced when risks to
aquatic life are reduced. Among these ecological benefits, EPA was able
to estimate dollar values for improved recreational opportunities and
for nonuser benefits.
EPA expects the MP&M rule to improve aquatic species habitats by
reducing concentrations of toxic and conventional contaminants in
water. These improvements should enhance the quality and value of
water-based recreation, such as fishing, swimming,
[[Page 504]]
wildlife viewing, camping, waterfowl hunting, and boating. The benefits
from improved water-based recreation would be seen as increases in the
increased value participants derive from a day of recreation or the
increased number of days that consumers of water-based recreation
choose to visit the cleaner waterways. This analysis measures the
economic benefit to society from water quality improvements based on
the increased monetary value of recreational opportunities resulting
from those improvements.
EPA assessed recreational benefits of reduced occurrence of
pollutant concentrations exceeding aquatic life and/or human health
AWQC values. This analysis combined the findings from the aquatic life
benefits analysis and the human health AWQC exceedence analysis
described previously. These analyses found that 10,443 stream reaches
exceed chronic or acute aquatic life AWQC and/or human health AWQC
values at the baseline discharge levels (see Table XIII-4). The
proposed rule is expected to eliminate exceedences on 1,185 of these
discharge reaches, leaving 9,258 reaches with concentrations of one or
more pollutants that exceed AWQC limits. Of these 9,258 reaches, 1,837
reaches will experience partial water quality improvements from reduced
occurrence of some pollutant concentrations in excess of AWQC limits.
Table XX-4.--Estimated MP&M Discharge Reaches with MP&M Pollutant Concentrations in Excess of AWQC Limits for
Protection of Human Health or Aquatic Species
----------------------------------------------------------------------------------------------------------------
Number of Number of benefitting reaches
reaches with -------------------------------
MP&M pollutant
Regulatory status concentrations All AWQC Number of AWQC
exceeding AWQC exceedences exceedences
limits eliminated reduced
----------------------------------------------------------------------------------------------------------------
Baseline........................................................ 10,443 .............. ..............
Proposed option................................................. 9,258 1,185 1,837
Option 2/6/10................................................... 4,217 6,226 1,894
Option 4/8...................................................... 4,226 6,217 1,866
----------------------------------------------------------------------------------------------------------------
EPA attached a monetary value to these reduced exceedences based on
increased values for recreational fishing and for nonuser values. Since
the benefiting reaches are close to densely populated areas potential
recreational users may also benefit from reduced visit ``price'' to
these sites (i.e., lower travel costs to good recreational sites). EPA
applied a benefits transfer approach to estimate the total willingness
to pay (WTP), including both use and non-use values, for improvements
in surface water quality. This approach builds upon a review and
analysis of the surface water valuation literature.
EPA first estimated the baseline value of water-based recreation
for the benefitting reaches based on estimated annual person-days of
recreational fishing. The baseline per-day values of water-based
recreation are based on studies by Walsh et. al (1992) and Bergstrom
and Cordell (1991). The studies provide values per recreation day for a
wide range of water-based activities, including fishing, boating,
wildlife viewing, waterfowl hunting, camping, and picnicking. The mean
value per recreational fishing day used in this analyses is $39.62.
EPA then applied the percentage change in the recreational fishing
value of water resources implied by surface water valuation studies to
estimate changes in values for all MP&M reaches in which the regulation
eliminates AWQC exceedences by one or more MP&M pollutants. The Agency
selected eight of the most comparable studies and calculated the
changes in recreational fishing values from water quality improvements
(as percentage of the baseline) implied by those studies. Sources of
estimates included Lyke (1993), Jakus et al. (1997), Montgomery and
Needleman (1997), Paneuf et al. (1998), Desvousges et al. (1987), Lant
and Roberts (1990), Farber and Griner (2000), and Tudor et al. (2000).
EPA took a simple mean of point estimates from all applicable studies
to derive a central tendency value for percentage change in the water
resource values due to water quality improvements.
This approach uses all possible applicable valuation studies, makes
unit values more likely to be nationally representative, and avoids the
potential bias inherent in using a single study to make estimates at
the national level. These studies yielded estimates of increased
recreational fishing value from water quality improvements expected
from reduced MP&M discharges of 10 to 15 percent. The estimated
national recreational benefits of the proposed rule (1999$) are
provided in Table XIII-5 below. Note that the benefits transfer
approach used in this analyses is based on eight studies as opposed to
one used in the previous rule.
The resulting average changes in participants' valuation of water
resources per year resulting from the MP&M rule is modest ($18.12 per
angler per year). EPA applied these estimates to the portion of the
population residing in each county that is traversed by (i.e., is
adjacent to) a water body that benefits from the proposed MP&M rule.
The portion of the anglers adjacent to the reach is calculated based on
the number of fishing licenses sold in the relevant counties and the
ratio of the benefiting reach length to the number of total reach miles
in the county. The results were then extrapolated to the national level
based on facility sample weights.
Removing water quality impairments would increase services provided
by water resources to recreational users. Potential recreational users
are expected to benefit from improved recreational opportunities,
including an increased number of available choices of recreational
sites. For example, some of the streams that were not usable for
recreation under the baseline discharge conditions may be newly
included in the site choice set for recreational users from nearby
counties. Streams that have been used for recreation under the baseline
conditions can become more attractive for users making recreational
trips more enjoyable. Individuals may also take trips more frequently
if they enjoy their recreational activities more.
EPA estimated that 20.2 million anglers will benefit from improved
recreational opportunities because they live in counties that are
traversed by reaches expected to benefit from the MP&M regulation. The
results show that roughly half of the nation's recreational
[[Page 505]]
anglers will benefit from the proposed rule. These results partially
stem from the concentration of MP&M facilities in all heavily populated
areas. However, EPA recognizes that extrapolating from sample facility
to national results introduces uncertainty in the analyses, and is
continuing to explore ways to reduce this uncertainty. The Agency is
requesting comment on the methods used to extrapolate sample results to
national benefit estimates. The extrapolation method used is described
in detail in chapters 5 and 15 and appendix F of the EEBA.
EPA also estimated non-market nonuser benefits. These non-market
nonuser benefits are not associated with current use of the affected
ecosystem or habitat; instead, they arise from the value society places
on improved water quality independent of planned uses or based on
expected future use. Past studies have shown that nonuser values are a
sizable component of the total economic value of water resources. EPA
estimated average changes in nonuser value to equal one-half of the
recreational fishing benefits. The estimated increase in nonuser value
is $182.7 million (1999$).
Table XX-5.--Estimated Recreational Fishing and Non-Use Benefits from Reduced MP&M Discharges
[Million 1999$]
----------------------------------------------------------------------------------------------------------------
Proposed
Benefit Type option Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
Recreational Fishing............................................ $365.4 $960.3 $962.1
Nonuse Benefit (1/2 of Recreational Fishing).................... 182.7 480.2 481.1
-----------------------------------------------
Total Recreational Benefits................................. 548.1 1,440.5 1,443.2
----------------------------------------------------------------------------------------------------------------
Note: Categories may not sum to totals due to rounding of individual estimates for presentation purposes.
EPA calculated the total value of enhanced water-based recreation
opportunities by summing recreational fishing and nonuser value. The
resulting increase in value of water resources to recreational anglers
and nonusers is $548.1 million, with an upper and lower bound range of
$294 to $941 million (1999$) annually.
D. Productivity Changes: Cleaner Sewage Sludge (Biosolids)
EPA evaluated two productivity measures associated with MP&M
pollutants. The first measure was the pollutant interference at
publicly-owned treatment works (POTWs) which were quantified but not
monetized in Section XII. The second measure is pass-through of
pollutants into the sludge which limits options for disposing of their
sewage sludge. EPA quantified the reduced costs for managing and
disposing of sewage sludge. This analyses relied on data from 147 POTW
surveys. The survey provided information on sewage sludge use and
disposal costs and practices, total metal loadings to the POTW,
percentage of total metal loadings contributed by MP&M facilities, and
the number of known MP&M dischargers to the POTW The survey also
provided information on the percentage of qualifying sludge that is not
land applied and reasons for not land applying qualifying sludge.
EPA has promulgated regulations establishing standards for sewage
sludge when it is applied to the land, disposed of at dedicated sites
(surface disposal), and incinerated (40 CFR part 503). In addition, EPA
has also established standards for sewage sludge when it is disposed of
in municipal solid waste landfills (40 CFR part 258). Disposing of
sewage sludge containing lower levels of pollutants is less expensive
than disposing of more contaminated sewage because these regulations
restrict disposal options based on sludge pollutant levels. The POTW
survey indicated that the costs of alternative use/disposal practices
follow a consistent ordinal relationship. That is, certain use/disposal
practices (e.g., incinerating sludge) are generally more expensive than
other practices (e.g., land application).
EPA estimated baseline and post-compliance sludge concentrations of
eight metals for POTWs receiving discharges from the sample MP&M
facilities. EPA compared these concentrations with the relevant metal
concentration limits for land application and surface disposal. In the
baseline case, EPA estimated that concentrations of one or more metals
at 6,953 POTWs would fail the land application limits.
EPA estimates that 62 POTWs will be able to select the lower-cost
land application disposal based on estimated reductions in sludge
contamination. An estimated 1.7 million dry metric tons (DMT) of sewage
sludge would newly qualify for land application annually. EPA also
estimated that 21 POTWs that previously met only the land application
pollutant limit would, as a result of regulation, meet the more
stringent land application concentration limits. EPA expects these
POTWs to benefit through reduced record-keeping requirements and
exemption from certain sludge management practices. The annual
estimated cost savings for the POTWs expected to upgrade their sludge
disposal practices are $61.3 million (1999$).
This analyses includes an adjustment to the estimate of national
sludge use/disposal cost benefits for POTWs located at cost-prohibitive
distances from agricultural, forest, or disturbed lands suitable for
sludge application. EPA assumed that 46 percent of sludge generated in
the United States is generated by POTWs located too far from sites
suitable for application sewage sludge to make these practices
economical.
E. Total Estimated Benefits of the Proposed MP&M Rule
EPA estimates that total benefits for the five categories for which
monetary estimates were possible are $0.651 billion (1999$) annually.
EPA characterized uncertainty inherent in the benefits analyses by
bounding benefit estimates. The low and upper bound benefit estimates
of the proposed option are $0.347 and $1,144 billion (1999$) annually.
EPA's complete benefit assessment can be found in Economic,
Environmental, and Benefit Assessment of Proposed Effluent Limitations
and Guidelines for the Metal Products and Machinery Industry. The
monetized benefits of the rule underestimate the total benefits of the
rule because it omits various sources of benefits to society may from
reduced MP&M effluent discharges. Examples of benefit categories not
reflected in this estimate include: non-cancer health benefits other
than benefits from reduced exposure to lead, other water dependent
recreational benefits such as swimming, boating, wildlife viewing, and
waterskiing, and reduced cost of
[[Page 506]]
drinking water treatment for the pollutants with drinking water
criteria.
Table XX-6.--Estimated Benefits from Reduced MP&M Discharges
[Annual Benefits--Million 1999$]
----------------------------------------------------------------------------------------------------------------
Proposed
Benefit category option Option 2/6/10 Option 4/8
----------------------------------------------------------------------------------------------------------------
1. Reduced Cancer Risk:
Fish Consumption............................................ $0.3 $0.3 $0.4
Water Consumption........................................... 13.0 13.7 13.8
2. Reduced Risk from Exposure to Lead:
Children.................................................... 14.4 14.8 14.9
Adults...................................................... 13.6 14.1 14.1
3. Avoided Sewage Sludge Disposal Costs......................... 61.3 68.5 127.4
4. Enhanced Fishing............................................. 365.4 960.7 962.7
5. Nonuse benefits (\1/2\ of Recreational Use Benefits)......... 182.7 480.4 481.3
-----------------------------------------------
Total Monetized Benefits.................................. 650.6 1,553.5 1,614.4
----------------------------------------------------------------------------------------------------------------
As previously mentioned, the EEBA includes national estimates for
benefits in two other categories, enhanced boating and wildlife
viewing. In addition, it also includes estimates from a travel cost
analyses of recreational benefits from enhanced fishing, swimming,
boating and wildlife viewing performed for the state of Ohio. The case
study analyses supplements the national level analyses performed for
the proposed MP&M regulation by using improved data and methods to
determine MP&M pollutant discharges from both MP&M facilities and other
sources and by estimating swimming, fishing, boating, and near-water
activities. The random utility model (RUM) used in the analyses
estimates the effects of the specific water quality characteristics
analyzed for the proposed MP&M regulation (i.e., the presence of AWQC
exceedances and concentrations of the nonconventional nutrient Total
Kjeldahl Nitrogen.) The direct link between the water quality
characteristics analyzed for the rule and the characteristics valued in
the RUM analyses reduces uncertainty in benefit estimates and makes the
analyses of recreational benefits more robust. This analyses is
presented in Chapters 20, 21, and 22 of the EEBA.
F. Benefit-Cost Comparison
EPA cannot perform a complete benefit-cost comparison because not
all of the benefits resulting from the proposed regulatory alternative
can be valued in dollar terms. A comparison of costs and benefits is
thus limited by the lack of a comprehensive benefits valuation and also
by some uncertainties in the estimates. Nonetheless, EPA presents the
following summary comparison of costs and benefits for the proposed
rule. The social cost of the proposed rule is $2.1 billion annually
(1999$). The total benefits that can be valued in dollar terms in the
categories traditionally analyzed for effluent guidelines range from
$0.4 billion to $1.1 billion annually (1999$). EPA believes that the
benefits of the proposed regulation justify the social costs.
XXI. Regulatory Implementation
A. Compliance Dates
As discussed in Section XII of this notice, EPA is proposing to
establish a three-year deadline (from the date of publication of the
final MP&M rule) for compliance with the MP&M pretreatment standards
for existing sources (PSES). EPA is proposing a three-year deadline
because design and construction of systems adequate for compliance with
PSES will be a substantial undertaking for many MP&M sites. In
addition, control authorities (e.g., POTWs) will need the time to
develop the permits or other control mechanisms for their industrial
users.
Once EPA finalizes the MP&M rule, these limitations will be
reflected in NPDES permits issued to direct dischargers.
New sources must comply with the new source standards and
limitations (PSNS and NSPS) of the MP&M rule (once it is finalized) at
the time they commence discharging MP&M process wastewater. Because the
final rule is not expected within 120 days of the proposed rule, the
Agency considers a discharger a new source if its construction
commences following promulgation of the final rule (40 CFR 122.2; 40
CFR 403.3). In addition, today's notice fully replaces the MP&M Phase I
proposal, published on May 30, 1995. Therefore, compliance deadlines in
that proposal would obviously no longer apply.
B. Implementation of Limitations and Standards
1. Concentration-Based Limitations and Standards
As discussed in Section II.D, EPA is proposing concentration-based
limits for all subcategories except the Steel Forming & Finishing
Subcategory for which EPA is proposing production-based limits (see
Section XXI.B.2, below, for a discussion on the Steel Forming &
Finishing Subcategory). Unlike the Phase I proposal, EPA is not
proposing to require permit writers or control authorities (e.g.,
POTWs) to implement the limits on a mass basis for dischargers. Instead
EPA is proposing to authorize permit writers and control authorities to
use their best professional judgement to decide when it is most
appropriate to implement mass-based limits. The NPDES regulations (40
CFR 122.45(f)) require permit writers to implement mass-based
limitations for direct dischargers, but allows an exception when the
limits are expressed in terms of other units of measurement (e.g.,
concentration) and the General Pretreatment Standards (40 CFR 403.6(d))
provides that the control authority may impose mass limitations on
industrial users which are using dilution to meet applicable
pretreatment requirements or where mass limitations are appropriate.
EPA believes that this approach will reduce implementation burden on
POTWs associated with implementing mass-based limits at all of their
MP&M industrial users, but will still result in increased use of water
conservation practices at the facilities where POTWs determine it is
most appropriate. EPA believes that MP&M facilities that have been
using the best pollution prevention and water conservation practices
may also request that the permit writer or POTW use
[[Page 507]]
mass-based limits in their permits or control mechanism. The Agency is
providing detailed information on water use levels for specific unit
operations in Section 15 of the Technical Development Document for
today's proposal. EPA believes this information will be useful to
permit writers and control authorities in those instances where they
deem it appropriate to set mass-based limits.
2. Mass-Based Limitations and Standards
a. Background
The effluent limitations guidelines and standards for BPT, BAT,
NSPS, PSES, and PSNS proposed today for the Steel Forming and Finishing
Subcategory are expressed as mass limitations in pounds/1,000 pounds of
product. The mass limitation is derived by multiplying an effluent
concentration (determined from the analyses of treatment system
performance) by an appropriate wastewater volume (``production-
normalized flow'') determined for each forming or finishing operation
expressed in gallons/ton of product. EPA developed the production
normalized flows used to develop the limits in the proposed rule from
survey questionnaire responses from steel forming and finishing
facilities. (The production-normalized flows are provided in the
Technical Development Document.) However, EPA did not collect
analytical wastewater samples from Steel Forming & Finishing facilities
that used the Option 2 treatment technology (see Section VIII for a
description of the technology options). EPA transferred the effluent
concentrations used to develop the proposed Steel Forming & Finishing
subcategory limitations and standards from those used for the General
Metals subcategory. EPA believes that the wastewater characteristics of
the General Metals subcategory closely resemble those of the Steel
Forming & Finishing subcategory. The concentration-based limitations
and standards for the General Metals subcategory are provided in
Subpart A of the proposed codified regulation that accompanies this
preamble. EPA will conduct analytical wastewater sampling of well-
operated chemical precipitation and clarification systems at steel
forming and finishing facilities post-proposal. EPA intends on
developing limitations and standards for this subcategory for the final
rule that would be based on the steel forming and finishing facilities
in this subcategory.
A facility subject to today's proposed regulation can use a
combination of various treatment alternatives and/or water conservation
practices to achieve a particular effluent limitation or standard. The
model treatment systems (i.e., Option 2 for BPT, BAT, BCT, and PSES and
Option 4 for NSPS and PSNS, as described in Section VIII) illustrate at
least one means available to achieve the proposed effluent limitations
guidelines and standards.
As discussed above in Section XXI.B.1, both the NPDES permit
regulations and the General Pretreatment Regulations discuss the use of
mass-based limitations and standards. In order to convert the proposed
effluent limitations and standards expressed as pounds/1,000 pounds of
product to a monthly average or daily maximum permit limit, the
permitting or control authority would use a production rate with units
of tons/day. The NPDES permit regulations (Part 122.45(b)(2)) require
that NPDES permit limits be based on a ``* * * reasonable measure of
actual production.'' A similar requirement is found in the General
Pretreatment regulations (40 CFR 403.6(c)(3)). As discussed in Section
VI, facilities in the proposed MP&M Steel Forming & Finishing
subcategory, are currently covered under the Iron & Steel Manufacturing
Point Source Category regulations (40 CFR part 420). The production
rates used for NPDES permitting for the iron and steel industry under
40 CFR part 420 have commonly been the highest annual average
production from the prior five year period prorated to a daily basis,
or the highest monthly production over the prior five years prorated to
a daily basis. Stakeholders involved in EPA's proposed revision of the
Iron and Steel effluent limitations guidelines and standards (which is
being proposed under a separate notice) have indicated that (1) EPA
should include the method used to determine appropriate production
rates for calculating allowable mass loadings into the regulation for
consistency, so that the permit writers can all use the same basis; and
(2) EPA should use a high production basis, such as maximum monthly
production over the previous five year period or maximum design
production, in order to ensure that a facility will not be out of
compliance during periods of high production.
Both the NPDES and General Pretreatment regulations require that,
for existing sources, production-based effluent limitations guidelines
and standards be based not on production capacity, but on a
``reasonable measure of actual production.'' The current iron and steel
regulation at 40 CFR 420.04 requires that the mass-based pretreatment
requirements be based on a reasonable measure of actual production.
That regulation provides two examples of what may constitute a
reasonable measure of actual production: (1) the monthly average for
the highest of the previous five years, or (2) the high month of the
previous year. Both values are converted to a daily basis (i.e., tons/
day) for purposes of calculating monthly average and daily maximum
mass-based permit effluent limitations.
Each of the above regulations requires that effluent limitations
and pretreatment standards for new sources must be based on projected
production. That approach is carried forward in this proposed
regulation.
EPA believes that production rates used in some permits and control
mechanisms have been derived in a manner that is not consistent with
the term ``reasonable measure of actual production'' specified at 40
CFR 122.45(b)(2)(i), 403.6(c)(3), and 420.04. In some cases, maximum
production rates for similar process units discharging to one treatment
system were determined from different years or months, which may
provide an unrealistically high measure of actual production. In EPA's
view, this unrealistic estimate of production would occur if the
different process units could not reasonably produce at these high
rates simultaneously.
The ideal situation for the application of production-based
effluent limitations and standards is where production is relatively
constant from day-to-day or month-to-month. In this case, the
production rate used for purposes of calculating the permit limitations
would then be the average rate. However, in the case of the steel
forming and finishing industry, production rates are not constant and
vary significantly based on factors such as fluctuations in market
demand for domestic products, maintenance, product changes, equipment
failures, and facility modifications. As such, the typical production
rate for individual facilities vary significantly over time, especially
over the customary five-year life of a permit or control mechanism.
Although permits and control mechanisms can be modified, if
necessary, during the five-year life of a permit or control mechanism,
re-opening a permit can be very burdensome on the regulator and the
facility. Therefore, the objective in determining a production estimate
for a facility is to develop a reasonable measure of production which
can reasonably be expected to prevail during
[[Page 508]]
the next term of the permit or control mechanism. The production
estimate is used in combination with the production-based limitations
to establish a maximum mass of pollutant that may be discharged each
day and month. However, if the permit or control mechanism production
rate is based on the maximum month, then the permit could allow
excessive discharges of pollutants during significant portions of the
life of the permit/control mechanism. These excessive allowances may
discourage facilities from ensuring optimal waste management, water
conservation, and wastewater treatment practices during lower
production periods. On the other hand, if the average production rate
is based on an average derived from the highest year of production over
the past five years, then facilities may have trouble ensuring that
their waste management, water conservation, and wastewater treatment
practices can accommodate shorter periods of higher production. This
might require facilities to target a more stringent treatment level
than that on which the limits and standards were based during these
periods of high production. To accomplish this, facilities would likely
have to develop more efficient treatment systems, greater hydraulic
surge capacity, and better water conservation and waste management
practices, or they may have to contract haul a portion of their
wastewater to off-site disposal during these periods.
b. Alternatives for Establishing Permit Effluent Limitations and
Standards
EPA is soliciting comment on several alternative approaches that
may result in more stringent mass-based permits/control mechanisms for
some facilities with better protection of the environment for the
entire life of a permit/control mechanism and may result in higher
costs. Each alternative requires that production from unit operations
that do not generate or discharge process wastewater shall not be
included in the calculation of operating rates.
Alternative A: This is the basis for today's proposed limits. It
retains the essential requirements of the rule that EPA currently
regulates Steel Forming and Finishing facilities under (40 CFR 420.04).
However, today's proposal provides additional instructions for avoiding
approaches that result in unrealistically high estimates of actual
production by only considering production from all production units
that could occur simultaneously (see Sec. 438.58(b)). This may result
in higher costs for those facilities with current permit or control
mechanism conditions based on production levels that are higher than
levels that could occur simultaneously at multiple process units.
In determining the production rate for the Steel Forming and
Finishing subcategory, EPA is proposing to require permit writers and
control authorities to use the following protocols:
(1) For similar, multiple production lines with process waters
treated in the same wastewater treatment system, the reasonable measure
of production shall be determined from the combined production of the
similar production lines during the same time period.
(2) For process wastewater treatment systems where wastewater from
two or more different production lines are commingled in the same
wastewater treatment system, the reasonable measure of production shall
be determined separately for each production line (or combination of
similar production lines) during the same time period.
Alternative B: The Agency is considering including in the rule a
requirement for the permit writer/control authority to establish multi-
tiered limits and pretreatment standards. Permit writers and control
authorities currently use their best professional judgment for
establishing multi-tiered permits. The Agency has issued guidance for
use in considering multi-tiered permits (see chapter 5 of the ``U.S.
EPA NPDES Permit Writers'' Manual,'' (EPA-833-8-96-003, December 1996)
and chapter 7 of the ``Industrial User Permitting Guidance Manual,''
(EPA 833/R-89-001, September 29, 1989)).
In situations where a single set of effluent limitations or
standards are not appropriate for the permit's (or control mechanism's)
entire period, a tiered permit/control mechanism may be established.
One set of limits would apply for periods of average production along
with other sets which take effect when there are significant changes in
the average production rate. The guidance notes that a 10 to 15 percent
deviation above or below the long-term average production rate is
within the range of normal variability. Predictable changes in the
long-term production higher than this range would warrant consideration
of a tiered or multi-tiered permit/control mechanism. Based on EPA's
limited data, the facilities in the Steel Forming and Finishing
subcategory may have a variable production rate where the permit/
control mechanism modification process is not fast enough to respond to
the need for higher or lower equivalent limits.
Alternative C: To provide a basis for deriving a permit/control
mechanism production rate that is consistent with the term reasonable
measure of actual production and that can be applied consistently for
facilities in the Steel Forming and Finishing subcategory, EPA is also
considering including a definition of ``production'' specific to this
subcategory in the rule. The modified definition for use in developing
the permit/control mechanism production basis would be the average
daily operating rate for the year with the highest annual production
over the past five years, taking into account the annual hours of
operation of the production unit and the typical operating schedule of
the production unit, as illustrated by the following example:
Highest annual production from previous five years: 3,570,000 tons.
Operating hours: 8,400 hours.
Hourly operating rate: 425 tons/hour.
Average daily operating rate (24 hour day): 10,200 tons/day.
The above example is for a process unit that is operated typically
24 hours per day with short-term outages for maintenance on a weekly or
monthly basis. For facilities in the Steel Forming and Finishing
subcategory that are operated typically less than 24 hours per day, the
average daily operating rate must be determined based on the typical
operating schedule (e.g., 8 hours per day for a facility operated one
8-hour turn (or shift) per day; 16 hours per day for a facility
operated for two 8-hour turns per day). For example:
Highest annual production from previous five years: 980,000 tons.
Operating hours: 4,160 hours.
Hourly operating rate: 235.6 tons/hour.
Average daily operating rate (16 hour day): 3,769 tons/day.
In this example, EPA recognizes that the approach could cause
problems for a facility that was operated 16 hours/day at the time the
permit was issued and then wished to change to 24 hours/day based on
unforseen changes in market conditions. To address this issue, the
approach could be combined with the tiered permit approach discussed
above.
For multiple similar process units discharging to the same
wastewater treatment system with one compliance point (e.g., two
electroplating lines operated with one treatment system for process
waters), the year with the highest annual production over the previous
five years under Alternative C would be determined on the basis of the
[[Page 509]]
sum of annual production for both electroplating lines. Then, based on
this year's average daily operating rate, the daily production rates
would be calculated as above independently for each electroplating line
using total annual production and annual operating hours for each line.
The daily production values would be summed to calculate the average
daily operating rate for the combination of the two lines. For example,
consider the following production data:
----------------------------------------------------------------------------------------------------------------
Electroplating Electroplating
Year line A (tons) line B (tons) Total (tons)
----------------------------------------------------------------------------------------------------------------
1995............................................................ 1,859,000 1,305,000 3,155,000
1996............................................................ 1,675,000 1,425,000 3,100,000
1997............................................................ 1,760,000 1,406,000 3,166,000
1998............................................................ 1,580,000 1,328,000 2,908,000
1999............................................................ 1,825,000 1,380,000 3,205,000
----------------------------------------------------------------------------------------------------------------
Annual maximum production rates for each electroplating line and
the combination of the two lines are italicized. In this example, 1999
was the maximum production year for the combination of the
electroplating lines and the data from each line that year would be
used to calculate the average daily operating rates. Had the 1995 data
from Electroplating Line A and the 1996 data from Electroplating Line B
been used in combination (3,275,000 tons), an unrealistic measure of
actual production might have resulted if the two electroplating lines
could not produce at these high levels concurrently.
In contrast to the previous example, for multiple process units
that are not similar, but have process wastewater commingled prior to
treatment in one central wastewater treatment system with one
compliance point, the year with the highest production over the
previous five years would be determined separately for each production
unit (or combination of similar and different production units) with
the highest annual production. For example, consider a situation where
process wastewater for an electroplating line, a pressure deformation
operation, and an acid pickling operation are discharged through one
compliance point. Consider the following example:
----------------------------------------------------------------------------------------------------------------
Pressure
Year Electroplating deformation Acid pickling
(tons) (tons) (tons)
----------------------------------------------------------------------------------------------------------------
1995............................................................ 575,000 650,000 900,000
1996............................................................ 650,000 700,000 1,000,000
1997............................................................ 675,000 850,000 950,000
1998............................................................ 750,000 825,000 1,125,000
1999............................................................ 700,000 600,000 900,000
----------------------------------------------------------------------------------------------------------------
In this example, 1998 production data for the electroplating line,
1997 data from the pressure deformation operation, and 1998 data for
the acid pickling operation would be used to develop the effluent
limitations or pretreatment standards used in the permit/control
mechanism.
Alternative D: The Agency is considering establishing production-
based maximum monthly average effluent limitations and standards in
combination with daily-maximum concentration-based effluent limitations
and standards. Under this alternative, the maximum monthly average
NPDES permit and pretreatment control mechanism mass basis requirements
would be determined using the part 438 subpart E production-based
standards in combination with a reasonable measure of actual
production, such as Alternative C above. However, the daily-maximum
requirements would be in the form of effluent concentrations that would
be included in part 438 subpart E in lieu of the daily-maximum
production-based mass effluent limitations guidelines and standards.
These daily maximum concentrations set out as effluent limitations
guidelines and standards would be based on the long-term averages and
variability factors derived from EPA sampling conducted post-proposal
at steel forming and finishing facilities representative of BAT.
The Agency believes this approach would effectively address the
potential issue cited above regarding short-term peaks in production
under most circumstances. There would be no additional burden on the
industry and permitting or control authorities for applying for and
writing NPDES permits or pretreatment control mechanisms. Permitting
and control authorities may need to revise their automated compliance
tracking systems to account for both mass and concentration limitations
at the same outfall, which is a common feature in many NPDES permits
and pretreatment control mechanisms issued prior to this proposal.
EPA solicits comments on these alternatives to the proposed
production bases for calculating effluent limitations and pretreatment
standards used in NPDES permits or control mechanisms. In particular,
the Agency solicits comments on related costs and any technical
difficulties that steel forming and finishing facilities might have in
meeting limits during short periods of high production. EPA also
solicits other options for consideration.
C. Monitoring Flexibility
1. Monitoring Waiver
EPA's Small Business Advocacy Review (SBAR) Panel encouraged EPA to
``explore options for allowing certification in lieu of monitoring
where an operator can determine, based on knowledge of the facility and
its processes, that certain pollutants are not likely to be present or
are adequately controlled.'' (See Section XXII.C for a discussion on
the recommendations of the SBAR Panel). Other stakeholders expressed
similar requests during public meetings with the Agency. Therefore, in
an effort to reduce monitoring burden on facilities, EPA is proposing
to allow MP&M indirect discharge facilities to
[[Page 510]]
apply for a waiver that would allow them to reduce their monitoring
burden (EPA discusses existing monitoring waivers available for direct
dischargers later in this section). In order for a facility to receive
a monitoring waiver, the facility would need to certify in writing to
the control authority (e.g., POTW) that the facility does not use, nor
generate in any way, a pollutant (or pollutants) at its site and that
the pollutant (or pollutants) is present only at background levels from
intake water and without any increase in the pollutant due to
activities of the discharger. The facility would need to base this
certification on sampling data or other technical factors. The
certification would not be a waiver from the pollutant numerical limit
in the control mechanism (i.e., permit). It would only be a waiver from
the monitoring requirements. In addition, EPA would still require the
industrial user to monitor for the specified pollutants as part of the
Baseline Monitoring Report (Sec. 403.12(b)) and the 90-day Compliance
Report (Sec. 403.12(d)). EPA believes control authorities can use the
sampling data generated from the Baseline Monitoring Report and the 90-
day Compliance Report in conjunction with technical information on the
raw materials and chemical processes used at the facility to determine
whether there is sufficient reason to allow the monitoring waiver for
any of the MP&M limited pollutants. Although EPA expects this
monitoring waiver to reduce burden overall, the Agency estimates the
burden associated with preparing the certification statement and
related documentation as required by the Paper Reduction Act (see
Section XXII.A for burden estimates).
EPA is proposing that the certification statement be submitted at
the same time indirect discharging MP&M facilities submit ``periodic
reports on continued compliance'' as directed by the General
Pretreatment Standards (40 CFR 403.12(e)). Indirect dischargers submit
such reports twice per year (typically June and December). In addition,
the certification would need to be signed by the same individual that
is authorized to sign the periodic reports as described in the General
Pretreatment Standards 403.12(l). This monitoring waiver would be
similar to the waiver in the Proposed ``Streamlining the General
Pretreatment Regulations for Existing and New Sources of Pollution,''
64 FR 39564; July 22, 1999 (commonly referred to as ``Pretreatment
Streamlining''). If EPA promulgates the final Pretreatment Streamlining
regulations prior to the final MP&M effluent guidelines and those
regulations contain a similar provision then a waiver specific to MP&M
facilities would be unnecessary.
EPA recently promulgated a regulation to streamline the NPDES
regulations (``Amendments to Streamline the National Pollutant
Discharge Elimination System Program Regulations: Round Two'' (65 FR
30886; May 15, 2000)). These revisions include a similar monitoring
waiver for direct dischargers subject to effluent guidelines. Direct
discharge facilities may forego sampling of a guideline-limited
pollutant if that discharger ``has demonstrated through sampling and
other technical factors that the pollutant is not present in the
discharge or is present only at background levels from intake water and
without any increase in the pollutant due to activities of the
discharger.'' (65 FR 30908. 40 CFR 122.44). EPA noted, in the preamble
to the final NPDES Streamlining rule, that it is providing a waiver
from monitoring requirements, but not a waiver from the limit. In
addition, the revision does not waive monitoring for any pollutants for
which there are limits based on water quality standards. The waiver for
direct dischargers lasts for the term of the NPDES permit and is not
available during the term of the first permit issued to a discharger.
Any request for this waiver under these revisions to the NPDES
regulations must be submitted when applying for a reissued permit or
modification of a reissued permit. Therefore, EPA is not proposing a
monitoring waiver in the MP&M regulations for direct dischargers. When
authorized by their permit writer, direct discharge facilities covered
by any effluent guidelines (including MP&M) will be able to use the
monitoring waiver contained in the NPDES streamlining final rule.
2. Monitoring Flexibility for Organic Pollutants
In an effort to reduce burden on MP&M facilities, EPA proposes
three alternatives to allow for maximum flexibility while ensuring
reductions in the amount of organic pollutants discharged from MP&M
facilities. EPA is proposing to require MP&M facilities within the
scope of this rule to either: (1) Meet a numerical limit for the total
sum of a list of specific organic pollutants (similar to the Total
Toxic Organics or TTO parameter used in the Metal Finishing Effluent
Guidelines); (2) meet a numerical limit for TOC as an indicator
parameter; or (3) develop and certify the implementation of an organic
pollutant management plan.
As discussed in section II.D, EPA proposed using an organic
pollutant indicator parameter in the 1995 Phase I MP&M proposal. At
that time, however, the Agency did not provide the alternative of
monitoring for individual organic pollutants. In an effort to provide
such an alternative, EPA reviewed the sampling data to identify
individual organic pollutants for which the Agency could develop
individual limits. Due to the variety of organic pollutants used across
MP&M facilities, EPA determined that it would be burdensome to
facilities and permit writers to have to determine which limits to
apply to a facility. Instead, EPA is proposing an approach similar to
the one used in the Metal Finishing Effluent Guidelines (40 CFR part
433). EPA developed a list of organic pollutants, called the Total
Organics Parameter (TOP), using the list of organic priority pollutants
and other nonconventional organic pollutants that met EPA's ``pollutant
of concern'' criteria for this rule (see Section VII for a discussion
on the selection of the MP&M pollutants of concern). Of the non-
conventional organic chemicals on the MP&M pollutant of concern list,
EPA included only those that were removed in appreciable quantities by
the selected technology option (based on toxic weighted pound-
equivalents) in two or more subcategories. See appendix B to part 438
of the proposed rule accompanying this notice for a list of organic
pollutants that comprise the proposed Total Organics Parameter (TOP).
EPA has derived the numerical limit for TOP based on the contribution
of each of the organic pollutants on the list in Appendix B using the
data collected during sampling and determined its limitation using the
same statistical methodology used for other limits developed for this
proposal (see Section VIII.B). In any case where the data for these
pollutants indicated a level below the minimum level (i.e., below
quantitation), EPA used the minimum level for the specific pollutant in
the summation of the total organics parameter limit. Facilities will
only have to monitor for those TOP chemicals that are reasonably
present (see XXI.C.1 for a discussion on monitoring waivers). Note that
the TOP limit shall not be adjusted for those pollutants that are not
reasonably present. EPA solicits comment on this methodology. For
compliance purposes, pollutants that have been given a waiver (because
they are not reasonably present) will be counted as zero in the TOP
limit. For remaining pollutants, the reported value, when above the
detection limit, shall be used in the TOP calculation. When a pollutant
is
[[Page 511]]
reported as a ``non-detect'' (i.e., not found above the nominal
quatitation value listed in appendix B of the proposed rule), the
nominal quantitation value shall be used in the TOP calculation.
EPA considered using the same list of organic chemicals as in the
Metal Finishing effluent guidelines Total Toxic Organics (TTO) list (40
CFR 433.11(e)), but rejected this approach. EPA did not include all
parameters from the Metal Finishing TTO list because: (1) EPA did not
find many of the TTO parameters in the wastewater sampled for the MP&M
rule; (2) many of the listed organics are pesticides that are no longer
manufactured (e.g., DDT) and would not be used in MP&M operations; and
(3) most facilities subject to the Metal Finishing TTO limits switched
to the use of solvents (or aqueous cleaners) that do not contain the
organic chemicals on the Metal Finishing TTO list.
As discussed above, EPA is also proposing to allow the use of an
indicator parameter to measure the presence of organic pollutants in
MP&M process wastewater. Facilities can monitor for the organic
pollutants specified in the total organics parameter list (as discussed
above) to demonstrate compliance with the TOP limit or they can monitor
for Total Organic Carbon (TOC) and meet the TOC limit. EPA chose TOC as
an indicator parameter because of its ability to measure all types of
organic pollutants. EPA solicits comment on the use of TOC as an
indicator pollutant for the organic pollutants typically found in
wastewater discharges from MP&M facilities. EPA also requests comment
on whether the Agency should allow facilities to choose an indicator
pollutant from a given set of choices (e.g., COD, Oil & Grease (as
HEM), TOC, Total Petroleum Hydrocarbons (as SGT-HEM)). EPA found TOC to
be the best general indicator parameter for measuring the sum of
organic compounds in a wastestream. EPA notes, however, that to
determine the best indicator parameter for a particular wastestream, a
facility would need to consider the specific organic components found
in its wastestreams.
Finally, EPA is proposing a third alternative to reduce monitoring
burden--the use of an organic pollutant management plan. The organic
pollutant management plan would need to specify, to the satisfaction of
the permitting authority or control authority, the toxic and non-
conventional organic constituents used at the facility; the disposal
method used; the procedures in place for ensuring that organic
pollutants do not routinely spill or leak into the wastewater or that
minimize the amount of organic pollutants used in the process; the
procedures in place to manage the oxidation reduction potential (ORP)
during cyanide destruction to control the formation of chlorinated
organic byproducts; and the procedures to prevent the over dosage of
dithiocarbamates when treating chelated wastewater. Facilities choosing
to develop an organic pollutant management plan would need to certify
that the procedures described in the plan are being implemented at the
facility. Based on the current data base, EPA is concerned that
wastewater generated by facilities in the Oily Wastes subcategory may
require end-of-pipe treatment to reduce the concentrations of organic
pollutants and that an organic management plan alone may not adequately
control organic-bearing wastewater at facilities containing significant
quantities of oil-bearing wastewater. Although EPA is proposing the use
of the organics management plan be offered to Oily Wastes facilities,
EPA solicits comment on whether sites with significant amounts of oil-
bearing wastewater (for example, a facility in the Oily Waste
subcategory) should be eligible for the use of an organic pollutant
management plan in lieu of monitoring for TOP (Total Organics
Parameter) or TOC (as an indicator).
3. Monitoring for Cyanide
For the General Metals, Metal Finishing Job Shop, Printed Wiring
Board, and Steel Forming and Finishing subcategories, EPA is proposing
to set a total cyanide limit. The point of compliance would be based on
monitoring for total cyanide directly after cyanide treatment, before
combining the cyanide treated effluent with other wastestreams. EPA is
also proposing an alternative where a facility may take samples of
final effluent, in order to meet the total cyanide limit, if the
control authority adjusts the permit limits based on the dilution ratio
of the cyanide wastestream flow to the effluent flow.
In addition, EPA has selected alkaline chlorination using sodium
hypochlorite as the best available economically achievable technology
for treating cyanide bearing wastewater from MP&M facilities. Not all
cyanide however is amenable to alkaline chlorination due to
``unavoidable'' complexing with other compounds at the process source
of the cyanide-bearing wastestreams. EPA believes that for some
facilities it may be more accurate to monitor for the portion of
cyanide in their wastewater that is amenable to alkaline chlorination
than to measure total cyanide which may include cyanide complexes that
this technology is not likely to treat. Therefore, EPA is also
proposing an alternative ``amenable cyanide'' limit for each of these
subcategories which a facility may use directly after cyanide treatment
(e.g., before combining the cyanide treated effluent with other
wastestreams). The Agency proposes to allow the use of this limit upon
the agreement of the facility and its permit writer or control
authority (e.g., POTW). However, when segregated cyanide treatment is
in place as a preliminary step prior to commingling wastewater for
chemical precipitation, EPA would allow the amenable cyanide
alternative limit to be measured at the end-of-pipe (i.e., final
effluent) if the control authority adjusts the permit limits based on
the dilution ratio of the cyanide wastestream flow to the effluent
flow. If facilities are not using cyanide destruction treatment on
cyanide-bearing wastestreams prior to commingling with metal-bearing
streams, additional complexing can occur. This additional complexing
would render the cyanide ``non-amenable'' when it would otherwise be
amenable to alkaline chlorination. EPA considers such complexing to be
``avoidable'' and would not allow the use of end-of-pipe monitoring for
amenable cyanide when in-process cyanide destruction is not performed.
(See the final Organic Chemicals, Plastics and Synthetic Fibers
Category Effluent Limitations Guidelines for a discussion on non-
amenable versus amenable cyanide; 57 FR 41836; September 11, 1992).
D. Pollution Prevention Alternative for the Metal Finishing Job Shops
Subcategory
EPA is soliciting comment on a compliance alternative that the
Agency is considering for the Metal Finishing Job Shops subcategory of
this proposed regulation (See Section VI.C.3. of this preamble for a
description of this subcategory). The purpose of a pollution prevention
compliance alternative (``P2 Alternative'') is to reduce economic
impacts on the facilities in the Metal Finishing Job Shops subcategory
and to take into consideration the activities and achievements of this
Common Sense Initiative (``CSI'') sector to test innovative approaches
to environmental protection, which has culminated in the National Metal
Finishing Strategic Goals Program.
The National Metal Finishing Strategic Goals Program (``SGP'') was
[[Page 512]]
developed out of EPA's sector based Common Sense Initiative. In 1994,
EPA launched the CSI to promote ``cleaner, cheaper, and smarter''
environmental performance, using a non-adversarial, stakeholder
consensus process to test innovative ideas and approaches. The SGP is a
cooperative effort that involves all stakeholders (e.g., industry,
regulators, environmental/citizen groups) to define a fundamentally
different approach to environmental and public health protection by
exploring a more flexible, cost-effective and environmentally
protective solutions tailored to specific industry needs. The Metal
Finishing SGP is a performance-based, voluntary program which includes
commitments by the industry to meet multimedia environmental targets
substantially reducing pollution from their operations beyond what is
required by law. These goals will conserve water, energy and metals,
and reduce hazardous emissions. The other stakeholders in this process
(EPA, State and local regulators, and environmental/community groups)
have also committed to working with the industry participants to help
them meet their goals through compliance, technical, and financial
assistance, removing regulatory and policy barriers, offering
incentives, and an open dialogue as issues arise. (See http://
www.strategicgoals.org for more information about the SGP and the
Common Sense Initiative).
The SGP represents a long-term strategic vision for improved
environmental protection by the entire metal finishing industry. The
metal finishing industry's tangible commitment to work with the Agency
lays the foundation for this pollution prevention (P2) compliance
alternative.
The Agency is considering allowing indirect discharge facilities in
the Metal Finishing Job Shops subcategory, with approval by their
control authority (e.g., POTW), to demonstrate compliance with
specified pollution prevention and water conservation practices (in
addition to maintaining compliance with the existing Metal Finishing
and Electroplating Effluent Guidelines or approved local water quality-
based limits, whichever is more stringent) in lieu of meeting the
requirements of the MP&M regulation. Facilities in the Metal Finishing
Job Shops subcategory that do not wish to use the compliance
alternative would need to meet the full requirements of the MP&M
regulation as specified in today's proposed rule.
EPA solicits comment on whether to allow all facilities in the
Metal Finishing Job Shops subcategory to comply with the P2 Alternative
or whether the P2 Alternative should only be available to facilities
below a specified wastewater discharge volume. EPA has proposed low
flow exclusions for indirect dischargers in the General Metals (1 MGY)
and Oily Wastes (2 MGY) subcategories due to potential permitting
burden on POTWs (see Sections II.D, VI.C and XII for a discussion on
low flow exclusions).
One way that EPA is considering to specify pollution prevention and
water conservation practices, without stifling innovation and advances,
is to require facilities to choose practices from a larger list (or
menu) of categories of specified practices (see below). EPA is
considering requiring practices in all ten categories. The following is
an example of the format and potential pollution prevention practices
that EPA is considering for incorporation into the final MP&M rule:
Category 1. Must Use Practices That Reduce and/or Recover Drag-Out
To satisfy this requirement, facilities must implement three or
more drag-out reduction practices or use at least one drag-out recovery
(i.e., chemical recovery) technology listed below on all electroplating
or surface finishing lines.
Drag-out Reduction Practices
Lower process solution viscosity and/or surface tension by
lowering chemical concentration, increasing bath temperature, or use
wetting agents.
Reduce drag-out volume by modifying rack/barrel design and
perform rack maintenance to avoid solution trapping under insulation.
Position parts on racks in a manner that avoids trapping
solution.
Reduce speed of rack/barrel withdraw from process solution
and/or increase dwell time over process tank.
Rotate barrels over process tank to improve drainage.
Use spray/fog rinsing over the process tank (limited
applicability).
Use drip boards and return process solution to the process
tank.
Use drag-out tanks, where applicable, and return solution
to the process tank.
Work with customers to ensure that part design maximizes
drainage
Drag-out Recovery
Use a chemical recovery technology to recover drag-out from
wastewater.
Evaporators
Ion exchange
Electrowinning
Electrodialysis
Reverse osmosis
Category 2. Must Use Good Rinse System Design for Water Conservation
To satisfy this requirement, facilities must implement three or
more elements of good rinse system design listed below on all
electroplating or surface finishing lines:
Select the minimum size rinse tank in which the parts can
be rinsed and use the same size for the entire plating line, where
practical.
Locate the water inlet and discharge points of the tank at
opposite positions in the tank to avoid short-circuiting or use a flow
distributor to feed the rinse water evenly.
Use air agitation, mechanical mixing or other means of
turbulence.
Use spray/fog rinsing (less effective with hidden
surfaces).
Use multiple rinse tanks in a counter-flow configuration
(i.e., counter-current cascade rinsing).
Reuse rinse water multiple times in different rinse tanks
for succeeding less critical rinsing
Category 3. Must Use Water Flow Control for Water Conservation
To satisfy this requirement, facilities must implement at least one
effective method of water use control on all electroplating or surface
finishing lines. Effective water use controls include, but are not
limited to:
Flow restrictors (Flow restrictors as a stand alone method
of rinse water control are only effective with plating lines that have
constant production rates, such as automatic plating machines. For
other operations, there must also be a mechanism or procedure for
stopping water flow during idle periods.)
Conductivity controls
Timer rinse controls
Production activated control (e.g., spray systems
activated when a rack or barrel enters/exits a rinse station)
Category 4. Must Segregate Non-Process Water From Process Water
To satisfy this requirement, facilities must not combine non-
process water such as non-contact cooling water with process wastewater
prior to wastewater treatment.
Category 5. Must Use Water Conservation Practices With Air Pollution
Control Devices
To satisfy this requirement, facilities operating air pollution
control devices with wet scrubbers must recirculate the scrubber water
as appropriate (periodic blowdown is allowed, as needed). Where
feasible, reuse scrubber water in process baths.
[[Page 513]]
Category 6. Must Practice Good Housekeeping
To satisfy this requirement, facilities must demonstrate compliance
with each of the requirements listed below:
Perform preventative maintenance on all valves and
fittings (i.e., check for leaks and damage) and repair leaky valves and
fittings in a timely manner.
Inspect tanks and liners and repair or replace equipment
as necessary to prevent ruptures and leaks. Use tank and liner
materials that are appropriate for associated process solutions.
Perform quick cleanup of leaks and spills in chemical
storage and process areas.
Remove metal buildup from racks and fixtures.
Category 7. Minimize the Entry of Oil Into Rinse Systems
To satisfy this requirement, facilities must do at least one of the
practices listed below:
Minimize the entry of oil into cleaning baths or use oil
skimmers or other oil removal devices in cleaning baths when needed to
prevent oil from entering rinse tanks.
Work with customers to degrease parts prior to shipment to
the plating facility to minimize the amount of oils on incoming
materials.
Category 8. Must Sweep or Vacuum Dry Production Areas Prior to Rinsing
With Water
To satisfy this requirement, facilities must sweep or vacuum dry
production area floors prior to rinsing with water.
Category 9. Must Reuse Drum/Shipping Container Rinsate Directly in
Process Tanks
To satisfy this requirement, when performing rinsing of raw
material drums, storage drums, and/or shipping containers that contain
pollutants regulated under the MP&M regulation, facilities must reuse
the rinsate directly into process tanks or save for use in future
production.
Category 10. Must Implement Environmental Management and Record Keeping
System
To satisfy this requirement, facilities must meet the requirements
listed below:
Implement an environmental management program that
includes, but is not limited to, the following elements:
Pollution prevention policy statement,
Environmental performance goals,
Pollution prevention assessment,
Pollution prevention plan,
Environmental tracking and record keeping system,
Procedures to optimize control parameter settings (e.g.,
ORP set point in cyanide destruction systems, optimum pH for chemical
precipitation systems, etc.), and
Statement delineating minimum training levels for
wastewater treatment operators.
(EPA notes that it has developed a template for a metal finishing
facility-specific Environmental Management System that is being used in
conjunction with the SGP in EPA's Region 9 in California--see http://
www.strategicgoals.org/tools/home.htm for information on this
template).
The first two categories listed above involve practices and
techniques for reducing drag-out. Drag-out is the film of chemical
solution covering parts and fixtures as they exit process solutions.
For many metal finishing operations, drag-out and the subsequent
contamination of rinse waters is the major pollution control challenge.
Reducing the formation of drag-out, minimizing the introduction of
drag-out to rinse systems, and recovering drag-out are important
pollution prevention measures. EPA believes that drag-out reduction and
recovery may prevent a substantial pollutant loading of metals from
being discharged to the POTW. However, EPA did not have sufficient
information on the pollutant reductions, capital costs, and operating
and maintenance costs associated with installation and operation of
drag-out reduction and recovery technologies to include such equipment
explicitly into the model that EPA uses to develop national estimates
of compliance costs and pollutant reductions. Some aspects of drag-out
reduction are captured in the flow rinse reduction modules of the cost
and loadings model (see the Technical Development Document for a
detailed discussion of the cost and loadings model). Good rinse design
can reduce contamination of rinse water as well as reduce the volume of
fresh water needed to perform the necessary rinsing. It also reduces
the volume of wastewater requiring treatment, which in turn reduces
costs and the volume of wastewater treatment sludge requiring disposal.
EPA specifically solicits data on the pollutant reductions, capital
costs, and operating and maintenance costs associated with installation
and operation of drag-out reduction and recovery technologies.
EPA is considering allowing facilities complying with the P2
Alternative to substitute another pollution prevention practice for one
listed above provided that the facility provides adequate justification
for the modification in a written request submitted to the control
authority. Facility owners must certify compliance with the pollution
prevention requirements twice per year and maintain records at the
facility indicating how each category requirement has been satisfied.
Facilities choosing the P2 Alternative would also need to agree to make
the practices enforceable. Reporting would occur in conjunction with
their twice annual periodic reports on continued compliance under the
General Pretreatment Regulations (40 CFR 403.12(e)).
EPA solicits comment on all aspects of the Pollution Prevention
Alternative for the Metal Finishing Job Shops subcategory including the
list of practices as well as the possible format for the alternative.
More specifically, EPA requests comment on whether there are additional
practices that should be listed, the costs of implementing this
compliance alternative, the pollutant reduction associated with this
alternative, and whether EPA should offer this alternative to other
subcategories (even those not currently regulated by the Metal
Finishing and Electroplating effluent guidelines). EPA also requests
comments from local regulators on the implementation burden, the
required documentation, and on the ability to enforce a P2 Alternative.
E. Upset and Bypass Provisions
A ``bypass'' is an intentional diversion of the streams from any
portion of a treatment facility. An ``upset'' is an exceptional
incident in which there is unintentional and temporary noncompliance
with technology-based permit effluent limitations because of factors
beyond the reasonable control of the permittee. EPA's regulations
concerning bypasses and upsets for direct dischargers are set forth at
40 CFR 122.41(m) and (n) and for indirect dischargers at 40 CFR 403.16
and Sec. 403.17.
F. Variances and Modifications
The CWA requires application of effluent limitations established
pursuant to section 301 or pretreatment standards of section 307 to all
direct and indirect dischargers. However, the statute provides for the
modification of these national requirements in a limited number of
circumstances. Moreover, the Agency has established administrative
mechanisms to provide an opportunity for relief from the application of
the national effluent limitations guidelines and pretreatment standards
for categories of existing sources for toxic, conventional, and
nonconventional pollutants.
[[Page 514]]
1. Fundamentally Different Factors Variances
EPA will develop effluent limitations or standards different from
the otherwise applicable requirements if an individual discharging
facility is fundamentally different with respect to factors considered
in establishing the limitation of standards applicable to the
individual facility. Such a modification is known as a ``fundamentally
different factors'' (FDF) variance.
Early on, EPA, by regulation provided for the FDF modifications
from the BPT effluent limitations, BAT limitations for toxic and
nonconventional pollutants and BPT limitations for conventional
pollutants for direct dischargers. For indirect dischargers, EPA
provided for modifications from pretreatment standards. FDF variances
for toxic pollutants were challenged judicially and ultimately
sustained by the Supreme Court. (Chemical Manufacturers Assn v. NRDC,
479 U.S. 116 (1985)).
Subsequently, in the Water Quality Act of 1987, Congress added new
section 301(n) of the Act explicitly to authorize modifications of the
otherwise applicable BAT effluent limitations or categorical
pretreatment standards for existing sources if a facility is
fundamentally different with respect to the factors specified in
section 304 (other than costs) from those considered by EPA in
establishing the effluent limitations or pretreatment standard. Section
301(n) also defined the conditions under which EPA may establish
alternative requirements. Under Section 301(n), an application for
approval of FDF variance must be based solely on (1) information
submitted during rulemaking raising the factors that are fundamentally
different or (2) information the applicant did not have an opportunity
to submit. The alternate limitation or standard must be no less
stringent than justified by the difference and must not result in
markedly more adverse non-water quality environmental impacts than the
national limitation or standard.
EPA regulations at 40 CFR part 125 subpart D, authorizing the
Regional Administrators to establish alternative limitations and
standards, further detail the substantive criteria used to evaluate FDF
variance requests for direct dischargers. Thus, 40 CFR 125.31(d)
identifies six factors (e.g., volume of process wastewater, age and
size of a discharger's facility) that may be considered in determining
if a facility is fundamentally different. The Agency must determine
whether, on the basis of one or more of these factors, the facility in
question is fundamentally different from the facilities and factors
considered by EPA in developing the nationally applicable effluent
guidelines. The regulation also lists four other factors (e.g.,
infeasibility of installation within the time allowed or a discharger's
ability to pay) that may not provide a basis for an FDF variance. In
addition, under 40 CFR 125.31(b)(3), a request for limitations less
stringent than the national limitation may be approved only if
compliance with the national limitations would result in either (a) a
removal cost wholly out of proportion to the removal cost considered
during development of the national limitations, or (b) a non-water
quality environmental impact (including energy requirements)
fundamentally more adverse than the impact considered during
development of the national limits. EPA regulations provide for an FDF
variance for indirect dischargers at 40 CFR 403.13. The conditions for
approval of a request to modify applicable pretreatment standards and
factors considered are the same as those for direct dischargers.
The legislative history of section 301(n) underscores the necessity
for the FDF variance applicant to establish eligibility for the
variance. EPA's regulations at 40 CFR 125.32(b)(1) are explicit in
imposing this burden upon the applicant. The applicant must show that
the factors relating to the discharge controlled by the applicant's
permit which are claimed to be fundamentally different are, in fact,
fundamentally different from those factors considered by the EPA in
establishing the applicable guidelines. The pretreatment regulations
incorporate a similar requirement at 40 CFR 403.13(h)(9).
An FDF variance is not available to a new source subject to NSPS or
PSNS.
2. Economic Variances
Section 301(c) of the CWA authorizes a variance from the otherwise
applicable BAT effluent guidelines for nonconventional pollutants due
to economic factors. The request for a variance from effluent
limitations developed from BAT guidelines must normally be filed by the
discharger during the public notice period for the draft permit. Other
filing time periods may apply, as specified in 40 CFR 122.21(1)(2).
Specific guidance for this type of variance is available from EPA's
Office of Wastewater Management.
3. Water Quality Variances
Section 301(g) of the CWA authorizes a variance from BAT effluent
guidelines for certain nonconventional pollutants due to localized
environment factors. These pollutants include ammonia, chlorine, color,
iron, and total phenols.
4. Permit Modifications
Even after EPA (or an authorized State) has issued a final permit
to a direct discharger, the permit may still be modified under certain
conditions. (When a permit modification is under consideration,
however, all other permit conditions remain in effect.) A permit
modification may be triggered in several circumstances. These could
include a regulatory inspection or information submitted by the
permittee that reveals the need for modification. Any interested person
may request that a permit modification be made. There are two
classifications of modifications; major and minor. From a procedural
standpoint, they differ primarily with respect to the public notice
requirements. Major modifications require public notice while minor
modifications do not. Virtually any modification that results in less
stringent conditions is treated as a major modifications, with
provisions for public notice and comment. Conditions that would
necessitate a major modification of a permit are described in 40 CFR
122.62. Minor modifications are generally non-substantive changes. The
conditions for minor modification are described in 40 CFR 122.63.
G. Relationship of Effluent Limitations and Pretreatment Standards to
NPDES Permits and Local Limits
Effluent limitations and pretreatment standards act as a primary
mechanism to control the discharges of pollutants to waters of the
United States. These limitations and standards are applied to
individual facilities through NPDES permits and local limits developed
for POTWs issued by EPA or authorized States under section 402 of the
Act and local pretreatment programs under section 307 of the Act.
The Agency has developed the limitations and standards for this
proposed rule to cover the discharge of pollutants for this industrial
category. In specific cases, the NPDES permitting authority or control
authority (e.g., local POTW) may elect to establish technology-based
permit limits or local limits for pollutants not covered by this
regulation. In addition, if State water quality standards or other
provisions of State or Federal law require limits on pollutants not
covered by this regulation (or require more stringent limits or
standards on covered pollutants to achieve compliance), the permitting
or control authority must apply those limitations or standards.
[[Page 515]]
H. Best Management Practices
Sections 304(e) and 402(a) of the Act authorize the Administrator
to prescribe ``best management practices'' (BMPs). (See 40 CFR
122.44(k)). EPA may develop BMPs that apply to all industrial sites or
to a designated industrial category and may offer guidance to permit
authorities in establishing management practices required by unique
circumstances at a given plant. Dikes, curbs, and other control
measures are being used at some MP&M sites to contain leaks and spills
as part of good ``housekeeping'' practices. However, on a facility-by-
facility basis a permit writer may choose to incorporate BMPs into the
permit. See section 8 of the Technical Development Document for this
proposed rule for a detailed discussion of pollution prevention and
best management practices used in the MP&M industry.
XXII. Related Acts of Congress, Executive Orders, and Agency
Initiatives
A. Paperwork Reduction Act
The information collection requirements in this proposed rule have
been submitted for approval to the Office of Management and Budget
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An
Information Collection Request (ICR) document has been prepared by EPA
(ICR No. 1980.01) and a copy may be obtained from Sandy Farmer by mail
at Collection Strategies Division; U.S. Environmental Protection Agency
(2822); 1200 Pennsylvania Ave., NW., Washington, DC 20460, by email at
farmer.sandy@epa.gov, or by calling (202) 260-2740. A copy may also be
downloaded off the internet at http://www.epa.gov/icr.
There are five areas for which EPA is proposing, or considering to
collect information from, or requiring reporting or record keeping by
MP&M facilities. In all cases, EPA believes the collection of
information, reporting, or record keeping is an alternative (i.e.,
voluntary) that will allow a reduction in overall burden to facilities
since EPA intends for these activities to reduce or eliminate effluent
sampling and analysis costs. EPA solicits comment on all estimates
discussed below.
First, EPA is proposing to allow indirect discharging MP&M
facilities (upon agreement with the control authority) to reduce their
analytical monitoring burden for specified pollutants by filing a
statement that certifies that those pollutants are not present in the
discharge or are present only at background levels from intake water
and without any increase in the pollutants due to activities of the
discharger (See Sec. 438.4(e) and Section XXI.C.1 for a discussion of
the monitoring waiver). EPA estimates the burden for reviewing
analytical sampling data and other technical information required to
make the certification (e.g., raw material inventory logs, production
information, product chemistry, and reports on source water) and for
preparing the certification statement one time per permit cycle (i.e.,
every 5 years) to be 24 hours. In developing the technical basis for
the waiver, EPA is allowing the use of historical sampling data as well
as sampling data generated for compliance reports required by the
General Pretreatment Standards (40 CFR 403.12). Therefore, EPA does not
anticipate additional monitoring burden associated with this waiver,
particularly in comparison to the periodic compliance monitoring that
is being replaced by this waiver. In addition, certification to receive
a monitoring waiver under this proposed rule is voluntary. MP&M
facilities may choose not to avail themselves of this optional
reduction in monitoring. EPA estimates that 5,250 facilities will
choose the monitoring waiver for some pollutants.
Second, EPA is proposing to allow facilities to implement an
organic pollutant management plan as one alternative to meeting organic
pollutant limits (or organic indicator limits). (See 438.4(b)). The
organic pollutant management plan must specify, to the satisfaction of
the permitting authority or control authority, the toxic and non-
conventional organic constituents used at the facility; the disposal
method used; the procedures in place for ensuring that organic
pollutants do not routinely spill or leak into the wastewater or that
minimize the amount of organic constituents used in the process; the
procedures in place to manage the oxidation reduction potential (ORP)
during cyanide destruction to control the formation of chlorinated
organic byproducts; and the procedures to prevent the over dosage of
dithiocarbamates when treating chelated wastewater. Facilities choosing
to develop an organic pollutant management plan must certify that the
procedures described in the plan are being implemented at the facility.
EPA estimates the burden associated with preparing an organic pollutant
management plan and an accompanying certification statement to be 50
hours. After the initial plan is approved, EPA estimates one additional
hour of burden (once per year for direct dischargers and twice per year
for indirect dischargers) for facilities to verify that the plan is
being implemented and to prepare the certification statement. However,
EPA believes that facilities that are already regulated by the Metal
Finishing Effluent Guidelines (40 CFR part 433) and that have a solvent
management plan in place under those regulations will only require 20
hours to update their plan for the initial submittal. EPA estimates
7,200 facilties will choose to implement an organics management plan in
lieu of monitoring.
Third, EPA is considering an alternate approach to the use of an
organic indicator parameter (see Section XXI.C.2 for a discussion on
the proposed organic indicator). EPA notes that this alternate approach
is not being proposed in today's notice, but is being considered for
the final rule. In this case, there would be some additional reporting
and record keeping. MP&M facilities could choose an indicator pollutant
parameter from a given set of choices. EPA would require facilities to
demonstrate a correlation between the chosen indicator parameter and
the regulated organic pollutants (i.e., the TOP organic pollutants)
found in their wastewater. EPA is soliciting comment on this approach
and has estimated the burden of performing testing, analyzing
analytical results, and keeping records that demonstrate a correlation
between the regulated organic pollutants and the selected indicator
parameter to be between 70 and 100 hours per facility once per permit
cycle (i.e., 5 years). If no major changes in processes or raw
materials occur during that period, the demonstration would not have to
be repeated for the next permit cycle. The Agency notes that the choice
of an option would be voluntary. EPA has estimated less burden for
direct dischargers than for indirect dischargers (i.e, 70 hours versus
100 hours) because the direct dischargers typically have more advanced
treatment in place and permit writers typically require them to monitor
for the types of parameters that EPA is considering as indicators
(e.g., COD, Oil & Grease, TOC, TPH), and therefore, may have data
available that demonstrates a correlation to the regulated organic
pollutants. EPA estimates that given the choice, approximately 515
facilities would choose to demonstrate and use a site-specific organic
pollutant indicator.
Fourth, EPA is considering whether to allow certain facilities in
the Metal Finishing Job Shops subcategory to demonstrate compliance
with specified pollution prevention and water conservation practices
(in addition to
[[Page 516]]
maintaining compliance with the existing Metal Finishing and
Electroplating Effluent Guidelines) in lieu of meeting the requirements
of the MP&M regulation. EPA notes that this alternate approach is not
being proposed in today's notice, but is being considered for the final
rule. Facilities in the Metal Finishing Job Shops subcategory that do
not wish to use the compliance alternative would need to meet the full
requirements of the MP&M regulation as specified in today's proposed
rule (see section XXI.D for a discussion of the Pollution Prevention
Alternative). EPA has estimated the burden associated with preparing
the associated certification statements to be 30 minutes each.
Facilities would submit certification statements one time initially (by
the compliance deadline) and twice per year thereafter for indirect
dischargers, or once per year for direct dischargers. In addition, EPA
estimates the burden associated with record keeping and reporting for
the other related compliance paperwork to be 40 hours one time for the
period of the permit or control mechanism (i.e., five years). EPA is
also soliciting comment on whether facilities in other subcategories
should have a similar alternative. EPA estimates that if the Pollution
Prevention Alternative were available to facilities in the Metal
Finishing Job Shops Subcategory, 1,360 facilities would choose this
alternative. In addition, EPA estimates that there would be 550
additional respondents if a limited number of other subcategories were
able to choose this compliance alternative.
Finally, EPA is proposing to set numerical limitations on the
discharge of Total Sulfide from facilities in several subcategories. In
an effort to reduce monitoring burden on indirect dischargers, EPA is
considering (but not proposing) to allow a waiver for the monitoring of
total sulfide (even when present), at the discretion of the POTW, when
a facility demonstrates that the sulfides will not generate acidic or
corrosive conditions and will not create conditions that enhance
opportunities for release of hydrogen sulfide gas in the sewer/
interceptor collection system or at the receiving POTW or otherwise
interfere with the operation of the POTW EPA estimates the burden
associated to make such a demonstration is 100 hours. EPA would require
this only one time per permit cycle and if no major changes in
processes or raw materials occur during that period, the demonstration
would not have to be repeated for the next permit cycle. EPA estimates
that 4,420 facilities would be respondents under the total sulfide
waiver if it were available.
The total burden for the two areas which are being proposed today
is 437,070 hours for approximately 7,200 facilities [Note:
approximately 5,200 facilities are expected to be respondents in both
areas]. In addition, for the three areas that EPA is not proposing but
is considering for the final rule, EPA estimates 565,595 hours for
6,845 respondents (some facilities may be respondents in more than one
of the three areas). Labor costs are accounted for within the estimated
burden hours. EPA estimates that there are no capital costs associated
with these potential reporting and record keeping requirements. EPA
estimates a reduction in the capital and operating and maintenance
costs associated with monitoring to demonstrate compliance with
numerical limits, particularly for the proposed monitoring waiver for
indirect dischargers and the organics management plan.
In the cases discussed above, the data and information required by
the proposed or considered information collection, reporting, or record
keeping requirements can be claimed as confidential business
information according to the regulations found in 40 CFR part 2.
However, as specified at 40 CFR 2.302, effluent data submitted in
response to these information and data requests can not be claimed as
confidential.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
An Agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15.
The Agency requests comments on its need for this information, the
accuracy of the provided burden estimates, and any suggested methods
for minimizing respondent burden, including through the use of
automated collection techniques. Send comments on the ICR to the
Director, Collection Strategies Division; U.S. Environmental Protection
Agency (2822); 1200 Pennsylvania Ave., NW., Washington, DC 20460; and
to the Office of Information and Regulatory Affairs, Office of
Management and Budget, 725 17th St., NW., Washington, DC 20503, marked
``Attention: Desk Officer for EPA.'' Include the ICR number in any
correspondence. Since OMB is required to make a decision concerning the
ICR between 30 and 60 days after January 3, 2001, a comment to OMB is
best assured of having its full effect if OMB receives it by February
2, 2001. The final rule will respond to any OMB or public comments on
the information collection requirements contained in this proposal.
B. Unfunded Mandates Reform Act (UMRA)
1. UMRA Requirements
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and Tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why EPA did
not adopt that alternative. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including Tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially
[[Page 517]]
affected small governments, enabling officials of affected small
governments to have meaningful and timely input in the development of
EPA regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising small governments on
compliance with the regulatory requirements.
Estimated total annualized before-tax costs of compliance for the
proposed rule are $2,034 million ($1999). Of this total, $2,020 million
is incurred by the private sector and $14 million is incurred by State
and local governments that perform MP&M activities. Permitting
authorities incur an additional $0.115 to $0.912 million to administer
the rule, including labor costs to write permits and to conduct
compliance monitoring and enforcement activities. Thus, EPA has
determined that this rule contains a Federal mandate that may result in
expenditures of $100 million or more for State, local, and Tribal
governments, in the aggregate, or the private sector in any one year.
Accordingly, EPA has prepared under section 202 of the UMRA a written
statement which is summarized below.
2. Analysis of Impacts on Government Entities
Although the costs of implementation (and compliance for
government-owned facilities) are approximately $15 million annually
(i.e., below the threshold specified in section 202) MP&M is a large
industrial category and EPA fully analyzed the impacts on State and
local governments. The proposed MP&M Rule will affect governments in
two ways:
Government-owned MP&M facilities may be directly affected
by the MP&M regulation and therefore incur compliance costs; and
Municipalities that own Publicly Owned Treatment Works
(POTWs) that receive influent from MP&M facilities subject to the
regulation may incur additional costs to implement the proposed rule.
These include costs associated with permitting MP&M facilities that
have not been previously permitted, and with repermitting some MP&M
facilities earlier than would otherwise be required. In addition, POTWs
may elect to issue mass-based permits to some MP&M facilities that
currently have concentration-based permits, at an additional cost.
a. Compliance Costs for Government-Owned MP&M Facilities
EPA administered a survey (the ``Municipal Survey'') to government-
owned facilities to assess the cost of the regulation on these
facilities and the government entities that own them. (See Section V.B
for a discussion of EPA's data collection efforts.) The survey
responses provide the basis for EPA's analysis of the budgetary impacts
of the proposed regulation, including the size and income of the
populations served by the affected government entities; the
government's current revenues by source, taxable property, debt,
pollution control spending, and bond rating; and the costs, funding
sources, and other characteristics of the MP&M facilities owned by each
government entity. Table XXII.B-1 provides national estimates of the
government entities that operate MP&M facilities potentially subject to
the proposed rule. Table XXII.B-2 summarizes the annualized compliance
costs incurred by government entities by regulatory option.
Table XXII.B-1.--Number of Government-Owned Facilities by Type and Size of Government Entity
----------------------------------------------------------------------------------------------------------------
Regional
Size of government and Status Municipal State County governmental Total
under proposed option government government government authority
----------------------------------------------------------------------------------------------------------------
Large Governments (population > 50,000)
----------------------------------------------------------------------------------------------------------------
Number of government entities > 60 183 77 0 319
flow cutoff....................
Number of government entities 512 183 610 36 1,341
flow cutoff........
----------------------------------------------------------------------------------------------------------------
Small Governments (population = 50,000)
----------------------------------------------------------------------------------------------------------------
Number of government entities > 410 .............. .............. .............. 410
flow cutoff....................
Number of government entities 1,781 .............. 481 .............. 2,262
flow cutoff........
----------------------------------------------------------------------------------------------------------------
All Governments
----------------------------------------------------------------------------------------------------------------
Number of government entities > 470 183 77 0 729
flow cutoff....................
Number of government entities 2,293 183 1,091 36 3,603
flow cutoff........
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Total....................... 2,763 366 1,167 36 4,332
----------------------------------------------------------------------------------------------------------------
Table XXII.B-2.--Number of Regulated Government-Owned Facilities and Compliance Costs by Size of Government and Regulatory Option
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed option Option 2/6/10 Option 4/8
-----------------------------------------------------------------------------------------------
Number of Compliance Number of Number of
facilities costs facilities Compliance facilities Compliance
subject to (million subject to costs (million subject to costs (million
regulation 1999$) regulation 1999$) regulation 1999$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facilities Owned by Large Governments................... 319 $11.3 1,660 31.5 1,660 $101.3
Facilities Owned by Small Governments................... 410 2.6 2,672 33.3 2,672 123.4
All Government-Owned Facilities......................... 729 13.9 4,332 64.8 4,332 224.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs incurred by government-owned facilities, particularly for
facilities owned by small governments, are substantially lower under
the proposed rule than under the other two options considered. The
lower costs result from
[[Page 518]]
the exclusion of a large number of government-owned facilities under
the proposed low flow cutoff.
b. Small Government Impacts
EPA's analysis also considered whether the proposed rule may
significantly or uniquely affect small governments. Section XVI.B.3.c
of today's notice describes the methodology used to assess budgetary
impacts on governments. Briefly, EPA examined three measures to assess
the affordability of new requirements. These three criteria incorporate
measures of compliance costs (impacts on site-level cost of service),
impacts on taxpayers, and impact on government debt levels.
EPA estimates that there are 2,672 facilities owned by small
governments (i.e., governments with a population of less than 50,000).
The low flow exclusion in today's proposed rule will exclude 2,262
small government-owned MP&M facilities. Thus, the proposed rule covers
410 small government-owned facilities. Of these facilities, 140 incur
no compliance costs under the proposed option, and the remaining 270
incur annualized costs that average less than $10,000 per facility. The
total compliance cost for all the small government-owned facilities
incurring costs under today's proposed rule is $2.6 million. Only 140
of the 270 facilities have costs greater than 1 percent of baseline
cost of service (measured as total facility costs and expenditures,
including operating, overhead and debt service costs and expenses). EPA
estimated no significant impacts for any of the governments owning
these facilities, based on the three budgetary criteria mentioned
above. EPA has determined that this rule contains no regulatory
requirements that might significantly or uniquely affect small
governments. None of the affected governments are expected to incur
significant budgetary impacts as a result of the proposed rule, and
consequently, that the proposed rule will not significantly or uniquely
affect small governments. Nonetheless, EPA did consult with small
governments (see discussions on consultation in sections XXII.B.7 and
XXII.C).
c. POTW Administrative Costs
EPA also analyzed the administrative costs incurred by local
governments to implement the proposed rule. The results of this
analysis are presented in section XVI.H.3. In summary, EPA estimates
that POTWs will incur incremental average annualized costs over 15
years of between $115,000 and $912,000 under the proposed rule. The
maximum expenditures by all affected POTWs in any one year will be
between $186,000 and $1,607,000. These costs include issuing new
permits to facilities that do not currently have permits, issuing mass-
based permits to some facilities that currently have concentration-
based permits, and repermitting some facilities sooner than would
otherwise be required to meet the three-year compliance schedule. On
average, a POTW's costs for the incremental permitting are only $23 to
$184 for the 4,944 MP&M facilities permitted under the proposed rule.
EPA expects that these increases in costs will be partially offset by
reductions in government administrative costs for facilities that are
already permitted under local limits and that will be repermitted under
this rule.
3. Statutory Authority
The statutory authority for this rulemaking is as follows: Sections
301, 304, 306, 307, 308, 402 and 501 of the Clean Water Act, 33 U.S.C.
1311, 1314, 1316, 1317, 1318, 1342 and 1361 and the Pollution
Prevention Act of 1990, 42 U.S.C. 13101 et seq., Pub L. 101-508,
November 5, 1990. A consent decree with the Natural Resources Defense
Council established a deadline of October 2000 for EPA to propose
effluent limitations for this industry.
4. Costs and Benefits
The assessment of costs and benefits for this rule, including the
assessment of costs to State, local, and Tribal governments and to the
private sector, is discussed above and in Sections XVI (costs), XX
(benefits) of this preamble. EPA prepared an extensive analysis of
costs and benefits for private facilities and for governments,
including analysis by size and by subcategory. In the most summarized
form, EPA estimates the social cost of the proposed rule (which
includes facility compliance costs) at $2.0 to $2.1 billion annually
($1999). The total value of benefits that can be expressed in dollar
terms ranges from $0.4 billion to $1.1 billion. As discussed in Section
XX, EPA solicits comment on several expansions to these benefit
estimates. In particular, EPA includes in the public record for today's
proposal, an extensive analysis of additional categories of benefits,
such as boating and wildlife viewing. EPA also estimated values for
these new categories, but pending public comment and peer review, did
not incorporate the results from the new methodologies into the total
monetized benefits of the proposed rule.
The Federal resources (i.e., water pollution control grants) which
are generally available for financial assistance to States are included
in section 106 of the Clean Water Act. There are no Federal funds
available to defray the costs of this rule on local governments.
5. Future Costs and Disproportionate Costs
The Unfunded Mandates Reform Act requires that EPA estimate, where
accurate estimation is reasonably feasible, future compliance costs
imposed by the rule and any disproportionate budgetary effects. EPA's
estimates of the future compliance costs of this rule are discussed in
detail in Section XVI.G of the preamble. Briefly, new sources in all
but the Metal Finishing Job Shop direct discharger subcategory incur
costs that are below one percent of post-regulation revenues, and costs
for the Metal Finishing Job Shop indirect dischargers are less than
three percent of estimated facility revenues. Cost increases of this
magnitude are unlikely to place new facilities at a competitive
disadvantage relative to existing sources. Moreover, costs as a
percentage of revenues are generally comparable for new sources and
existing sources with which they will compete.
EPA does not expect that the rule will have disproportionate
budgetary effects on any particular areas of the country, particular
governments or types of communities. The affected population of MP&M
facilities is distributed throughout the country in settings from urban
to rural, with more facilities likely to be located in larger urban
areas. EPA therefore expects that the burden on governments to permit
facilities under the rule, and the loss of employment due to closures
caused by the rule, will be dispersed rather than concentrated in any
specific area. Moreover, the proposed rule is expected to result in a
net increase in employment over 15 years, when the employment
associated with compliance activities is considered. A discussion of
community impacts is included in Section XVI.
6. Effects on National Economy
The Unfunded Mandates Reform Act requires that EPA estimate the
effect of this rule on the national economy where (1) accurate
estimates are feasible and (2) the rule will have a ``material'' effect
on the economy. EPA's estimates of the impact of this proposal on the
national economy are described in Section XVI of this preamble and in
the EEBA. The proposed rule is projected to result in closures or
moderate financial impacts on a very small percentage of all MP&M
[[Page 519]]
facilities, to result in only limited price increases in any MP&M
sector, and to have a negligible impact on the U.S. balance of trade.
7. Consultation
In addition to private industry, our stakeholders include State and
local government regulators. We consulted with all of these stakeholder
groups on topics such as options development, cost models, pollutants
to be regulated, cost of the regulation, and compliance alternatives.
Some of the stakeholders provided helpful comments on the cost models,
technology options, pollution prevention techniques, and monitoring
alternatives.
Because many facilities affected by this proposal are indirect
dischargers, the Agency involved POTWs as they will have to implement
the rule. EPA consulted with POTWs individually and through the
Association of Municipal Sewerage Agencies (AMSA). In addition, EPA
consulted with pretreatment coordinators and State and local
regulators.
The Agency collaborated with POTWs in selecting BAT facilities for
EPA wastewater sampling and, in several cases, POTWs performed
wastewater sampling and submitted the data to EPA for use in developing
the rule. As described above and in Section V.B, EPA conducted the POTW
survey to obtain estimates of POTW permitting costs and sludge disposal
practices and costs. EPA assessed whether any impacts of the regulatory
requirements in the rule might significantly or uniquely affect POTWs,
especially small POTWs, and determined the degree to which POTWs would
benefit from the regulation by having more options for sewage sludge
disposal and decreased costs of disposing of the sludge.
EPA consulted with State and local regulators during three
different public meetings. Their main comments focused on: (1) The
potential burden on them to issue permits/control mechanisms for a
large number of facilities that have not been permitted under effluent
guidelines prior to this rule; (2) request for additional monitoring
flexibilities; and (3) request to allow them to use concentration-based
standards in the MP&M rule for those subcategories where it is
difficult to obtain production or flow information at the process-
level. EPA has incorporated many of their suggestions and addressed
these concerns throughout today's preamble (see Sections II.D, XII.C,
and XXI ).
8. Alternatives Considered
EPA believes that the proposed rule is the least burdensome and
most cost-effective of the regulatory alternatives considered that
still meets the objectives of the rule. EPA acknowledges that the rule
will impose some burden, but EPA believes that the additional costs are
justified due to the additional pollutant removals. The proposed low-
flow cutoffs and subcategory exemptions reduce the number of facilities
that require permitting by over 90 percent. Section XVI.H presents
EPA's analysis of the facility impacts of the proposed rule, which
shows that facility compliance costs would be 36 percent higher under
Option 2/6/10 than under the proposed rule and 120 percent higher under
Option 4/8. Section XVII presents EPA's analysis of the cost-
effectiveness of the regulatory options, which shows that the proposed
option is the most cost-effective of these three options.
C. Regulatory Flexibility Act (RFA) as Amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et
seq.
The Regulatory Flexibility Act generally requires an agency to
prepare a regulatory flexibility analysis of any rule subject to notice
and comment rulemaking requirements under the Administrative Procedures
Act or any other statute, unless the Administrator certifies that the
rule will not have significant economic impact on a substantial number
of small entities. Small entities include small businesses, small
organizations, and small governmental organizations.
For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as (1) A small business according to
the Regulations of the Small Business Administration (SBA) at 13 CFR
121.201, which define small businesses for Standard Industrial
Classification (SIC) codes; (2) a small governmental jurisdiction that
is a government of a city, county, town, school district or special
district with a population of less than 50,000; and (3) small
organization that is any not-for-profit enterprise that is
independently owned and operated and is not dominant in its field.
In accordance with Section 603 of the RFA, EPA prepared an initial
regulatory flexibility analysis (IRFA) that examines the impact of the
proposed rule on small entities, along with regulatory alternatives
that could reduce that impact. The IRFA is available for review in the
public record (as Chapter 10 in the Economic, Environmental, and
Benefits Analysis) and is summarized below.
1. Initial Regulatory Flexibility Analysis
a. Rationale, Objectives, and Legal Basis for Proposal
EPA's ``Preliminary Data Summary for the Machinery Manufacturing
and Rebuilding Industry'' (EPA 440/1-89/106) identified the Metal
Products and Machinery (MP&M) industry as one that is discharging
wastestreams containing toxic pollutants to publicly owned treatment
works and directly into the nation's surface waters. The volume and
characteristics of these wastestreams are described more fully in
Section VII of this notice. Due to the water quality, human health, and
environmental concerns associated with these discharges, EPA selected
the MP&M industry for the development of a new effluent guidelines
regulation in 1990. The Agency develops categorical effluent
limitations under authority of the Clean Water Act (33 U.S.C. 1251 et
seq.). Section I of this notice discusses the legal basis for the
proposed rule in more detail. Briefly, the Clean Water Act directs the
Agency to reduce discharges of pollutants into the Nation's water and
into publicly-owned treatment works. The objective of today's proposed
rule is to reduce those discharges from the class of point sources in
the MP&M industry.
b. Number and Type of Small Entities
A large number of the 63,000 MP&M facilities nationwide are owned
by small entities. The small entities covered by this proposed rule are
small businesses and small governmental jurisdictions. Table XXII.C-1
shows the total number of facilities operating in the baseline and the
number owned by small entities. Overall, approximately 80 percent of
all MP&M facilities are owned by small entities. However, it should be
noted that the low flow exclusions in the proposed rule will exclude
approximately 85 percent of the facilities owned by small entities.
[[Page 520]]
Table XXII.C-1.--Percent of MP&M facilities Owned by Small Entities
----------------------------------------------------------------------------------------------------------------
Number of Number of Percent of
facilities facilities facilities
Type of Facility operating in owned by small owned by small
baseline entities entities
----------------------------------------------------------------------------------------------------------------
Private MP&M *.................................................. 54,591 44,773 82%
Government-Owned................................................ 4,332 2,672 62%
-----------------------------------------------
Total *..................................................... 58,923 47,445 81%
----------------------------------------------------------------------------------------------------------------
* Excludes baseline closures.
The SBA definitions for small business use either employment-based
or revenue-based standards, depending on the Standard Industrial
Classification (SIC) code. The manufacturing sectors generally use
employment-based standards, and most non-manufacturing sectors use
revenue-based standards. MP&M facilities perform a wide variety of
activities, represented by over 200 SIC codes. To assess the impacts of
the rule on small entities, for analytical purposes, these SIC codes
were organized into 18 industry sectors, with some further distinctions
by type of activity (i.e., manufacturing or maintenance/repair). To
select a small business definition for each sector, EPA chose the SBA
standard that was common to the most SIC Codes (i.e., the mode of the
distribution of SBA definitions) in a particular sector (or activity).
Table XXII.C-2 lists the definitions by sector used in the impact
assessment.
Table XXII.C-2.--Small Business Definitions for Analyzing MP&M Sectors
------------------------------------------------------------------------
Small business definition using the
Sector and activity most common SBA standard for the SIC
codes in each sector
------------------------------------------------------------------------
Hardware......................... 500 Employees.
Aircraft--Manufacturing.......... 1,000 Employees.
Aircraft-Maintenance/Repair...... $5 Million.
Electronic Equipment............. 750 Employees.
Stationary Industrial Equip.-- 500 Employees.
Manufacturing.
Stationary Industrial Equip.-- $5 Million.
Maint/Repair.
Ordnance......................... 1,000 Employees.
Aerospace........................ 1,000 Employees.
Mobile Industrial Equip.......... 500 Employees.
Instruments--Manufacturing....... 500 Employees.
Instruments--Maintenance/Repair.. $5 Million.
Precious Metals/Jewelry-- 500 Employees.
Manufacturing.
Precious Metals/Jewelry-- $5 Million.
Maintenance/Repair.
Ship--Manufacturing.............. 1,000 Employees.
Ship--Maintenance/Repair......... 500 Employees.
Ship--Maintenance/Repair (SIC $5 Million.
449) \1\.
Household Equip.--Manufacturing.. 500 Employees.
Household Equip.--Maintenance/ $5 Million.
Repair.
Railroad--Manufacturing.......... 1,000 Employees.
Railroad--Maintenance/Repair..... 1,500 Employees.
Motor Vehicle--Manufacturing..... 500 Employees.
Motor Vehicle--Maintenance/Repair $5 Million.
Motor Vehicle--Maintenance/Repair 100 Employees.
(SIC 5013) \2\.
Bus & Truck--Manufacturing....... 500 Employees.
Bus & Truck--Maintenance/Repair.. $5 Million.
Office Machines--Manufacturing... 1,000 Employees.
Office Machines--Maintenance/ $18 Million.
Repair.
Steel Forming & Finishing........ 1,000 Employees.
Printed Circuit Boards........... 500 Employees.
Metal Finishing & Electroplating 500 Employees.
Job Shops.
Other Metal Products-- 500 Employees.
Manufacturing.
Other Metal Products--Maintenance/ $5 Million.
Repair.
------------------------------------------------------------------------
Notes:
\1\ SIC Code 449--Includes 4491 (Marine Cargo), 4492 (Towing & tugboat
service), 4493 (Marinas), and 4499 (Water Transportation Services,
nec).
\2\ SIC Code 5013--Wholesale distribution of motor vehicle supplies,
tools and equipment; and new motor vehicle parts.
c. Impacts on Small Entities
For small businesses, EPA drew on the firm and facility impact
analyses discussed in Section XVI of this notice to assess impacts on
small entities. The analysis compared compliance costs to revenues for
the small entities at the firm level. EPA also examined the facility
impact analysis results for facilities owned by small firms. The
facility impact analysis estimated facility closures and other adverse
[[Page 521]]
changes to financial conditions (denoted here as ``moderate impacts'').
See Section XVI.B of this notice for details on how EPA determines
closures and moderate impacts for private businesses. The results from
these analyses are discussed in more detail in the following
paragraphs. Briefly, these analyses indicated that 941 of the small
entities may incur costs equal to 3 percent or more of annual revenues,
181 facilities owned by small entities might close as a result of the
proposed rule, and 492 facilities owned by small entities are likely to
experience moderate financial impacts. The181 small entity facility
closures represent less than one-half of one percent of the facilities
owned by small entities that are operating in the baseline. Although
the percentage of small facilities projected to incur impacts is quite
small, the number, in absolute terms, was large enough for the Agency
to conclude that a small business analysis was appropriate. After EPA
considers comments and data received in response to this proposed
rulemaking, especially with regard to the IRFA, the Panel's
recommendations, and alternatives that would reduce small entity
impacts, EPA will adjust the rule as appropriate and it is possible
that the final rule will not have a significant economic impact on a
substantial number of small entities. Consequently, there is a
possibility that the Agency may not prepare a final regulatory
flexibility analysis and would certify the final rule.
i. Compliance Costs as a Percent of Firm Revenue
EPA compared compliance costs to revenues at the firm level as a
measure of the relative burden of compliance costs. Table XXII.C-3
shows the results of this comparison. The Agency was not able to
estimate national numbers of firms that own MP&M facilities precisely,
because the sample weights based on the survey design represent numbers
of facilities rather than firms. The results in Table XXII.C-3 are
reasonable approximations, however, in that 95 percent of the
facilities owned by small firms are single-facility firms, for which
sample weights could be used.
Table XXII.C-3.--Firm Level Before-Tax Annual Compliance Costs as a Percent of Annual Revenues for Private Small Businesses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number and percent with before-tax annual compliance costs annual revenues equal to:
-----------------------------------------------------------------------------------------------
Number of small firms in the analysis Less than 1% 1-3% Over 3%
-----------------------------------------------------------------------------------------------
Number Percent Number Percent Number Percent
--------------------------------------------------------------------------------------------------------------------------------------------------------
42,509.................................................. 40,560 95.4% 1,008 2.4% 941 2.2%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Approximately 85 percent of the small entities are not projected to
incur any costs to comply with the proposed rule because they are among
the facilities covered by the low flow exclusions (See Section XII for
discussion of the low flow exclusions). Even so, the IRFA includes a
cost analysis for all small facilities. The results reported here
account for the exclusions. More than 95 percent of small entities
incur compliance costs less than 1 percent of annual revenues. A small
percentage (2 percent) of the small businesses in the analysis incur
costs equal to 3 percent or more of annual revenues. (Results of the
cost-to-sales ratios are presented in the EEBA.) Of the small firms
that incur costs greater than 1 percent of revenues, 612 firms are
projected by the facility impact analysis to close or experience
moderate impacts.
ii. Facility Closures and Moderate Impacts
Table XXII.C-4 summarizes the results from the facility closure
analysis for the proposed option for private facilities owned by small
entities, by discharge status. Table XXII.C-4 also shows the number of
facilities owned by small businesses that experience moderate impacts.
Table XXII.C-4.--Closures and Moderate Impacts for Private Facilities Owned by Small Entities
----------------------------------------------------------------------------------------------------------------
Indirect Direct
All facilities dischargers dischargers
----------------------------------------------------------------------------------------------------------------
Number of facilities operating in the baseline.................. 44,773 41,536 3,237
Number of closures.............................................. 181 161 20
Percent closing................................................. 0.40% 0.39% 0.62%
Number of facilities with moderate impacts...................... 492 454 38
Percent with moderate impacts................................... 1.1% 1.1% 1.2%
----------------------------------------------------------------------------------------------------------------
Again, approximately 85 percent of the facilities owned by small
entities are not projected to incur any costs to comply with the
proposed rule because they are among the facilities covered by the low
flow exclusions. (See Section XII for discussion of the low flow
exclusions.) The projected number of closures is very small compared to
the large number of facilities owned by small entities. Less than one-
half of one percent of the facilities owned by small entities that are
operating in the baseline are projected to close. The percentage of
small entities experiencing moderate impacts is also low, at one
percent. In regard to the baseline closure analysis, to put this
information in context, data on facility start-ups and closures from
the Census Statistics of U.S. Businesses indicate that between 6 and 12
percent of facilities in the major metal products manufacturing
industries close in any given year. (See discussion in Chapter 5 of the
Economic, Environmental, and Benefits Analysis.)
iii. Impacts on Small Governments
For small governments, EPA relied on the analysis described in
Section XVI.B.3.c. EPA estimates that there are 2,672 facilities owned
by small governments. The low flow exclusion in today's proposed rule
will exclude 2,262 of these small government-owned
[[Page 522]]
MP&M facilities. Thus, the proposed rule covers 410 small government-
owned facilities. Of these facilities, only 270 incur costs, and the
average cost per facility is less than $10,000. The total compliance
cost for all the small government-owned facilities incurring costs
under today's proposed rule is $2.7 million. Only 140 of the 270
facilities have costs greater than 1 percent of baseline cost of
service (measured as total facility costs and expenditures, including
operating, overhead and debt service costs and expenses). EPA estimated
no significant impacts for any of these facilities, based on three
budgetary criteria (i.e., impacts on site-level cost of service,
impacts on taxpayers, and impact on government debt levels) as
described in Section XVI.B.3.c . Thus, EPA concluded that none of the
affected governments are expected to incur significant budgetary
impacts as a result of the proposed rule.
d. Alternatives to the Proposed Rule
EPA sought from the outset to design a regulation that would not
unreasonably burden small entities. In particular, EPA considered a
number of regulatory alternatives for indirect and direct dischargers,
and conducted extensive analysis of wastewater flow exclusions. As
detailed in Section XII of this notice, EPA selected a regulatory
alternative that incorporates low flow exclusions for several
subcategories. The primary alternatives to the proposal, while
providing additional pollutant reductions, also increased the number of
small entities covered. These alternatives would have resulted in
additional small entity impacts. The results from the closure analysis
and the cost-to-revenue analysis for these alternatives are included in
the IRFA, but are not summarized in this section of today's notice. As
a result of selecting the low flow exclusions, the proposed rule
imposes substantially lower impacts on small entities than the other
options. In particular, the low flow exclusion for indirect discharging
facilities in two subcategories--the General Metals subcategory and the
Oily Wastes subcategory--played a significant role in minimizing small
business impacts. EPA estimates that there are over 26,000 facilities
in the General Metals subcategory and over 28,000 in the Oily Wastes
subcategory operating in the baseline, and that small entities comprise
a large portion of these subcategories. The low flow exclusion for both
of these subcategories will largely reduce the number of small entities
affected by the MP&M proposed rule. For the General Metals subcategory,
EPA is proposing a 1 MGY flow cutoff for the reasons explained in
Section XII.D. This low flow exclusion reduces the number of regulated
facilities in this subcategory by 75 percent. The facilities that
comprise the 75 percent are mostly small entities and represent only 6
percent of the total pollutants discharged by the facilities in this
subcategory. For the Oily Wastes subcategory, EPA is proposing a 2 MGY
flow cutoff for the reasons explained in Section XII. This low flow
exclusion reduces the number of regulated facilities in this
subcategory by 96 percent. The facilities that comprise the 96 percent
are mostly small entities and represent 39 percent of the total
pollutant discharged by the facilities in this subcategory. In Section
XII, EPA presented its rationale for concluding that national
pretreatment standards were not warranted for facilities discharging
less than 2 MGY in this subcategory.
EPA considered and incorporated other types of alternatives, such
as monitoring alternatives. These are summarized below and discussed
more fully in Sections XXI.C and XXI.D of today's notice.
e. Reporting, Record Keeping and Other Compliance Requirements
There are five areas for which EPA is proposing to require, or
considering requiring, reporting or record keeping by MP&M facilities:
(1) Certification to waive monitoring for pollutants that are not
present; (2) certification and implementation of an organic chemicals
management plan in lieu of monitoring for organic pollutants; (3)
demonstration of a correlation to a site-specific organic pollutant
indicator parameter; (4) certification of a total sulfide monitoring
waiver for indirect dischargers; and (5) demonstration of specified
pollution prevention practices and compliance with existing regulations
in lieu of compliance with the MP&M effluent guidelines for facilities
in the Metal Finishing Job Shop subcategory and some facilities in
other subcategories. In all cases, EPA believes the collection of
information, reporting, or record keeping is an alternative (i.e.,
voluntary) that will allow a reduction in overall burden to facilities
since EPA intends for these activities to reduce or eliminate effluent
sampling and analysis costs. Each of these five areas is briefly
described below and is described in detail in section XXI, and the
associated burden is discussed in section XXII.A.
Briefly, for the certification to waive monitoring for pollutants
that are not present, EPA expects that facilities will need to review
analytical sampling data and other technical information required to
make the certification (e.g., raw material inventory logs, production
information, product chemistry, and reports on source water). There is
some additional effort required to prepare the certification statement
one time per permit cycle (i.e., every 5 years). EPA is allowing the
use of historical sampling data as well as sampling data generated for
compliance reports required by the General Pretreatment Standards (40
CFR 403.12) in the development of the certification statement.
Therefore, EPA does not anticipate additional monitoring burden
associated with this waiver, particularly in comparison to the periodic
compliance monitoring that is being replaced by this waiver. A
wastewater treatment operator or other qualified facility personnel who
is familiar with the facility's processes, products and analytical
monitoring reports can make the determination.
In terms of the certification and implementation of an organic
chemicals management plan in lieu of monitoring for organic pollutants,
facilities choosing to develop an organic pollutant management plan
must certify that the procedures described in the plan are being
implemented at the facility. EPA notes that development and
implementation of the plan would likely require the attention of the
wastewater treatment operator or plant manager. EPA believes that
facilities covered by the Metal Finishing effluent guidelines (40 CFR
part 433) with a solvent management plan in place under those
regulations will only have to update their plan.
EPA is considering (but is not proposing) allowing the
demonstration of a correlation to a site-specific organic pollutant
indicator parameter as an alternate approach to the use of an organic
indicator parameter (see section XXI.C.2 for a discussion on the
proposed organic indicator). In this case, there would be some
additional reporting and record keeping. Facilities would need to
perform testing, analyze analytical results, and keep records that
demonstrate a correlation between the regulated organic pollutants and
the selected indicator parameter. EPA notes that direct dischargers may
incur less burden than indirect dischargers because they typically have
more advanced treatment in place and permit writers typically require
them to monitor for the types of parameters that EPA is considering as
indicators (e.g., COD, Oil & Grease, TOC, and TPH); therefore, they may
already have data available that demonstrates a correlation to the
regulated organic pollutants. A wastewater treatment operator or other
qualified facility personnel who is
[[Continued on page 523]]