[Federal Register Volume 60, Number 103 (Tuesday, May 30, 1995)]
[Proposed Rules]
[Pages 28210-28278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-8885]
[[Page 28209]]
_______________________________________________________________________
Part II
Environmental Protection Agency
_______________________________________________________________________
40 CFR Part 433, et al.
Effluent Limitations Guidelines, Pretreatment Standards, and New Source
Performance Standards: Metal Products and Machinery; Proposed Rule
Federal Register / Vol. 60, No. 103 / Tuesday, May 30, 1995 /
Proposed Rules
[[Page 28210]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 433, 438 and 464
[FRL-5186-6]
RIN 2040-AB79
Effluent Limitations Guidelines, Pretreatment Standards, and New
Source Performance Standards: Metal Products and Machinery
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: This proposed regulation establishes technology-based limits
for the discharge of pollutants into waters of the United States and
into publicly owned treatment works by existing and new facilities that
manufacture, maintain or rebuild finished metal parts, products or
machines.
This proposed regulation will reduce the discharge of toxic
pollutants from Metal Products and Machinery (MP&M) facilities by
almost a million pounds per year, thereby reducing violations of water
quality standards (which were established to protect aquatic life and/
or human health) in water bodies across the country. This proposed
regulation will also reduce the metals content of municipal sludge,
thereby allowing approximately 184 additional POTWs to land apply
another 439,000 dry metric tons of sewage sludge rather than
incinerating or landfilling the sludge.
As a result of consultations with numerous stakeholders, the
preamble solicits comments and data not only on issues raised by EPA,
but also on those raised by environmental groups, by state and local
governments who will be implementing these regulations, and by industry
representatives who will be affected by them. As indicated elsewhere
throughout this proposal, the Agency welcomes comment on all options,
issues, and proposed decisions and encourages commentors to submit
additional data during the comment period (See Section XIX of this
preamble). The Agency plans to have additional discussions with
interested parties during the comment period to help ensure that the
Agency has the views of such parties and the best possible data upon
which to base decisions for the final rule. EPA's final rule may be
based upon any technologies, rationale or approaches that are a logical
outgrowth of this proposal, including any options discussed in this or
subsequent documents.
DATES: Comments on the proposal must be received by August 28, 1995. In
addition, EPA will conduct a workshop covering this rulemaking, in
conjunction with a public hearing on the pretreatment standards portion
of the rule. The public hearing and the workshop will be held on June
28, 1995. Persons wishing to present formal comments at the public
hearing should have a written copy for submittal.
ADDRESSES: Submit comments in writing, and if possible on a 3.5 inch
disk in Word Perfect 5.1 format to: Mr. Steven Geil, Engineering &
Analysis Division (4303), U.S. EPA, 401 M Street, SW., Washington, DC
20460.
The public hearing and the workshop will be held starting at 9 a.m.
at the Hall of States, room 333, 444 North Capital Street, Washington,
DC 20001.
The public record for this rulemaking is available for review at
the EPA's Water Docket; 401 M Street, SW., Washington, DC 20460; call
between 9 a.m. and 3:30 p.m. Eastern Standard Time for an appointment.
The EPA public information regulation (40 CFR part 2) provides that a
reasonable fee may be charged for copying. For access to Docket
materials, call (202) 260-3027.
FOR FURTHER INFORMATION CONTACT: For additional technical information,
contact Mr. Steven Geil at (202) 260-9817. Additional economic
information may be obtained by contacting Dr. Lynne G. Tudor at (202)
260-5834. Background documents supporting the proposed regulations are
described in the ``Background Documents'' section below. Some of the
documents are available from the Office of Water Resource Center, Mail
Code RC-4100, US EPA, 401 M Street SW., Washington, DC 20460; telephone
(202) 260-7786 for the voice mail publication request line.
SUPPLEMENTARY INFORMATION:
Overview
This preamble describes the scope, purpose, legal authority and
background of this rule, the technical and economic bases, and the
methodology used by the Agency to develop these effluent limitations
guidelines and standards.
Abbreviations, acronyms, and other terms used in the Supplementary
Information Section are defined in Appendix A to this notice.
Background Documents
The regulation proposed today is supported by the major documents
listed below. (1) EPA's technical conclusions concerning the
regulations are detailed in the ``Development Document for Proposed
Effluent Limitations Guidelines and Standards for the Metal Products
and Machinery Phase I Point Source Category,'' hereafter referred to as
the Technical Development Document (EPA 821-R-95-021). (2) The Agency's
economic and regulatory flexibility analyses are found in the
``Economic Impact of Proposed Effluent Limitations Guidelines and
Standards For The Metal Products And Machinery Industry Phase I,''
hereafter referred to as the Economic Impact Analysis (EPA 821-5-95-
022). (3) The industry profile is described in the ``Industry Profile
Of The Metal Products And Machinery Industry Phase I,'' (EPA 821-R-95-
024). (4) The regulatory impact analysis (including the Agency's
assessment of environmental benefits) is detailed in the ``Regulatory
Impact Assessment of Proposed Effluent Limitations Guidelines and
Standards for the Metal Products and Machinery Industry Phase I,''
hereafter referred to as the Regulatory Impact Assessment (EPA 821-R-
95-023). (5) An analysis of the incremental costs and pollutant
removals is presented in ``Cost Effectiveness Analysis of Proposed
Effluent Limitations Guidelines and Standards for the Metal Products
and Machinery Phase I Point Source Category,'' (EPA 821-R-95-025). (6)
The statistical support for today's proposal is found in reports on the
information screener survey (called the Mini Data Collection
Portfolio), the detailed questionnaire (call the Data Collection
Portfolio), and the calculation of limits.
Outline: This preamble is organized according to the following
outline:
I. Legal Authority
II. Background
A. Statutory Requirements of Regulation
1. Best Practicable Control Technology Currently Available (BPT)
2. Best Available Technology Economically Achievable (BAT)
3. Best Conventional Pollutant Control Technology (BCT)
4. New Source Performance Standards (NSPS)
5. Pretreatment Standards for Existing Sources (PSES)
6. Pretreatment Standards for New Sources (PSNS)
7. Best Management Practices (BMP)
B. Litigation History
C. Pollution Prevention Act
D. Common Sense Initiative
E. Consultation (Executive Order 12875)
F. Prior Regulation for Metals Industries
G. Scope of Today's Proposed Rule
III. Summary of Proposed Regulations
A. BPT
B. BCT
C. BAT
D. NSPS
E. PSES
F. PSNS [[Page 28211]]
IV. Overview of the Industry
A. Industry Description
B. Estimation of Number of Metal Products & Machinery Phase I Sites
C. Source Reduction Review Project
V. Data Gathering Efforts
A. Existing Databases
B. Survey Questionnaire
C. Waste water Sampling and Site Visits
D. EPA Bench Scale Treatability Studies (Terpene Study)
VI. Industry Subcategorization
VII. Water Use and Waste water Characteristics
A. Waste water Sources and Characteristics
B. Pollution Prevention, Recycle, Reuse and Water Conservation
Practices
VIII. Approach for Estimating Costs and Pollution Reductions Achieved
by Waste water Control Technology
IX. Best Practicable Control Technology Currently Available
A. Need for BPT Regulation
B. BPT Technology Options and Selection
C. Calculation of BPT Limitations
D. Applicability of BPT
E. BPT Pollutant Removals, Costs, and Economic Impacts
X. Best Conventional Pollutant Control Technology
A. July 9, 1986 BCT Methodology
B. BCT Options Identified
XI. Best Available Technology Economically Achievable
A. Need for BAT Regulation
B. BAT Technology Options and Selection
C. Calculation of BAT Limitations
D. Applicability of BAT
E. BAT Pollutant Removals, Costs, and Economic Impacts
XII. Pretreatment Standards for Existing Sources
A. Need for Pretreatment Standards
B. PSES Technology Options and Selection
C. Calculation of PSES
D. Applicability of PSES Limitations
E. Removal Credits
F. Compliance Date
G. PSES Pollutant Removals, Costs and Economic Impacts
XIII. New Source Performance Standards (NSPS) and Pretreatment
Standards for New Sources (PSNS)
XIV. Economic Considerations
A. Introduction
B. Overview of the Facilities Subject to Regulation
C. Overview of Options Considered for Proposal and Selection of the
Proposed Options
D. Economic Impact Methodology
E. Estimated Facility Economic Impacts
F. Labor Requirements and Possible Employment Benefits of Regulatory
Compliance
G. Community Impacts
H. Impacts on Firms Owning Metal Products & Machinery Facilities
I. Foreign Trade Impacts
J. Impacts on NSPS and PSNS
K. Regulation Flexibility Analysis
L. Cost Effectiveness Analysis
XV. Executive Order 12866
A. Introduction
B. Benefits Associated with the Proposed Effluent Guidelines
C. Costs to Society
D. Benefit-Cost Comparison
XVI. Water Quality and Other Environmental Benefits of Proposed Rule
for the Metal Products and Machinery (MP&M) Industry
XVII. Non-Water Quality Environmental Impacts
A. Air Pollution
B. Solid Waste
C. Energy Requirements
XVIII. Regulatory Implementation
A. Upset and Bypass Provisions
B. Variances and Modifications
1. Fundamentally Different Factors Variances
2. Economic Variances
3. Water Quality Variances
4. Permit Modifications
C. Relationship to NPDES Permits and Monitoring Requirements
D. Best Management Practice
XIX. Solicitation of Data and Comments
XX. Guidelines for Comment Submission of Analytical Data
A. Types of Data Requested
B. Analytes Requested
C. Quality Assurance/Quality Control (QA/QC) Requirements
XXI. Unfunded Mandates Reform Act
Appendix A Abbreviations, Acronyms, and Other Terms Used in This Notice
I. Legal Authority
This regulation is being proposed under the authorities of sections
301, 304, 306, 307, 308, and 501 of the Clean Water Act, 33 U.S.C.
Sections 1311, 1314, 1316, 1317, 1318, and 1361; and under authority of
the Pollution Prevention Act of 1990 (PPA), 42 U.S.C. 13101 et seq.,
Pub. L. 101-508, November 5, 1990.
II. Background
A. Statutory Requirements of Regulation
The objective of the Clean Water Act (``Act'') is to ``restore and
maintain the chemical, physical, and biological integrity of the
Nation's waters,'' (section 101(a)). To assist in achieving this
objective, EPA is to issue effluent limitations guidelines,
pretreatment standards, and new source performance standards for
industrial dischargers.
These guidelines and standards are summarized briefly below:
1. Best Practicable Control Technology Currently Available (BPT)
(Section 304(b)(1) of the Act)
BPT effluent limitations guidelines are generally based on the
average of the best existing performance by plants of various sizes,
ages, and unit processes within the category or subcategory for control
of pollutants.
In establishing BPT effluent limitations guidelines, EPA considers
the total cost of achieving effluent reductions in relation to the
effluent reduction benefits, the age of equipment and facilities
involved, the processes employed, process changes required, engineering
aspects of the control technologies, non-water quality environmental
impacts (including energy requirements) and other factors as the EPA
Administrator deems appropriate (section 304(b)(1)(B) of the Act). The
Agency considers the category or subcategory-wide cost of applying the
technology in relation to the effluent reduction benefits. Where
existing performance is uniformly inadequate, BPT may be transferred
from a different subcategory or category.
2. Best Available Technology Economically Achievable (BAT) (Section
304(b)(2) of the Act)
In general, BAT effluent limitations represent the best existing
economically achievable performance of plants in the industrial
subcategory or category. The Act establishes BAT as the principal
national means of controlling the direct discharge of toxic pollutants
and nonconventional pollutants to navigable waters. The factors
considered in assessing BAT include the age of equipment and facilities
involved, the process employed, potential process changes, and non-
water quality environmental impacts (including energy requirements)
(section 304(b)(2)(B)). The Agency retains considerable discretion in
assigning the weight to be accorded these factors. As with BPT, where
existing performance is uniformly inadequate, BAT may be transferred
from a different subcategory or category. BAT may include process
changes or internal controls, even when these technologies are not
common industry practice.
3. Best Conventional Pollutant Control Technology (BCT) (Section
304(b)(4) of the Act)
The 1977 Amendments to the Act established BCT for discharges of
conventional pollutants from existing industrial point sources. Section
304(a)(4) designated the following as conventional pollutants:
Biochemical oxygen demanding pollutants (BOD), total suspended solids
(TSS), fecal coliform, pH, and any additional pollutants defined by the
Administrator as conventional. The Administrator designated oil and
grease as an [[Page 28212]] additional conventional pollutant on July
30, 1979 (44 FR 44501).
BCT replaces BAT for the control of conventional pollutants for
certain facilities. In addition to other factors specified in section
304(b)(4)(B), the Act requires that BCT limitations be established in
light of a two part ``cost-reasonableness'' test. EPA's current
methodology for the general development of BCT limitations was issued
in 1986 (51 FR 24974; July 9, 1986).
4. New Source Performance Standards (NSPS) (Section 306 of the Act)
NSPS are based on the best available demonstrated treatment
technology. New plants have the opportunity to install the best and
most efficient production processes and waste water treatment
technologies. As a result, NSPS should represent the most stringent
numerical values attainable through the application of the best
available control technology for all pollutants (i.e., conventional,
nonconventional, and toxic pollutants). In establishing NSPS, EPA is
directed to take into consideration the cost of achieving the effluent
reduction and any non-water quality environmental impacts and energy
requirements.
5. Pretreatment Standards for Existing Sources (PSES) (Section 307(b)
of the Act)
PSES are designed to prevent the discharge of pollutants that pass
through, interfere with, or are otherwise incompatible with the
operation of publicly owned treatment works (POTWs). The Act requires
pretreatment standards for pollutants that pass through POTWs or
interfere with POTWs' treatment processes or sludge disposal methods.
The Act requires industry to achieve PSES within three years of
promulgation. Pretreatment standards are technology-based and analogous
to the BAT effluent limitations guidelines. For the purpose of
determining whether to promulgate national category-wide pretreatment
standards, EPA generally determines that there is pass-through of a
pollutant and thus a need for categorical standards if the nation-wide
average percent removal of a pollutant removed by well-operated POTWs
achieving secondary treatment is less than the percent removed by the
BAT model treatment system.
The General Pretreatment Regulations, which set forth the framework
for the implementation of categorical pretreatment standards, are found
at 40 CFR Part 403. Those regulations contain a definition of pass-
through that addresses localized rather than national instances of
pass-through and does not use the percent removal comparison test
described above. See 52 FR 1586 (January 14, 1987.)
6. Pretreatment Standards for New Sources (PSNS) (Section 307(b) of the
Act)
Like PSES, PSNS are designed to prevent the discharges of
pollutants that pass through, interfere with, or are otherwise
incompatible with the operation of POTWs. PSNS are to be issued at the
same time as NSPS. New indirect dischargers, like the new direct
dischargers, have the opportunity to incorporate into their plants the
best available demonstrated technologies. The Agency considers the same
factors in promulgating PSNS as it considers in promulgating NSPS.
7. Best Management Practices (BMP)
The Agency is not proposing BMPs for MP&M. However, we are
soliciting comment on whether BMPs could be promulgated in lieu of
numeric limitations for low discharge volume sites. EPA has defined
BMPs broadly (40 CFR 122.2) and is considering whether numeric
limitations are infeasible for such sites because of the administrative
burdens imposed on permitting authorities to develop, implement, and
monitor necessary permits. BMP's could also cause pretreatment
permitting to be more efficient and less costly for both control
authorities and dischargers. The use of BMP's instead of flow
monitoring associated with mass-based limits could result in greater
efficiencies and cost savings for both control authorities and
discharges. Properly implemented, BMP's could provide environmental
protection equivalent to mass-based limits at a lower cost. Since some
Control Authorities pass their costs along to industrial users in the
form of service fees, cost savings to Control Authorities could be
passed along to industrial users. BMPs could include any of the in-
process pollution prevention or flow reduction technologies discussed
in the MP&M public record and pollution prevention bibliography section
of the Technical Development Document.
B. Litigation History
Section 304(m) of the Act (33 U.S.C. 1314(m)), added by the Water
Quality Act of 1987, requires EPA to establish schedules for (i)
reviewing and revising existing effluent limitations guidelines and
standards (``effluent guidelines''), and (ii) promulgating new effluent
guidelines. On January 2, 1990, EPA published an Effluent Guidelines
Plan (55 FR 80), in which schedules were established for developing new
and revised effluent guidelines for several industry categories. One of
the industries for which the Agency established a schedule was the
Machinery Manufacturing and Rebuilding Category (the name was changed
to Metal Products and Machinery in 1992).
Natural Resources Defense Council, Inc. (NRDC) and Public Citizen,
Inc. challenged the Effluent Guidelines Plan in a suit filed in U.S.
District Court for the District of Columbia (NRDC et al v. Reilly, Civ.
No. 89-2980). The plaintiffs charged that EPA's plan did not meet the
requirements of section 304(m). A Consent Decree in this litigation was
entered by the Court on January 31, 1992. The terms of the Consent
Decree are reflected in the Effluent Guidelines Plan published on
September 8, 1992 (57 FR 41000). This plan requires, among other
things, that EPA propose effluent guidelines for the Metal Products and
Machinery (MP&M) category by November, 1994 and take final action on
these effluent guidelines by May, 1996. The most recent Effluent
Guidelines Plan was published on August 26, 1994 (59 FR 44235). EPA
filed a motion with the court on September 28, 1994, requesting an
extension of time until March 31, 1995, for the EPA Administrator to
sign the proposed regulation and a subsequent four month extension for
signature of the final regulation in September 1996.
C. Pollution Prevention Act
The Pollution Prevention Act of 1990 (PPA) (42 U.S.C. 13101 et
seq., Pub. L. 101-508, November 5, 1990) makes pollution prevention the
national policy of the United States. The PPA identifies an
environmental management hierarchy in which pollution ``should be
prevented or reduced whenever feasible; pollution that cannot be
prevented should be recycled in an environmentally safe manner,
whenever feasible; pollution that cannot be prevented or recycled
should be treated in an environmentally safe manner whenever feasible;
and disposal or release into the environment should be employed only as
a last resort * * *'' (42 U.S.C. 13103). In short, preventing pollution
before it is created is preferable to trying to manage, treat or
dispose of it after it is created. According to the PPA, source
reduction reduces the generation and release of hazardous substances,
pollutants, wastes, contaminants or residuals at the source, usually
within a process. The term source reduction ``* * * includes equipment
or technology modifications, [[Page 28213]] process or procedure
modifications, reformulation or redesign of products, substitution of
raw materials, and improvements in housekeeping, maintenance, training,
or inventory control. The term `source reduction' does not include any
practice which alters the physical, chemical, or biological
characteristics or the volume of a hazardous substance, pollutant, or
contaminant through a process or activity which itself is not integral
to or necessary for the production of a product or the providing of a
service.'' In effect, source reduction means reducing the amount of a
pollutant that enters a waste stream or that is otherwise released into
the environment prior to out-of-process recycling, treatment, or
disposal.
The PPA directs the Agency to, among other things, ``* * * review
regulations of the Agency prior and subsequent to their proposal to
determine their effect on source reduction'' (42 U.S.C. 13103). This
directive led the Agency to implement a pilot project called the Source
Reduction Review Project that would facilitate the integration of
source reduction in the Agency's regulations, including the technology
based effluent guidelines and standards.
(see Section IV. B. for a more complete discussion of the Source
Reduction Review Project.) The MP&M Phase I category effluent guideline
was included in the Source Reduction Review Project.
D. Common Sense Initiative
On October 17, 1994, the Administrator established the Common Sense
Initiative (CSI) Council in accordance with Federal Advisory Committee
Act (U.S.C. App. 2, Section 9(c)) requirements. One of the goals of the
CSI is to develop recommendations for optimal multi-media approaches to
address environmental problems associated with six industrial sectors
including Metal Plating and Finishing, Electronics and Computers, Auto
Assembly, and Iron and Steel Manufacturing. The current Clean Water Act
MP&M rulemaking studies, which were initiated in 1989, overlap to
varying degrees these six CSI pilot industrial sectors.
The following are the six elements of the CSI program, as stated in
the ``Advisory Committee Charter.''
1. Regulation. Review existing regulations for opportunities to
get better environmental results at less cost. Improve new rules
through increased coordination.
2. Pollution Prevention. Actively promote pollution prevention
as the standard business practice and a central ethic of
environmental protection.
3. Recordkeeping and Reporting. Make it easier to provide, use,
and publicly disseminate relevant pollution and environmental
information.
4. Compliance and Enforcement. Find innovative ways to assist
companies that seek to comply and exceed legal requirements while
consistently enforcing the law for those that do not achieve
compliance.
5. Permitting. Improve permitting so that it works more
efficiently, encourages innovation, and creates more opportunities
for public participation.
6. Environmental Technology. Give Industry the incentives and
flexibility to develop innovative technologies that meet and exceed
environmental standards while cutting costs.
In addition, it is the intent of the Agency to work with the CSI's
sector teams and further integrate their consensus recommendations
applicable to the MP&M Phase I proposal as they are developed. Even
though the MP&M Phase I data collection and analysis efforts were
completed before the CSI program was announced, many aspects of the CSI
objectives are reflected in the MP&M proposal. As part of the
development of this proposal, EPA took advantage of several
opportunities to gain the involvement of various stakeholders. For
example, a public meeting was held in March of 1994 to present the
technology options under consideration by the Agency. We have addressed
industry trade associations, the Association of Metropolitan Sewerage
Authorities, pretreatment coordinators from the Regions, States, and
municipalities, and the Effluent Guidelines Task Force, and we have met
with environmental interest group representatives. We have used
comments and concerns raised at these meetings to frame solicitations
for data and comment on aspects of this regulation ranging from
pollution prevention to implementation issues. The MP&M Phase I
proposal was based in part on pollution prevention for the largest
dischargers, and the technical documents that support the proposal
provide guidance on pollution prevention techniques applicable to this
industry for use by all facilities. This proposal is performance-based
and does not stipulate the use of specific control or treatment
technologies. Industry retains the flexibility to develop or select
innovative technologies that meet or exceed the performance-based
standards proposed today. EPA considered cost effectiveness as part of
the overall MP&M Phase I effluent guideline development process. The
MP&M Phase II effluent guideline development process will further
support the CSI.
E. Consultation (Executive Order 12875)
Executive Order 12875, ``Enhancing the Intergovernmental
Partnership'' requires Federal Agencies to consider the impacts of
unfunded mandates on state, local, or tribal governments. Agencies,
such as the EPA, that can impose unfunded mandates on state, local, or
tribal governments are required by Executive Order 12875 to ensure that
the Federal government either allocates the funds necessary for
compliance or involves the affected agencies in the regulatory
development process. The proposed MP&M Phase I regulation establishes
effluent limitations guidelines and pretreatment standards that will
directly impact the state and local waste water permitting process. The
primary impact of the proposed MP&M Phase I regulation on state and
local regulatory agencies will be that an increased number of permits
will have to be issued. The cost associated with writing additional
permits for direct dischargers based on national guidelines may be
partially offset by a decrease in the expenses associated with writing
individual permits based on local conditions or best professional
judgment (BPJ). In general, EPA believes that the cost of individual
permits for direct dischargers may be reduced by the MP&M Phase I rule,
because fewer resources are required to issue effluent-guideline-based
permits than to issue BPJ-based permits.
The proposed MP&M Phase I effluent guidelines will be implemented
as part of the National Pollutant Discharge Elimination System (NPDES)
and pretreatment permitting processes. An estimated 1,895 direct and
8,706 indirect discharging facilities will require permits under the
proposed MP&M Phase I regulation. Although existing effluent guidelines
such as metal finishing (40 CFR 433) and electroplating (40 CFR 413)
cover some of these facilities (approximately 2,000), EPA expects a
substantial net increase in the number of permits state and local
regulatory agencies are required to write. The economic impact on
industry associated with the additional permits is not expected to
adversely affect industries that dominate local economies in a manner
that would significantly alter state or local government revenues.
The administrative burden created by the proposed MP&M Phase I
effluent guidelines may be partially offset by anticipated savings in
the costs associated with writing individual permits. Currently, many
permits are written based on BPJ criteria. The development of such
permits is often [[Page 28214]] contentious and can require a
significant investment in resources. The proposed MP&M Phase I
guidelines are expected to require fewer resources to develop permits
than those based on BPJ, since MP&M Phase I includes specific effluent
guidelines and pretreatment standards. EPA solicits comments on the
administrative burden associated with permits based on BPJ, permits
based on effluent guidelines, and the relationship between the two.
The MP&M Phase I regulatory development process was closely
coordinated with the public, industry groups, and other interested
parties. MP&M regulation development summaries were presented at
technical symposia and two public outreach meetings. In addition,
comments regarding several implementation issues are included in
today's notice (See Section XIX). Based on public comments, concerns
will be addressed and, if applicable, incorporated into the final MP&M
regulation.
EPA plans to continue the data collection and public outreach
programs for MP&M Phase I. Consultation with other governmental
activities will also be initiated early in MP&M Phase II regulation
development to allow continued, effective compliance with E.O. 12875
requirements.
F. Prior Regulation for Metals Industries
EPA has established effluent guidelines regulations for thirteen
industries which may perform operations that are sometimes found in
MP&M Phase I facilities. These effluent guidelines are:
Electroplating (40 CFR Part 413);
Iron & Steel Manufacturing (40 CFR Part 420);
Nonferrous Metals Manufacturing (40 CFR Part 421);
Ferroalloy Manufacturing (40 CFR Part 424);
Metal Finishing (40 CFR Part 433);
Battery Manufacturing (40 CFR Part 461);
Metal Molding & Casting (40 CFR Part 464);
Coil Coating (40 CFR Part 465);
Porcelain Enameling (40 CFR Part 466);
Aluminum Forming (40 CFR Part 467);
Copper Forming (40 CFR Part 468);
Electrical & Electronic Components (40 CFR Part 469); and
Nonferrous Metals Forming & Metal Powders (40 CFR Part 471).
These existing effluent guidelines generally apply to the production of
semi-finished products, while the MP&M Phase I category applies to
finished metal parts, products, and machines. EPA recognizes that unit
operations performed in industries covered by the existing effluent
guidelines generate waste water similar to unit operations performed at
MP&M Phase I sites. A discussion of how these guidelines are integrated
with the regulations proposed today is continued in the following
section.
G. Scope of Today's Proposed Rule
The MP&M Phase I category applies to industrial sites engaged in
the manufacturing, maintaining or rebuilding of finished metal parts,
products or machines. Today's proposed effluent guideline (MP&M Phase
I) applies to process waste water discharges from sites performing
manufacturing, rebuilding or maintenance on a metal part, product or
machine to be used in one of the following industrial sectors:
Aerospace;
Aircraft;
Electronic Equipment;
Hardware;
Mobile Industrial Equipment;
Ordnance; and
Stationary Industrial Equipment.
MP&M Phase II will be proposed and promulgated approximately three
years after the MP&M Phase I schedule. EPA currently intends to cover
the following eight industrial sectors in MP&M Phase II:
Bus and Truck;
Household Equipment;
Instruments;
Motor Vehicle;
Office Machine;
Precious and Nonprecious Metals;
Railroad; and
Ships and Boats.
EPA has identified these fifteen industrial sectors in the MP&M
category; these sectors manufacture, maintain and rebuild products
under more than 200 different SIC codes. In order to make the
regulation more manageable, EPA has divided it into the two phases
discussed above; lists of typical products manufactured within the two
MP&M phases are included as appendices to the proposed regulation.
Although EPA believes that it has clearly defined what the fifteen
sectors are and how they have been divided into two phases for the
purposes of regulation, EPA expects that some products will clearly fit
within certain industry sectors while others will be more difficult to
define. Some examples of how the proposed MP&M Phase I regulation would
apply are provided below for clarification.
An example of a clear fit would be a site which manufactures
aircraft engines. The site would be considered to be within the
aircraft industrial sector of MP&M. Since aircraft is an MP&M Phase I
industry, the aircraft engine manufacturer would be covered by MP&M
Phase I.
Another example of a clear fit would be a site which manufactures
school buses. The site would be considered to be within the bus and
truck industrial sector of MP&M. Since bus and truck is an MP&M Phase
II industry, the school bus manufacturer would be covered by MP&M Phase
II.
An example of a site which produces products which would fall under
more than one MP&M Phase I industry would be a site which manufacturers
farm tractors and farm conveyors. The site would be considered to be
within the mobile industrial equipment and the stationary industrial
equipment sectors. Since both mobile industrial equipment and
stationary industrial equipment are MP&M Phase I industries, the farm
tractor and farm conveyor manufacturer would be covered by MP&M Phase
I. Although MP&M Phase I covers seven industrial categories, the
proposed rule is not subcategorized by industrial sector (See Section
VI). Instead, all seven MP&M Phase I industries are grouped together
under one MP&M Phase I category.
An example of a site that produces products within an MP&M Phase I
industry and an MP&M Phase II industry would be a site which
manufactures hand tools and household cooking equipment. The site would
be considered to be within the hardware and household equipment
sectors. Since hardware is an MP&M Phase I industry and household
equipment is an MP&M Phase II industry, the site has operations in both
MP&M phases. As discussed further below, EPA proposes to apply the MP&M
Phase I rule to sites with operations in both MP&M Phase I and MP&M
Phase II. As a result, all of the site's operations (including those
performed to manufacture the cooking equipment) would be covered under
MP&M Phase I. The coverage of sites that might be assigned to either
Phase I or II is discussed further below.
An example of a site which manufactures products which could be
difficult to assign to a specific MP&M industrial sector would be a car
door handle manufacturing site. If a car door handle were considered a
piece of hardware, then the site would fit under MP&M Phase I (hardware
industrial sector). If, on the other hand, the door handle were
considered a motor vehicle part, then the site would fit under MP&M
Phase II (motor vehicle industrial sector). In cases where
[[Page 28215]] products could be viewed under different industrial
sectors, EPA proposes that the industrial sector(s) which most
accurately matches the market into which the product is sold be
assigned. In addition, if a metal part has a specific use in one of the
fifteen MP&M industrial sectors, then the sector in which it is
intended to be used is the industrial sector that should be assigned to
that site. In this example, the car door handle has no other uses than
operating the door of a car, and this site would be considered a motor
vehicle site (MP&M Phase II).
Another example of a site which produces products which could be
difficult to assign to a specific MP&M industrial sector would be a
site which manufactures pistons for use in internal combustion engines,
stationary generators, automotive engines, aircraft engines, truck
engines, etc. Since the pistons are used in a wide variety of
industrial applications and are not produced for use in a specific MP&M
industry, the piston manufacture should be considered to be making a
fabricated metal product and be covered under MP&M Phase I (hardware).
EPA is soliciting comment from any industrial site which has the
potential to be covered by MP&M but is uncertain as to their
appropriate industrial sector and phase (MP&M Phase I or MP&M Phase II)
classification. These sites are requested to supply information about
what operations they are performing, what products they are
manufacturing, and to what industries they are selling their products.
As discussed above, some MP&M sites will have operations in both
MP&M Phase I and Phase II industries. EPA proposes to apply the MP&M
Phase I regulation to combined waste water discharges when a site is
manufacturing, rebuilding or maintaining finished metal products in
both Phase I and Phase II sectors.
For example, a site manufacturing aircraft components and
discharging process waste water in the process is included in the
aircraft sector and thus its waste water discharges would be regulated
by MP&M Phase I effluent guidelines. Another site which manufactures
components that are used in aircraft and ships and generates waste
water in the process which is combined and discharged would also be
regulated by the MP&M Phase I effluent guidelines for the combined
discharge. This proposal should alleviate burdens on the permit writers
and allow the site to achieve compliance more cost effectively, since
they will have to comply with one set of limits.
EPA's data collection and analysis of MP&M sites included MP&M
Phase I and Phase II overlap sites and processing of both Phase I and
II parts at these sites. Many of these sites use the same equipment to
manufacture, maintain, and rebuild goods for both Phase I and Phase II
sectors, making it impossible to separate the two phases, and in many
cases impossible to distinguish among the sectors, for these sites.
Typical MP&M unit operations include any one or more of the
following: abrasive blasting, abrasive jet machining, acid treatment,
adhesive bonding, alkaline treatment, anodizing, assembly, barrel
finishing, brazing, burnishing, calibration, chemical conversion
coating, chemical machining, corrosion preventive coating, disassembly,
electrical discharge machining, electrochemical machining, electrolytic
cleaning, electroplating, electron beam machining, electropolishing,
floor cleaning, grinding, heat treating, hot-dip coating, impact
deformation, laminating, laser beam machining, machining, metal
spraying, painting, plating, plasma arc machining, polishing, pressure
deformation, rinsing, salt bath descaling, soldering, solvent
degreasing, sputtering, stripping, testing, thermal cutting, thermal
infusion, ultrasonic machining, vacuum metalizing, welding and numerous
sub-operations within those listed above. In addition to waste water
that is generated from these operations, these operations also
frequently have associated rinses and water-discharging air pollution
control devices which are also included under the scope of today's
proposed regulation.
Waste water from noncontact, nondestructive testing is also
included under the scope of today's proposed regulation. A common
source of ``testing'' waste water is photographic waste from
nondestructive X-ray examination of parts.
Many MP&M sites will also have operations covered by one of the
existing metal processing effluent guidelines listed above in Section
II.D. In general, with the exception of the metal finishing
regulations, the existing effluent guideline will continue to apply to
those operations judged to be covered by it. MP&M will provide the
basis for establishing permit limitations for the unit operations which
at present are not covered, covered by the metal finishing effluent
guidelines regulation, or covered by best professional judgment. EPA is
proposing to require that the MP&M Phase I effluent guidelines
regulation replace the metal finishing regulation for sites with
operations in an MP&M Phase I industrial sector. Both MP&M and metal
finishing apply to the same types of unit operations. EPA has included
the metal finishing sites in its data collection and study of the MP&M
industry and has estimated the costs and impacts on these sites to
comply with the proposed MP&M regulation. EPA anticipates that today's
proposed limitations will impose more stringent requirements on waste
water discharges from MP&M/metal finishing sites without undue economic
impacts (see Section XIV), and therefore is proposing that MP&M replace
metal finishing regulations for sites satisfying the MP&M Phase I
criteria. Today's proposal does not apply to surface finishing job
shops and independent circuit board manufacturers as defined in this
regulation; they will continue to be covered by 40 CFR Part 413 and 40
CFR Part 433.
``Surface finishing job shops'' defined in the proposed MP&M
regulation are identical to ``job shops'' defined in the metal
finishing category (40 CFR 433). Indirectly discharging job shops which
were considered existing for the metal finishing category (existing
prior to August 31, 1982) and independent printed circuit board
manufacturers will continue to be covered by the electroplating
category (40 CFR 413). Indirectly discharging jobs shops which were
considered new sources for the metal finishing category and directly
discharging job shops will continue to be covered by the metal
finishing category.
III. Summary of Proposed Regulations
A. BPT
EPA is proposing to establish concentration-based BPT limitations
which reflect the best practicable technology performance. EPA proposes
to require permit writers to convert the concentration-based
limitations into mass-based limitations based on MP&M flow guidance in
the MP&M Phase I Technical Development Document. This document provides
guidance to permit writers on identifying sites with pollution
prevention and water conservation technologies equivalent to those
listed above (e.g., electrodialysis, reverse osmosis). EPA recognizes
that there are many different pollution prevention and water
conservation technologies that may achieve the same performance as
those listed above; therefore, the Agency has provided permit writers
guidance on assessing these technologies.
EPA recommends that, for sites with pollution prevention and water
[[Page 28216]] conservation technologies in place that are equivalent
to those included as the basis for BPT, permit writers use historical
flow as a basis for converting the concentration-based limitations to
mass-based. For sites without these types of technologies in place, EPA
recommends that permit writers do not use historical flow, but use
other tools listed in the development document (e.g., measuring
production through unit operations, measuring the concentration of
total dissolved solids (TDS) in rinse waters) to convert the
concentration-based limitations to mass-based. This approach encourages
sites to implement good water use practices and investigate and install
pollution prevention and water conservation technologies. By
recommending use of historical flow only when sites have pollution
prevention and water conservation technologies in place, EPA expects
that permits based on BPT will reflect pollution prevention and water
conservation technologies. If mass-based limitations have not been
developed as required, the source shall achieve discharges not
exceeding the concentration limitations listed in the regulation.
The technology basis for BPT is end-of-pipe treatment using
chemical precipitation and sedimentation (commonly referred to as lime
and settle technology), used in conjunction with flow reduction and
pollution prevention technologies. EPA has also included the following
as a basis for BPT limits: oil-water separation through chemical
emulsion breaking and either skimming or coalescing; cyanide
destruction through alkaline chlorination; chemical reduction of
hexavalent chromium; chemical reduction of chelated metals; and
contract hauling of organic solvent-bearing waste waters. The
technology basis of BPT is to apply these preliminary treatment
technologies when necessary based on waste water characteristics.
The following in-process pollution prevention and water
conservation technologies were included as a basis for BPT:
--Flow reduction using flow restrictors, conductivity meters, and/or
timed rinses, for all flowing rinses, plus countercurrent cascade
rinsing for all flowing rinses;
--Flow reduction using bath maintenance for all other process water-
discharging operations;
--Centrifugation and 100 percent recycling of painting water curtains;
--Centrifugation and pasteurization to extend the life of water-soluble
machining coolants, reducing discharge volume by 80 percent; and
--In-process metals recovery with ion exchange followed by electrolytic
recovery of the cation regenerants for selected electroplating rinses.
This includes first stage drag-out rinsing with electrolytic metal
recovery.
The discharge limitations included in today's proposal are based on
the technology discussed above. However, it is important to note that
these technologies are not mandated under effluent guidelines and
pretreatment standards. Sites which would be covered by this proposed
rule would be required to meet the discharge limitations but would not
be required to use the technology basis discussed above.
B. BCT
EPA is proposing to establish BCT limitations equivalent to BPT
limitations.
C. BAT
EPA is proposing to establish BAT limitations equivalent to BPT
limitations.
D. NSPS
EPA is proposing to establish NSPS equivalent to BAT limitations.
E. PSES
EPA is proposing to establish PSES equivalent to BAT limitations.
Facilities with an annual discharge volume less than 1,000,000 gallons
are proposed to be exempt from PSES. For a site operating 250 days per
year, 1,000,000 gallons per year translates into an average discharge
flow rate of 4,000 gallons per day.
F. PSNS
EPA is proposing to establish PSNS equivalent to BAT.
IV. Overview of the Industry
A. Industry Description
As discussed above, the MP&M Phase I Category covers sites that
generate waste water while manufacturing, maintaining or rebuilding
finished metal parts, metal products, and machinery EPA within 7
industrial sectors. See the discussion under Section II.G. of this
notice for the scope of today's proposed rule.
MP&M sites perform a wide variety of process unit operations on
metal parts. For a given MP&M site, the specific unit operations
performed and the sequence of operations depend on many factors,
including the activity (i.e., manufacturing, rebuilding, or
maintenance), industrial sector, and type of product processed. MP&M
sites that repair, rebuild, or maintain products often perform
preliminary operations that may not be performed at manufacturing
facilities (e.g., disassembly, cleaning, or degreasing to remove dirt
and oil accumulated during use of the product). Sites that manufacture
products required to meet very strict performance specifications (e.g.,
aerospace or electronic components) often perform unit operations such
as gold electroplating or magnetic flux testing that may not be
performed when manufacturing other products.
EPA identified 47 unit operations as typical operations performed
at MP&M Phase I sites. The following general types of unit operations
are included in Phase I of the MP&M Category:
Metal shaping operations;
Surface preparation operations;
Metal deposition operations;
Organic deposition operations;
Surface finishing operations; and
Assembly operations.
Metal shaping operations (e.g., machining, grinding, impact and
pressure deformation) are mechanical operations that alter the form of
raw materials into intermediate and final product forms. Surface
preparation operations (e.g., alkaline treatment, barrel finishing and
etching) are chemical and mechanical operations that remove unwanted
materials from or alter the chemical or physical properties of the
surface prior to subsequent MP&M operations. Metal deposition
operations (e.g., electroplating, metal spraying) apply a metal coating
to the part surface by chemical or physical means. Organic deposition
operations (e.g., painting, corrosion preventive coating) apply an
organic material to the part by chemical or physical means. Metal and
organic deposition operations may be performed for reasons such as
protecting the surface from wear or corrosion, altering the electrical
properties of the surface, or altering the appearance of the surface.
Surface finishing operations (e.g., chromate conversion coating,
anodizing, sealing) protect and seal the surface of the treated part
from wear or corrosion by chemical means. Assembly operations (e.g.,
welding, soldering, testing, assembly) are performed to complete the
manufacturing, rebuilding, or maintenance process.
Revenues at Phase I MP&M sites range from less than $10,000 to more
than $50 million (in 1989 dollars) annually. Phase I MP&M sites range
in size from less than 10 employees and waste water discharge flows of
less than 100 gallons per year to sites with tens of thousands of
employees and waste water discharge [[Page 28217]] flows exceeding 100
million gallons per year. Table 1 presents information on the waste
water discharge flow ranges for Phase I MP&M sites based on responses
to EPA's survey (See Section V.B. below).
Table 1.--Estimated Distribution of Sites by Baseline Range of Flow
----------------------------------------------------------------------------------------------------------------
Estimated Estimated
total flow total load
Estimated in range in range Estimated Estimated Estimated
Flow range (gal/yr/site) number of (millions (millions percent of percent of percent of
sites of gal/ of lbs/ total sites total flow total load
year) year)
----------------------------------------------------------------------------------------------------------------
0-10,000.......................... 3,216 4.6 3.5 30 <1 1="" 10,000-1,000,000..................="" 5,109="" 800="" 150="" 48="" 3="" 8="" greater="" than="" 1,000,000............="" 2,276="" 22,000="" 1,500="" 22="" 97="" 91="" -----------------------------------------------------------------------------="" totals........................="" 10,601="" 23,000="" 1,600="" 100="" 100="" 100="" ----------------------------------------------------------------------------------------------------------------="" source:="" 1989="" data="" collection="" portfolio.="" as="" shown="" in="" table="" 1,="" sites="" discharging="" more="" than="" 1,000,000="" gallons="" per="" year="" (approximately="" 22%="" of="" the="" total="" phase="" i="" sites)="" account="" for="" approximately="" 97%="" of="" the="" total="" waste="" water="" discharge="" and="" 91%="" of="" the="" pollutant="" load="" from="" the="" industry.="" for="" a="" site="" operating="" 250="" days="" per="" year,="" 1,000,000="" gallons="" per="" year="" translates="" into="" an="" average="" discharge="" flow="" rate="" of="" 4,000="" gallons="" per="" day.="" in="" contrast,="" sites="" discharging="" less="" than="" 10,000="" gallons="" per="" year="" (approximately="" 30%="" of="" the="" total="" phase="" i="" sites)="" account="" for="" less="" than="" one="" percent="" of="" the="" overall="" waste="" water="" discharge="" flow="" and="" approximately="" one="" percent="" of="" the="" pollutant="" load="" for="" the="" industry.="" for="" a="" site="" operating="" 250="" days="" per="" year,="" 10,000="" gallons="" per="" year="" translates="" into="" an="" average="" discharge="" flow="" rate="" of="" 40="" gallons="" per="" day.="" this="" regulation="" applies="" to="" process="" wastewater="" discharges="" from="" plants="" or="" portions="" of="" plants="" within="" the="" mp&m="" phase="" i="" industries="" that="" manufacture,="" maintain,="" or="" rebuild="" finished="" metal="" parts,="" products="" or="" machines="" from="" any="" basis="" metal.="" a="" ``plant="" or="" portion="" of="" a="" plant''="" is="" defined="" to="" include="" all="" activities="" or="" facilities="" located="" in="" a="" single="" building="" or="" on="" a="" contiguous="" parcel="" of="" property="" that="" are="" engaged="" in="" performing="" an="" mp&m-related="" industrial="" function.="" for="" instance,="" if="" an="" entity="" operates="" a="" chrome="" plating="" operation="" and,="" on="" a="" non-adjoining="" parcel="" of="" property="" and="" within="" the="" same="" fence="" line,="" operates="" a="" runway="" or="" vehicle="" maintenance="" shop,="" discharges="" resulting="" from="" these="" different="" activities="" would="" not="" be="" considered="" discharges="" from="" a="" single="" plant.="" epa="" seeks="" comments="" on="" how="" to="" define="" which="" parcels="" of="" property="" within="" the="" same="" fence="" line="" on="" a="" mixed="" use="" property="" are="" contiguous.="" for="" example,="" should="" properties="" be="" divided="" into="" a="" system="" of="" grids="" with="" all="" discharges="" from="" sites="" within="" a="" single="" sector="" considered="" contiguous?="" should="" discharges="" from="" a="" single="" building="" be="" treated="" as="" a="" plant="" or="" portion="" of="" a="" plant="" for="" purposes="" of="" determining="" the="" volume="" of="" discharge="" subject="" to="" regulation?="" another="" option="" would="" be="" for="" permit="" writers="" to="" make="" the="" determination="" case-by-case="" based="" on="" some="" degree="" of="" proximity="" between="" industrial="" operations="" and="" a="" practical="" application="" of="" the="" requirements="" for="" mp&m="" phase="" i="" industries="" (with="" due="" consideration="" to="" the="" amount="" of="" mp&m="" phase="" i="" wastestream="" and="" its="" concentration="" in="" the="" overall="" wastestream="" discharged="" to="" the="" treatment="" works),="" the="" degree="" to="" which="" functions="" are="" related,="" and="" such="" other="" factors="" as="" epa="" considers="" relevant="" to="" the="" determination.="" this="" definition="" is="" relevant="" in="" the="" determination="" of="" the="" amount="" of="" wastewater="" generated="" by="" a="" plant="" and="" the="" applicability="" of="" the="" provisions="" for="" small="" volume="" indirect="" dischargers.="" it="" is="" particularly="" important="" in="" the="" case="" of="" federal,="" state,="" and="" local="" government="" agencies="" or="" entities="" that="" perform="" highly="" varied="" function,="" more="" than="" one="" of="" which="" may="" be="" an="" mp&m="" phase="" i="" or="" ii="" activity="" located="" in="" separate="" areas="" of="" the="" same="" facility.="" for="" instance,="" one="" of="" the="" military="" services="" may="" operate="" an="" airfield,="" a="" metal="" plating="" facility,="" and="" a="" motor="" pool.="" while="" each="" of="" these="" facilities="" would="" be="" considered="" a="" plant,="" it="" would="" be="" illogical="" to="" consider="" the="" entire="" mixed="" use="" facility="" to="" be="" a="" single="" plant="" and="" to="" calculate="" its="" discharges="" collectively.="" unlike="" the="" typical="" industrial="" plant,="" such="" as="" an="" aircraft="" or="" electronic="" equipment="" manufacturing="" plant="" with="" one="" primary="" manufacturing="" activity,="" the="" majority="" of="" military="" installations="" are="" mixed="" use="" facilities="" and="" more="" like="" municipalities="" with="" several="" small="" industries="" as="" well="" as="" other="" operations="" within="" their="" boundaries;="" they="" support="" a="" unique="" and="" wide="" variety="" of="" functions="" and="" activities,="" including="" residential="" housing,="" schools,="" churches,="" recreational="" parks,="" shopping="" centers,="" industrial="" operations,="" training="" ranges,="" airports,="" gas="" stations,="" utility="" plants,="" police="" and="" fire="" departments,="" and="" hospitals.="" installations="" also="" include="" a="" variety="" of="" tenant="" activities,="" including="" contractor="" and="" other="" department="" of="" defense="" federal="" agency="" activities.="" finally,="" the="" geographic="" size="" of="" many="" military="" installations="" (for="" example,="" over="" 300="" square="" miles="" at="" fort="" hood,="" tx="" and="" over="" 1.1="" million="" acres="" at="" the="" china="" lake="" naval="" air="" warfare="" center,="" ca)="" makes="" it="" difficult="" to="" treat="" them="" as="" a="" single="" plant.="" treating="" military="" installations="" or="" other="" mixed="" use="" facilities="" as="" multiple="" plants="" or="" portions="" of="" plants="" allows="" them="" to="" take="" advantage="" of="" any="" less="" stringent="" requirements="" for="" small="" volume="" indirect="" dischargers="" without="" significantly="" increasing="" the="" threat="" to="" human="" health="" or="" the="" environment.="" epa="" seeks="" information="" from="" other="" facilities="" that="" believe="" they="" would="" fall="" within="" this="" mixed="" use="" facility="" category.="" b.="" estimation="" of="" number="" of="" mp&m="" phase="" i="" sites="" between="" 1986="" and="" 1989,="" epa="" conducted="" a="" preliminary="" study="" of="" the="" mp&m="" industry.="" for="" this="" study,="" epa="" identified="" over="" 200="" sic="" codes="" pertaining="" to="" sites="" that="" would="" be="" included="" in="" the="" mp&m="" category="" (including="" phase="" i="" and="" phase="" ii).="" using="" information="" from="" dun="" &="" bradstreet,="" epa="" estimated="" that="" there="" were="" 970,000="" sites="" within="" these="" sic="" codes,="" including="" 278,000="" with="" more="" than="" nine="" employees.="" this="" estimate="" did="" not="" quantify="" the="" number="" of="" water-discharging="" mp&m="" sites.="" the="" basis="" for="" these="" estimates="" and="" a="" discussion="" of="" how="" epa="" identified="" the="" sic="" codes="" included="" in="" the="" mp&m="" category="" are="" presented="" in="" the="" preliminary="" data="" summary="" for="" the="" machinery="" manufacturing="" and="" rebuilding="" industry="" (epa="" 440/1-89/106,="" october="" 1989).="" as="" discussed="" above,="" to="" make="" the="" regulatory="" process="" for="" such="" a="" large="" number="" of="" sites="" more="" manageable,="" epa="" decided="" to="" divide="" the="" mp&m="" category="" into="" two="" segments="" and="" to="" develop="" effluent="" guidelines="" regulations="" in="" phases.="" this="" is="" also="" described="" in="" epa's="" regulatory="" plan="" published="" on="" january="" 2,="" 1990="" (55="" fr="" 80).="" the="" industrial="" sectors="" [[page="" 28218]]="" in="" each="" phase="" are="" listed="" in="" section="" ii.g.="" based="" on="" the="" dun="" &="" bradstreet="" estimates,="" phase="" i="" sectors="" included="" approximately="" 195,000="" sites.="" epa="" used="" the="" information="" collected="" from="" dun="" &="" bradstreet="" to="" conduct="" a="" screener="" survey="" of="" phase="" i="" manufacturing,="" rebuilding,="" and="" maintenance="" sites="" and="" phase="" ii="" manufacturing="" sites.="" this="" survey="" is="" described="" in="" section="" v.b.="" the="" results="" of="" this="" survey="" indicated="" that="" there="" were="" approximately="" 80,000="" mp&m="" phase="" i="" sites.="" the="" difference="" between="" the="" two="" estimates="" (195,000="" sites="" versus="" 80,000="" sites)="" was="" caused="" primarily="" by="" sites="" misclassified="" by="" dun="" &="" bradstreet="" and="" sites="" that="" had="" gone="" out="" of="" business.="" approximately="" 20,000="" of="" the="" mp&m="" phase="" i="" sites="" were="" identified="" by="" the="" screener="" survey="" as="" water-discharging="" sites.="" epa="" used="" the="" data="" collected="" by="" the="" screener="" survey="" to="" conduct="" a="" detailed="" survey="" of="" water-discharging="" mp&m="" phase="" i="" sites.="" this="" questionnaire="" is="" described="" in="" section="" v.b.="" this="" survey="" requested="" detailed="" information="" on="" unit="" operations="" and="" water="" use="" practices.="" the="" results="" of="" this="" survey="" indicated="" that="" there="" were="" an="" estimated="" 10,601="" mp&m="" phase="" i="" water-discharging="" sites.="" the="" difference="" between="" the="" two="" estimates="" of="" water-discharging="" sites="" was="" primarily="" caused="" by="" sites="" that="" had="" misinterpreted="" questions="" on="" the="" screener="" survey.="" c.="" source="" reduction="" review="" project="" section="" 6604="" of="" the="" ppa="" directs="" the="" administrator="" to="" set="" up="" an="" office="" for="" the="" purpose,="" among="" other="" things,="" of="" reviewing="" for="" the="" epa="" administrator="" the="" impact="" that="" agency="" regulations="" would="" have="" on="" source="" reduction="" (see="" 42="" u.s.c.="" 13103).="" this="" office="" is="" to="" ``consider''="" the="" effect="" of="" agency="" programs="" on="" source="" reduction="" efforts="" and="" to="" ``review''="" epa's="" regulations="" prior="" and="" subsequent="" to="" their="" proposal="" to="" determine="" their="" effect="" on="" source="" reduction.="" the="" source="" reduction="" review="" project="" (srrp)="" is="" a="" pilot="" program="" of="" the="" epa="" to="" promote="" a="" source="" reduction="" approach="" in="" designing="" environmental="" regulations.="" the="" project's="" goal="" is="" to="" ensure="" that="" source="" reduction="" measures="" and="" implications="" of="" rules="" to="" other="" regulatory="" programs="" are="" fully="" considered="" during="" development="" of="" regulations.="" to="" the="" extent="" practicable="" and="" consistent="" with="" existing="" law,="" and="" considering="" cost-effectiveness="" as="" appropriate,="" the="" agency="" will="" emphasize="" source="" reduction="" as="" the="" basis="" of="" its="" rules.="" where="" source="" reduction="" cannot="" be="" implemented,="" the="" agency="" will="" consider="" recycling,="" then="" treatment="" and="" if="" necessary="" disposal="" technologies="" and="" practices="" as="" the="" basis="" of="" its="" rules.="" even="" in="" cases="" where="" epa="" cannot="" base="" its="" rule="" on="" source="" reduction="" practices,="" the="" agency="" may="" encourage="" the="" regulated="" community="" to="" consider="" using="" source="" reduction="" measures="" to="" comply="" with="" rules="" by="" providing="" information="" and="" economic="" incentives.="" to="" investigate="" opportunities="" for="" source="" reduction,="" epa="" will="" consider="" source="" reduction="" in="" every="" phase="" of="" rule="" development:="" data="" collection,="" site="" visits,="" bench-scale="" technology="" testing,="" economic="" and="" technical="" analysis,="" multi-media="" impacts="" and="" agency="" and="" public="" reporting.="" since="" initial="" data="" collection="" for="" mp&m="" preceded="" the="" ppa,="" the="" agency="" did="" not="" collect="" much="" information="" about="" source="" reduction="" in="" the="" industry="" survey.="" since="" the="" survey,="" the="" agency="" has="" considered="" and="" evaluated="" opportunities="" for="" source="" reduction.="" in="" addition,="" the="" office="" of="" water="" has="" coordinated="" this="" rule="" with="" efforts="" by="" the="" office="" of="" air="" and="" radiation="" to="" develop="" regulations="" for="" halogenated="" solvents,="" chromium="" electroplating,="" and="" others.="" the="" primary="" sources="" of="" waste="" waters="" generated="" by="" this="" industry="" are="" water-based="" lubricants="" used="" in="" the="" metal="" working="" (machining="" or="" deformation="" operations)="" or="" process="" solutions="" and="" rinses="" associated="" with="" surface="" treatment="" operations="" (cleaning,="" chemical="" etching="" or="" surface="" finishing).="" these="" waste="" waters="" afford="" considerable="" opportunities="" for="" pollution="" prevention="" and="" water="" conservation.="" as="" described="" in="" section="" vii="" of="" this="" preamble,="" epa="" has="" studied="" and="" observed="" a="" number="" of="" pollution-preventing="" and/or="" waste="" water="" conserving="" practices="" at="" a="" wide="" range="" of="" metal="" products="" and="" machinery="" facilities.="" this="" information="" is="" included="" in="" the="" technical="" development="" document="" for="" mp&m="" phase="" i.="" because="" of="" the="" pollution="" prevention="" opportunities="" demonstrated="" by="" this="" industry,="" the="" agency="" has="" included="" this="" rule="" in="" the="" srrp.="" some="" of="" the="" research="" on="" waste="" water="" treatment="" described="" in="" the="" next="" section="" focuses="" on="" waste="" water="" treatment="" that="" also="" allows="" for="" product="" recovery.="" the="" srrp="" designation="" for="" the="" mp&m="" effluent="" guidelines="" has="" prompted="" epa="" to="" look="" more="" closely="" at="" what="" some="" of="" the="" likely="" outcomes="" would="" be="" of="" applying="" the="" identified="" candidate="" bat="" technologies.="" the="" agency="" has="" looked="" beyond="" the="" usual="" estimation="" of="" the="" cost="" expected="" to="" be="" incurred="" by="" the="" industry="" to="" comply="" with="" this="" rule="" and="" the="" pollutants="" expected="" to="" be="" removed="" from="" the="" waste="" water="" stream.="" epa="" also="" has="" estimated="" the="" savings="" that="" might="" be="" realized="" due="" to="" the="" water="" conservation="" and="" product="" recovery="" practices="" that="" are="" part="" of="" the="" best="" available="" technology.="" for="" example,="" epa="" estimated="" the="" savings="" in="" water="" cost="" through="" flow="" reduction,="" as="" well="" as="" the="" reduction="" in="" costs="" for="" end-of-="" pipe="" treatment="" associated="" with="" flow="" reduction.="" epa="" also="" estimated="" the="" cost="" savings="" from="" recovery="" of="" metals="" through="" electrolytic="" recovery,="" and="" savings="" in="" virgin="" coolant="" from="" reduction="" of="" coolant="" discharge="" through="" centrifugation="" and="" pasteurization.="" v.="" data="" gathering="" efforts="" a.="" databases="" in="" developing="" the="" mp&m="" effluent="" guidelines,="" epa="" evaluated="" the="" following="" data="" sources:=""> EPA/EAD databases from development of effluent guidelines for
other metals industries;
The Office of Research and Development (ORD) Risk Reduction
Engineering Laboratory (RREL) treatability database;
The Fate of Priority Pollutants in Publicly Owned Treatment
Works (50 POTW Study) database;
The Domestic Sewage Study; and
The Toxics Release Inventory (TRI) database.
These data sources and their uses for the development of the MP&M Phase
I effluent guidelines are discussed below.
EPA has promulgated effluent guidelines for 13 metals industries
(See Section II.F. above). In developing these effluent guidelines, EPA
collected waste water samples to characterize the unit operations and
treatment systems at sites in these industries. Many of the sampled
unit operations and treatment systems are operated at MP&M sites;
therefore, EPA evaluated these data for transfer to the MP&M effluent
guidelines development effort.
For the MP&M Phase I pollutant loading and waste water
characterization efforts, EPA reviewed the data collected for unit
operations performed at both MP&M sites and at sites in other metals
industries. EPA reviewed the Technical Development Documents (TDDs),
sampling episode reports (SERs), and supporting record materials for
the other metals industries to identify available data. EPA transferred
data for unit operations that met the following two criteria:
The unit operation was performed at MP&M Phase I sites; and
EPA had not collected data for the unit operation from MP&M
sites.
EPA keypunched the data into a database, which was combined with the
data collected from the MP&M sampling program.
For the MP&M technology effectiveness assessment effort, EPA
reviewed data collected to characterize treatment systems sampled for
the development of effluent guidelines for [[Page 28219]] other metals
industries. For several previous effluent guidelines, EPA used
treatment data from metals industries to develop the Combined Metals
Data Base (CMDB), which served as the basis for developing limits for
these industries. EPA also developed a separate database used as the
basis for limits for the Metal Finishing category. EPA used the CMDB
and Metal Finishing data as a guide in identifying well-designed and
well-operated MP&M treatment systems. EPA did not use these data in
developing the MP&M technology effectiveness concentrations, since
sufficient data were collected from MP&M Phase I sites to develop
technology effectiveness concentrations.
EPA's Office of Research and Development (ORD) developed the Risk
Reduction Engineering Laboratory (RREL) treatability database to
provide data on the removal and destruction of chemicals in various
types of media, including water, soil, debris, sludge, and sediment.
This database contains treatability data from publicly owned treatment
works (POTWs) for various pollutants. This database includes physical
and chemical data for each pollutant, the types of treatment used to
treat the specific pollutants, the type of waste water treated, the
size of the POTW, and the treatment concentrations achieved. EPA used
this database to assess removal by POTWs of MP&M pollutants of concern.
In September, 1982, EPA published the Fate of Priority Pollutants
in Publicly Owned Treatment Works (EPA 440/1-82/303), referred to as
the 50 POTW Study. The purpose of this study was to generate, compile,
and report data on the occurrence and fate of the 129 priority
pollutants in 50 POTWs. The report presents all of the data collected,
the results of preliminary evaluations of these data, and the results
of calculations to determine:
The quantity of priority pollutants in the influent to POTWs;
The quantity of priority pollutants discharged from the POTWs;
The quantity of priority pollutants in the effluent from
intermediate process streams; and
The quantity of priority pollutants in the POTW sludge
streams.
EPA used the data from this study to assess removal by POTWs of MP&M
pollutants of concern.
In February, 1986, EPA issued The Report to Congress on the
Discharge of Hazardous Wastes to Publicly Owned Treatment Works (EPA
530-SW-86-004), referred to as the Domestic Sewage Study (DSS). This
report, which was based in part on the 50 POTW Study, revealed a
significant number of sites discharging pollutants to POTWs which are a
threat to the treatment capability of the POTW. These pollutants were
not regulated by national effluent regulations. Some of the major areas
identified were in the metals industries areas, particularly an area
called ``equipment manufacturing and assembly.'' This category included
sites which manufacture such products as office machines, household
appliances, scientific equipment, and industrial machine tools and
equipment. The DSS estimated that the ``equipment manufacturing and
assembly'' category discharges 7,715 metric tons per year of priority
hazardous organic pollutants which are presently unregulated. Data on
priority hazardous metals discharges were unavailable for this
category. Further review of the DSS revealed other categories which
were related to metals industries, namely the motor vehicle category,
which includes servicing of new and used cars and engine and parts
rebuilding; and the transportation services category, which includes
railroad operations, truck service and repair, and aircraft servicing
and repair. EPA used the information in the DSS in development of the
Preliminary Data Summary (PDS) for the MP&M category.
The Toxics Release Inventory (TRI) database contains specific toxic
chemical release and transfer information from manufacturing facilities
throughout the United States. This database was established under the
Emergency Planning and Community Right-to-Know Act of 1986 (EPCRA),
which Congress passed to promote planning for chemical emergencies and
to provide information to the public about the presence and release of
toxic and hazardous chemicals. Each year, manufacturing facilities
meeting certain activity thresholds must report the estimated releases
and transfers of listed toxic chemicals to EPA and to the state or
tribal entity in whose jurisdiction the facility is located. The TRI
list includes more than 300 chemicals in 20 chemical categories.
EPA considered use of the TRI database for development of the MP&M
effluent guidelines. However, EPA did not use TRI data on waste water
discharges from MP&M sites because sufficient data were not available
for effluent guidelines development. For example, in development of the
MP&M effluent guidelines, production data were used that could be
linked directly to pollutant loadings. This information was used to
normalize pollutant loadings to production. The linked production and
pollutant loadings data are not available in the TRI database. EPA also
did not use the data on waste water discharges because many MP&M Phase
I sites do not meet the reporting thresholds for the TRI database.
B. Survey Questionnaires
EPA surveyed the metal products and machinery industry through two
survey instruments pursuant to Section 308 of the Act. The first survey
was titled ``1989 Machinery Manufacturing and Rebuilding Mini Data
Collection Portfolio'' (OMB No. 2040-0148) or MDCP. The MDCP was sent
to a random sample of 8,342 MP&M facilities, stratified within sector
by Standard Industrial Classification (SIC) code. Facilities were
classified by SIC code strata based on Dun & Bradstreet data. The
sample size determination for each strata was based on the use of a
coefficient of variation (CV) minimization procedure. The basic goal of
the CV procedure was to minimize the number of facilities needed for
the survey, subject to the condition that the separate strata variances
would not be too large. The CV minimization procedure is described in
the ``Data Base Summary Report for the Metal Products and Machinery
Mini Data Collection Portfolio.'' A name and address list of sites was
purchased from Dun & Bradstreet. This list included more than twice the
number of sites specified by the CV procedure (for a total of
approximately 22,110 sites). Within each SIC code, Dun & Bradstreet
randomly selected the requested number of sites from the Dun &
Bradstreet data base.
EPA reviewed the Sites listed for each SIC code and deleted sites
from the mailing list for the following three reasons: (1) Sites had
SIC codes which were inconsistent with company names, (2) sites were
corporate headquarters, or (3) sites had insufficient mailing
addresses. After this review, EPA randomly selected sites to receive
the MDCP.
The purpose of the MDCP was to characterize the industry, help in
the selection of sites to receive a more detailed questionnaire, and to
estimate the number of MP&M sites in the country. To characterize sites
engaged in MP&M activities, the MDCP requested the following site-
specific information:
Name and address;
Contact person;
Parent company;
Industrial sectors in which the site manufactures, rebuilds or
maintains machines or metal components;
SIC codes corresponding to products at the
site; [[Page 28220]]
Number of employees;
Annual revenues;
Unit operations performed at the site;
Process water use and waste water discharge for each unit
operation performed at the site; and
Base metals on which each unit operation is preformed.
EPA sent the MDCP to randomly selected MP&M Phase I sites engaged
in manufacturing, rebuilding, or maintenance operations. The MDCP was
also sent to selected MP&M Phase II manufacturing sites to characterize
the interfaces between MP&M phases. The MDCP was not sent to sites with
SIC codes indicating that the sites were engaged in MP&M Phase II
rebuilding or maintenance operations.
The MDCP survey estimated that approximately 80,000 sites were
engaged in Phase I sector activities. The majority of these sites were
engaged only in Phase I sectors, since the majority of the MDCPs were
sent to sites within Phase I sectors. The remainder of the sites were
phase overlapped sites (engaged in industrial sectors in both Phase I
and II) or Phase II only sites. Some of the smaller sites could have
been misclassified as to their industrial sector based on the results
of the MDCP, because the sites did not know their SIC code. Uncertainty
as to SIC code is one of the reasons that EPA is not proposing to
define the MP&M Phase I applicability in terms of SIC codes. Less than
half of all engaged sites were estimated to be water users, and less
than one-fourth were estimated to be water dischargers. Sites with
operations in both Phase I and II (``overlap sites'') were more likely
to use water than sites engaged only in Phase I activities (50% vs.
35%). This may be partly because overlap sites were on average larger
with respect to number of employees and revenues than sites engaged in
Phase I activities only. In general, larger sites were more likely to
use water than smaller sites. Nonconfidential information from the
MDCPs is included in the MP&M public record.
The second questionnaire, entitled ``1989 Machinery Manufacturing
and Rebuilding Data Collection Portfolio (DCP)'' (OMB No. 2040-0148),
was designed to collect detailed technical and financial information
from water-using MP&M sites. Eight hundred ninety-six questionnaires
were mailed in January 1991. Because a number of questionnaires were
returned undelivered, an additional 124 questionnaires were mailed in
January and February 1991, for a total of 1,020. EPA assumed that the
undelivered DCP questionnaires represented sites that had gone out of
business since the MDCP survey.
The DCP was divided into six parts:
General information;
Process information;
Water supply;
Waste water treatment and discharge;
Process and hazardous wastes; and
Financial and economic information.
The general information was requested to identify the site, to
characterize the site by certain parameters (including number of
employees, age, and location), and to confirm that the site was engaged
in MP&M activities.
The process information requested included details on products,
production levels, unit operations, activity, water use for unit
operations, waste water discharge from unit operations, miscellaneous
waste water sources, pollution prevention or water conservation
practices, and air pollution control for unit operations.
The water supply section requested the site to specify the source
of water, average intake flow, average intake operating hours, and the
percentage of water used for MP&M operations.
EPA requested detailed information on the waste water treatment
systems used and the discharge volumes (including residuals), including
a block diagram of the waste water treatment system; self-sampling
monitoring data; and capital and operating cost data (including
treatment chemical usage).
The fifth section of the questionnaire requested detailed
information on the types, amounts and composition of solid/hazardous
wastes generated during production to evaluate the types and amounts of
pollutants currently discharged, the amount of pollutants that are
contract-hauled off-site, and the cost of hauling pollutants.
The sixth section requested information on the site's finances and
corporate structure.
EPA selected sites to receive the DCP based on the responses
obtained by the MDCP and other factors. Three population groups formed
the basis of the survey of this industry.
1. Water-discharging Phase I and overlap MDCP sites;
2. Water-using Phase I and overlap MDCP sites that do not discharge
process water; and
3. Key water-discharging MP&M Phase I and overlap sites that did
not receive the MDCP (discussed further below).
EPA sent DCP's to all 860 Phase I and overlap water-discharging
MDCP sites to characterize the potential variations in unit operations
performed and water use practices among sites in the MP&M industry.
In addition, a random sample of 50 MDCP recipients that use but do
not discharge process water was selected by EPA to receive the DCP in
order to provide information on potential zero-discharge unit
operations. EPA selected these sites to obtain information on water-use
practices from sites that use but do not discharge process water, and
to determine if ``zero-discharge'' practices employed at those sites
may be used at other MP&M sites. An additional 24 MDCP recipients that
use but do not discharge process water were selected by EPA. These
sites were selected to provide information on specific unit operations
expected at each site.
Eighty-six sites that did not receive the MDCP were selected by EPA
to receive the DCP. These sites represent key MP&M companies that were
not selected as DCP recipients based on the MDCP responses. EPA's
intent in selecting these sites was to characterize leading companies
in the MP&M category. The key companies were identified from the Dun &
Bradstreet company listings, the Thomas Register, and MP&M site visits.
These key companies reported annual revenues of $50 million or more or
were recognized by the EPA to be leading companies in their particular
sector. Each company was contacted to identify sites within the company
that were engaged in MP&M activities and used process water to perform
MP&M unit operations. The one or two sites believed to perform the most
water-using MP&M unit operations from each key company were selected to
receive the DCP. Non-confidential information contained in the DCPs are
included in the public record.
C. Waste Water Sampling and Site Visits
EPA visited 98 MP&M sites between 1986 and 1993 to collect
information about MP&M unit operations, water use practices, pollution
prevention and treatment technologies and waste disposal methods, and
to evaluate sites for potential inclusion in the MP&M sampling program.
In general, EPA selected sites for visits to encompass the range of
sectors, unit operations, in-process source reduction and recycling
practices, and treatment operations within the MP&M industry. EPA's
site visits encompassed sites in both Phase I and II but focused
primarily on Phase I sites. EPA also performed site visits at military
installations, government owned and operated sites, and government
owned contractor operated sites. In addition, EPA visited four job shop
electroplating sites that performed [[Page 28221]] in-process source
reduction and recycling technologies.
EPA selected sites from information contained in the MDCPs and
DCPs, and also through contacts with EPA regional personnel, state
environmental agency personnel, local pretreatment coordinators, and
pollution prevention and technical assistance providers. These
personnel helped EPA identify MP&M sites believed to be operating in-
process source reduction and recycling technologies or end-of-pipe
waste water treatment technologies.
To ensure that EPA selected sites that encompassed the range of
sectors and unit operations within the MP&M industry, the Agency used
the following general criteria as part of the basis for selecting sites
for visits:
1. The site performed MP&M unit operations in an industrial
sector in which sites had not previously been visited.
2. The site performed MP&M unit operations that had not been
observed during previous site visits.
3. The site had water use practices that were believed to be
representative of the site's industrial sector.
4. The site operated in-process source reduction, recycling, or
end-of-pipe treatment technologies considered in the development of
the MP&M technology options.
EPA visited sites of various sizes, with waste water flows ranging
from less than 200 gallons/day to more than 1,000,000 gallons/day.
EPA collected detailed information from the sites visited such as
unit operations performed and the types of metals processed through
these operations, purpose of the unit operation and any waste water
associated with it, and in-process source reduction and water
conservation practices as well as whether these source reduction
practices caused any cross-media impacts. Also collected during the
site visits were information on the end-of-pipe treatment technologies
and, if the facility was a candidate for sampling, the logistics of
collecting samples. All nonconfidential information collected during
site visits are included in the public record.
The Agency conducted waste water sampling at 27 sites between 1986
and 1993. EPA sampled at least two sites in each of the seven MP&M
Phase I sectors, as well as several sites in Phase II sectors. EPA also
sampled waste water at one job shop electroplating site to characterize
surface treatment operations and end-of-pipe treatment systems that
were comparable to MP&M unit operation and treatment systems. EPA
selected sites for sampling for reasons such as the following:
The site performed MP&M unit operations that had not been
sampled at other sites;
The site processed metals through MP&M unit operations for
which the metal/unit operation combination had not been sampled at
other sites;
The site performed in-process source reduction recycling,
or end-of-pipe treatment technologies that were considered for
technology option development; or
The site performed unit operations in a sector in which
samples had not previously been collected.
EPA sampled sites with waste water flows ranging from less than 200
gallons/day to greater than 600,000 gallons/day.
During sampling, EPA collected samples of both raw (untreated)
waste water and treated waste water, frequently across individual unit
treatment operations, to characterize the performance of the entire
treatment system. In addition, EPA gathered flow data corresponding to
each sample, and design and operating parameters for source reduction,
recycling and treatment technologies. EPA also collected samples of
unit operations to determine pollutant loadings at the unit operation
level as well as flow and production data corresponding to each sample.
All data collected during the sampling episodes are included in the
sampling reports which are in the rulemaking record.
D. EPA Bench Scale Treatability Studies (Terpene Study)
Terpenes are a broad classification of 10, 15, 20 or 30 carbon-atom
compounds and derivatives produced from citrus fruits, wood turpentine,
and wood pulp byproducts. Increasingly, these compounds are being used
in industrial cleaning formulations designed for printed circuit board
defluxing and metal degreasing operations. The popularity of these
terpene-based cleaners is based primarily on their ability to replace
the usage of suspected ozone-depleting chemicals such as 1,1,1-
trichloroethane and 1,1,2-trichloro-1,2,2-trifluoroethane (e.g., CFC-
113).
In general, the use of terpene-based cleaners in these applications
is considered environmentally preferable to chlorinated solvents.
However, studies conducted by EPA's Office of Toxic Substances (OTS)
indicate that substitution of chlorinated solvents with terpene-based
cleaners will result in increased discharges of these chemicals to
waste water from these industrial operations. The OTS studies also
identified potential aquatic toxicity concerns associated with several
specific terpene compounds. These concerns, combined with the fact that
most industrial facilities engaged in printed circuit board defluxing
and metal cleaning operations discharge their waste water into public
sewers, created the need to better understand the fate of terpene
compounds in a typical municipal waste water treatment system.
EPA's Risk Reduction Engineering Laboratory (RREL) conducted a
study to quantify the fate of specific terpene compounds in the
activated sludge waste water treatment process. The study was conducted
using pilot-scale equipment at EPA's Test and Evaluation (T&E) Facility
in Cincinnati, Ohio. The specific goal of the research was to establish
the percentage of the terpene mass entering a typical activated sludge
process that is (1) biodegraded, (2) partitioned to waste sludge, (3)
volatilized to air, and/or (4) passed through the treatment process
unchanged.
This study on the fate of specific terpene compounds in the
activated sludge waste water treatment process produced the following
conclusions:
The primary fate of d-limonene and terpinolene in a typical
municipal waste water treatment process (primary clarifier/activated
sludge) is biodegradation followed by sorption onto primary
clarifier solids and volatilization.
The activated sludge process typically produces d-limonene
and terpinolene effluent concentrations below 10 g/L,
corresponding to influent concentrations as high as 10,000
g/L.
EPA's terpene study was conducted to determine the treatability of
terpene in municipal waste water treatment systems. The results of the
study indicate that the primary removal mechanism for the terpenes
studied in the activated sludge process is biodegradation. EPA studied
terpenes because they represent one broad class of compounds in use as
replacements for ozone depleting chlorinated solvents. A wide variety
of non-terpene compounds are also being used as solvent substitutes,
but these compounds were not examined in this study.
VI. Industry Subcategorization
EPA is not proposing to subcategorize the MP&M Phase I category.
EPA considered a number of potential subcategorization schemes as
described below, but concluded that no basis exists for creating
subcategories and the only way to establish a categorical regulation
that could be implemented to ensure the most effective treatment and
removal of waste water pollutants was [[Page 28222]] to not
subcategorize this industrial category.
The subcategorization factors considered were based on
subcategorization factors required by the Clean Water Act, as well as
factors that have been used as a basis for subcategorization in other
metals industry regulations. These factors include:
unit operation;
activity;
raw materials;
products;
size of site;
location;
age;
economic impacts;
total energy requirements;
air pollution control methods; and
solid waste generation and disposal.
EPA considered subcategorizing the MP&M Phase I category by unit
operation. EPA identified 47 unit operations, subsets of which are
typically performed at MP&M sites. These unit operations can use
differing amounts of water, generate different pollutant loadings, and
can be performed in different combinations; however, the resulting
waste waters exhibit general characteristics that allow the waste
waters to be treated by the technologies on which this proposed rule is
based (See Section IX.). Subcategorization by unit operation is
technically feasible, but would result in approximately 47
subcategories with facilities operating under numerous subcategories.
This would result in a very complex and unmanageable regulatory
structure. The waste water characteristics for a given unit operation
are expected to be similar across the other subcategorization factors
listed above. As a result, EPA is not proposing to subcategorize by
unit operation.
EPA also considered subcategorizing this industry by activity;
i.e., manufacturing, rebuilding, and maintenance. Manufacturing is
defined as the series of unit operations necessary to produce metal
products, generally performed in a production environment. Rebuilding
is defined as the series of unit operations necessary to disassemble
used metal products into components, replace one or more components or
subassemblies or restore them to original function, and reassemble the
metal product. Rebuilding is generally performed in a production
environment. Maintenance is defined as the series of unit operations,
on original or replacement components, required to keep metal products
in operating condition. Maintenance is generally performed in a non-
production environment.
Based on the results of the DCP survey, the estimated percentages
of water discharging Phase I sites performing each activity are listed
below:
Percent
Manufacturing only............................................ 71
Rebuilding only............................................... 1
Maintenance only.............................................. 8
Manufacturing and rebuilding.................................. 13
Manufacturing and maintenance................................. 2
Rebuilding and maintenance.................................... 2
Manufacturing, rebuilding & maintenance....................... 3
With the exception of the initial cleaning steps for rebuilding and
maintenance (discussed below), waste water characteristics do not vary
across activity. Results of analyses of the DCP database indicate that
the production-normalized flow (volume of waste water discharged per
unit of production) for each unit operation does not depend on the
activity. Additionally, for sites performing multiple activities, the
same unit operations are often used for multiple activities (e.g., a
machining process may be used to both manufacture and rebuild parts).
Information collected during site visits at MP&M Phase I sites supports
these conclusions.
The initial cleaning steps associated with rebuilding and
maintenance may have unique waste water characteristics because of the
presence of oil, grease, and grime not present in cleaning during
manufacturing. These pollutants are present in waste waters generated
by other operations at manufacturing, rebuilding, and maintenance sites
(e.g., machining and grinding), and a technology used to remove these
pollutants (oil-water separation) is included in the technology options
considered for MP&M Phase I. Based on analytical data collected at
rebuilding sites, the waste waters from initial cleaning require
additional preliminary treatment capacity for oil-water separation, but
do not impact the overall treatability of waste water from rebuilding
sites. The impact of the oil and grime in the initial cleaning steps
was accounted for in the development of compliance cost estimates and
pollutant loading estimates. Because the initial cleaning steps do not
impact waste water treatability, sites performing these cleaning steps
can achieve the same effluent concentrations as sites that don't
perform these steps.
Subcategorization by raw material may be appropriate when sites
process similar types of raw materials, and these raw materials dictate
a site's overall waste water characteristics. Raw materials at MP&M
sites consist of base metals processed (e.g., bar stock, sheet stock,
ingots, formed parts) and applied materials (e.g., paint, corrosion
preventive coatings, metal applied during electroplating, electroless
plating, and metal spraying).
Data from the DCP database and site visits indicate that the waste
water discharge rates from unit operations are not dependent on the
base metal processed or material applied. The base metal or material
applied affects the site's waste water characteristics; however, EPA
accounted for this in calculating technology effectiveness
concentrations and pollutant loading estimates.
Based on the DCP results it is estimated that more than half of the
MP&M Phase I sites process more than one type of base metal or metal
applied. The estimated percentages of sites by the number of metal
types processed are as follows:
Percent
Zero metal types.............................................. <1 one="" metal="" type................................................="" 43="" two="" metal="" types...............................................="" 32="" three="" metal="" types.............................................="" 15="" four="" metal="" types..............................................="" 4="" five="" or="" more="" metal="" types......................................="" 6="" the="" metal="" types="" processed="" at="" mp&m="" sites="" are="" diverse,="" and="" sites="" periodically="" change="" metal="" types.="" at="" sites="" processing="" multiple="" metal="" types,="" individual="" unit="" operations="" frequently="" process="" more="" than="" one="" metal="" type="" (e.g.,="" a="" machining="" operation="" can="" process="" nickel,="" aluminum,="" and="" iron="" parts).="" additionally,="" not="" all="" metal="" types="" processed="" at="" a="" site="" are="" processed="" through="" all="" unit="" operations.="" for="" example,="" a="" site="" may="" process="" aluminum="" and="" iron="" base="" metals.="" anodizing="" is="" performed="" on="" the="" aluminum,="" and="" electroplating="" on="" the="" iron.="" both="" metals="" share="" the="" same="" alkaline="" and="" acid="" treatments.="" subcategorizing="" by="" base="" metal="" type="" would="" place="" the="" anodizing="" operation="" in="" the="" aluminum="" subcategory,="" the="" electroplating="" operation="" in="" the="" iron="" subcategory,="" and="" the="" alkaline="" and="" acid="" treatments="" in="" both="" subcategories.="" while="" this="" subcategorization="" scheme="" is="" possible,="" the="" agency="" did="" not="" select="" this="" approach="" because="" the="" waste="" water="" discharge="" rates="" from="" unit="" operations="" are="" not="" dependent="" on="" metal="" type.="" also,="" epa="" considered="" the="" effect="" of="" metal="" type="" on="" waste="" water="" characteristics="" in="" calculating="" technology="" effectiveness="" concentrations="" and="" pollutant="" loadings.="" epa="" considered="" subcategorizing="" the="" mp&m="" category="" by="" industrial="" sector="" (e.g.,="" aerospace,="" aircraft,="" electronic="" [[page="" 28223]]="" equipment,="" hardware,="" mobile="" industrial="" equipment,="" ordnance,="" and="" stationary="" industrial="" equipment).="" however,="" waste="" water="" characteristics,="" unit="" operations,="" and="" raw="" materials="" used="" to="" produce="" products="" within="" a="" given="" sector="" are="" not="" always="" the="" same="" from="" site="" to="" site,="" and="" they="" are="" not="" always="" different="" from="" sector="" to="" sector.="" within="" each="" sector,="" sites="" can="" perform="" a="" variety="" of="" unit="" operations="" on="" a="" variety="" of="" raw="" materials.="" for="" example,="" a="" site="" in="" the="" aerospace="" sector="" may="" primarily="" machine="" aluminum="" missile="" components="" and="" not="" perform="" any="" surface="" treatment="" other="" than="" alkaline="" cleaning.="" another="" site="" in="" that="" sector="" may="" electroplate="" iron="" parts="" for="" missiles="" and="" perform="" little="" or="" no="" machining.="" waste="" water="" characteristics="" from="" these="" sites="" may="" differ="" because="" of="" the="" different="" unit="" operations="" performed="" and="" different="" raw="" materials="" used.="" based="" on="" the="" analytical="" data="" collected="" for="" this="" rule,="" epa="" has="" found="" no="" statistically="" significant="" difference="" in="" industrial="" waste="" water="" discharge="" among="" industrial="" sectors="" for="" cadmium,="" chromium,="" copper,="" cyanide,="" lead,="" nickel,="" oil="" &="" grease,="" silver,="" tss="" and="" zinc.="" the="" analytical="" data="" are="" available="" in="" the="" public="" record="" for="" this="" rulemaking.="" most="" mp&m="" unit="" operations="" are="" not="" unique="" to="" a="" particular="" sector="" and="" are="" performed="" across="" all="" sectors.="" major="" waste="" water-generating="" unit="" operations="" (e.g.,="" alkaline="" treatment,="" acid="" treatment,="" machining,="" electroplating)="" are="" performed="" in="" all="" sectors.="" the="" unit="" operations="" that="" are="" rarely="" performed="" (e.g.,="" abrasive="" jet="" machining)="" are="" not="" performed="" in="" all="" sectors,="" but="" are="" also="" not="" limited="" to="" a="" single="" sector.="" based="" on="" the="" information="" obtained="" from="" engineering="" site="" visits="" and="" sampling="" episodes,="" these="" unit="" operations="" do="" not="" affect="" the="" overall="" treatability="" of="" waste="" waters="" generated="" at="" sites="" performing="" these="" unit="" operations.="" therefore,="" the="" raw="" waste="" waters="" are="" expected="" to="" have="" similar="" treatability="" across="" the="" mp&m="" phase="" i="" sectors.="" epa="" considered="" subcategorization="" of="" the="" mp&m="" phase="" i="" category="" on="" the="" basis="" of="" site="" size.="" three="" parameters="" were="" identified="" as="" relative="" measures="" of="" mp&m="" site="" size:="" number="" of="" employees,="" production,="" and="" waste="" water="" discharge="" flow="" rate.="" raw="" materials,="" unit="" operations,="" and="" waste="" water="" characteristics="" are="" independent="" of="" the="" number="" of="" site="" employees.="" a="" review="" of="" the="" dcp="" database="" shows="" that="" production-normalized="" flows="" do="" not="" depend="" on="" the="" number="" of="" employees.="" a="" correlation="" between="" the="" number="" of="" employees="" and="" waste="" water="" generation="" can="" be="" difficult="" to="" develop="" due="" to="" variations="" in="" staff.="" fluctuations="" can="" occur="" for="" many="" reasons,="" including="" shift="" differences,="" clerical="" and="" administrative="" support,="" maintenance="" workers,="" efficiency="" of="" site="" operations,="" degree="" of="" automation,="" and="" market="" fluctuations.="" for="" these="" reasons,="" epa="" did="" not="" subcategorize="" by="" number="" of="" employees.="" epa="" did="" not="" subcategorize="" by="" site="" production,="" since="" the="" production="" through="" an="" mp&m="" phase="" i="" site="" does="" not="" reflect="" the="" production="" through="" process="" waste="" water-generating="" unit="" operations.="" for="" example,="" two="" sites="" may="" each="" process="" 100="" tons="" of="" steel="" annually.="" one="" site="" may="" process="" all="" of="" the="" steel="" through="" an="" electroplating="" line,="" while="" the="" other="" may="" perform="" dry="" assembly="" for="" 95="" tons,="" and="" process="" five="" tons="" through="" a="" machining="" operation.="" if="" production="" through="" the="" entire="" site="" were="" used="" for="" subcategorization,="" these="" two="" sites="" would="" be="" placed="" in="" the="" same="" subcategory="" while="" their="" waste="" water="" characteristics="" would="" be="" different.="" epa="" did="" not="" subcategorize="" by="" site="" waste="" water="" discharge="" flow="" rate="" because="" the="" waste="" water="" characteristics="" for="" a="" site="" are="" independent="" of="" the="" overall="" waste="" water="" discharge="" flow="" rate="" from="" a="" site.="" waste="" water="" characteristics="" are="" primarily="" a="" function="" of="" the="" raw="" materials="" and="" unit="" operations="" at="" a="" site,="" and="" not="" the="" site's="" waste="" water="" discharge="" flow.="" for="" example,="" a="" site="" performing="" one="" machining="" operation="" on="" steel="" and="" discharging="" 100="" gallons="" per="" year="" (gpy)="" of="" waste="" water="" would="" have="" similar="" waste="" water="" characteristics="" as="" a="" site="" with="" 1,000="" machining="" operations="" on="" steel="" discharging="" 100,000="" gpy,="" provided="" the="" sites="" have="" similar="" water="" use="" practices.="" a="" review="" of="" the="" dcp="" database="" shows="" that="" water="" use="" practices,="" as="" measured="" by="" production-normalized="" flow="" rates,="" do="" not="" depend="" on="" the="" overall="" waste="" water="" discharge="" flow="" rate="" from="" a="" site.="" the="" raw="" materials="" and="" unit="" operations="" also="" do="" not="" vary="" by="" site="" discharge="" flow="" rate.="" for="" sites="" discharging="" to="" publicly="" owned="" treatment="" works="" (potws),="" epa="" divided="" the="" mp&m="" phase="" i="" population="" by="" waste="" water="" discharge="" rate="" to="" facilitate="" implementation="" (see="" section="" iii.e).="" epa="" also="" considered="" subcategorizing="" mp&m="" facilities="" on="" the="" basis="" of="" economic="" characteristics="" of="" these="" facilities.="" if="" a="" group="" of="" facilities="" with="" common="" economic="" characteristics,="" such="" as="" revenue="" size,="" was="" in="" a="" much="" better="" or="" worse="" financial="" condition="" than="" others,="" then="" it="" might="" be="" appropriate="" to="" subcategorize="" based="" on="" economics.="" however,="" analyses="" of="" the="" financial="" conditions="" of="" facilities="" showed="" no="" significant="" pattern="" of="" variation="" across="" possible="" subcategories.="" while="" any="" group="" of="" facilities="" is="" likely="" to="" differ="" from="" any="" other="" group="" of="" facilities,="" the="" relevant="" issue="" is="" whether="" these="" differences="" were="" random="" differences="" due="" to="" the="" normal="" variation="" characteristic="" of="" all="" mp&m="" businesses,="" or="" whether="" these="" differences="" were="" systematically="" and="" predictably="" related="" to="" some="" shared="" economic="" characteristic.="" linear="" regression="" and="" logistic="" regression="" were="" used="" to="" test="" for="" systematic="" variations="" in="" the="" financial="" condition="" and="" performance="" of="" subcategories="" of="" facilities="" grouped="" according="" to="" the="" following="" kinds="" of="" economic="" characteristics:=""> Primary Line of Business: Facilities were assigned to MP&M
sectors according to the sector in which they earned most of their
revenues. The financial condition and performance of facilities across
sectors did not vary in a statistically significant way.
Customer Type: Responding facilities indicated the
percentage of revenues they earned from three customer types,
government, domestic non-government and foreign customers. When
facilities were grouped according to their dependence on each of these
customer types, statistical analyses found no significant differences
in the financial condition or performance of the various groups.
MP&M Activity: Responding facilities indicated the
percentage of revenues they earned from each of three categories of
activities (manufacturing, repairing and rebuilding). Facility
financial performance and condition did not vary systematically with
variations in dependence on the three categories of activities.
Revenue Size: Facilities subcategorized by revenue size
did not differ in financial condition or performance in a statistically
significant way.
Appendix D of the Industry Profile of the Metal Products and
Machinery Industry Phase I documents the methodology and findings in
detail. This document is in the MP&M public record. Based on these
analyses, EPA found no reasonable economic basis for subcategorizing
MP&M facilities.
EPA is directed by the Clean Water Act to consider geographic
location as a potential factor in subcategorizing an industrial
category. The MP&M sites are generally located all over the country,
however, almost two-thirds are located east of the Mississippi, with
pockets of sites in Texas and California. EPA generally found that the
sites located in California had installed more water conservation
equipment and were generally more sensitive to water consumption
concerns than the sites located in the rest of the country. EPA expects
this is due to the nearly decade long drought suffered by California
[[Page 28224]] during the 1980's, as well as local regulations that are
often stricter than other areas of the country. However, EPA did not
find this limited water conservation a sufficient basis for
subcategorization.
Other factors that EPA is directed to consider by the Clean Water
Act include total energy requirements, non-water quality
considerations, and age of facilities. Energy requirements vary widely
throughout the MP&M Phase I category; however, EPA did not
subcategorize by this factor because the energy requirements are not
directly related to waste water characteristics. Energy costs resulting
from this regulation were accounted for in the economic impact
assessment for this regulation. Non-water quality considerations
include solid waste and air pollution generation. EPA did not
subcategorize by these factors because solid waste and air pollution
characteristics and generation rates depend on the raw materials
processed and unit operations performed at MP&M sites, and are not
directly related to waste water characteristics. The non-water quality
impacts and costs of solid waste and air pollution control associated
with this regulation were considered in the economic analysis and
regulatory impact analysis for this regulation.
EPA did not subcategorize by age of facility because site age does
not account for differences in raw waste water characteristics. The
percentage of sites by the decade in which they were built is listed
below. This information is based on the DCP respondents that reported
the date in which their facility was built:
Percent
Before 1920................................................... 4
1920 through 1929............................................. 3
1930 through 1939............................................. 2
1940 through 1949............................................. 8
1950 through 1959............................................. 8
1960 through 1969............................................. 13
1970 through 1979............................................. 40
1980 through 1989............................................. 21
1990*......................................................... 1
* The DCP was mailed on January 2, 1991.
The majority of the sites have been built since 1960. The DCP
respondents reported a wide range of ages; however, based on
information in the DCPs and from site visits, MP&M Phase I sites
continually modernize to remain competitive. For example, several sites
visited that were built before 1960 had recently installed either new
electroplating lines with in-process pollution control technologies or
in-process pollution control technologies on existing electroplating
lines. Another site which was initially built before 1940 had recently
installed a new heat treating process. This type of modernization is
typical in the MP&M Phase I industry. Modernization of production
processes and pollution control equipment produces similar wastes among
all sites of various ages that are performing similar types of
operations; therefore, site age does not account for differences in the
raw waste water characteristics and was not selected as a basis for
subcategorization.
VII. Water Use and Waste Water Characteristics
A. Waste Water Sources and Characteristics
The unit operations included in the MP&M category can be classified
by water use practices into those that typically use process water and
discharge process waste water, unit operations that typically either do
not use process water or use process water but do not discharge waste
water, and miscellaneous operations reported in DCP responses by fewer
than five MP&M sites.
Process waste water includes any water that, during manufacturing
or processing, comes into direct contact with or results from the
production or use of any raw materials, intermediate products, finished
products, by-products, or waste products. Process waste water includes
waste water from wet air pollution control devices. Non-contact cooling
water is not considered a process waste water. Non-aqueous wastes used
as processing liquids, such as spent solvents or quench oil, are also
not considered process waste waters.
As discussed below, waste waters from the operations that use
process water have different characteristics depending on the unit
operation from which they are derived. First, oil-bearing waste waters
are typically metal shaping coolants and lubricants, surface
preparation solutions used to remove oil and dirt from components, and
associated rinses. Some examples of oil-bearing waste waters are:
machining and grinding coolants and lubricants; pressure and impact
deformation lubricants; dye penetrant and magnetic flux testing; and
alkaline cleaning solutions and rinses used to remove oil and dirt.
These waste waters typically require preliminary treatment to remove
oil. Chemical emulsion breaking followed by oil skimming is typically
used for this treatment. Membrane separation technologies are also used
for oil removal.
Second, hexavalent chromium-bearing waste water typically consists
of concentrated surface preparation or metal deposition solutions,
sealants, and associated rinses. Some examples of hexavalent chromium-
bearing waste waters are: chromic acid treatment solutions and rinses;
chromate conversion coating solutions and rinses; and chromium
electroplating solutions and rinses. These waste waters typically
require preliminary treatment to reduce the hexavalent chromium to
trivalent chromium for subsequent chemical precipitation and settling.
Sodium metabisulfite is typically used for this reduction.
Third, process waste waters that contain cyanide are typically
generated by surface preparation or metal deposition solutions and
their associated rinses. Two examples of cyanide-bearing waste waters
are: cyanide-bearing alkaline treatment solutions and rinses (typically
used as a surface treatment step prior to electroplating with cyanide
solutions) and cyanide-bearing electroplating solutions and rinses.
These waste waters typically require preliminary treatment to destroy
cyanide and facilitate subsequent chemical precipitation and settling.
Sodium hypochlorite is typically used for this treatment.
Fourth, process waste waters that contain complexed metals are
typically concentrated surface preparation or metal deposition
solutions and their associated rinses. Complexed metal-bearing waste
waters are usually generated at MP&M sites by electroless plating
operations and their rinses. These waste waters require preliminary
treatment to break the complexes for subsequent chemical precipitation
and settling.
Finally, virtually all of the MP&M process waste waters contain
some metallic pollutants. The most concentrated metal bearing waste
waters include metal shaping solutions, surface preparation solutions,
metal deposition solutions, and surface finishing solutions. Chemical
precipitation (usually with either lime or sodium hydroxide) and
settling is typically used for metals removal. Coagulants and
flocculants may be added to assist chemical precipitation and settling.
B. Pollution Prevention, Recycle, Reuse and Water Conservation
Practices
The data gathered to support this rule indicate that a number of
pollution prevention and water conservation practices exist in the MP&M
industries. Some of these pollution prevention, recycling, and water
conservation practices were determined to be broadly applicable to the
MP&M category, and [[Page 28225]] these were included in the technology
options (see Section III.A.).
A large number of additional pollution prevention practices were
site specific and could not be used as the basis for a national
standard. However, EPA considers it important to make this site
specific pollution prevention information available for possible use by
MP&M sites. Therefore, the Technical Development Document contains a
bibliography of the pollution prevention practices identified during
the development of this rule. EPA's proposed flow guidance also
discusses the applicability of the more prevalent pollution practices
identified in this category.
VIII. Approach for Estimating Costs and Pollution Reductions
Achieved by Waste Water Control Technology
EPA estimated industry-wide compliance costs and pollutant loadings
using model sites based on DCP respondents and a computerized design
and cost model for the MP&M technology options. Industry-wide costs and
pollutant loadings were estimated for three technology options based on
technologies designed for 396 model sites. Statistically calculated
weights were used to scale those results to the estimated 10,601 MP&M
Phase I sites nationwide which are expected to incur costs under the
regulation.
The 396 model sites were a subset of the 860 sites which indicated
that they were water dischargers on their MDCP survey response. Six
hundred seventy five of these sites returned the subsequent DCP and
their responses were entered into the DCP database. Of these 675 sites
in the DCP database, 396 were chosen to be model sites for the
following reasons:
The site generated revenue from a Phase I sector, as
determined from the economic section of the DCP (for some sites, an
economic sector was not identified; therefore, the sector identified in
the technical section of the DCP was used); and
The site supplied sufficient economic and technical data
to estimate compliance costs and pollutant loadings of the MP&M
technology options.
Each of the 396 sites selected was assessed to determine the unit
operations, waste water characteristics and treatment technologies
currently in place at the sites.
Based on the information provided by the sites in their DCP
responses, follow-up letters, and phone calls, each waste water stream
was classified by the type of unit operation (e.g., machining,
electroplating, acid treatment, etc.) and base metal type (e.g., steel,
aluminum, zinc, etc.). The following additional DCP data were used to
characterize process waste water streams: waste water discharge flow
rate, production rate, operating schedule, and discharge destination.
Many of the 396 sites provided these data for all waste water streams
generated on site. For sites that did not provide complete data, the
missing data were either estimated based on technical considerations
specific to the site, or were statistically imputed. The concentration
of each pollutant in each waste water stream was modelled from field
sampling of waste water discharges from the unit operation/metal type
combinations at other MP&M sites. DCP responses were used 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 waste water to each treatment unit; and the
operating schedule of each treatment unit.
A computerized design and cost model was developed to estimate
compliance costs and pollutant loadings for the MP&M technology
options, taking into account each site's level of treatment in place.
The model was programmed with technology-specific modules which
calculated the costs for various combinations of technologies as
required by the technology options and the model site waste water
stream characteristics. Design and cost data were based on MP&M site
data, literature data, and vendor data.
Technology-specific cost modules were developed for the in-process
pollution prevention and water use reduction technologies and end-of-
pipe treatment technologies discussed in Section IX below. 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;
Metal reclaimed and associated cost credit;
Chemical usage reduction and associated cost credit;
Effluent flow rate; and
Effluent pollutant concentrations.
If contract hauling of waste water for off-site treatment and
disposal was less costly than on-site treatment, EPA estimated costs
assuming the model site would contract haul the waste water. EPA made
this assessment on a technology-specific basis.
After estimation of capital and operating and maintenance costs,
the total capital investment (TCI), total annualized cost (TAC), and
monitoring costs were calculated. Sites that reported being regulated
by categorical limitations and standards were assumed to currently
incur some monitoring cost.
IX. Best Practicable Control Technology Currently Available
A. Need for BPT Regulation
The MP&M Phase I regulation is estimated to potentially apply to
10,601 facilities nationwide. Although there are a number of metal
processing categorical effluent guidelines that also apply to some
operations performed at MP&M sites, these other effluent guidelines
only affect approximately 2,000 MP&M Phase I sites. Thus, a large
number of MP&M Phase I facilities do not have any effluent limitations
guidelines. EPA estimates that 1,895 MP&M sites that are direct
dischargers currently discharge substantial quantities of pollutants
into the surface waters of the United States, including 18 million
pounds per year of oil and grease, 2.6 million pounds per year of total
suspended solids, 0.56 million pounds per year of priority pollutants,
and 0.6 million pounds per year of nonconventional metal pollutants.
EPA estimates that the proposed BPT limitations will reduce these
quantities to 150,000 pounds per year of oil and grease, 360,000 pounds
per year of total suspended solids, 40,000 pounds per year of priority
metal pollutants, and 130,000 pounds per year of nonconventional metal
pollutants.
B. BPT Technology Options and Selection
EPA considered three regulatory options on which to base BPT
limitations.
1. Option 1: Lime and Settle Treatment. Option 1 consists of
preliminary treatment for specific pollutants and end-of-pipe treatment
with chemical precipitation (usually accomplished by raising the pH
with an alkaline chemical such as lime or caustic to produce insoluble
metal hydroxides) followed by clarification. This treatment, which is
also commonly referred to as lime and settle treatment, has been widely
used throughout the metals industry and is well documented to be
effective for removing metal pollutants. As with a number of previously
promulgated regulations, EPA has established BPT on the basis
[[Page 28226]] that all process waste waters, except solvent bearing
waste waters, will be treated through lime and settle end-of-pipe
treatment.
All of the regulatory options considered for the MP&M category are
based on a commingled treatment of process waste waters through lime
and settle with preliminary treatment when needed for specific waste
streams. Preliminary treatment is performed to remove oil and grease
through emulsion breaking and oil skimming; to destroy cyanide using
sodium hypochlorite; to reduce hexavalent chromium to the trivalent
form of chromium which can subsequently be precipitated as chromium
hydroxide; or to break metal complexes by chemical reduction. EPA has
also included the contract hauling of any waste waters associated with
organic solvent degreasing as part of the Option 1 technology.
Through sampling episodes and site visits, EPA has determined that
some waste waters, usually alkaline cleaning waste waters and water-
based metal working fluids (e.g., machining and grinding coolants,
deformation lubricants), may contain significant amounts of oil and
grease. These waste waters require preliminary treatment to remove oil
and grease and organic pollutants. Chemical emulsion breaking followed
by either skimming or coalescing is an effective technology for
removing these pollutants.
EPA has identified MP&M waste waters that may contain significant
amounts of cyanide, such as plating and cleaning waste waters. These
waste waters require preliminary treatment to destroy the cyanide. This
is typically performed using alkaline chlorination with sodium
hypochlorite or chlorine gas. EPA has also identified hexavalent
chromium-bearing waste waters, usually generated by anodizing,
conversion coating, acid treatment, and electroplating operations and
rinses. These waste waters require chemical reduction of the hexavalent
chromium to trivalent chromium. Sodium metabisulfite or gaseous sulphur
dioxide are typically used as reducing agents. Several surface
treatment waste waters typically contain significant amounts of
chelated metals. These chelated metals require chemical reduction to
break down the chelated metals prior to lime and settle. Sodium
borohydride, hydrazine, and sodium hydrosulfite can be used as reducing
agents. These preliminary treatment technologies are more effective and
less costly on segregated waste waters, prior to adding waste waters
that do not contain the pollutants being treated with the preliminary
treatment technologies. Thus, EPA includes these preliminary treatment
steps whenever it refers to lime and settle treatment.
2. Option 2: In-process Flow Control, Pollution Prevention, and
Lime and Settle Treatment. Option 2 builds on Option 1 by adding in-
process pollution prevention, recycling, and water conservation methods
which allow for recovery and reuse of materials. Techniques or
technologies, such as centrifugation or skimming for metal working
fluids, or ion exchange for electroplating rinses, can save money for
companies by allowing materials to be used over a longer period before
they need to be disposed. These techniques and technologies also can be
used to recover metal or metal treatment solutions. Using these
techniques along with water conservation also leads to the generation
of less pollution and results in more effective treatment of the waste
water that is generated. As has been demonstrated by numerous
industrial treatment systems, the treatment of metal bearing waste
waters is relatively independent of influent concentration. For
example, the well-operated lime and settle treatment system can achieve
the same effluent concentration with an influent stream of 1,000
gallons per minute (gpm) and 10 parts per million (ppm) as it can
achieve with an influent stream which is 500 gpm and 20 ppm. In fact,
within a broad range of influent concentrations, the more highly
concentrated waste water influent, when treated down to the technology
effectiveness concentrations of a lime and settle treatment system,
results in better pollutant removals and less mass of pollutant in the
discharge. In addition, the cost of a treatment system is largely
dependent on the size, which in turn is largely dependent on flow. As a
result, the lower the flow of water to the treatment system the less
costly the system. Option 2 in-process technologies include:
Flow reduction using flow restrictors, conductivity
meters, and/or timed rinses, for all flowing rinses, plus
countercurrent cascade rinsing for all flowing rinses;
Flow reduction using bath maintenance for all other
process water-discharging operations;
Centrifugation and 100 percent recycling of painting
water curtains;
Centrifugation and pasteurization to extend the life of
water-soluble machining coolants reducing discharge volume by 80%;
and
In-process metals recovery using ion exchange followed
by electrolytic recovery of the cation regenerant for selected
electroplating rinses. This includes first-stage drag-out rinsing
with electrolytic metal recovery.
The flow reduction practices included in Option 2 are widely used by
MP&M sites and are also included as part of the regulatory basis for a
number of effluent guidelines regulations in the metals industry.
3. Option 3: Advanced End-of-Pipe Treatment. Option 3 includes all
of the Option 2 technologies plus advanced end-of-pipe treatment.
Advanced end-of-pipe treatment could be either reverse osmosis or ion
exchange to remove suspended and dissolved solids yielding a treated
waste water that can be partially recycled as process water. This
technology is not widely used but has been demonstrated by some MP&M
sites, particularly in instances where the water supply is contaminated
and requires clean-up before it can be used. For the purposes of
modelling the cost of compliance and resulting pollutant removals,
Option 3 technology is expected to achieve a sufficiently clean treated
waste water such that 90 percent of the treated waste water can be
recycled back to the facility to be reused in the processing area.
Selected Option. EPA proposes to establish BPT effluent limitations
guidelines based on Option 2 technologies. Lime and settle treatment
used in conjunction with flow reduction and pollution prevention
technologies represents the best technology widely practiced by MP&M
sites. EPA proposes to require permit writers to convert the
concentration-based effluent limitations guidelines into mass-based
permit limitations based on MP&M flow guidance from the Technical
Development Document. This document provides guidance to permit writers
on identifying sites with pollution prevention and water conservation
technologies equivalent to those included in Option 2 (e.g.,
electrodialysis, reverse osmosis). EPA recognizes that there are many
different pollution prevention and water conservation technologies that
may achieve the same performance as those included in Option 2;
therefore, the Agency has provided permit writers guidance on assessing
these technologies.
EPA recommends that, for sites with pollution prevention and water
conservation technologies in place that are equivalent to those
included as the basis for BPT, permit writers use historical flow as a
basis for converting the concentration-based limitations to mass-based.
For sites without these types of technologies in place, EPA recommends
that permit writers do not use historical flow, but use other tools
listed in the Technical Development Document (e.g., measuring
production [[Page 28227]] through unit operations, measuring the
concentration of total dissolved solids (TDS) in rinse waters) to
convert the concentration-based limitations to mass-based. This
approach encourages sites to implement good water use practices and
investigate and install pollution prevention and water conservation
technologies. By recommending use of historical flow only when sites
have pollution prevention and water conservation technologies in place,
EPA expects that permits based on BPT will reflect pollution prevention
and water conservation technologies. If mass-based limitations have not
been developed as required, the source shall achieve discharges not
exceeding the concentration limitations listed in the regulation.
EPA did not select Option 1 as it does not reflect the average of
the best technology performance in the industry. EPA did not select
Option 3 technology as the basis for BPT because the costs do not
justify the removals achieved.
C. Calculation of BPT Limitations
EPA visited 98 sites and sampled waste waters from 27 MP&M Phase I
sites. In addition to sampling to characterize the process waste
waters, EPA sampled 23 lime and settle treatment systems. EPA reviewed
the treatment data gathered and identified data considered appropriate
for calculating BPT limitations for the MP&M Phase I industry. EPA
identified data from well-designed and well-operated treatment systems
and focused on data for specific pollutants processed and treated on
site. The data editing procedures used for this assessment consisted of
four major steps:
1. Assessment of the performance of the entire treatment system;
2. Identification of process upsets during sampling that impacted
the treatment effectiveness of the system;
3. Identification of pollutants not present in the raw waste water
at sufficient concentrations to evaluate treatment effectiveness; and
4. Identification of treatment chemicals used in the treatment
system.
The evaluation criteria used for each of these steps are described
below. Data that failed one or more of the evaluation criteria were
excluded from calculation of the BPT limitations.
1. Assessment of Treatment System Performance. EPA assessed the
performance of the entire treatment system during sampling. Data for
systems identified as not being well-designed or well-operated were
excluded from use in calculating BPT limitations. EPA first identified
the metals processed on site, as well as if the site performed unit
operations likely to generate oil and grease and cyanide. EPA focused
on these pollutants because the treatment trains used as a basis for
the limitations are designed to treat and remove these pollutants. EPA
then performed the following technical analyses of the treatment
systems:
--Based on the pollutants processed or treated on site, EPA excluded
data from systems that were not operated at the proper pH for
removal of the pollutants.
--EPA excluded data from lime and settle systems that did not have
solids removal indicative of effective treatment. In general, EPA
identified as having poor solids removal systems that did not
achieve 90% removal of total suspended solids (TSS) and had effluent
TSS concentrations greater than 50 milligrams per liter. Site-
specific exceptions were made to this rule depending on influent
concentrations of TSS.
--EPA excluded data from lime and settle systems at which the
concentration of most of the metals present in the influent stream
did not decrease, indicating poor treatment.
2. Identification of Process Upsets Occurring During Sampling. EPA
reviewed the sampling episode reports for each of the sampled sites,
and identified any process upsets that resulted in poor treatment
during one or more days of the sampling episode. EPA excluded the data
affected by the process upsets.
3. Identification of Pollutants Not Present in the Raw Waste water
at Sufficient Concentrations to Evaluate Removal. EPA excluded data for
pollutants that were not detected in the treatment influent streams at
a site, or were detected at concentrations less than 0.1 milligram per
liter. EPA also excluded data for pollutants that were not processed on
site. EPA reviewed the water use practices for the sampled sites and
excluded data from sites that may have been diluting the raw waste
water and reducing the concentration of pollutants processed on site.
Because the MP&M Phase I effluent guidelines include water conservation
practices and pollution prevention technologies, EPA reviewed the data
to ensure that the BPT limitations were based on sites that had these
practices and technologies in place.
4. Identification of Waste water Treatment Chemicals. EPA
identified treatment chemicals used in each of the sampled treatment
systems to determine if the removal of the metals used as treatment
chemicals were consistent with removal of other metals on site,
indicating a well-designed and well-operated system. If a metal was
used as a treatment chemical, and the site treated the metal to a
concentration consistent with other metals removed on site, the metal
was included in calculation of the BPT limitations. If the metal was
used as a treatment chemical and was not removed to a concentration
consistent with other metals removed on site, the treatment chemical
was excluded from calculation of the limitations. The data remaining
after these data editing procedures were used to calculate the BPT
limitations.
A detailed description of the statistical methodology used for the
calculation of limitations is described in the Technical Development
Document. A summary of the methodology follows.
The calculation of the BPT daily maximum limitations for pollutants
was performed by the following steps. The arithmetic long-term mean
concentration was calculated for each facility representing BPT
treatment technology, and the median of the means was determined. A
modified delta-lognormal distribution was fit to daily concentration
data from each facility that had enough detected concentration values
for parameter estimation. This is the same distributional model used by
EPA in the final rulemakings for the Organic Chemicals, Plastics and
Synthetic Fibers (OCPSF) and Pesticides Manufacturing categories and
the proposed rulemaking for the Pulp and Paper category. Variability
factors were then computed for each facility distribution, and the
average variability factor was determined. Finally, the daily maximum
limitation was calculated by multiplying the median long-term mean by
the average variability factor. The monthly maximum limitation was
calculated similarly except that the variability factor corresponding
to the 95th percentile of the distribution of monthly averages was used
instead of the 99th percentile of daily concentration measurements.
The daily variability factor is a statistical entity defined as the
ratio of the estimated 99th percentile of the distribution of daily
values divided by the expected value, or mean, of the distribution.
Similarly, the monthly variability factor is defined as the estimated
95th percentile of the distribution of four-day averages divided by the
expected value of the monthly averages.
The modified delta-lognormal distribution models the data as a
mixture of non-detect observations and measured values. This
distribution was selected because the data for most analytes consisted
of a mixture of measured values and non-detects. The modified delta-
lognormal distribution assumes that all non-detects have a
[[Page 28228]] value equal to the detection limit and that the detected
values follow a lognormal distribution.
Table 2 presents the proposed daily and monthly limitations. In
Table 2, the term ``T'', as in ``cyanide(T)'', shall mean total. The
values calculated by the above procedures were rounded off to the next
highest tenths place for metals, to the next highest hundredths place
for cyanide, and to the next highest unit place for TSS and oil and
grease.
EPA identified 24 metal types processed at MP&M Phase I sites.
Because EPA did not have sufficient data to set limits for all of these
metal types, EPA is regulating aluminum and iron as indicator metals
for removal of non-regulated metals that may be processed at MP&M
sites. Aluminum is most effectively removed in lime and settle systems
at a pH between 7.5 and 8 standard units, while iron is most
effectively removed at a pH of approximately 10.5 standard units. Most
metals that may be present in MP&M waste waters are effectively removed
in this pH range. Therefore, removal of aluminum and iron will indicate
effective removal of other metal types. Although iron and aluminum can
be used as water treatment chemicals, EPA believes that regulation of
these pollutants will control discharges of non-regulated metals that
are processed at MP&M sites.
EPA is proposing a pH range limit in order to assure that the pH of
the waste water is within the neutral range.
EPA is also proposing to use oil and grease as an indicator for
monitoring for organic pollutants that have the potential to be present
in MP&M waste waters. EPA is using oil and grease as an indicator since
most of the organic pollutants detected in MP&M waste waters during the
MP&M sampling program are more soluble in oil than in water, and as
such would partition to the oil layer. Thus, removal of oil and grease
will result in significant removal of these pollutants. Data for oil-
water separation systems collected during the MP&M sampling program
show removals between 63 and 90 percent for organic pollutants across
the oil-water separation systems. These data support the conclusion
that the organic pollutants will partition to the oil layer. In
addition, most of the organic pollutants detected in MP&M waste waters
are insoluble in water, further supporting that these pollutants will
partition to the oil layer.
EPA considered establishing limitations for Total Toxic Organics
(TTO), which would reflect the sum of concentrations achieved for
several specific organic pollutants identified during the MP&M sampling
program. However, because of the diversity in the types of cleaners,
coolants, paints, etc., used in the MP&M industry, as well as the
current industry trends in identifying substitutes for organic solvent
degreasing, EPA did not have sufficient analytical data to identify and
regulate all organic pollutants in use at MP&M sites. Therefore, EPA
rejected TTO as an approach to controlling organic pollutant
discharges. EPA believes that use of oil and grease as an indicator
will provide regulatory control of organic pollutants while allowing
the flexibility to control organic pollutants that are used by MP&M
sites but not identified during the MP&M sampling program.
EPA also considered establishing limitations for lead, since lead
is known to have several adverse human health effects. Although lead
was analyzed for in nearly all samples collected during the development
of the MP&M Phase I rule, lead was rarely found at treatable
concentrations in the influent to the treatment systems sampled. As
discussed above, treatable concentration was defined as 0.1 milligram
per liter in the raw waste water prior to treatment. The majority of
lead data were non-detects or detects at very low concentrations. Since
lead was rarely found at treatable concentrations in the raw waste
water, prior to treatment, EPA decided not to propose a limit for lead.
EPA is soliciting additional data and comments on the possibility of
setting a limit for lead in the final rule (see Section XIX).
Table 2.--Proposed Effluent Concentration Limitations
[Milligrams per liter (mg/l)]
------------------------------------------------------------------------
Monthly
Maximum average
Pollutant or pollutant parameter for any 1 shall not
day exceed
------------------------------------------------------------------------
Aluminum (T).................................... 1.4 1.0
Cadmium(T)...................................... 0.7 0.3
Chromium(T)..................................... 0.3 0.2
Copper(T)....................................... 1.3 0.6
Iron(T)......................................... 2.4 1.3
Nickel(T)....................................... 1.1 0.5
Zinc(T)......................................... 0.8 0.4
Cyanide(T)...................................... 0.03 0.02
Oil & Grease.................................... 35 17
TSS............................................. 73 36
pH.............................................. (\1\) (\1\)
------------------------------------------------------------------------
\1\ Within 6.0 to 9.0.
D. Applicability of BPT
The Agency is proposing BPT limitations guidelines for the MP&M
Phase I category to apply to all MP&M process waste waters that are
generated by sites performing manufacturing, rebuilding or maintenance
of metal parts, products, or machinery in one of the seven industrial
sectors (i.e., aerospace, aircraft, electronic equipment, hardware,
mobile industrial equipment, ordnance and stationary industrial
equipment).
E. BPT Pollutant Removals, Costs, and Economic Impacts
EPA estimates that the proposed BPT limitations will remove
annually an estimated 20 million pounds of conventional pollutants (TSS
and oil and grease), 1 million pounds of metals and cyanide, and 67,000
pounds of organic pollutants. BPT is estimated to require a capital
expenditure of $63 million (in 1994$), which will require an annualized
cost of $18 million. In addition, as a result of this regulation, EPA
estimates that 18 sites may close with an accompanying job loss of 158
full time employees (FTEs). EPA estimates that compliance activities
may generate annual labor requirements which could more than offset
these job losses. EPA believes that the effluent reduction benefits
achieved by this proposed BPT justify the costs and that all statutory
factors have been satisfied. (See further discussion of costs and
benefits below).
X. Best Conventional Pollutant Control Technology
A. July 9, 1986 BCT Methodology
The BCT methodology, promulgated in 1986 (51 FR 24974), discusses
the Agency's consideration of costs in establishing BCT effluent
limitations guidelines. EPA evaluates the reasonableness of BCT
candidate technologies (those that are technologically feasible) by
applying a two-part cost test:
(1) The POTW test; and
(2) The industry cost-effectiveness test.
In the POTW test, EPA calculates the cost per pound of conventional
pollutant removed by industrial dischargers in upgrading from BPT to a
BCT candidate technology and then compares this cost to the cost per
pound of conventional pollutant removed in upgrading POTWs from
secondary treatment. The upgrade cost to industry must be less than the
POTW benchmark of $0.25 per pound (in 1976 dollars).
In the industry cost-effectiveness test, the ratio of the
incremental BPT to BCT cost divided by the BPT cost for the industry
must be less than 1.29 (i.e., the cost increase must be less than 29
percent). [[Page 28229]]
B. BCT Options Identified
For today's proposed rule, EPA considered whether or not to
establish BCT effluent limitation guidelines for MP&M sites that would
attain incremental levels of effluent reduction beyond BPT for TSS. The
only technology option identified to attain further TSS reduction is
the addition of multimedia filtration to existing BPT systems.
EPA applied the BCT cost test to use of multimedia filtration
technology as a means to reduce TSS loadings. The MP&M sites were split
into three flow categories: low flow (generally less than 10,000
gallons per year (gpy)); medium flow (between 10,000 gpy and 1,000,000
gpy); and high flow (greater than 1,000,000 gpy). For each of these
three flow categories, a representative site was chosen for which EPA
had estimated the costs of installing the Option 2 technologies
discussed under BPT (See Section IX.B. above). The Agency evaluated the
costs of installing a polishing multimedia filter to remove an
estimated additional 45 percent of the TSS discharged after lime and
settle treatment. This estimated removal reflects the reduced TSS
concentrations seen when filters are used in the MP&M industry. The
cost per pound of the high flow case was $28/lb of TSS (in 1976
dollars), the cost per pound removed of the medium flow case was $131/
lb and the cost of the low flow case was $813/lb of TSS (in 1976
dollars). All of these cases individually as well as combined exceed
the $0.25/lb (in 1976 dollars) POTW cost test value. Because these
costs exceed the POTW benchmark, the first part of the cost test fails;
therefore, the second part of the test was unnecessary. It was
therefore determined that multi-media filtration does not pass the cost
test for BCT regulations development. In light of the above, BCT
limitations for MP&M are proposed to be set equal to BPT limitations.
Therefore, EPA is proposing to establish BCT limitations on the
basis of Option 2 technology, equivalent to BPT.
XI. Best Available Technology Economically Achievable
A. Need for BAT Regulation
The need for BAT regulation is the same as the need for BPT
regulation (see Section IX.A.).
B. BAT Technology Options and Selection
The factors considered in establishing the best available
technology economically achievable (BAT) level of control include: the
age of process equipment and facilities, the processes employed,
process changes, the engineering aspects of applying various types of
control techniques, the costs of applying the control technology,
economic impacts imposed by the regulation, non-water quality
environmental impacts such as energy requirements, air pollution and
solid waste generation, and other such factors as the Administrator
deems appropriate (sec
tion 304(b)(2)(B) of the Act). In general, the BAT technology level
represents the best existing economically achievable performance among
plants with shared characteristics. In making the determination about
economic achievability, the Agency takes into consideration factors
such as plant closures and product line closures. Where existing waste
water treatment performance is uniformly inadequate, BAT technology may
be transferred from a different subcategory or industrial category. BAT
may also include process changes or internal plant controls which are
not common industry practice.
EPA is today proposing BAT effluent limitations guidelines for all
parameters listed in Table 2 except TSS and pH. Oil and grease is an
indicator for 2-methylnaphthalene, 2-propanone, N-octadecane, and N-
tetradecane.
The three regulatory options which EPA considered for BAT are
identical to the three options discussed under BPT. Like BPT, EPA is
proposing BAT on the basis of Option 2. This technology represents the
best available technology economically achievable. Option 1 was
rejected because it does not include the pollution prevention and water
conservation technologies which are widely demonstrated at MP&M sites.
Option 3 was rejected because the costs do not justify the removals
achieved.
EPA did not include the application of filters, discussed under
BCT, as a BAT option. Data collected during sampling at MP&M facilities
demonstrated no additional removals of many metal pollutants resulting
from the use of filters as compared to concentrations of the same
metals after the lime and settle treatment included in Option 2. Thus,
although filtration is demonstrated to be effective in achieving
additional removals of suspended solids, and as such was considered for
the basis of BCT, multimedia or sand filtration does not reflect the
best available technology performance for priority and nonconventional
pollutants.
C. Calculation of BAT Limitations
The calculation of the BAT limitations were performed by using the
same methodology used for calculating BPT limitations (see Section
IX.C.)
D. Applicability of BAT
The applicability of BAT is the same as that for BPT.
E. BAT Pollutant Removals, Costs, and Economic Impacts
The pollutant removals for BAT are the same as those for BPT except
that BAT does not cover TSS (see Section IX.E.). The estimated cost of
BAT is the same as BPT (see Section IX.E.). The economic impacts of BAT
are the same as BPT (see Section IX.E.). EPA believes that the effluent
reduction benefits achieved by this proposed BAT justify the costs and
that all statutory factors have been satisfied. (See further discussion
of costs and benefits below.)
XII. Pretreatment Standards for Existing Sources
A. Need for Pretreatment Standards
Indirect dischargers in the MP&M Phase I category, like the direct
dischargers, use raw materials that contain many priority pollutant and
nonconventional metal pollutants. As in the case of direct dischargers,
they may be expected to discharge many of these pollutants to POTWs at
significant mass or concentration levels, or both. EPA estimates that
indirect dischargers annually discharge approximately 12 million pounds
of priority and nonconventional metals, and 2.4 million pounds of
priority and nonconventional organic pollutants.
EPA determines which pollutants to regulate in PSES on the basis of
whether or not they pass through, interfere with, or are incompatible
with the operation of POTWs (including interference with sludge
practices). The Agency evaluates pollutant pass through by comparing
the pollutant percentage removed by well operated POTWs achieving
secondary treatment with the percentage removed by BAT technology
applied by direct dischargers. A pollutant is deemed to pass through
POTWs when the average percentage removed nationwide by well-operated
POTWs (those meeting secondary treatment requirement) is less than the
percentage removed by directly discharging MP&M sites applying BAT for
that pollutant.
To evaluate the need for PSES, EPA followed the procedures
established by the Organic Chemicals, Plastics and Synthetic Fibers
(OCPSF) regulation to determine the degree to which well-operated POTWs
are capable of removing pollutants. Prior to promulgation of the OCPSF
effluent guidelines, EPA conducted a study of [[Page 28230]] well-
operated POTWs that use secondary (biological) treatment (the ``50-POTW
Study''). The 50-POTW study determined the extent to which priority
pollutants are removed by POTWs. The principal means by which the
Agency evaluated pollutant pass-through was to compare the pollutant
percentage removed by POTWs with the percentage removed to comply with
BAT limitations.
Because some of the data collected for evaluating POTW removals
included influent levels of priority pollutants that were close to the
detection limit, the POTW data were edited to eliminate influent values
less than 10 times the nominal method detection limit (MDL) and the
corresponding effluent values, except in cases where none of the
influent concentrations exceeded 10 times the MDL. In the latter case,
where there were no influent data exceeding 10 times the MDL, the data
were edited to eliminate influent values less than twice the MDL and
the corresponding effluent values. These editing rules were used to
allow for the possibility that low POTW removals simply reflected the
low influent levels.
EPA then averaged the remaining influent data and also averaged the
remaining effluent data for the POTWs. The percent removal achieved for
each priority pollutant was determined from these averaged influent and
effluent levels. This percent removal was then compared to the percent
removal achieved by BAT treatment technology. Based on this analysis,
EPA determined that four nonconventional organic pollutants, seven
priority metal pollutants, five nonconventional metal pollutants,
cyanide, and chemical oxygen demand pass through POTWs. POTW removals
for ten of the nonconventional organic pollutants were calculated using
a data base developed by EPA's Risk Reduction Engineering Laboratory
(RREL) and data transferred from other pollutants based on physical
similarities (e.g., straight-chained hydrocarbons, ketones, etc.).
B. PSES Technology Options and Selection
Indirect discharging MP&M sites generate waste waters with similar
pollutant characteristics to direct discharging facilities. Hence, the
same treatment technologies discussed previously for BPT and BAT are
considered applicable to PSES. However, as described below, the
application of the technology options has resulted in the addition of a
new option that applies to indirect dischargers.
EPA is today proposing PSES for all parameters listed in Table 2
except TSS and pH. EPA is proposing PSES for oil and grease as an
indicator for monitoring for organic pollutants which have the
potential to be present.
The Agency considered the following five options in developing PSES
for MP&M Phase I.
1. Option 1: Lime and Settle Treatment. This option is equivalent
to BPT Option 1.
2. Option 1a: Tiered PSES for ``Low'' Flow and ``Large'' Flow
Sites. This option would establish a tiered PSES requirement depending
on the annual discharge volume at a given MP&M site. For ``low'' flow
sites, sites with a discharge volume of less than 1,000,000 gallons per
year (gpy), PSES would require that sites comply with concentration
standards based on Option 1. For a site operating 250 days per year,
1,000,000 gallons per year translates into an average discharge flow
rate of 4,000 gallons per day. For ``large'' flow sites, sites with a
discharge volume of 1,000,000 gpy or greater, PSES would require that
mass-based standards be imposed based on Option 2 (i.e. the conversion
of Option 1 concentration-based standards using an appropriate flow
which reflects good pollution prevention and water conservation
practices such as those included in BPT Option 2). The flow basis would
be determined by the Control Authority using site-specific factors and
flow guidance (see the Technical Development Document for a detailed
presentation of flow guidance aimed at water conservation and good
housekeeping practices). If mass-based limitations have not been
developed as required, the source would have to achieve discharges not
exceeding the concentration limitations listed in the regulation. The
technology basis for PSES for large flow sites is the same as BPT
Option 2.
3. Option 2a: In-process Flow Reduction and Pollution Prevention
and Lime and Settle Treatment for ``Large'' Flow sites. This option
would require that mass-based standards be imposed based on Option 2
for sites with a discharge volume of 1,000,000 gpy or greater. Sites
with a discharge volume of less than 1,000,000 gpy would not be subject
to PSES requirements. For a site operating 250 days per year, 1,000,000
gallons per year translates into an average discharge flow rate of
4,000 gallons per day.
In order to fully implement the mass-based permits, it is important
for Control Authorities to issue permits in a timely manner.
Dischargers are reminded of their responsibilities under the General
Pretreatment Regulations (40 CFR 403) to provide, among other things,
Baseline Monitoring Reports. The Agency expects Control Authorities to
place a priority on issuing needed mass-based permits, and those
permits should be issued within a year after the Baseline Monitoring
Report deadline. Control Authorities that do not meet these permitting
timelines may not be in compliance with their pretreatment programs
under 40 CFR 123.45.
4. Option 2: In-Process Flow Reduction & Pollution Prevention and
Lime and Settle Treatment. This option is equivalent to BPT Option 2.
5. Option 3: Advanced End-of-Pipe Treatment. This option is
equivalent to BPT Option 3.
Selected Option: EPA is proposing Option 2a technologies as the
basis for the proposed PSES for MP&M Phase I. Option 2a is economically
achievable (see Section XIV) and greatly reduces pollutants discharged
into the environment. Compared to Option 2, which would require that
all MP&M indirect dischargers be controlled by mass standards, Option
2a achieves significant pollutant reduction without imposing undue
administrative burden on the Control Authorities. Whereas Option 2
would require an estimated 8,706 facilities to have permits or similar
control mechanisms written incorporating the proposed standards into a
mass-based permit, Option 2a reduces this burden, requiring only an
estimated 1,998 facilities to have mass-based permits, the rest of the
facilities would not be subject to PSES requirements. EPA believes this
approach would allow Control Authorities to focus their efforts on the
facilities discharging the vast majority of the pollutants, rather than
dissipating their limited resources on sites contributing much less to
the overall problem. An indication of relative pollutant loadings by
size of facility is provided in Table 26 below. The low flow sites
could also be expected to reduce their discharges of pollutants, but
they would do so by meeting local limits. EPA has consulted with
representatives from EPA Regions, States and Municipalities, the
majority of whom favor this approach to regulating the MP&M industry.
C. Calculation of PSES
The proposed pretreatment standards for existing sources in the
MP&M Phase I category are presented in today's proposed rule. The
pretreatment standards are shown for cyanide and priority and
nonconventional metal pollutants. [[Page 28231]]
An oil and grease standard is proposed as an indicator for specific
organic pollutants. The specific organic pollutants for which oil and
grease is an indicator are 2-methylnaphthalene, 2-propanone, N-
octadecane, and N-tetradecane. EPA identified these pollutants in MP&M
waste water and determined that these pollutants will pass through a
POTW. These pollutants are more likely to partition to the oily phase
than the water phase, thus EPA believes that the treatment and removal
of oil and grease in waste water will also result in significant
removals of these pollutants. EPA's sampling results show higher
percent removals are achieved through oil and grease treatment (BAT
technology) than at a well-operated secondary POTW. EPA considered and
rejected establishing a pretreatment standard for Total Toxic Organics
(TTO) which would reflect the sum of concentrations achieved for
several organic pollutants. The reason EPA rejected TTO as an approach
to controlling organic pollutant discharges is that EPA knows that the
industry is in the midst of a significant shift in the solvents it is
using. Accordingly, EPA has no reason to believe that regulation of the
specific list of organics identified as of today would reflect the
organics that will be present in waste water when this regulation is
promulgated. EPA is planning to continue to study the sources and
concentrations of organic pollutants in MP&M waste water, particularly
as sites switch from ozone-depleting solvents to aqueous-based
cleaners. Accordingly, EPA may propose a different approach to
controlling organic pollutant discharges for both Phase I and Phase II
in conjunction with the MP&M Phase II rulemaking.
As with BAT proposed standards, the pretreatment standards are
expressed in terms of concentration-based standards. As described
above, EPA is proposing that MP&M sites be required to comply with a
mass-based permit if their annual discharge volume equals or exceeds
1,000,000 gallons. The proposed PSES would require dischargers to meet
``maximum for any one day'' and ``maximum monthly average'' standards.
The proposed PSES limitations for cyanide, priority and nonconventional
metal pollutants, and oil and grease are identical to those limits
established for these pollutants under proposed BAT Option 2.
Considering the large number of indirect dischargers which have the
potential to be covered by this proposed regulation, an important issue
to the affected industry and to permit writers is the potentially
enormous administrative burden. Therefore, in developing this proposal,
EPA has looked for means of reducing the administrative burden,
reducing monitoring requirements, and reducing reporting requirements.
The proposed exemption of existing indirect discharges discharging less
than one million gallons per year is one means by which EPA is
proposing to reduce the administrative burden.
D. Applicability of PSES Limitations
The Agency is proposing PSES under the MP&M Phase I category to
apply to all MP&M process waste waters that are generated by sites
performing manufacturing, rebuilding, or maintenance of metal parts,
products, or machinery in one of the seven industrial sectors (i.e.,
aerospace, aircraft, electronic equipment, hardware, mobile industrial
equipment, ordnance and stationary industrial equipment). The Combined
Wastestream Formula will apply to sites which have operations covered
by MP&M Phase I, existing effluent guidelines, or not covered by
existing regulations.
E. Removal Credits
As described previously, many industrial facilities discharge large
quantities of pollutants to POTWs where their wastes mix with waste
water from other sources, domestic wastes from private residences and
run-off from various sources prior to treatment and discharge by the
POTW. Industrial discharges frequently contain pollutants that are
generally not removed as effectively by waste water treatment at the
POTWs as by the industries themselves.
The introduction of pollutants to a POTW from industrial discharges
poses several problems. These include potential interference with the
POTW's operation or pass-through of pollutants if inadequately treated.
As discussed, Congress, in section 307(b) of the Act, directed EPA to
establish pretreatment standards to prevent these potential problems.
Congress also recognized that, in certain instances, POTWs could
provide some or all of the treatment of an industrial user's
wastestream that would be required pursuant to the pretreatment
standard. Consequently, Congress established a discretionary program
for POTWs to grant ``removal credits'' to their indirect dischargers.
The credit, in the form of a less stringent pretreatment standard,
allows an increased amount of pollutants to flow from the indirect
discharger's facility to the POTW.
Section 307(b) of the CWA establishes a three-part test for
obtaining removal credit authority for a given pollutant. Removal
credits may be authorized only if (1) The POTW ``removes all or any
part of such toxic pollutant,'' (2) the POTW's ultimate discharge would
``not violate that effluent limitation, or standard which would be
applicable to that toxic pollutant if it were discharged'' directly
rather than through a POTW and (3) the POTW's discharge would ``not
prevent sludge use and disposal by such [POTW] in accordance with
section [405]. * * *'' Section 307(b).
EPA has promulgated removal credit regulations in 40 CFR part
403.7. The United States Court of Appeals for the Third Circuit has
interpreted the statute to require EPA to promulgate comprehensive
sewage sludge regulations before any removal credits could be
authorized. NRDC v. EPA, 790 F.2d 289, 292 (3rd Cir. 1986) cert.
denied. 479 U.S. 1084 (1987). Congress made this explicit in the Water
Quality Act of 1987 which provided that EPA could not authorize any
removal credits until it issued the sewage sludge use and disposal
regulations required by section 405(d)(2)(a)(ii).
Section 405 of the CWA requires EPA to promulgate regulations which
establish standards for sewage sludge when used or disposed for various
purposes. These standards must include sewage sludge management
standards as well as numerical limits for pollutants which may be
present in sewage sludge in concentrations which may adversely affect
public health and the environment. Section 405 requires EPA to develop
these standards in two phases. On February 19, 1993, EPA promulgated
the Round One sewage sludge regulations establishing standards,
including numerical pollutant limits, for the use and disposal of
sewage sludge. 58 FR 9248. EPA established pollutant limits for ten
metals when sewage sludge is applied to land, for three metals when it
is disposed of at surface disposal sites and for seven metals and total
hydrocarbons, a surrogate for organic pollutant emissions, when sewage
sludge is incinerated. These requirements are codified at 40 CFR part
503.
The Phase One regulations partially fulfilled the Agency's
commitment under the terms of a consent decree that settled a citizens
suit to compel issuance of the sludge regulations. Gearhart, et al. v.
Reilly, Civil No. 89-6266-JO (D.Ore). Under the terms of that decree,
EPA must propose and take final action on Round Two sewage sludge
regulations by December 15, 2001. [[Page 28232]]
At the same time EPA promulgated the Round One regulations, EPA
also amended its pretreatment regulations to provide that removal
credits would be available for certain pollutants regulated in the
sewage sludge regulations. See 58 FR at 9386. The amendments to part
403 provide that removal credits may be made potentially available for
the following pollutants:
(1) If a POTW applies its sewage sludge to the land for beneficial
uses, disposes of it on surface disposal sites or incinerates it,
removal credits may be available, depending on which use or disposal
method is selected (so long as the POTW complies with the requirements
in part 503). When sewage sludge is applied to land, removal credits
may be available for ten metals. When sewage sludge is disposed of on a
surface disposal site, removal credits may be available for three
metals. When the sewage sludge is incinerated, removal credits may be
available for seven metals and for 57 organic pollutants. See 40 CFR
403.7(a)(3)(iv)(A).
(2) In addition, when sewage sludge is used on land or disposed of
on a surface disposal site or incinerated, removal credits may also be
available for additional pollutants so long as the concentration of the
pollutant in sludge does not exceed a concentration level established
in part 403. When sewage sludge is applied to land, removal credits may
be available for two additional metals and 14 organic pollutants. When
the sewage sludge is disposed of on a surface disposal site, removal
credits may be available for seven additional metals and 13 organic
pollutants. When the sewage sludge is incinerated, removal credits may
be available for three other metals. See 40 CFR 403.7(a)(3)(iv)(B).
(3) When a POTW disposes of its sewage sludge in a municipal solid
waste landfill that meets the criteria of 40 CFR part 258 (MSWLF),
removal credits may be available for any pollutant in sewage sludge.
See 40 CFR 403.7(a)(3)(iv)(C).
Thus, given compliance with the requirements of EPA's removal
credit regulations,1 following promulgation of the pretreatment
standards being proposed here, removal credits may be authorized for
any pollutant subject to pretreatment standards if the applying POTW
disposes of its sewage sludge in a MSWLF that meets the requirements of
40 CFR part 258. If the POTW uses or disposes of its sewage sludge by
land application, surface disposal or incineration, removal credits may
be available for the following metal pollutants (depending on the
method of use or disposal): arsenic, cadmium, chromium, copper, iron,
lead, mercury, molybdenum, nickel and zinc. Given compliance with
section 403.7, removal credits may be available for the following
organic pollutants (depending on the method of use or disposal) if the
POTW uses or disposes of its sewage sludge: benzene, 1,1-
dichloroethane, 1,2-dibromoethane, ethylbenzene, methylene chloride,
toluene, tetrachloroethene, 1,1,1-trichloroethane, 1,1,2-
trichloroethane and trans-1,2-dichloroethene.
\1\ Under Section 403.7, a POTW is authorized to give removal
credits only under certain conditions. These include applying for,
and obtaining, approval from the Regional Administrator (or Director
of a State NPDES program with an approved pretreatment program), a
showing of consistent pollutant removal and an approved pretreatment
program. See 40 CFR 403.7(a)(3) (i), (ii), and (iii).
Some facilities may be interested in obtaining removal credit
authorization for other pollutants being considered for regulation in
this rulemaking for which removal credit authorization would not
otherwise be available under part 403. As discussed in the sewage
sludge regulations (58 FR 9382-83), EPA has concluded that removal
credits should not be authorized for pollutants other than the
pollutants specifically regulated by the final part 503 regulation. The
Agency has determined that the CWA, as amended, removal credit
eligibility is limited to those pollutants regulated specifically in
Part 503 and to pollutants that the Agency determines do not threaten
human health and the environment when used or disposed of in sewage
sludge. When read together, sections 307(b) and 405 permit removal
credits only when it can be determined that the increased
concentrations or amounts allowed by the removal credit will not affect
sewage sludge use or disposal adversely. EPA determined that a
categorical pretreatment standard pollutant is eligible for removal
credits only when EPA has either established a specific numerical limit
for that pollutant or has evaluated it and concluded that it does not
threaten public health or the environment. 58 FR 9382-83.
Consequently, in the case of a pollutant for which EPA did not
perform a risk analysis in developing the Phase One sewage sludge
regulations, removal credit for pollutants will only be available when
the Agency determines either a safe level for the pollutant in sewage
sludge or that regulation of the pollutant is unnecessary to protect
public health and the environment from the reasonably anticipated
adverse effects of such a pollutant.2 Therefore, any person
seeking to add additional categorical pollutants to the list for which
removal credits are now available would need to submit information to
the Agency to support such a determination. The basis for such a
determination may include information showing the absence of risks for
the pollutant (generally established through an environmental pathway
risk assessment such as EPA used for Phase One) or data establishing
the pollutant's presence in sewage sludge at low levels relative to
risk levels or both. Parties, however, may submit whatever information
they conclude is sufficient to establish either the absence of any
potential for harm from the presence of the pollutant in sewage sludge
or data demonstrating a ``safe'' level for the pollutant in sludge.
Following submission of such a demonstration, EPA will review the data
and determine whether or not it should propose to amend the list of
pollutants for which removal credits would be available.
\2\ In the Round One sewage sludge regulation, EPA concluded, on
the basis of risk assessments, that certain pollutants (see Appendix
G to Part 403) did not pose an unreasonable risk to human health and
the environment and did not require the establishment of sewage
sludge pollutant limits. As discussed above, so long as the
concentration of these pollutant in sewage sludge are lower than a
prescribed level, removal credits are authorized for such
pollutants.
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EPA has already begun the process of evaluating a number of
pollutants for adverse potential to human health and the environment
when present in sewage sludge. In May, 1993, pursuant to the terms of
the consent decree in the Gearhart case, the Agency notified the United
States District Court for the District of Oregon that, based on the
information then available at that time, it intended to propose 31
pollutants for regulation in Round Two sewage sludge regulations. These
are acetic acid (2, 4, -dichlorophenoxy), aluminum, antimony, asbestos,
barium, beryllium, boron, butanone (2-), carbon disulfide, cresol (p-),
cyanides (soluble salts and complexes), dioxins/dibenzofurans (all
monochloro to octochloro congeners), endsulfan-II, fluoride, manganese,
methylene chloride, nitrate, nitrite, pentachloronitrobenzene, phenol,
phthalate (bis-2-ethylhexyl), polychlorinated biphenyls (co-planar),
propanone (2-), silver, thallium, tin, titanium, toluene,
trichlorophenoxyacetic acid (2, 4, 5-), trichlorphenoxypropionic acid
([2- (2, 4, 5-)], and vanadium.
The Round Two regulations are not scheduled for proposal until
December, 1999 and promulgation in December 2001. However, given the
necessary [[Page 28233]] factual showing, as detailed above, EPA could
conclude before the contemplated proposal and promulgation dates that
regulation of some of these pollutants is not necessary. In those
circumstances, EPA could propose that removal credits should be
authorized for such pollutants before promulgation of the Round Two
sewage sludge regulations. However, because of the Agency's commitment
to promulgation of effluent limitations and guidelines under the
consent decree with NRDC, it may not be possible to complete review of
removal credit authorization requests by the time EPA must promulgate
these guidelines and standards.
EPA's proposal to establish pretreatment standards for oil and
grease as an indicator for organic pollutants means that oil and grease
is not subject to removal credits.
F. Compliance Date
EPA is proposing to establish a three-year deadline for compliance
with PSES. Design and construction of systems adequate for compliance
with PSES will be a substantial undertaking for many MP&M sites. In
addition, Control Authorities will need the time to develop the mass-
permits for their industrial users with annual discharge volumes
greater than 1,000,000 gallons.
G. PSES Pollutant Removals, Costs and Economic Impacts
EPA estimates that the proposed PSES regulation will result in the
removal of 14 million pounds per year of pollutants including 9.1
million pounds of priority and nonconventional metal pollutants and 2.1
million pounds of priority and nonconventional organic pollutants and
cyanide. PSES is estimated to result in capital costs of approximately
$ 351 million and annualized costs of $ 142 million (in 1994 dollars).
EPA projects that 7 sites may be closed as a result of PSES, and job
losses will affect 540 full-time employees (FTEs). However, EPA
estimates that compliance activities may generate annual labor
requirements which could more than offset these job losses.
XIII. New Source Performance Standards (NSPS) and Pretreatment
Standards for New Sources (PSNS)
Section 307(c) of the Act calls for EPA to promulgate pretreatment
standards for new sources (PSNS) at the same time that it promulgates
new source performance standards (NSPS). New facilities have the
opportunity to incorporate the best available demonstrated technologies
including process changes, in-plant controls, and end-of-pipe treatment
technologies.
The same technologies discussed previously for BAT and PSES are
available as the basis for NSPS and PSNS. Option 2 was the selected
option for BAT and for large flow PSES, and the only higher technology
option identified by EPA was Option 3. Option 3 includes advanced end-
of-pipe treatment with significant reuse of process water. Since new
sites have the potential to install pollution prevention and pollution
control technologies more cost effectively then existing sources,
Option 3 was considered for NSPS and PSNS. However, EPA did not select
Option 3 technology as the basis for NSPS and PSNS because the costs do
not justify the removals achieved. Therefore, EPA is proposing NSPS and
PSNS for MP&M Phase I are based on the proposed Option 2 BAT
technologies identified above. All NSPS and PSNS limits are expected to
be mass-based. If mass-based limitations have not been developed as
required, the source shall achieve discharges not exceeding the
concentration limitations listed in the regulation.
XIV. Economic Considerations
A. Introduction
EPA's economic impact assessment is set forth in the report titled
``Economic Impact Analysis Of Proposed Effluent Limitations Guidelines
And Standards For The Metal Products And Machinery Industry, Phase I''
(hereinafter ``EIA''). This report estimates the expected economic
effect of compliance with the proposed regulatory options in terms of
facility closures and associated losses in employment. Firm-level
impacts, local community impacts, international trade effects, labor
requirements of compliance, and effects on new Metal Products and
Machinery Industry (MP&M) facilities are also presented in this report.
A Regulatory Flexibility Analysis detailing the small business impacts
for this industry is also included in the EIA. In addition, EPA
conducted an analysis of the cost-effectiveness of the regulatory
options. The report, ``Cost-Effectiveness Analysis of Proposed Effluent
Limitations Guidelines and Standards of Performance for the Metal
Products and Machinery Industry, Phase I'' is included in the record of
this rule-making. EPA also prepared a background analysis of the
economic conditions in the MP&M industry, ``Industry Profile Of the
Metal Products and Machinery Industry, Phase I.'' The following
discussion summarizes material from the Economic Impact Analysis, Cost-
Effectiveness Analysis, and Industry Profile reports. The reader is
referred to these reports for the full details of these analyses.
Analysis of the economic impacts of effluent guidelines for the
MP&M industry relies heavily on the responses to the questionnaire
distributed to MP&M facilities by EPA under the authority of Section
308 of the Clean Water Act (the DCP). As discussed above, EPA sent the
questionnaire, requesting both technical and economic information, to
1,020 MP&M industry facilities (See Section V.A.2 for details). After
detailed data cleaning and validation activities, the responses for 396
facilities, representing 10,601 water-discharging facilities in the
MP&M industry population, were used in the industry impact analysis.
EPA analyzed the economic impacts of the regulatory options applicable
to MP&M Phase I facilities on the basis of data for the 396 sample
facilities. The impacts assessed for these sample facilities were
extrapolated to the level of the MP&M industry population using
facility sample weights that are based on the sample design for the
Section 308 survey. Unless otherwise indicated, the remainder of this
discussion reports the estimated economic impacts for the MP&M industry
population.
B. Overview of the Facilities Potentially Subject to Regulation
From secondary source data (Department of Commerce), EPA estimates
that approximately 90,000 establishments or facilities participated in
the MP&M Phase I business sectors as of 1987. Thus, the estimated
10,601 water-discharging facilities (from Section 308 Survey data) that
would potentially be affected by this regulation represent about 11
percent of the total facilities in the MP&M Phase I business sectors.
Of the 10,601 water-discharging facilities, EPA estimates that 8,706
facilities are indirect dischargers (i.e., they discharge effluent to a
POTW) and would thus be subject to Pretreatment Standards for Existing
Sources (PSES). The remaining 1,895 facilities are estimated to be
direct dischargers (i.e., they discharge effluent directly to a
waterway under a NPDES permit) and will thus be subject to Best
Available Technology Economically Achievable (BAT) and Best Practicable
Control Technology Currently Available (BPT) requirements as herein
proposed.
The MP&M facilities that are expected to be subject to this
regulation contribute significantly to the U.S. economy. Table 3,
below, summarizes important economic data for the estimated 10,601
water-discharging facilities that are potentially subject to regulation
and on which the economic [[Page 28234]] impact analysis for this
regulation is based.
Table 3.--Summary Data for 1989 for Facilities Subject to Regulation in MP&M Phase I Sectors Estimated Revenue,
Value Added and Payroll in Millions of 1989 Dollars
----------------------------------------------------------------------------------------------------------------
Sector Facilities Employment Revenue Value added Payroll
----------------------------------------------------------------------------------------------------------------
Hardware........................ 4,197 379,000 44,327 9,463 5,845
Aircraft........................ 856 552,000 96,715 24,858 15,148
Electronic Equipment............ 1,280 700,000 155,101 80,502 12,503
Stationary Industrial Equipment. 2,769 419,000 52,918 12,815 6,306
Ordnance........................ 190 131,000 21,666 7,059 4,006
Aerospace....................... 545 580,000 54,430 19,454 9,660
Mobile Industrial Equipment..... 764 275,000 65,914 14,101 8,151
-------------------------------------------------------------------------------
All Phase I Sectors......... 10,601 3,036,000 491,071 168,252 61,620
-------------------------------------------------------------------------------
Total U.S. Manufacturing.... .............. 19,492,000 2,793,000 1,308,000 533,000
Phase I Facilities as a Percent
of Total U.S. Manufacturing.... .............. 15.58% 17.58% 12.86% 11.56%
----------------------------------------------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency, Section 308 Survey Data, 1989, and Statistical Abstract of the
United States, 1992, Department of Commerce.
These data show that the 10,601 facilities potentially subject to
regulation employed over 3,000,000 persons in 1989 or approximately 16
percent of the total U.S. manufacturing employment of 19.5 million in
1989.3 Total revenues for the 10,601 facilities are estimated at
$491 billion or about 18 percent of the total shipments for U.S.
manufacturing in 1989 of $2,793 billion. A more meaningful measure of
the value of production activity in these facilities is provided by
value added,4 which is estimated to amount to about $168 billion
or approximately 13 percent of the total value added of $1,308 billion
for U.S. manufacturing in 1989. The estimated payroll for the 10,601
facilities is about $62 billion or approximately 12 percent of the
total of $533 billion for U.S. manufacturing in 1989.
\3\ Although the MP&M Phase I sectors include non-manufacturing
activities and employment, nearly 95 percent of the revenue received
by facilities affected by the regulation is estimated to be derived
from manufacturing activities. Thus, the comparison of employment
and other economic values with totals for the U.S. manufacturing
sector provides a relevant basis for understanding the economic
significance of the industries and facilities expected to incur
costs under the regulation.
\4\ Value Added is the difference between the output price of a
good or service and the price of all material inputs used in
producing the good or service, and is generally considered a better
measure than revenue of the value of production that occurs in a
given economic activity.
Table 3 also shows these economic activity data for the seven MP&M
Phase I business sectors. On the basis of number of facilities, the
Hardware, Stationary Industrial Equipment, and Electronic Equipment
sectors are the largest sectors subject to regulation. These three
sectors account for over 75 percent of the total of 10,601 facilities
expected to be subject to regulation. However, on the basis of
employment and dollar measures of economic activity, the Hardware
sector is less dominant. A ranking on both employment and value added
shows that Electronic Equipment is the largest sector in terms of
economic contribution followed by Aircraft, Aerospace, Stationary
Industrial Equipment, Mobile Industrial Equipment, Hardware, and
Ordnance.
C. Overview of Options Considered for Proposal and Selection of the
Proposed Options
In developing the regulatory proposals presented herein, EPA
defined and evaluated a number of PSES regulatory options for indirect
dischargers and BAT/BPT options for direct dischargers. The following
discussion defines the options that were considered for proposal and
outlines the rationale for the regulatory proposals.
1. PSES Options for Indirect Dischargers
As discussed previously in Sections IX, XI, and XII, EPA initially
evaluated three PSES regulatory options for indirect dischargers:
Option 1: Lime and Settle Treatment. Under this option,
Pretreatment Standards for Existing Sources (PSES) would be established
on the basis of the application of lime and settle treatment without
any pollution prevention and flow controls imposed. The implementation
of this option would likely result in concentration-based standards
imposed on facilities by Control Authorities.
Option 2: In-Process Flow Reduction and Pollution Prevention and
Lime and Settle Treatment. This option would establish PSES on the
basis that all facilities should comply with mass-based standards that
are the based on the Lime and Settle technology and associated
concentration limits as specified for Option 1. However, the mass-based
standards would be calculated from a flow volume that reflects good
pollution prevention and water conservation practices. Thus, this
option embodies a requirement for pollution prevention and water
conservation in conjunction with the Lime and Settle Treatment process.
The flow basis would be determined by the relevant Control Authority
using site-specific factors and flow guidance.
Option 3: Advanced End-of-Pipe Treatment. This option would
establish PSES based on the same technology and mass-based limit
specifications as set forth for in Option 2 plus additional end-of-pipe
treatment through reverse osmosis or ion exchange to achieve additional
removals and produce a treated wastewater that can be recycled back to
the facility for reuse as process waters.
From its preliminary analysis of these options, EPA initially
selected Option 2, In-Process Flow Reduction and Pollution Prevention
and Lime and Settle Treatment, as the preferred PSES regulatory option
for indirect dischargers. Stated simply, EPA preferred Option 2 because
it would apply to all indirect discharging facilities, mass-based
standards that embody best available technology based on a combination
of treatment systems and pollution prevention measures. Moreover, EPA
found that Option 2 would impose relatively modest economic impacts in
terms of expected facility closures and employment losses in the MP&M
industry and thus concluded that Option 2 would be
[[Page 28235]] economically achievable. However, upon further analysis
and consideration, EPA reached additional findings that weighed against
the proposal of Option 2 and caused the Agency to define and evaluate
modifications to Option 2 as the basis for a PSES proposal. These
findings involved three issues as follows:
Impact on small business. In its Regulatory Flexibility Analysis,
EPA found that Option 2 would be expected to disproportionately burden
small business-owned facilities in terms of facility closures and
financial requirements. In particular, by embodying technology
requirements for pollution prevention as well as treatment systems,
Option 2 was found to impose greater financial burden on MP&M small
business-owned, indirect discharging facilities than would result from
the treatment system-only basis of Option 1. As discussed in Section
K., Regulatory Flexibility Analysis, below, EPA considered
modifications to Option 2 in an effort to mitigate financial and
economic burdens on small business-owned facilities. These
modifications differentiated among facilities based on the annual
volume of facility discharge; however, EPA anticipated that reducing
regulatory requirements for small discharge volume facilities would
also mitigate the regulatory burden among small business entities.
Cost effectiveness. For indirect discharging facilities with
smaller discharge volumes, EPA found that Option 2 would not be cost
effective (see Section L, below). That is, for facilities with smaller
discharge volumes, Option 2 would not achieve sufficient additional
reductions in pollutant discharges beyond those achieved by Option 1 to
support its higher cost relative to Option 1. In view of this finding,
EPA considered modifications to Option 2 that would be more cost
effective for indirect discharging facilities with smaller discharge
volumes.
Impact on permitting authorities. EPA was concerned that Option 2,
by requiring mass-based permits for all indirect discharging
facilities, regardless of discharge volume, would substantially burden
the authorities that administer the permit requirements. In particular,
as part of the public participation in the regulation development
process, the Association of Metropolitan Sewerage Agencies (AMSA)
commented that the permit administration requirements of covering small
discharge facilities under mass-based limitations would unduly burden
permitting authorities. In its analysis of the MP&M Phase I industry,
EPA estimated that a large percentage of indirect discharging
facilities had relatively small annual discharge: over 75 percent of
the estimated 6,700 indirect discharging facilities discharge less than
1 million gallons annually. Thus, EPA acknowledged that Option 2 would
require a large number of permits to be written for these smaller
discharge volume facilities and could therefore impose a substantial
burden on permitting authorities. In response to this concern, EPA
undertook a limited analysis of the likely costs to permitting
authorities of issuing mass-based and concentration-based permits. This
analysis indicated that the cost to permitting authorities of covering
smaller discharge volume facilities (less than 1 million gallons per
year) could vary considerably among permitting authorities but, in
aggregate, might not be excessive: EPA estimated a total annual cost of
$1.9 to $3.2 million ($1994) for writing and administering permits for
indirect discharging facilities with effluent discharge of less than 1
million gallons per year. Still, in view of the limited nature of EPA's
analysis of permitting costs and, moreover, in view of the findings
with regard to small business impact and cost effectiveness (which also
argued for moderating requirements among smaller facilities), EPA
decided to define and evaluate modifications to Option 2 that would
reduce the number of mass-based permits needed for implementing the
regulation. Because of the conflicting information and findings
regarding the burden of permit administration, EPA requests that
permitting authorities comment on this issue.
On the basis of these findings, EPA defined and evaluated two
additional PSES regulatory options for indirect discharging facilities:
Option 1a and Option 2a. EPA found that both options addressed the
issues described above and presented superior alternatives to Options
1, 2, or 3, alone, for regulatory proposal. However, with respect to
each of the issues noted above--impact on small business, cost
effectiveness, and burden on permit writing authorities--EPA found that
Option 2a provided a better solution than Option 1a. Accordingly, EPA
is proposing Option 2a as the preferred PSES option for indirect
discharging facilities. Option 1a and Option 2a, together with the
basis of their selection for regulatory proposal, are discussed below:
Option 1a: Tiered PSES for ``Low'' Flow and ``Large'' Flow Sites.
This option would establish a tiered PSES requirement and blends
elements of Option 1 and Option 2 depending on a site's annual
discharge volume. Sites with a discharge volume of less than 1,000,000
gallons per year (``low'' flow sites) would meet the concentration-
based standard set forth in Option 1. Sites with a discharge volume of
at least 1,000,000 gallons per year (``large'' flow sites) would meet
the mass-based standards that embody pollution prevention as well as
the Lime and Settle Treatment process as set forth in Option 2.
By adopting the concentration-based requirements of Option 1 for
``low'' flow sites, Option 1a reduces the number of facilities for
which mass-based permits would need to be written. In addition, Option
1a reduces the expected compliance costs and financial burdens for the
smaller discharge volume facilities, many of which are small
businesses. Finally, because of the reduced requirements on smaller
discharge volume facilities, Option 1a achieves better cost
effectiveness than Option 2.
Option 2a: In-Process Flow Reduction and Pollution Prevention and
Lime and Settle Treatment for ``Large'' Flow Sites. This option would
establish the same PSES requirements as specified for Option 2.
However, these requirements would apply to only ``large'' flow sites--
that is, indirect discharge sites with a discharge volume of at least
1,000,000 gallons per year. All such sites would comply with mass-based
standards based on the Lime and Settle Treatment process coupled with a
requirement for pollution prevention and water conservation as
specified for Option 2. ``Low'' flow indirect discharge sites--that is,
with a discharge volume of less than 1,000,000 gallons per year--would
not be subject to PSES requirements. EPA estimates that, of the 8,706
indirect discharge facilities in the MP&M Phase I industry, 6,708 would
qualify as low flow discharge sites and thus would not be subject to
the Option 2a PSES requirement.
By exempting low flow discharge sites from PSES regulatory
requirements, Option 2a, even more than Option 1a, mitigates the
difficulties of Option 2. Specifically, because of the regulation's
reduced coverage in terms of number of facilities, Option 2a would
substantially reduce the burden on permit-writing authorities. In
addition, low flow indirect discharging facilities would bear no costs
as a result of regulation, substantially reducing financial burdens and
closure impacts among small business-owned facilities. Finally, as
discussed below at Section L, EPA found that Option 2a would be
expected to achieve substantially better cost effectiveness than the
other regulatory [[Page 28236]] options considered for indirect
discharging facilities.
Thus, EPA found that Option 2a addresses the limitations of Option
2 while imposing even fewer economic impacts than Option 2 or Option 1a
in terms of facility closures and financial burdens. Moreover, Option
2a embodies best available technology for reducing the industry's
effluent discharges. Accordingly, EPA judges that Option 2a presents a
balanced regulatory approach for reducing effluent discharges from the
MP&M Phase I indirect discharging facilities while not imposing undue
burdens on industry or on the permit-writing authorities that will be
directly responsible for administering the regulation.
2. BAT/BPT Options for Direct Dischargers
As discussed previously in Sections IX, XI, and XII, EPA evaluated
three BAT/BPT regulatory options for direct discharging facilities:
Option 1: Lime and Settle Treatment. Under this option, BAT/BPT
would be established on the basis of the application of lime and settle
treatment without any pollution prevention and flow controls imposed.
Option 2: In-Process Flow Reduction and Pollution Prevention and
Lime and Settle Treatment. Option 2 includes the same technology basis
as Option 1, lime and settle treatment, but adds in-process pollution
prevention and flow controls.
Option 3: Advanced End-of-Pipe Treatment. Option 3 includes the
same treatment technology and in-process pollution prevention and flow
controls as set forth in Option 2 plus additional end-of-pipe treatment
through reverse osmosis or ion exchange to achieve additional removals
and produce a treated wastewater that can be recycled back to the
facility for reuse as process waters.
Of these options, EPA selected Option 2 as the proposed BPT/BAT
regulation for direct existing discharging facilities. Like Option 2a
for indirect discharging facilities, Option 2 embodies best available
technology for reducing effluent discharges. Moreover, EPA found that
Option 2 would impose modest economic impacts in terms of facility
closures, employment losses, and financial requirements. As discussed
in Section L, below, EPA also found that Option 2 is cost effective.
Finally, EPA concluded that Option 2 (in combination with Option 2a for
indirect dischargers) would impose a modest and manageable burden among
small business-owned, direct discharging facilities.
The following sections summarize the specific analyses and findings
leading to EPA's selection of Option 2a for indirect dischargers and
Option 2 for direct dischargers as the proposed regulatory alternatives
for existing facilities in the MP&M Phase I industries.
D. Economic Impact Methodology
The promulgation of a BAT effluent guideline rests on a finding of
economic achievability. As described earlier in Section III of this
Preamble, EPA is proposing to establish BAT equal to BPT. BPT effluent
limitations do not face the same economic achievability test as BAT.
Therefore, the following discussion of economic achievability describes
the regulatory approach in terms of BAT economic achievability. The
analyses supporting the determination of economic achievability for
this proposed regulation include a facility impact analysis, which
assesses how facilities are expected to be affected financially by the
proposed regulation. Key outputs of the facility impact analysis
include expected facility closures in the MP&M industry and the
associated losses in employment and value of economic activity in those
facilities. The findings from the facility impact analysis provide the
basis for the other analyses regarding the economic achievability of
the regulation. These include:
A firm-level analysis, which assesses the impact of
effluent guidelines on the financial performance and condition of firms
owning MP&M facilities subject to regulation;
A labor requirements analysis, which assesses the likely
demands for labor that will accompany the activities of facilities to
comply with effluent guidelines.
A community impact analysis, which assesses the local
employment impact of possible facility closures;
A foreign trade analysis, which assesses the effect of
effluent guidelines on the international competitiveness and balance of
trade of the MP&M industries.
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 Regulatory Flexibility Analysis, which assesses the
economic and financial impacts of effluent guidelines for the MP&M
industries on small businesses.
The following section of the preamble addresses the facility impact
analysis. This discussion is followed by the other analyses of the
economic impact of effluent guidelines for the MP&M industries.
1. Structure of the Facility Impact Analysis
The facility-level impact analysis involves a series of financial
analyses to assess the expected occurrence of significant financial
impacts as the result of an MP&M effluent guideline. Several
considerations define the structure of the facility impact analysis,
including: the impact categories analyzed; baseline and post-compliance
analyses; assumptions regarding the ability of facilities to pass
compliance costs on to customers; and whether facilities were expected
to discharge effluent to a publicly owned treatment works (POTW) (i.e.,
indirect dischargers) or directly to a waterway (i.e., direct
dischargers). Each of these considerations is discussed briefly below.
a. Impact Categories Analyzed
Two categories of significant impact are assessed: (1) facility
closure, which is judged as a severe economic impact, in that all
employment and production at the facility are assumed to be terminated;
and (2) financial stress short of closure, which is judged to be a
moderate economic impact. The estimates of facility closures and
associated employment and production losses underlie the other analyses
required for the assessment of economic achievability. The second
impact category, financial stress short of closure, signifies that
facilities may experience difficulty in financing the pollution
prevention and treatment systems needed for compliance or that, because
of compliance, may subsequently experience difficulty in financing
other capital needs.
b. Baseline and Post-Compliance Analyses
The facility closure analyses were undertaken on both a pre-
compliance, or baseline, basis, and a post-compliance basis. The
purpose of the Baseline Analysis is to identify facilities that are
currently experiencing or are projected to experience significant
financial stress following the period for which the Survey was
completed. These facilities are having or are expected to have serious
financial difficulties regardless of the promulgation of effluent
guidelines. Attribution of these financial difficulties to the effluent
guidelines rather than to facilities' current financial problems would
inaccurately represent the burden of the effluent guidelines.
Accordingly, facilities that failed the baseline analysis
[[Page 28237]] were excluded from the subsequent, post-compliance
analyses that measure the impact of compliance on financial performance
and condition.
The Post-Compliance Analyses differ from the Baseline Analysis by
accounting for the capital and operating costs of pollution prevention
and discharge treatment systems needed to comply with regulatory
options. The post-compliance analyses thus indicate how facility
financial performance and condition are likely to be affected by the
proposed regulation and provide the basis for identifying whether
facilities may be expected to incur a significant financial impact.
c. Pass Through of Compliance Costs to Customers
The analyses of Post-Compliance Closure and Financial Stress Short
Of Closure were performed under assumptions of both zero-cost-pass-
through and partial-cost-pass-through of compliance costs to customers.
The zero-cost-pass-through case provides a conservative assessment of
regulatory impacts in that facilities are assumed to pass none of the
costs of compliance through to customers. That is, both quantities and
prices--and therefore revenues--for each facility's production were
assumed to remain constant after compliance even though costs were
increased on the basis of the estimated equipment and operating
requirements for effluent guidelines compliance. Because it is likely
that companies would both attempt and be able to recover some of the
compliance costs by increasing prices, the no-cost-pass-through case
represents an extremely conservative, worst case assessment of the
effects of the regulation.
For a more realistic assessment of impacts, EPA also analyzed the
impact of regulatory options under an assumption of partial-cost-pass-
through. For the partial-cost-pass-through analysis, EPA estimated the
ability of firms in each of the MP&M sectors to recover compliance
costs from customers. The assessment of cost pass-through potential was
based on an econometric analysis of historical pricing and cost trends
in the MP&M industries over a fifteen-year period coupled with an
analysis of market structure factors that provide additional insight
into the likely ability of firms to pass on higher costs to customers.
Market structure factors considered in the analysis include: market
power based on horizontal and vertical integration; extent of
competition from foreign suppliers (both in domestic and export
markets); barriers to competition as indicated by higher than normal
profitability; and the long term growth trend in the industry. The
analysis of pass-through potential yielded a pass-through parameter
applicable to each MP&M industry sector indicating the fraction of
compliance costs that firms subject to regulation are expected to
recover from customers through increased revenues. The partial-cost-
pass-through analysis yielded modestly lower impacts in terms of
expected facility closures and losses in employment and production.
d. Facility Discharge Status
Whether facilities discharge effluent streams to a publicly owned
treatment works (POTW) (i.e., indirect dischargers) or directly to a
waterway (i.e., direct dischargers) is relevant to the structure of the
economic impact analysis because these facilities and their effluent
streams are regulated under different technology standards. Indirect
dischargers are subject to Pretreatment Standards for Existing Sources
(PSES) while direct dischargers are subject to Best Available
Technology Economically Achievable (BAT), Best Practicable Control
Technology Currently Available (BPT), and Best Conventional Pollutant
Control Technology (BCT) requirements. For this regulation, different
sets of regulatory options were considered for indirect and direct
dischargers. As discussed above, five PSES regulatory options were
considered for indirect dischargers and three BAT/BPT options were
considered for direct dischargers. EPA performed the facility impact
analyses separately for these two classes of facilities and the
regulatory options that were considered for them. In the following
discussion, economic impact analysis results are presented separately
for the two classes of facilities and are also summed for the proposed
options for both facility classes.
2. Data Supporting the Facility Impact Analysis
The most important source of data for the facility impact analysis
is the facility-level financial data obtained by the DCP. These data
include: three years (1987-89) of income statements and balance sheets
at the level of 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; and ownership of the
facility business and total revenues of the owning entity (if separate
from the facility).
In addition to the DCP data, several secondary sources provided
data for the analysis. In most cases, secondary source data were used
to characterize a background economic or financial condition, in the
economy as a whole or in the particular industries subject to the MP&M
effluent guideline. For example, secondary source data were used to
define capital market conditions underlying the cost-of-capital
analysis. Secondary source data also figured prominently in the
analysis of cost pass-through potential for the MP&M sectors. Secondary
sources used in the analysis include:5
\5\ See the Public Record for a detailed listing of the
secondary information sources used in the economic impact analysis.
---------------------------------------------------------------------------
Department of Commerce economic census and survey data
including the Censuses of Manufacturers, Annual Surveys of
Manufacturers, 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. Industrial Outlook, published by the Department of
Commerce;
Industry trade publications; and
Financial publications, including the Value Line
Investment Survey and Robert Morris Associates annual data summaries.
Other vital data for the analysis of facility impacts include the
estimates of capital and operating costs for complying with regulatory
options. These cost estimates were developed by EPA from engineering
studies of sample MP&M industry facilities. These studies took into
account the characteristics of effluent discharges and existing
treatment systems at the facilities and estimated the additional
pollution prevention and treatment system needs for complying with the
alternative regulatory options. The estimated capital costs and annual
operating and maintenance costs for pollution prevention and treatment
systems provided the basis for assessing how an effluent guideline
would be likely to affect the financial performance and condition of
MP&M facilities and whether those facilities might be expected to incur
significant economic impacts.
3. Methodology for Calculating Facility Impacts
The estimation of facility impacts is based on the following
analyses: the Baseline Closure Analysis, the Post-Compliance Closure
Analysis, and the Financial Stress Short of Closure Analysis. Each
analysis is described briefly in the following section. Table 4,
[[Page 28238]] below, summarizes the methodology for each impact
category.
a. Baseline Closure Analysis
The Baseline Facility Closure Analysis is based on two financial
tests, both of which must be failed for the facility to be deemed a
closure:
1. After-Tax Cash Flow Test. This test examines whether a facility
has lost money on a cash basis for the three years covered by the DCP.
If the facility's cash flow is negative when averaged over the period
of analysis, then the facility's management and ownership is presumed
to be under pressure to change operations or business practices to
eliminate future losses. One possible change is to terminate operations
at the facility. Whether it may be financially advantageous to the
facility's ownership to terminate facility operations is the subject of
the second financial test.
2. Liquidation Value and Going-Concern Value Comparison Test. This
test examines whether the liquidation value of facility assets exceeds
the going concern value of the facility based on a discounted value
analysis of the facility's after-tax cash flow. The liquidation value
of facility assets was calculated from information provided by
facilities in the DCP and reflects the market value of facility assets
less expenses associated with closure and liquidation. The financial
question underlying this comparison is whether the facility is worth
more in liquidation or in its current operation (i.e., as a going
concern). If the liquidation value exceeded the going-concern value,
then facility ownership is presumed to see a reward for terminating the
facility's business and liquidating its assets.
If a facility failed both tests, then the facility was presumed to
be in jeopardy of financial failure independent of the application of
the MP&M effluent guideline and was excluded from further consideration
in the analysis of effluent guideline impacts. Failure of the after-tax
cash flow tests means that the facility is incurring a cash loss and is
thus under financial pressure to alter its business to prevent future
losses. Failure of the liquidation value/going-concern value test means
that facility ownership would benefit financially by terminating
operations and liquidating facility assets. The combination of these
two circumstances leads to the expectation that facility management and
ownership may decide to cease business at the facility independent of
the application of an MP&M effluent guideline. Facilities failing only
one test were carried forward to the post-compliance analysis; because
of their more fragile condition, these facilities were more likely to
fail that analysis.
b. Post-Compliance Closure Analysis
The Post-Compliance Closure analysis is identical in structure to
the Baseline Closure Analysis with the exception that the after-tax
cash flow amounts used in the After-Tax Cash Flow test and in the
Liquidation Value and Going-Concern Value Comparison test are adjusted
to reflect the annual cash outlays for financing and operating the
pollution prevention and treatment systems needed to comply with an
MP&M effluent guideline. The adjustments to cash flow reflect the
annualized costs of purchasing and financing equipment for compliance
with the alternative regulatory options and include allowances for the
cost of debt and equity financing. In addition, the cash flow
adjustments reflect the annual costs incurred by facilities for
operating and maintaining the pollution prevention and treatment
systems needed for compliance. The capital cost and operating and
maintenance costs that underlie these cash flow adjustments were
estimated by EPA on the basis of engineering studies of pollution
prevention and treatment system needs at sample MP&M facilities for
complying with alternative regulatory options.
In the same way as for the Baseline Closure Analysis, a facility
was judged likely to close as a result of regulation only if the
facility fails both the After-Tax Cash Flow Test and the Liquidation
Value and Going-Concern Value Comparison Test. The requirement to fail
both tests again rests on the logic that negative cash flow provides
the impetus for considering facility closure to avoid future losses and
the excess of liquidation value over going concern value provides the
reward for doing so.
The analysis of post-compliance facility closures was undertaken
for the sample facilities that were not assessed as baseline closures.
These results were then extrapolated to the facility population using
sample weights. As discussed above, facility closure is considered a
severe economic impact as all employment and production from the
facility is assumed to be lost as a result of closure. Moreover, for
this analysis, none of the production or employment losses were assumed
to be offset by possible increases in MP&M production activity at other
facilities that remain in production. Thus, the assumption of full loss
of employment and production in closing facilities is conservative and
overstates possible employment and production impacts.
c. Analysis of Financial Stress Short of Closure
The analysis of Financial Stress Short of Closure identifies
facilities whose financial condition is so weak as to imply difficulty
in financing the treatment system investments for compliance with an
MP&M effluent guideline. This analysis was undertaken only for those
facilities that passed the preceding Facility Closure analysis.
Facilities that fail the Financial Stress analysis were judged as
likely to experience a financial impact that is less severe than
closure as the result of efforts to comply with an MP&M effluent
guideline. However, they would be expected to incur significant
financial stress from undertaking compliance-related investments and/or
incurring the operating cost burdens of compliance. Financing
assistance might be required from the parent firm or through an equity
infusion or other financial restructuring. These facilities or firms
are projected to become among the poorer, but still viable, financial
performers in an industry. Although they are not projected to fail or
otherwise terminate operations directly because of compliance
requirements, the deterioration in their financial performance would
presumably leave them at greater risk of failure from other factors in
their business environment.
The analysis of Financial Stress Short of Closure was based on two
tests of financial performance and condition calculated at the facility
level. The measures of financial performance and condition--pre-tax
return on assets and interest coverage ratio--are among the more
important criteria reviewed by creditors and equity investors in
determining whether and under what terms to provide financing to a
firm. These measures also provide insight into the ability of firms to
generate funds for compliance investments from internally generated
equity--that is, from after-tax cash flow. The basis for evaluating
these measures was by comparison of the facility values with industry
norms obtained from secondary sources.
The analyses of pre-tax return on assets (ROA) and interest
coverage ratio (ICR) were performed by first calculating ROA and ICR
values for facilities independent of the financial effects of complying
with an effluent guideline. The ROA and ICR values were then adjusted
to reflect the expected changes in facility finances resulting from
installing and operating the pollution prevention and treatment systems
needed for effluent guidelines compliance. As a result of the
compliance-related outlays, if a facility's ROA or ICR fell below
industry norms, the facility was judged likely to incur a moderate
impact (i.e., financial stress short of closure) as a result of
regulatory compliance. The industry norms for evaluating ROA and ICR
were developed from data reported in Robert Morris Associates Annual
Statement Summaries (RMA).6 Specifically, facility ROA and ICR
values were compared with the lowest quartile (i.e., 25th percentile)
value for the respective financial measures as calculated from RMA data
for the relevant industries over the period 1985-1992. [[Page 28239]]
\6\ RMA provides financial statistics based on bank credit
reports from public-reporting and non-public-reporting firms in a
variety of industries.
Table 4.--Summary of Facility Impact Methodology
------------------------------------------------------------------------
Significance of
Impact category Description Analysis negative finding
------------------------------------------------------------------------
1. Baseline Identifies Two tests: 1. Facilities
Closure. facilities that After-tax cash failing both
are in jeopardy flow negative? tests are
of financial and 2. considered a
failure Liquidation baseline
regardless of value exceed closure and
the going concern excluded from
promulgation of value? subsequent
effluent analyses.
guidelines.
2. Post- Identifies Two tests: 1. Facilities
Compliance facilities that Post-compliance failing both
Closure. are likely to after-tax cash tests are
close instead flow negative? projected to
of implementing and 2. close as the
the pollution Liquidation result of
prevention and value exceed regulation, a
treatment post-compliance severe economic
systems needed going concern impact.
for effluent value?
guidelines
compliance.
3. Financial Identifies Two tests: 1. Facilities
Stress Short of facilities with Decline in pre- failing either
Closure. limited ability tax ROA to a test are likely
to finance the level that to experience
pollution jeopardizes financial
prevention and access to weakness as the
treatment financing? or 2. result of
systems needed Decline in ICR regulation, a
for effluent to a level that moderate
guidelines jeopardizes economic
compliance. access to impact.
financing?
------------------------------------------------------------------------
E. Estimated Facility Economic Impacts
The findings from the facility impact analysis are summarized
below.
1. Baseline Closure Analysis
The estimated baseline closures for both indirect and direct
discharge facilities are summarized in Table 5. Of the estimated 10,601
discharging facilities, 13.9 percent or 1,471 facilities were assessed
as baseline closures from the financial analyses outlined above. The
1,471 baseline closures include 1,413 indirect dischargers, or 16.2
percent of indirect dischargers, and 58 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 promulgation of the MP&M regulation. The estimated baseline
closures are removed from the subsequent post-compliance analysis of
regulatory impacts.
Table 5.--Summary of Baseline Closure Analysis
------------------------------------------------------------------------
Indirect Direct
Total dischargers dischargers
------------------------------------------------------------------------
Facilities in Analysis (dischargers
only).............................. 10,601
100.0% 8,706
82.1% 1,895
17.9%
Baseline Failures (percent failing
in class).......................... 1,471
13.9% 1,413
16.2% 58
3.1%
Facilities in Analysis (percent in
class)............................. 9,130
86.1% 7,293
83.8% 1,837
96.9%
------------------------------------------------------------------------
2. Post-Compliance Impact Analysis
The findings from the Post-Compliance Impact Analyses are
summarized below. Findings are presented first for the PSES options
considered for indirect discharging facilities, and then for the BAT/
BPT options considered for direct discharging facilities. A third
section presents aggregate findings for the proposed PSES and BAT/BPT
options for both discharger classes. In each discussion, findings in
terms of estimated facility closure and lost employment and production
are presented for both the highly unlikely zero-cost-pass-through case
and the more realistic partial-cost-pass-through case. The expected
impacts of compliance in terms of estimated total capital cost and
total annual costs are also summarized. In addition, the numbers of
facilities expected to incur moderate impacts are discussed.
a. Indirect Dischargers
For indirect discharging facilities, EPA analyzed the impacts of
five possible PSES regulatory options--Options 1, 2, 3, 1a, and 2a--as
discussed in Section XIV.C., above, and as described in Section XII of
the technical discussion. Of the options considered, EPA is proposing
Option 2a as the preferred PSES regulatory option. As discussed in
Section XII, Option 2a embodies best available technology for reducing
the industry's effluent discharges. In addition, EPA estimates that
Option 2a will impose very modest economic impacts and is thus
economically achievable. The estimated facility-level impacts
associated with each of the regulatory options are discussed below and
presented in Table 6. The discussion first reviews the impact findings
for the three PSES options that EPA initially evaluated for proposal:
Options 1, 2, and 3. The discussion then reviews the impact findings
for the two PSES options that were subsequently developed: Option 1a
and the PSES proposal, Option 2a. As described previously, Option 1a
applies the requirements of Option 1 or Option 2 to facilities based on
whether facilities are ``low'' flow (i.e., discharge volume of less
than 1,000,000 gallons per year) or ``large'' flow (i.e., discharge
volume of at least 1,000,000 gallons per year), while
[[Page 28240]] Option 2a applies the requirements of Option 2 to only
``large'' flow facilities.
i. Impacts of Option 1: Lime and Settle Treatment
Zero-Cost-Pass-Through Analysis
Of the 7,293 indirect discharging facilities subject to regulation,
EPA estimates that 161 facilities or 2.2 percent could be expected to
close as the result of the Option 1 regulation. The employment and
shipments losses associated with these facility closures are estimated
at 3,001 full-time equivalent (FTE) positions and $370 million,
respectively (all amounts in 1994 dollars). The estimated employment
and shipments losses amount to 0.14 percent and 0.08 percent,
respectively, of the total values for indirect discharging facilities
that pass the baseline closure analysis and are thus the basis for the
post-compliance analysis. The estimates of possible facility closures
and associated losses in employment and shipments are probably
substantial overestimates because of the assumption of zero-cost-pass-
through and because the analysis does not account for the likelihood
that non-closing facilities will absorb some of the lost production and
employment from closing facilities. In addition to the facility closure
impacts, another 42 facilities would be expected to incur financial
stress short of closure, a moderate economic impact, under Option 1.
EPA estimates that industry would incur capital costs of $276 million
for complying with Option 1. The estimated total annualized, after-tax
cash cost to industry, which reflects private costs of capital and
expected tax treatment of capital outlays and annual expenses, amounts
to $202 million.
Table 6.--Estimated Impacts of Regulatory Compliance, Indirect Dischargers
[Dollar values in $000, 1994]
----------------------------------------------------------------------------------------------------------------
Options initially considered for Subsequent options
proposal -------------------------
---------------------------------------
Option 1 Option 2 Option 3 Option 1a Option 2a
----------------------------------------------------------------------------------------------------------------
Facilities in Analysis......................... 7,293 7,293 7,293 7,293 1,792
----------------------------------------------------------------------------------------------------------------
Severe Impacts (closing facilities)
Zero-Cost-Pass-Through Analysis (unrealistic worst case)
----------------------------------------------------------------------------------------------------------------
Number of Facilities........................... 161 151 227 151 7
Percent of Class............................... 2.20% 2.07% 3.11% 2.07% 0.39%
Employment (FTEs).............................. 3,001 2,354 18,215 2,354 540
Value of Shipments............................. $369,997 $235,852 $2,350,346 $235,852 $133,678
----------------------------------------------------------------------------------------------------------------
Moderate Impacts (financial stress short of closure)
----------------------------------------------------------------------------------------------------------------
Number of Facilities........................... 42 124 184 54 12
Financial Impacts on Complying Facilities:
Capital Cost............................... $275,798 $436,293 $1,174,721 $437,209 $350,853
Total Annual Compliance Cost:
Tax-adjusted *............................. $202,115 $213,530 $615,530 $208,639 $142,467
No adjustments .................... $271,020 $267,544 $783,691 $259,994 $171,134
----------------------------------------------------------------------------------------------------------------
Severe Impacts (closing facilities)
Partial-Cost-Pass-Through Analysis
----------------------------------------------------------------------------------------------------------------
Number of Facilities........................... 91 52 160 82 7
Percent of Class............................... 1.25% 0.72% 2.20% 1.12% 0.39%
Employment (FTEs).............................. 1,714 892 7,710 1,068 540
Value of Shipments............................. $325,896 $177,109 $858,207 $191,751 $133,678
Moderate Impacts (financial stress short of closure)
----------------------------------------------------------------------------------------------------------------
Number of Facilities........................... 0 41 66 12 12
Financial Impacts on Complying Facilities:
Capital Cost............................... $279,029 $439,840 $1,195,482 $440,441 $350,853
Total Annual Compliance Cost:
Tax-adjusted *............................. $203,647 $215,274 $629,618 $210,171 $142,467
No adjustments .................... $272,914 $269,717 $802,156 $261,888 $171,134
----------------------------------------------------------------------------------------------------------------
* ``Tax-adjusted'' compliance costs are an estimate of the annual cash compliance cost to industry and reflect
private costs of capital and expected tax treatment of capital outlays and annual expenses.
Compliance costs with ``No adjustments'' are an estimate of the total annual cost of compliance without
tax adjustments and with capital costs annualized on the basis of a real social discount rate.
Partial-Cost-Pass-Through Analysis
The more realistic, partial-cost-pass-through analysis shows fewer
impacts under Option 1. Among indirect dischargers, 91 facilities or
1.3 percent would be expected to close as a result of such regulation
and no additional facilities are expected to incur moderate economic
impacts. Employment and shipments losses associated with closing
facilities are estimated at 1,714 FTEs (0.08 percent of total for
indirect discharging facilities in the post-compliance analysis) and
$326 million (0.07 percent of total) respectively. Because additional
facilities are expected to come into compliance (instead of closing)
under the partial-cost-pass-through analysis, the costs of compliance
are estimated to be modestly higher. Total capital costs of compliance
are estimated at $279 million and total annualized
[[Page 28241]] compliance costs are estimated at $204 million, tax-
adjusted.
ii. Impacts of Option 2: In-Process Flow Reduction and Pollution
Prevention and Lime and Settle Treatment
Zero-Cost-Pass-Through Analysis
Under Option 2, EPA estimates that 151 facilities or 2.1 percent
could be expected to close as the result of regulation. The employment
and shipments losses associated with these facility closures are
conservatively estimated at 2,354 FTEs (0.11 percent of total) and $236
million (0.05 percent of total), respectively. In addition to the
facility closure impacts, another 124 facilities are expected to incur
financial stress short of closure because of regulation. EPA estimates
that industry will incur capital costs of $436 million for complying
with Option 2. The estimated total annualized, after-tax cash cost to
industry, which reflects private costs of capital and expected tax
treatment of capital outlays and annual expenses, amounts to $214
million.
Partial-Cost-Pass-Through Analysis
Under the more realistic, partial-cost-pass-through analysis, 52
facilities or 0.7 percent of indirect dischargers passing the baseline
analysis are expected to close as a result of regulation and another 41
facilities are expected to incur moderate economic impacts. Employment
and shipments losses associated with closing facilities are estimated
at 892 FTEs (0.04 percent of total) and $177 million (0.04 percent of
total) respectively. Total capital costs of compliance are estimated at
$440 million and total annualized compliance costs are estimated at
$215 million, tax-adjusted.
iii. Impacts of Option 3: Advanced End-of-Pipe Treatment
Zero-Cost-Pass-Through Analysis
Impacts under Option 3 are estimated to be markedly higher than
those for Options 1 or 2. Under Option 3, EPA estimates that 227
facilities or 3.1 percent could be expected to close as the result of
regulation. The employment and shipments losses associated with these
facility closures are conservatively estimated at 18,215 FTEs (0.87
percent of total) and $2,350 million (0.52 percent of total),
respectively. In addition to the facility closure impacts, another 184
facilities are expected to incur financial stress short of closure
because of regulation, again considerably higher than for the other
options considered. Compliance costs are also considerably higher for
Option 3. EPA estimates that industry will incur capital costs of
$1,175 million for complying with Option 3. The estimated total
annualized, after-tax cash cost to industry, which reflects private
costs of capital and expected tax treatment of capital outlays and
annual expenses, amounts to $616 million.
Partial-Cost-Pass-Through Analysis
Although impacts are moderated under the more realistic partial-
cost-pass-through analysis (in relation to the zero-cost-pass-through
analysis), they still remain considerably higher than the impacts
estimated for the other options. Among indirect dischargers, 160
facilities or 2.2 percent of facilities passing the baseline analysis
are expected to close as a result of regulation and another 66
facilities are expected to incur moderate economic impacts. Employment
and shipments losses associated with closing facilities are estimated
at 7,710 FTEs and $858 million respectively. Total capital costs of
compliance are estimated at $1,195 million and total annualized
compliance costs are estimated at $630 million, tax-adjusted.
iv. Impacts of Option 1a: Tiered PSES for ``Low'' Flow and ``Large''
Flow Sites
Zero-Cost-Pass-Through Analysis
Under Option 1a, which applies the limitations of Option 1 or
Option 2 based on facility discharge volume, EPA estimates that 151
facilities or 2.1 percent could be expected to close as the result of
regulation. The employment and shipments losses associated with these
facility closures are conservatively estimated at 2,354 FTEs (0.11
percent of total) and $236 million (0.05 percent of total),
respectively. All these values are the same as estimated for Option 2.
Under Option 1a, 54 facilities are expected to incur financial stress
short of closure, a moderate economic impact. EPA estimates that
industry will incur capital costs of $437 million for complying with
Option 1a, or very slightly greater than for Option 2. However, the
estimated total annualized, after-tax cash cost to industry, which
reflects private costs of capital and expected tax treatment of capital
outlays and annual expenses, amounts to $209 million, which is about $5
million less than estimated for Option 2.
Partial-Cost-Pass-Through Analysis
The more realistic, partial-cost-pass-through analysis again shows
fewer impacts than the zero-cost-pass-through analysis. Among indirect
dischargers, 82 facilities or 1.1 percent are expected to close as a
result of regulation and only 12 facilities are expected to incur
moderate economic impacts. Employment and shipments losses associated
with closing facilities are estimated at 1,068 FTEs (0.05 percent of
total) and $192 million (0.04 percent of total), respectively. Total
capital costs of compliance are estimated at $440 million and total
annualized compliance costs are estimated at $210 million, tax-
adjusted.
v. Impacts of Option 2a: In-Process Flow Reduction and Pollution
Prevention and Lime and Settle Treatment for ``Large'' Flow Sites
Zero-Cost-Pass-Through Analysis
Among the five PSES options that EPA analyzed, the proposed Option
2a, which applies the limitations of Option 2 to large flow facilities
and exempts low flow facilities from regulation, achieves the lowest
impacts in terms of facility closures, employment losses, and financial
burdens. Under Option 2a, EPA estimates that a minimal number of
facilities--7--would be expected to close as the result of regulation.
These 7 facilities represent 0.1 percent of the 7,293 indirect
discharge facilities found to pass the baseline closure analysis and
0.4 percent of the 1,792 indirect discharge facilities that both have a
discharge volume of at least 1,000,000 gallons per year and pass the
baseline closure analysis. The employment and shipments losses
associated with these facility closures are conservatively estimated at
540 FTEs (0.03 percent of total) and $134 million (0.03 percent of
total), respectively. In addition to the facility closure impacts, 12
facilities are expected to incur financial stress short of closure
because of regulation. EPA estimates that industry will incur capital
costs of $351 million to comply with Option 2a. The estimated total
annualized, after-tax cash cost to industry, which reflects private
costs of capital and expected tax treatment of capital outlays and
annual expenses, amounts to $142 million.
Partial-Cost-Pass-Through Analysis
The estimated impacts of Option 2a under the partial-cost-pass-
through case are the same as the already modest values estimated for
the zero-cost-pass-through case. The estimated closure and financial
impact values remain the lowest among the five PSES options analyzed
for indirect discharging facilities.
b. Direct Dischargers
For direct discharging facilities, EPA analyzed the impacts of
three possible [[Page 28242]] BAT/BPT regulatory options--Options 1, 2,
and 3--as previously described. Of these options, EPA is proposing
Option 2 because, as discussed above, it represents the performance
achievable with the best available technology and, in view of its
comparatively modest economic impacts, is economically achievable. The
estimated facility-level impacts associated with each of the regulatory
options are discussed below and presented in Table 7. For direct
dischargers, EPA estimated the same level of facility closure and
compliance cost impacts under both the zero-cost-pass-through and
partial-cost-pass-through analyses. Thus, these results for these two
cases are not presented separately. The estimated moderate impacts--
that is, financial stress short of closure--did vary between the two
cost pass-through cases and these differences are noted in the summary
table and accompanying discussion.
i. Impacts of Option 1: Lime and Settle Treatment
Of the 1,837 direct discharging facilities subject to regulation,
EPA estimates that 18 facilities or 1.0 percent could be expected to
close as the result of regulation. The employment and shipments losses
associated with these facility closures are estimated at 158 FTEs (0.03
percent of total employment for direct discharging facilities passing
the baseline closure analysis) and $6 million (0.01 percent of total
shipments for direct discharging facilities passing the baseline
closure analysis), respectively. As noted above, the estimates of
possible facility closures and associated losses in employment and
shipments overstate likely impacts because the analysis does not
account for the likelihood that non-closing facilities will absorb some
of the lost production and employment from closing facilities. Under
the zero-cost-pass-through analysis, an additional 6 facilities are
expected to incur financial stress short of closure because of
regulation, a moderate economic impact; no facilities are estimated to
incur moderate economic impacts under the partial-cost-pass-through
case. EPA estimates that industry will incur capital costs of $47
million for complying with Option 1. The estimated total annualized,
after-tax cash cost to industry, which reflects private costs of
capital and expected treatment of capital outlays and annual expenses,
amounts to $16 million.
Table 7.--Estimated Impacts of Regulatory Compliance, Direct Dischargers
[Dollar values in $000, 1994]
------------------------------------------------------------------------
Option 1 Option 2 Option 3
------------------------------------------------------------------------
Facilities in Analysis........... 1,837 1,837 1,837
------------------------------------------------------------------------
Severe Impacts (closing facilities)
Zero-Cost-Pass-Through and Partial-Cost-Pass-Through Analyses (same
results)
------------------------------------------------------------------------
Number of Facilities............. 18 18 90
Percent of Class................. 0.96% 0.96% 4.92%
Employment (FTEs)................ 158 158 7,339
Value of Shipments............... $6,161 $6,161 $883,577
------------------------------------------------------------------------
Moderate Impacts (financial stress short of closure)
------------------------------------------------------------------------
Zero-Cost-Pass-Through
Number of Facilities......... 6 0 0
Partial-Cost-Pass-Through
Number of Facilities......... 0 0 0
------------------------------------------------------------------------
Financial Impacts on Complying Facilities
Zero-Cost-Pass-Through and Partial-Cost-Pass-Through Analyses (same
results)
------------------------------------------------------------------------
Capital Cost..................... $47,363 $63,269 $127,369
Total Annual Compliance Cost:
Tax-adjusted*................ $16,297 $18,136 $63,979
No adjustments....... $18,181 $19,137 $80,523
------------------------------------------------------------------------
* ``Tax-adjusted'' compliance costs are an estimate of the annual cash
compliance cost to industry and reflect private costs of capital and
expected tax treatment of capital outlays and annual expenses.
Compliance costs with ``No adjustments'' are an estimate of the
total annual cost of compliance without tax adjustments and with
capital costs annualized on the basis of a real social discount rate.
ii. Impacts of Option 2: In-Process Flow Reduction and Pollution
Prevention and Lime and Settle Treatment
Under the proposed Option 2, EPA estimated the same level of
facility closures and associated impacts as for Option 1; however,
moderate facility impacts are modestly lower and compliance costs are
modestly higher. Closing facilities are estimated at 18 facilities or
1.0 percent of direct dischargers passing the baseline analysis.
Associated employment and shipments losses are again estimated at 158
FTEs (0.03 percent of total) and $6 million (0.01 percent of total),
respectively. In both the zero-cost-pass-through and partial-cost-pass-
through analyses, no additional facilities were assessed as likely to
incur financial stress short of closure. EPA estimates that industry
will incur capital costs of $63 million for complying with Option 2.
The estimated total annualized, after-tax cash cost to industry, which
reflects private costs of capital and expected tax treatment of capital
outlays and annual expenses, amounts to $18 million.
iii. Impacts of Option 3: Advanced End-of-Pipe Treatment
In a similar way as for indirect dischargers, impacts under Option
3 for direct dischargers are estimated to be markedly higher than those
for Options 1 and 2. Under Option 3, EPA estimates that 90 facilities
or 4.9 percent of direct dischargers passing the baseline analysis
could be expected to close as the result of regulation. The employment
and shipments losses associated with these facility closures are
conservatively estimated at 7,339 FTEs (1.24 percent of total) and $884
million (1.26 percent of total), respectively. In both the zero-cost-
pass-through and partial-cost-pass-through analyses, no additional
facilities were assessed as likely to incur financial stress short of
closure, the same result as estimated for Option 2. Compliance costs
are estimated to be considerably higher for Option 3 than for Options 1
and 2. EPA estimates that industry will incur capital costs of $127
million for complying with Option 3. The estimated total annualized,
after-tax cash cost to industry, which reflects private costs of
capital and expected tax treatment of capital outlays and annual
expenses, amounts to $64 million.
c. Aggregate Impacts for the Combined Regulatory Proposal for Existing
Facilities: Option 2a for Indirect Discharging Facilities and Option 2
for Direct Discharging Facilities
Aggregate impacts for both indirect and direct discharging
facilities are summarized in Table 8, below, for the proposed
regulatory options applicable to existing facilities: Option 2a for
indirect dischargers (PSES) and Option 2 for direct dischargers (BAT/
BPT).
Overall, 3,629 facilities passed the Baseline Closure analysis
(1,837 direct discharging facilities and 1,792--large flow--indirect
discharging facilities) and thus are expected to be subject to
regulation. Of this population, 25 facilities or 0.7 percent are
expected to close as a result of regulation in both the zero-cost-pass
through and partial-cost-pass-through analyses.7 The total
associated employment impact amounts to 698 FTEs (0.03 percent of the
total employment in facilities passing the baseline analysis and thus
potentially subject to regulation) and the associated value of lost
shipments amounts to $140 million (0.03 percent of the total shipments
in facilities passing the baseline analysis and thus potentially
subject to regulation).8 In addition to the estimated closure
impacts, a modest 12 facilities are expected to encounter financial
stress short of closure as a result of the proposed regulation. Summed
over both indirect and direct discharging facilities, the total capital
costs of compliance amount to $414 million. Total annualized costs of
compliance are estimated at $161 million, when calculated on an after-
tax basis using private costs of capital. [[Page 28243]]
\7\ The impact analysis results for Option 2a/2 are the same
throughout for both the zero-cost-pass-through and partial-cost-
pass-through cases.
\8\ An analysis of possible employment increases that may
partially offset these losses is presented in the next section.
Table 8.--Estimated Aggregate Impacts of Regulatory Compliance-Proposed
Regulatory Options 2a and 2 for Indirect and Direct Dischargers
[Dollar values in $000, 1994]
------------------------------------------------------------------------
Option 2a Option 2 Sum for both
(indirect (direct classes of
dischargers) dischargers) facilities
------------------------------------------------------------------------
Facilities in Analysis.. 1,792 1,837 3,629
------------------------------------------------------------------------
Severe Impacts (closing facilities)
Zero-Cost-Pass-Through and Partial-Cost-Pass-Through Analysis
------------------------------------------------------------------------
Number of Facilities.... 7 18 25
Percent of Class........ 0.39% 0.96% 0.69%
Employment (FTEs)....... 540 158 698
Value of Shipments...... $133,678 $6,161 $139,839
------------------------------------------------------------------------
Moderate Impacts (financial stress short of closure)
------------------------------------------------------------------------
Number of Facilities.... 12 0 12
Financial Impacts in
Complying Facilities:
Capital Cost........ $350,853 $63,269 $414,122
Total Annual Compliance
Cost:
Tax-adjusted........ $142,467 $18,136 $160,602
No adjustments
.......... $171,134 $19,137 $190,270
------------------------------------------------------------------------
*``Tax-adjusted'' compliance costs are an estimate of the annual cash
compliance cost to industry and reflect private costs of capital and
expected tax treatment of capital outlays and annual expenses.
Compliance costs with ``No adjustments'' are an estimate of the
total annual cost of compliance without tax adjustments and with
capital costs annualized on the basis of a real social discount rate.
F. Labor Requirements and Possible Employment Benefits of Regulatory
Compliance
Firms will need to install and operate compliance systems to comply
with an effluent limitations guideline for the MP&M industry. The
manufacture, installation, and operation of these systems will require
use of labor resources. To the extent that these labor needs translate
into employment increases in affected firms, a MP&M rule has the
potential to generate employment benefits. If realized, these
employment benefits may partially offset the employment losses that are
expected to occur in facilities impacted by the rule. The employment
effects that would occur in the manufacture, installation, and
operation of treatment systems are termed the ``direct'' employment
benefits of the rule. Because these employment effects are directly
attributable to the MP&M rule, they are conceptually parallel to the
employment losses that were estimated for the facilities that are
expected to incur significant impacts as a result of the MP&M rule.
In addition to direct employment benefits, the MP&M rule may
generate other employment benefits through two mechanisms. First,
employment effects [[Page 28244]] may occur in the industries that are
linked to the industries that manufacture and install compliance
equipment; these effects are termed ``indirect'' employment benefits.
For example, a firm that manufactures the pumps, piping and other
hardware that comprise a treatment system will purchase intermediate
goods and services from other firms and sectors of the economy. Thus,
increased economic activity in the firm that manufacturers the
treatment system components has the potential to increase activity and
employment in these linked firms and sectors. Second, the increased
payments to labor in the directly and indirectly affected industries
will lead to increased purchases from consumer-oriented service and
retail businesses, which in turn lead to additional labor demand and
employment benefits in those businesses. These effects are termed
``induced'' employment benefits.
In view of these possible employment benefits, EPA estimated the
labor requirements associated with compliance with the proposed MP&M
Phase I regulatory option: Option 2a for indirect dischargers and
Option 2 for direct dischargers. Labor requirements--and thus the
possible employment benefits-- were estimated in two steps. EPA first
estimated the direct employment effects associated with the
manufacture, installation, and operation of compliance equipment.
Second, EPA considered the additional employment effects that might
occur through the indirect and induced effect mechanisms outlined
above.
1. Direct Labor Requirements of Complying With the Proposed Regulation
EPA separately analyzed each component of the direct labor
requirements: manufacturing, installing, and operating compliance
equipment. The analysis is based on the compliance cost estimates
developed for the economic impact analysis of the MP&M regulation.
Compliance requirements and associated costs were estimated for each
facility in the Survey that was assessed as incurring costs. For the
labor requirements analysis, compliance costs and their associated
labor requirements were considered only for those facilities that were
not assessed as a baseline or compliance related closure. That is, the
analysis considered the labor requirement effects associated only with
those facilities that, upon compliance with the rule, would be likely
to continue MP&M production activities.
EPA estimated the direct labor requirements for manufacturing and
installing compliance equipment based on the cost of the equipment and
its installation, and labor's expected share of cost in manufacturing
and installing the equipment. The labor input was estimated in dollars
based on information contained in the National Input-Output Tables
assembled by the Bureau of Economic Analysis in the Department of
Commerce. In particular, the direct requirements matrix identifies the
value of each input, including labor, that is required to produce a one
dollar value of output for a subject industry. The industries in the
input-output tables that were used as the basis for this analysis are:
the Heating, Plumbing, and Fabricated Structural Metal Products
Industry (Bureau of Economic Analysis industry classification 40) for
compliance equipment manufacturing; and the Repair and Maintenance
Construction Industry (Bureau of Economic Analysis industry
classification 12) for compliance equipment installation. The dollar
value of labor's contribution was converted to a full-time employment
equivalent based on a yearly labor cost of $56,244 in 1994 dollars
(including benefits and payroll taxes). Because compliance equipment
purchase and installation are considered one-time outlays, the labor
requirements for these activities were annualized over a 15-year period
at the seven percent social discount rate.
For the analysis of the labor required to operate compliance
equipment, EPA used the estimates of annual labor hours that were
developed as the basis for assessing the annual operating and
maintenance costs of the MP&M regulatory options.
From these analyses, EPA estimated an annual direct labor
requirement of 1,594 full-time equivalent positions (FTEs) for
complying with the combined regulatory proposal for existing
facilities: Option 2a for indirect dischargers and Option 2 for direct
dischargers (Option 2a/2). Of this total, the annualized labor
requirements for manufacturing and installing compliance equipment are
187 and 85 FTEs, respectively. Compliance equipment operation is
estimated to require 1,322 FTEs annually. The corresponding annual
estimated payments to labor is $89,664,000 (1994 dollars) (see Table
9).
Table 9.--Analysis of Possible Employment Generation Effects of Proposed Regulatory Options for the MP&M Industry
[All dollar amounts in thousands of 1994 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Labor cost Labor cost component Direct labor requirements \3\
Total weighted share of ---------------------------------------------------------------
expenditures production Annual basis
value \1\ One-time basis \2\ One-time basis Annual basis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2a for Indirect Dischargers and Option 2 for Direct Dischargers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Direct Labor Effects From Compliance Equipment:
Manufacturing....................................... $308,981 31.02% $95,833 $10,522 1,704 187
Installation........................................ $102,994 42.23% $43,497 $4,776 773 85
Operation........................................... .............. .............. .............. $74,367 .............. 1,322
---------------- ---------------
Total Direct Labor Effects........................ .............. .............. .............. $89,664 .............. 1,594
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Source: U.S. Department of Commerce, The 1982 Benchmark Input-Output Accounts of the United States, December 1991. The labor cost share of
production value for compliance equipment manufacturing is based on the input-output composition of the Heating, Plumbing, and Fabricated Structural
Metal Products Industry (Bureau of Economic Analysis industry classification 40). The labor share of production value for compliance equipment
installation is based on information for the Repair and Maintenance Construction Industry (Bureau of Economic Analysis industry classification 12).
\2\ Annualized over 15 years at the social discount rate of 7 percent.
\3\ Number of jobs calculated on the basis of an average hourly labor cost of $24.00 ($1989) and 2,000 hours per labor-year. The annual labor cost of
$48,000 ($1989) was brought forward as $56,244 for 1994.
[[Page 28245]] 2. Indirect and Induced Labor Requirements of Complying
With the MP&M Rule
In addition to its direct labor effects, an MP&M effluent guideline
may also generate labor requirements through the indirect and induced
effect mechanisms described above. EPA assessed the indirect and
induced employment effects of the proposed regulatory options by use of
multipliers that relate aggregate economic effects, including indirect
and induced effects, to direct economic effects. Using a range of
multipliers from previous studies of the aggregate employment effects
of general water treatment and pollution control expenditures, EPA
estimated that the total labor requirement effect would range from
3,900 to 6,400 FTEs for the proposed Option 2a/2 . The lower end of
this range reflects the use of lower multiplier values and conservative
assumptions regarding effects on economic activity in industries linked
to the MP&M industry. The higher end of the range reflects the higher
multiplier values and assumes full incurrence of indirect economic
effects in industries linked to the MP&M industry.
G. Community Impacts
EPA expects that the employment losses resulting from MP&M facility
closures will not have a significant impact on the national economy.
However, employment losses may be significant at the local level if
facility closures are concentrated regionally or if they occur in
smaller communities. Therefore, EPA examined the community level
employment impacts that may result from the proposed regulatory options
for the MP&M industry. Community impacts were assessed by estimating
the expected change in employment in communities with MP&M facilities
that are affected by regulation. Possible community employment effects
include the lost employment in facilities that are expected to close
because of regulation, and related employment losses in other
businesses in the affected community. These employment losses are
considered significant if they are expected to exceed one percent of
the pre-regulation level of employment in the affected communities. For
such comparisons, a community is generally defined as the area in which
employees may reasonably commute to work--typically a Metropolitan
Statistical Area (MSA), or county if the affected community is not
contained within a MSA.
To understand the significance of community employment impacts from
the proposed regulation, Option 2a/2, EPA performed two analyses of
expected community employment impacts. First, EPA examined the
community employment impacts based on the known location of the sample
facility closures estimated to result from each of the proposed
regulatory options. Because the location of these sample facilities is
known, it is possible to compare the expected employment loss from
closure, including losses in related businesses, with the pre-
regulation employment in the affected community, defined as either the
MSA or the county in which the sample facility closure is located. This
analysis directly tests the significance of employment losses in the
communities in which the estimated closing sample facilities are
located.
Second, EPA examined the significance of expected facility closures
taking into account the employment losses from the closing facilities
in the underlying facility population that are represented by the
sample facility closures. Because the locations of these non-sample
closing facilities are not known, it was not possible to measure the
significance of the associated employment losses in specific
communities. Instead, EPA distributed these employment losses among
states and assessed their significance at the state level, taking into
account the estimated job losses in both MP&M facilities and in related
businesses.
In addition to these analyses of the impact of employment losses,
EPA also considered the effect of possible employment gains as
discussed in the preceding section at the state level. Specifically,
EPA distributed the possible employment gains among states and
calculated a net potential employment impact by state taking into
account the expected effect of both facility closures and labor demands
from compliance-related outlays.
1. Assessment of Community Impacts for Estimated Sample Facility
Closures
To assess the significance of facility closures and associated
employment losses in specific communities, EPA compared the employment
loss from estimated sample facility closures, including losses in
related businesses, to the pre-regulation level of employment in the
communities in which the sample facilities are located.
For the proposed Option 2a/2 (Option 2a for indirect dischargers
and Option 2 for direct dischargers), the facility closure analysis
indicated that three sample facilities would be expected to close as a
result of regulation. Two of the three sample facilities are located in
California: 1 in Merced County, 1 in the Los Angeles-Long Beach MSA.
The third facility is located in Virginia, in the Norfolk-Virginia
Beach-Newport News MSA. The total of employment losses in these sample
facilities amounts to 168 FTEs, or an average of 56 FTEs per closing
sample facility (see Table 10).
Table 10.--Community Employment Impacts in Estimated Sample Closing Facilities
----------------------------------------------------------------------------------------------------------------
Facilities Total employment loss in
affected MSA
Pre-regulation -------------------- MP&M state -------------------------
MSA or county employment multiplier As % of pre-
Number Empl. FTEs regulation
(FTEs) employment
----------------------------------------------------------------------------------------------------------------
Los Angeles-Long Beach............ 4,173,000 1 97 2.72 264 0.01%
Merced County..................... 64,617 1 62 2.72 169 0.26%
Norfolk-Virginia Beach-Newport
News............................. 594,463 1 9 2.27 20 0.00%
----------------------------------------------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
In addition to the primary employment losses (i.e., those that
occur in the estimated MP&M facility closures), employment losses may
also occur through the secondary impact mechanism. Such secondary
employment losses may occur in: (1) Industries that are economically
linked to MP&M industries and (2) consumer businesses whose employment
is affected by changes in the earnings and expenditures of the
employees in the directly and indirectly affected industries. To assess
these secondary employment losses, EPA calculated [[Page 28246]] state-
specific, composite MP&M employment multipliers that are based on the
estimated relationship of employment in MP&M industry sectors to total
state employment, and the composition of employment within a state
among the seven MP&M Phase I sectors. These state-specific composite
employment multipliers were calculated from Regional Input-Output
Modeling System (RIMS) multipliers developed by the Bureau of Economic
Analysis (BEA) within the Department of Commerce.
To calculate the expected total employment loss (i.e., considering
both primary and secondary employment impacts) in the communities in
which estimated sample facility closures are located, EPA multiplied
the employment loss in the estimated sample facility closures by the
composite multiplier for the particular state. The total losses by MSA
ranged from 20 to 264 FTEs. To assess the significance of these losses,
EPA compared the estimated total employment loss with the pre-
regulation employment in the community, based on 1990 Census data. For
the two facilities that are located in an MSA, the pre-regulation
employment is the 1990 employment for the MSA. For the facility that is
not located within a MSA, the pre-regulation employment is the 1990
civilian employment for the county in which the facility is located.
This comparison indicated that none of the estimated sample facility
closures would be expected to have a significant impact on total
community employment. The largest of the percentage impacts is
estimated for Merced County, California and amounts to 0.26 percent.
The estimated impact in the Los Angeles-Long Beach MSA amounts to only
0.01 percent, while the impact in the Norfolk-Virginia Beach-Newport
News MSA rounds to zero when calculated to the nearest hundredth of a
percent (see Table 10).
2. Assessment of State-Level Employment Impacts
To capture the effect of employment losses in the non-sample
facilities that are represented by the estimated sample facility
closures, EPA performed a second analysis in which the employment loss
in these non-sample facilities was distributed among states in
proportion to pre-regulation levels of MP&M industry employment.
Because the community locations of these non-sample, represented
facilities is not known, it is not possible to analyze the impact of
these employment losses in specific communities as defined by MSAs or
counties.
In addition to the 168 FTE losses in the 3 sample facility
closures, EPA estimated that another 530 FTE employment losses and 22
facility closures would occur in the underlying population that is
represented by the sample facilities. EPA distributed these losses
among states in proportion to each state's estimated MP&M Phase I
sector employment as calculated from Department of Commerce employment
data. To estimate the total employment loss by state (i.e., both
primary and secondary losses), EPA multiplied the primary losses for
each state by the state's composite employment impact multiplier as
developed from BEA state- and industry-specific multipliers. The
estimated loss by state averaged 36 FTEs and ranged from a low of zero
to a high of 621; 32 states and the District of Columbia had a total
estimated loss of less than 25 FTEs. Table 11 summarizes the estimated
facility closures and associated primary and total employment losses
for the 9 states in which the total employment loss is estimated to
exceed 50 FTEs. To evaluate the significance of the estimated total
employment loss by state, EPA compared the employment loss values with
estimated total civilian employment for each state, as reported by the
Department of Commerce for 1991.
From these calculations, the estimated total employment loss as a
percent of total state employment rounds to zero when calculated to the
nearest hundredth of a percent for all 50 states and the District of
Columbia. The maximum estimated employment loss as a percentage of
total state employment amounts to less than one-half of one-hundredth
of one percent of total state employment (Table 12 lists the estimated
employment loss results for the 10 states with the highest percentage
impacts). Thus, on the basis of the findings from this and the
preceding analysis, EPA expects that the proposed regulation for the
MP&M industry will not cause significant employment impacts at the
local level.
Table 11.--Estimated Facility Closures and Total Employment Losses for
States With Largest Total Loss
------------------------------------------------------------------------
Employment
Estimated losses in Total
State total facility facilities employment
closures (FTEs) loss (FTEs)
------------------------------------------------------------------------
California.............. 4.9 228 621
Ohio.................... 1.6 38 116
Illinois................ 1.6 38 116
Pennsylvania............ 1.3 31 89
Texas................... 1.3 32 89
Michigan................ 1.1 27 74
New York................ 1.2 30 64
Wisconsin............... 0.8 20 53
Indiana................. 0.7 17 52
------------------------------------------------------------------------
Loss in all other states is less than 50 FTEs.
Source: U.S. Environmental Protection Agency.
Table 12.--Total Employment Loss by State, 10 States With Highest Percentage Loss
----------------------------------------------------------------------------------------------------------------
Employment
Estimated loss in Total Total state Loss as a
State total facility facilities employment employment percent of
closures (FTEs) loss (FTEs) (1990) total
----------------------------------------------------------------------------------------------------------------
California...................... 4.9 228 621 13,714,000 0.005%
Ohio............................ 1.6 38 116 5,094,000 0.002%
Wisconsin....................... 0.8 20 53 2,453,000 0.002%
Connecticut..................... 0.6 15 35 1,679,000 0.002%
Illinois........................ 1.6 38 116 5,598,000 0.002%
[[Page 28247]]
Indiana......................... 0.7 17 52 2,632,000 0.002%
Michigan........................ 1.1 27 74 4,125,000 0.002%
Pennsylvania.................... 1.3 31 89 5,524,000 0.002%
Massachusetts................... 0.7 17 45 2,847,000 0.002%
New Hampshire................... 0.1 3 9 589,000 0.001%
----------------------------------------------------------------------------------------------------------------
Total percentage employment loss for all states rounds to zero at the nearest hundredth of a percent.
Source: U.S. Environmental Protection Agency.
3. Assessment of State-Level Employment Impacts Including Possible
Employment Gains
As a final part of the analysis of community level employment
impacts, EPA considered total state-level employment effects taking
into account possible employment gains. Possible labor gains, as
discussed in the previous section, were distributed by state in
proportion to MP&M employment by state, and state-level employment
multipliers were applied to these gains to estimate the total potential
state-level employment gain. The multipliers used for this analysis
were selected to correspond to the industries in which primary labor
effects are expected to occur. These values were subtracted from the
total employment loss values calculated in the preceding section to
calculate a net employment loss by state, taking into account the
possible employment gains from compliance-related activities.
The estimated employment gain values range from a low of zero for
the District of Columbia, which has a very low estimated employment in
MP&M industry activity, to a high of 552 for California, the state with
the largest estimated MP&M industry employment. The average possible
gain by state amounted to 81 FTEs. These values were subtracted from
the estimated total loss values calculated in the preceding section to
yield an estimated net employment loss by state for the proposed
regulation. For all states but California, which has an estimated net
employment loss of 69 FTEs, the estimated potential gain exceeds the
estimated loss from facility closures (Table 13 summarizes these values
for the 10 states with the highest estimated loss from facility
closures). Thus, the potential employment gains associated with
compliance activities could substantially offset the local employment
losses expected to result from facility closures.
Table 13.--Employment Loss and Possible Gain by State, 10 States With Highest Estimated Loss From Facility
Closures
----------------------------------------------------------------------------------------------------------------
Total loss Employment Total gain
State from facility gain, primary with Net employment
closures impact only multiplier loss
----------------------------------------------------------------------------------------------------------------
California...................................... 621 209 552 69
Ohio............................................ 116 115 345 (229)
Illinois........................................ 116 113 344 (228)
Pennsylvania.................................... 89 93 265 (176)
Texas........................................... 89 97 261 (171)
Michigan........................................ 74 82 222 (148)
New York........................................ 64 90 187 (124)
Wisconsin....................................... 53 59 155 (102)
Indiana......................................... 52 51 153 (101)
Massachusetts................................... 45 52 130 (86)
----------------------------------------------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
H. Impacts on Firms Owning MP&M Facilities
The assessment of economic achievability of the MP&M regulation is
based primarily on the facility-level impact analysis. However, because
the impacts at the level of the firm may exceed those assessed at the
level of the facility, particularly when a firm owns more than one
facility that will be subject to regulation, EPA also conducted a firm-
level impact analysis for the MP&M regulation. The firm-level analysis
estimates the impact of regulatory compliance on firms owning
facilities subject to MP&M effluent guidelines.
Secondary financial sources and DCP responses provided income
statement and balance sheet data for 255 firms that own 290 of the 396
sampled facilities. Sufficient data were not available to analyze
compliance impacts on the parent firms of the remaining 106 facilities.
EPA conducted the firm-level impact analysis under the zero-cost-
pass-through scenario. Because the DCP sample was not designed as a
random sample of firms, but was instead directed toward estimating
national characteristics of facilities, the DCP sample data used in
this analysis is not sample weighted. The findings apply only to the
firms that own sample facilities and do not represent national
estimates of firm-level impacts.
EPA assessed firm-level impacts on the basis of changes in measures
of profitability and interest coverage, as calculated from firm
financial statements. These measures, Pre-Tax Return on Assets (ROA)
and Interest Coverage Ratio (ICR), are the same as those used in the
facility-level Analysis of Financial Stress Short of Closure. When
applied at the level of the firm, these measures indicate the firm's
ability to attract the capital needed for expansion in the normal
course of business or for pollution control [[Page 28248]] investments
associated with effluent guidelines compliance. EPA used the same
thresholds of minimum financial performance for these two measures in
the facility-level Financial Stress Short of Closure analysis. These
thresholds are based on a weighted average of the first quartile values
for ROA and ICR for the relevant MP&M industries as reported in the
Robert Morris Associates publication Annual Statement Studies.
In the same way as for the facility closure analysis, EPA performed
the firm-level analysis in two steps: (1) a baseline analysis, which
evaluates the firm's financial condition independent of the costs of
regulatory compliance; and (2) a post-compliance analysis, which
accounts for the effects of compliance costs on the firm-level
financial measures. In the baseline analysis, firms whose ROA or ICR
were below the industry standards were considered financially weak
independent of regulation and were eliminated from further analysis.
Firms that pass both of the thresholds were subjected to a post-
compliance test, in which their financial measures were changed to
reflect the impact of the MP&M effluent guideline. Firms that failed
either threshold post-compliance but pass both pre-compliance are
expected to incur significant financial stress as a result of
compliance with the regulation.
The firms consist of both single and multiple facility firms. In
the case of single facility firms, the impact on each firm's ROA and
ICR is identical to the impact calculated on the basis of the
responding facility's financial statements and estimated compliance
costs, alone. The impacts for single facility firms correspond to those
calculated in the facility level analysis.
Analysis of firm impacts for multiple facility firms, however,
involves aggregating and extrapolating financial and compliance cost
data for sample facilities to the level of the firm. If all of a firm's
revenues come from activities subject to the MP&M regulation, the
impact of regulation on that firm will clearly be greater than the
impact on a firm that participates minimally in activities subject to
the MP&M regulation, all other things being equal. Similarly, a firm
whose production is heavily concentrated in foreign facilities would
also experience less significant impacts than firms primarily producing
in the U.S. (i.e., with more facilities subject to the MP&M effluent
guideline).
The analysis of firm-level impacts for multiple facility firms is
made difficult because compliance-related information is available only
for the sample facilities owned by these firms. That is, information is
not available for the non-sample facilities owned by a firm in terms of
whether or not those facilities would be subject to the MP&M regulation
and, if so, the costs that they would incur to achieve compliance with
the proposed regulation. Lacking this information, the firm-level
analysis estimated impacts based on two scenarios that cover the full
range of possible regulatory applicability to the non-sample facilities
owned by a firm. The first scenario is based on the minimum
applicability of the regulation and assumes that the sampled facilities
are the only facilities that engage in activities subject to regulation
in a firm. In this scenario, the firm level impact of the regulation is
calculated by adjusting the firm-level financial measures for the
compliance costs incurred by the firm's sampled facility(ies).
The second scenario is based on the maximum applicability of the
regulation and assumes that all of a firm's activities are subject to
regulation, whether associated with a sampled facility or not. In this
scenario, EPA calculated a firm-level impact by extrapolating the
estimated costs of compliance for the firm's sample facility(ies) to
the level of the firm assuming that all of the firm's revenues are
subject to regulation. Specifically, the compliance costs for the
sample facility (or the sum of costs over facilities, for those firms
owning more than one sample facility) were scaled upward by the ratio
of firm revenue to the sum of sampled facility revenues. This method
presumes a uniform relationship between compliance costs and revenue
over all the facilities owned by a firm. EPA then used these estimated
firm-level compliance costs under the scenario in which all revenue is
subject to regulation to adjust the pre-compliance measures of
financial performance.
Of the 255 firms analyzed, 73 firms, or slightly less than 29
percent, failed one or both of the firm financial tests pre-compliance
and therefore failed the baseline firm-level impact analysis. These
firms are assessed as being financially weak based on current
circumstances and independent of the effects of the MP&M regulation. Of
these 73 firms, 39 own facilities that were projected to close under
the facility-level baseline closure test.
Of the 182 firms that pass the baseline firm financial test, only
one failed either test under Option 2a/2, even under the conservative
zero-cost-pass-through assumption (see Table 14). The single adversely
affected firm is a single facility firm and accounts for less than
0.0001 percent of revenues earned by all 255 sampled firms in the firm-
level impact analysis. These results are independent of the assumptions
about the share of firm revenue subject to regulation. The minimum and
maximum impact scenarios yielded identical results, in terms of
financial test failures. From this analysis, EPA finds that firm-level
impacts are not likely to be significant.
Table 14.--Summary of Firm Impact Analysis Results
Number of Firms in Analysis...................................... 255
Baseline Failures................................................ 73
Incremental Post-Compliance Failures............................. 1
Source: U.S. Environmental Protection Agency.
I. Foreign Trade Impacts
Products of the MP&M industry are traded internationally.
Therefore, changes in domestic production resulting from effluent
regulations may affect the balance of trade. In particular, some of the
production from facilities estimated to close because of regulation may
be replaced by foreign producers, thus changing the U.S. foreign trade
balance. The foreign trade analysis examines the trade balance effects
of Option 2a/2 under the zero-cost-pass-through assumption. This
assumption is conservative in the sense that it projects the most post-
compliance closures. Even under this assumption, EPA estimates that the
MP&M industry will experience less than a 0.01 percent loss in its
trade balance. Therefore, EPA finds that the proposed effluent
guidelines will not have a significant adverse impact on the
international trade status of the MP&M Phase I industry.
The foreign trade impact analysis identifies three scenarios that
span the likely range of foreign trade responses to post-compliance
closures. Each scenario describes a possible outcome of the competition
between domestic and foreign producers to replace the production loss
from closure of domestic facilities. The three scenarios are as
follows:
1. Worst case. In the worst case scenario, all production for
domestic consumption and for export by domestic facilities subject to
post-compliance closure is replaced by foreign sources. Therefore, the
net trade balance deteriorates by the total amount of production lost
by post-compliance incremental closures.
2. Best case. In the best case scenario, all production for
domestic consumption and for export by facilities subject to closure
are replaced in full by production and exports from other
[[Page 28249]] domestic facilities. The net trade balance is unaffected
by regulation.
3. Proportional case. Domestic production of facilities subject to
closure is replaced both by remaining domestic facilities and by
foreign imports in the same proportions as the baseline ratio of
imports and exports to the total domestic market. In this scenario, if,
in the baseline case, imports accounted for half of the domestic
market, then a closing facility's production for domestic sales would
be replaced half by imports and half by other domestic producers. This
scenario is meant to reflect the historical performance of the MP&M
Phase I industries in competing with foreign producers for import and
domestic markets.
In the foreign trade impact analysis, EPA assigned each sample
facility that is expected to close--and its associated revenue--to one
of the three scenarios, depending on the findings from two assessments
of the facility's exposure to competition from foreign producers. The
first assessment is based on sample facilities' responses to DCP
questions concerning the magnitude and source of competition in various
markets, including export and domestic markets. The second assessment
is based on secondary source data provided by the Department of
Commerce and used in the industry profile. This assessment considers
the overall competitiveness of the MP&M industries in import and export
markets, with respect to foreign competitors.
On the basis of the two assessments, facilities with significant
exposure to foreign competition were assigned to the worst case trade
impact scenario while facilities with little expected exposure to
foreign competition were assigned to the best case trade impact
scenario. Facilities with moderate exposure to foreign competition were
assigned to the proportional case trade impact scenario.
After assigning each sample facility closure to a trade impact
scenario, EPA allocated the export and import market revenues from
estimated facility closures between foreign and domestic producers
according to the rules for the three trade scenarios. The changes in
exports and imports accruing from all incrementally closing facilities
were multiplied by their sample weights and summed to yield an estimate
of the aggregate impact on imports, exports and the trade balance
resulting from promulgation of the effluent guideline.
Table 15 presents the results from the foreign trade impact
analysis. As shown in the table, even under the conservative zero-cost-
pass-through assumption, the proposed effluent guideline will have a
negligible impact on U.S. imports, exports and the trade balance.
On the basis of sample-weighted national estimates, EPA estimates
that exports will not be measurably affected by compliance with the
proposed regulation, while imports are estimated to increase by
approximately $5.3 million, or 0.01 percent of the 1991 imports of the
MP&M Phase I industry commodities, according to Department of Commerce
data. The net effect on the trade balance is therefore a decline of
$5.3 million, or approximately 0.01 percent of the current trade
balance in MP&M Phase I industry commodities.
Table 15.--MP&M Phase I Effluent Guideline Impacts on Foreign Trade
[Sample Weighted National Estimates for Option 2a/2 ($ millions)]
------------------------------------------------------------------------
Exports Imports Trade balance
------------------------------------------------------------------------
Baseline................ 112,565.1 72,157.1 40,408.0
Post-Compliance Change.. 0.0 5.3 -5.3
Percent Change From
Baseline............... 0.00% 0.01% -0.01%
------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency and Department of Commerce.
J. Impacts of New Source Performance Standards and Pre-Treatment
Standards for New Sources
The proposed regulation includes limitations that will apply to new
direct and indirect discharging sources within the MP&M Phase I
category. EPA examined the impact of these regulations for new
dischargers to determine if they would impose an undue economic and
financial burden on new sources seeking to enter the MP&M Phase I
industry.
As documented in Part 438.16-17 and Section XIII, EPA proposes to
set New Source Performance Standards (NSPS), which apply to new
facilities that discharge directly to receiving waters, on the basis of
the Best Achievable Technology (BAT) limitations as specified by the
proposed Option 2 for existing direct dischargers. Thus, the new source
limitations for direct dischargers are the same as those proposed for
existing direct discharge facilities.
In addition, EPA proposes to set Pretreatment Standards for New
Sources (PSNS), which apply to new indirect discharging facilities
(i.e., that will discharge to POTWs), on the basis of the discharge
limitations in PSES Option 2, as analyzed for existing indirect
discharging facilities. Thus, the new source limitations for indirect
discharging facilities will differ from the PSES limitations proposed
for existing indirect discharge facilities. Specifically, the proposed
PSES option for existing indirect discharge facilities, Option 2a,
applies the mass-based limitations of Option 2 to large flow indirect
discharge facilities (i.e., facilities discharging at least 1,000,000
gallons per year) but applies no limitations to low flow indirect
discharge facilities (i.e., facilities discharging less than 1,000,000
gallons per year). However, for new indirect dischargers, the proposed
PSNS limitations will apply the mass-based limitations of Option 2
regardless of the new facility's discharge volume.
In general, EPA estimates that, when new and existing sources face
the same discharge limitations, new sources will be able to comply with
those limitations at the same or lower costs than those incurred by
existing sources. Engineering analysis indicates that the cost of
installing pollution control systems during new construction is
generally less than the cost of retrofitting existing facilities. Thus,
a finding that discharge limitations are economically achievable by
existing facilities will also mean that those same discharge
limitations will be economically achievable to new facilities.
On the basis of this argument alone, EPA concludes that those
elements of the effluent limitations that are the same for both new and
existing facilities will be economically achievable. In fact, the new
source and existing source limitations are identical except for the
limitations applicable to new indirect discharging sources with a
discharge volume of less than 1,000,000 gallons per year. As stated
above, these new [[Page 28250]] sources must meet the mass-based
limitations of PSES Option 2, while existing, low flow indirect
discharging facilities would not be subject to effluent limitations
under the proposed guideline. Therefore, the only issue concerning
economic achievability of the new source limitations involves the
application of the PSES Option 2 limitation to new indirect discharging
sources with a discharge volume of less than 1,000,000 gallons per
year.
However, in its analysis of regulatory impacts on existing
facilities, EPA found that the mass-based limitations of PSES Option 2
would be economically achievable by indirect discharging facilities
regardless of discharge volume. For this reason, EPA additionally
concludes that the new source limitations applicable to new indirect
discharging facilities will also be economically achievable by indirect
discharging facilities with flow of less than 1,000,000 gallons per
year. Therefore, EPA finds that the proposed NSPS and PSNS limitations
will be economically achievable.
EPA notes that an important reason for exempting the low flow class
of existing indirect dischargers (less than 1,000,000 gallons per year)
from regulatory requirements is to reduce the administrative burden to
permit writers that would result from writing mass-based permits for
the large number of existing low flow indirect dischargers. EPA
estimates that approximately 63 percent of the existing facilities to
which the regulation could have applied are low flow indirect
dischargers. However, applying the mass-based concentration
requirements of Option 2 to new facilities will not impose so great an
administrative burden, because new facilities enter gradually over
time.
K. Regulatory Flexibility Analysis
In accordance with the requirements of the Regulatory Flexibility
Act (Public Law 96-354), the Agency performed a Regulatory Flexibility
Analysis of the proposed regulation. The purpose of the Regulatory
Flexibility Act is to ensure that, while achieving statutory goals,
government regulations do not impose disproportionate impacts on small
entities. The Regulatory Flexibility Analysis for the proposed
regulation is contained in Chapter 10 of the Economic Impact Analysis
report referenced above, ``Economic Impact Analysis Of Proposed
Effluent Limitations Guidelines And Standards For The Metal Products
And Machinery Industry, Phase I.'' On the basis of the Regulatory
Flexibility Analysis and as summarized herein, the Administrator
certifies, pursuant to Section 605(b) of the Regulatory Flexibility
Act, 5 U.S.C. 605(b), that the proposed regulation will not have a
significant economic impact on a substantial number of small entities.
In developing the proposed regulation, EPA sought from the outset
to define a regulation that would not unreasonably burden small
entities. In particular, EPA considered a number of regulatory
alternatives for indirect and direct dischargers, each of which was
assessed to have varying degrees of impact on small entities. In
selecting the proposed regulation from among these alternatives, EPA
balanced several factors, including: the need for additional reduction
in effluent discharges from the MP&M industry; the fact that the MP&M
industry is largely comprised of small business entities; and the need
to achieve additional reduction in effluent discharges without imposing
unreasonable burdens on small entities. As a result of these
considerations, EPA expressly framed the proposed regulation to reduce
impacts on small entities.
Specifically, as discussed in Section XIV. C., above, EPA settled
on the proposed regulation for indirect dischargers, Option 2a, after
considering and rejecting the initial Option 2. On the basis of the
facility impact analyses presented above, EPA determined that Option 2
would be economically achievable by indirect discharging facilities. In
accordance with this finding, EPA initially considered adopting the
mass-based requirements of Option 2 for all indirect discharging
facilities. However, further analysis indicated that Option 2 would
place substantial financial burdens on smaller facilities and,
moreover, would substantially burden permitting authorities by
requiring that mass-based standards be written for all indirect
discharging facilities, regardless of size and amount of discharge
reduction to be achieved. For these reasons, EPA defined and evaluated
two additional options: Option 1a, which applies the Option 2
requirements to large flow facilities and the modestly less stringent
Option 1 requirements to low flow facilities; and Option 2a, which
applies the requirements of Option 2 to large flow facilities while
exempting low flow indirect discharging facilities from regulation. EPA
found that both of these additional options would mitigate the burden
of regulation on small businesses and permitting authorities. However,
EPA found that the latter option, Option 2a, much more substantially
reduced the closure impacts and financial burdens among MP&M facilities
owned by small business and, as well, the regulatory implementation
burden on permitting authorities. After considering other factors that
also favored Option 2a--namely, cost effectiveness--EPA decided to
propose Option 2a as the PSES option for indirect discharging
facilities.
The following sections summarize the analyses underlying the
Agency's conclusion that the proposed regulation will not have a
significant economic impact on a substantial number of small entities
1. Small Business in the MP&M Industry
EPA analyzed the role of small entities in the MP&M industry and
the associated impacts that would be caused by the proposed regulation.
These analyses showed that the MP&M industry is largely comprised of
small business entities and, accordingly, the regulation is expected to
apply to a substantial number of small entities. Specifically, on the
basis of Small Business Administration (SBA) firm-employment size
criteria, EPA estimates that over 75 percent of the estimated 10,601
water discharging facilities in the MP&M Phase I industries are owned
by a small business. With over 75 percent of the facilities to which
the regulation is expected to apply defined as small businesses, EPA
also examined the employment size distribution of the MP&M facilities
to gain provide additional insight into how smaller facilities are
likely to be affected by the proposed regulation. From the analysis of
the facility employment distribution, EPA estimated that 25 percent of
water-discharging facilities have 9 or fewer employees and that 50
percent of water-discharging facilities have 79 or fewer employees.
EPA also found that small facilities play a substantial role in the
economic performance and contributions of the MP&M industry. From
Department of Commerce data for 1989, EPA estimates that over 97
percent of facilities in the MP&M Phase I industries (including both
water-discharging and non-discharging facilities) have fewer than 250
employees. These relatively small facilities account for about 49
percent of total MP&M industry employment, 40 percent of total
shipments, and 40 percent of the MP&M industry's tribution to gross
domestic product.
2. Impacts of the Proposed Regulation on Small Business
To gauge whether the proposed regulation would have a significant
impact on a substantial number of small entities, EPA considered the
level of impacts and compliance costs expected [[Page 28251]] to be
imposed on small entities. From these analyses, EPA found that the
proposed regulation will impose significant economic impacts (i.e.,
facility closures) more frequently among small business entities than
among MP&M facilities generally. In addition, these analyses indicated
that the compliance cost burden (as measured by total annual compliance
costs as a percent of facility revenue) is expected to be greater among
small business entities than among MP&M facilities generally. However,
for both of these measures of small business impact--frequency of
facility closures and compliance cost burden--EPA found that the
absolute levels of impacts were so slight as to not constitute a
significant economic impact on small entities. Moreover, the impact
levels under the proposed regulation are much lower than those that
would be expected under any of the other options that EPA considered
for proposal.
a. Facility Closure Impacts by Business Size
Table 16 summarizes the findings from the facility closure analysis
according to business size classification. The first three columns--
Option 1, Option 2, and Option 3--combine the results for indirect and
direct dischargers for each of those options. The latter two columns
reflect the additional options that were developed for indirect
dischargers--Option 1a and Option 2a--combined with Option 2 for direct
dischargers. Specifically, the rightmost column, which is labeled
Option 2a/2, combines results for Option 2a for indirect dischargers
and Option 2 for direct dischargers and thus represents the proposed
regulatory option. The next column to the left, which is labeled Option
1a/2, combines results for Option 1a for indirect dischargers and
Option 2 for direct dischargers and represents the other option that
EPA defined as an alternative to the initially selected Option 2 for
indirect and direct dischargers.
As shown in the table, all estimated facility closures for Options
1, 2, 1a/2, and 2a/2 occur among small business-owned facilities, as
defined on the basis of SBA criteria. Only under Option 3 are closures
estimated to occur among facilities not owned by small businesses. The
analysis according to facility employment size gives similar results
with estimated facility closures occurring more frequently in the 1-9
and 10-79 employee size classes.
Table 16.--Facility Closure Impacts by Business Size
----------------------------------------------------------------------------------------------------------------
Regulatory option
----------------------------------------------------------------------
Facility classifications Initial options Subsequent options
----------------------------------------------------------------------
Option 1 Option 2 Option 3 Option 1a/2 Option 2a/2
----------------------------------------------------------------------------------------------------------------
Total Estimated Facility Closures........ 178 169 317 169 25
(as percent of facilities in impact
analysis)............................. 2.0% 1.8% 3.5% 1.8% 0.3%
Closures By SBA Firm-Size Criteria:
Small Business-Owned................. 178 169 248 169 25
(as percent of class)...... 2.6% 2.5% 3.6% 2.5% 0.4%
Other (not Small Business-Owned)..... 0 0 69 0 0
(as percent of class).............. 0.0% 0.0% 3.1% 0.0% 0.0%
Closures By Facility Employment Class:
1-9 Employees........................ 83 83 83 83 18
(as percent of class).............. 4.1% 4.1% 4.1% 4.1% 0.9%
10-79 Employees...................... 95 84 132 84 5
(as percent of class).............. 4.0% 3.5% 5.5% 3.5% 0.2%
80 or more Employees................. 0 2 102 2 2
(as percent of class).............. 0.0% 0.1% 2.2% 0.1% 0.1%
----------------------------------------------------------------------------------------------------------------
``Class'' refers to the indicated sub-group of facilities (e.g., Small Business-Owned Facilities) and
``percent of class'' means the percentage of that group expected to incur facility closure impacts.
Source: Environmental Protection Agency.
Although closure impacts are concentrated among small entities, the
expected level of closures under the proposed option is extremely low
for the small entity categorizations analyzed: 0.4 percent of small
business-owned facilities; 0.9 percent of facilities with 9 or fewer
employees; and 0.2 percent of facilities with 10 to 79 employees.
Notably, closures among the small entity categorizations are
substantially higher for all the other options analyzed. To illustrate,
for small business-owned facilities, the closure rate ranges from 2.5
percent to 3.6 percent for the other four composite options presented
in the table. Overall, EPA finds that the rate of expected facility
closures among small business entities is well within acceptable
bounds.
b. Compliance Cost Impacts by Business Size
EPA also considered the compliance costs likely to be incurred by
facilities in complying with the proposed regulation. EPA assessed
compliance costs in terms of (1) the total annual compliance costs
expected to be imposed on facilities according to business size and (2)
total annual compliance cost as a percentage of facility revenue as a
measure of the relative burden of compliance costs.
i. Analysis of Total Annual Compliance Costs
Table 17 summarizes total annual compliance costs by business size
classification of facility for the alternative regulatory options.
Total annual compliance costs are calculated as the annual after-tax
cash flow impact on facilities and reflect private costs of capital and
the expected tax treatment of capital outlays and operating costs of
compliance. This analysis shows that the aggregate compliance costs to
small entities are substantially lower under the proposed Option 2a/2
than under all the other options analyzed. At $63.9 million ($1994),
the estimated annual compliance cost for small business-owned
facilities under the proposed Option 2a/2 is approximately 40 percent
less than the cost estimated for either the initially selected Option 2
or the other secondarily defined option, Option 1a/2. The analysis
based on facility employment size class further confirms the reduced
impact of the proposed Option 2a/2 on small entities:
[[Page 28252]] the total costs of Option 2a/2 among facilities with 9
or fewer employees are only about 9 percent of the costs for Option 2
or Option 1a/2; and the costs for Option 2a/2 among facilities with 10
to 79 employees are about half of the costs for Option 2 or Option 1a/
2. That the cost burden of Option 2a/2 on small business entities is so
much lower than that estimated for the other options supports EPA's
choice of Option 2a/2 as the proposed regulatory option and the finding
that Option 2a/2 will not impose a significant economic impact on small
entities.
Table 17.--Total Annual Compliance Costs by Business Size, All Dischargers ($000, 1994)
----------------------------------------------------------------------------------------------------------------
Regulatory option
----------------------------------------------------------------------
Facility classification Initial options Subsequent options
----------------------------------------------------------------------
Option 1 Option 2 Option 3 Option 1a/2 Option 2a/2
----------------------------------------------------------------------------------------------------------------
All Facilities........................... 218,412 231,666 679,509 226,781 160,607
By SBA Firm-Size Criteria:
Small Business-Owned................. 91,414 107,062 330,215 105,431 63,906
Other (not Small Business-Owned)..... 126,998 124,602 349,293 121,349 96,702
By Facility Employment Class:
1-9 Employees........................ 10,996 11,264 11,781 10,935 974
10-79 Employees...................... 34,449 37,907 87,482 37,294 18,642
80 or more Employees................. 172,967 182,494 580,245 178,550 140,991
----------------------------------------------------------------------------------------------------------------
Source: Environmental Protection Agency.
ii. Analysis of Compliance Costs Relative to Facility Revenue
Table 18 summarizes the relative compliance cost burden among
facilities by business size classification. For this analysis, the
compliance cost burden was assessed as the ratio of total annual
compliance cost to facility revenue. Table 18 indicates for each option
the average value of compliance costs as a percentage of revenue for
facilities by size class, and lists the percentage of facilities in
each size class expected to incur compliance costs exceeding 5 percent
of revenue. For several previous regulations, EPA judged annual
compliance costs that are less than five percent of facility revenue as
not likely to impose a significant financial burden on the complying
entity.
As shown in Table 18, EPA estimates that compliance costs as a
percentage of facility revenue will be higher for small entities than
for MP&M facilities generally both for the proposed Option 2a/2 and, as
well, for the other options considered. However, among small business-
owned facilities, total annual compliance costs are estimated to
average only 0.11 percent of revenue for the proposed Option 2a/2.
Moreover, in comparing compliance costs with the 5 percent of revenue
threshold, EPA found that a very small percentage of small business-
owned facilities, only 0.26 percent, are expected to incur total annual
compliance costs exceeding 5 percent of revenue under the proposed
regulatory option. Accordingly, EPA judges that the proposed
regulation's cost burden on small entities would be manageable based on
accepted standards of cost severity.
Table 18.--Total Annual Compliance Costs as a Percentage of Facility Revenue
[All Dischargers, by Business Size Criteria]
----------------------------------------------------------------------------------------------------------------
Regulatory option
----------------------------------------------------------------
Facility size classes Initial options Subsequent options
----------------------------------------------------------------
Option 1 Option 2 Option 3 Option 1a/2 Option 2a/2
----------------------------------------------------------------------------------------------------------------
Compliance Costs as a Percentage of Facility Revenue, Average Values by Facility Class
----------------------------------------------------------------------------------------------------------------
All Facilities................................. 0.41 0.42 0.65 0.41 0.10
By SBA Firm-Size Criteria:
Small Business-Owned Facilities............ 0.51 0.53 0.78 0.51 0.11
Other (not Small Business-Owned)........... 0.11 0.11 0.26 0.11 0.06
By Facility Employment Class:
1-9 Employees.............................. 1.09 1.12 1.20 1.08 0.10
10-79 Employees............................ 0.41 0.42 0.79 0.42 0.12
80 or more Employees....................... 0.12 0.13 0.36 0.13 0.09
----------------------------------------------------------------------------------------------------------------
Percentage of Facilities by Class with Compliance Costs Exceeding Five Percent of Revenue
----------------------------------------------------------------------------------------------------------------
All Facilities................................. 0.52 0.47 1.35 0.52 0.19
By SBA Firm-Size Criteria:
Small Business-Owned Facilities............ 0.69 0.63 1.79 0.69 0.26
Other (not Small Business-Owned)........... 0.00 0.00 0.00 0.00 0.00
By Facility Employment Class:
1-9 Employees.............................. 1.27 1.27 2.78 1.27 0.00
10-79 Employees............................ 0.94 0.76 2.49 0.93 0.73
80 or more Employees....................... 0.00 0.00 0.17 0.00 0.00
----------------------------------------------------------------------------------------------------------------
Source: Environmental Protection Agency.
[[Page 28253]] 3. Small Business Impact Finding
In view of this analysis and in recognition of the Agency's
efforts, as summarized above, to define the proposed option in a way
that would reduce impacts to small entities, EPA concluded that the
facility closure impacts and compliance cost burdens of the proposed
option will not constitute an undue impact on small business entities.
Pursuant to Section 605(b) of the Regulatory Flexibility Act, 5 U.S.C.
605(b), the Administrator certifies that the proposed regulation will
not have a significant economic impact on a substantial number of small
entities.
L. Cost Effectiveness Analysis of MP&M Regulatory Options
In addition to the foregoing analyses, EPA performed a cost-
effectiveness analysis of the alternative regulatory options for
indirect dischargers (PSES) and direct dischargers (BPT/BAT). This
analysis is detailed in ``Cost-Effectiveness Analysis of Proposed
Effluent Limitations Guidelines and Standards for the Metal Products
and Machinery Industry, Phase I'' (hereinafter ``Cost Effectiveness
Report''). Cost-effectiveness analysis is used in the development of
effluent limitations guidelines to evaluate the relative efficiency of
alternative regulatory options in removing pollutants from the effluent
discharges to the nation's waters, and to compare the efficiency of a
proposed regulation with that estimated for previous regulations.
The cost effectiveness of a regulatory option is defined as the
incremental annual cost (in 1981 constant dollars) per incremental
toxic-weighted pollutant removal for that option. This definition
embodies the following concepts:
Toxic-weighted removals. Because pollutants differ in their
toxicity, the 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 allow the removals of
different pollutants to be expressed on a constant toxicity basis in
toxic pounds-equivalent (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 given regulatory option. Note that cost-effectiveness
analysis does not address the removal of conventional pollutants (oil
and grease, biological oxygen demand, and total suspended solids).
Annual costs. The costs used in the cost-effectiveness analysis are
the estimated annual costs to industry for complying with the
alternative regulatory options. The annual costs include the annual
expenses for operating and maintaining compliance equipment and for
meeting monitoring requirements, and an annual allowance for the
capital outlays for pollution prevention and treatment systems needed
for compliance. However, unlike the costs used in the facility impact
analysis, the costs used in the cost-effectiveness analysis are
calculated on a pre-tax basis and capital costs are annualized using an
estimated real opportunity cost of capital to society of 7 percent.
Thus, these costs represent the costs incurred by industry on behalf of
society for compliance with the proposed regulation. In the facility
impact analysis, costs were considered on an after-tax basis and
reflected the estimated private after-tax cost of capital to MP&M
firms. In addition, the costs used in the cost-effectiveness analysis
are calculated in 1981 dollars so that the cost-effectiveness values
for regulations applying to different industries and that were
developed at different times may be consistently compared.
Incremental calculations. The incremental values that are
calculated for a given option are the change in total annual compliance
costs and change in removals from the next less stringent option, or
the baseline if there is no less stringent option, where regulatory
options are ranked by increasing levels of toxic-weighted removals.
Thus, the cost-effectiveness values for a given option are relative to
another option or, for the least stringent option considered, the
baseline.
The question posed in a cost-effectiveness analysis is: what is the
cost to industry of the additional toxic-weighted pollutant removals
achieved by a given option relative to the next less stringent option
or 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). The cost-effectiveness values for a given
option may be compared with those of other options being considered for
a given regulation and also with those calculated for other industries
or regulatory settings. Although not required by the Clean Water Act,
cost-effectiveness analysis is a useful tool for evaluating regulatory
options for the removal of 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/BPT). For each of the regulatory
options, the pounds-equivalent removed were calculated by multiplying
the estimated pounds removed of each pollutant by its toxic weighting
factor and summing the toxic-weighted removals over all toxic (i.e.,
excluding conventional) pollutants. The estimated annual compliance
costs for each option (as reported in Section XIV.D., above) were
deflated to 1981 dollars. As discussed above, the cost-effectiveness
values were then calculated as the change in compliance cost, in moving
to a given option from the next less stringent option, divided by the
change in toxic-weighted removals. The following sections summarize the
results for the two classes of facilities.
1. Cost-Effectiveness Analysis for Indirect Dischargers
Table 19 summarizes the cost-effectiveness analysis for the PSES
regulatory options applicable to indirect dischargers. Annual
compliance costs are shown in 1994 dollars and also in 1981 dollars. In
addition, pollutant removals are reported on both an unweighted and
toxic-weighted basis. The regulatory options are listed in order of
increasing stringency on the basis of the estimated toxic-weighted
pollutant removals.
As shown in Table 19, Option 2a/2 achieves approximately 12.8
million pounds of toxic pollutant removals, on an unweighted basis and
881,300 pounds-equivalent on a toxic-weighted basis. Because Option 2a/
2 is the least stringent option in terms of pollutant removals, the
cost-effectiveness of this option is the same as its average cost per
pounds-equivalent removed, $127. EPA considers this value to be
acceptable when compared to values calculated for previous regulations.
The next more stringent option, Option 1, is estimated to achieve
approximately 14.6 million pounds of toxic pollutant removals on an
unweighted basis and 988,900 pounds-equivalent on a toxic-weighted
basis, which is a 107,100 pounds-equivalent increment over Option 2a/2.
With an estimated annual compliance cost of $137 million ($1981), or
$65 million more than Option 2a/2, the calculated cost effectiveness
for Option 1's removals is $607 per pound-equivalent of pollutant
removed. This cost-effectiveness value is higher than the
[[Page 28254]] values calculated for other industrial discharge
limitations previously promulgated by EPA.
In moving from Option 1 to Option 1a, toxic-weighted pollutant
removals increase by 22,100 pounds-equivalent while costs decrease by
$7.2 million. Thus, the cost effectiveness of Option 1a relative to
Option 1 is a negative $327 per pound-equivalent of additional
pollutant removed. Because Option 1a is estimated to impose lower cost
on industry and society than Option 1 while, at the same time,
achieving greater toxic-weighted removals, Option 1a may be said to
dominate Option 1 from an economic efficiency perspective. That is,
within the context of the cost-effectiveness analysis, society would
always be better off by choosing the more stringent Option 1a over
Option 1 because greater toxic-weighted pollutant removals would be
achieved by Option 1a but at a lower total pre-tax cost of compliance.
Table 19.--Cost Effectiveness of Regulatory Options for the Metal Products and Machinery Industry
[Indirect Dischargers (PSES)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual compliance costs Unweighted Weighted pollutant removals Incremental Cost
-------------------------------- pollutant -------------------------------- cost effectiveness
Regulatory option ($000,000, ($000,000, removals (000, Incremental ($000,000, ($/lb-eq,
1994) 1981) lbs) (000, lbs-eq) (000, lbs-eq) 1981) $1981)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2a............................... 171.1 111.9 12,769.7 881.3 881.3 111.9 127
Option 1................................ 271.0 177.2 14,611.7 988.9 107.6 65.3 607
Option 1a............................... 260.0 170.0 14,872.8 1,011.0 22.1 (7.2) (327)
Option 2................................ 267.5 174.9 14,878.8 1,011.6 0.6 4.9 8,537
Option 3................................ 783.7 512.3 15,612.1 1,105.4 93.8 337.4 3,596
--------------------------------------------------------------------------------------------------------------------------------------------------------
The cost effectiveness for a regulatory option is defined as the incremental cost per incremental removal in toxic pounds equivalent ($/lb-eq) for that
option. The ``increment'' for a given option is the change in costs or removals from the next less stringent option, or the baseline if there is no
less stringent option (i.e., Baseline to Option 2a, Option 2a to Option 1, . . .). Regulatory options are ranked by increasing levels of toxic-
weighted removals. Cost effectiveness-values are calculated in 1981 dollars to permit consistent comparison of cost-effectiveness values among
regulations promulgated at different times.
Source: U.S. Environmental Protection Agency.
Stepping beyond Option 1a to Option 2 is clearly not cost effective
for existing indirect dischargers in comparison to values calculated
for previous regulations. Stepping from Option 1a to Option 2 yields
very little additional toxic-weighted pollutant removals, 600 pounds-
equivalent, at an additional estimated cost of $4.9 million. Because
the increase in removals is so small, the cost-effectiveness value for
moving from Option 1a to Option 2 is extremely high at $8,537 per
pound-equivalent of additional pollutant removed. The only difference
between Option 1a and Option 2 is that Option 2 applies the mass-based
limitations of Option 2 to low-flow indirect dischargers while Option
1a applies the somewhat less stringent, concentration-based limitations
of Option 1 to these facilities. Thus, the high cost-effectiveness
value of $8,537 stems entirely from the increased stringency of
regulatory requirements for these low-flow indirect discharging
facilities and demonstrates the poor cost effectiveness of applying the
Option 2 requirements to this class of facilities. As noted in Section
XIV.C, above, the finding of such a high cost-effectiveness value for
Option 2 for low-flow indirect discharging facilities was an important
factor in EPA's decision to define and evaluate alternatives to Option
2 for these facilities in developing the PSES regulatory proposal.
Moving from Option 2 to Option 3 was also found to yield a high
cost-effectiveness value. Although the incremental removals for this
step are relatively substantial at 93,800 pounds-equivalent, the large
increase in cost of $337.4 million yields a cost-effectiveness value of
$3,596 per pound-equivalent of additional pollutant removed, thus
rendering this option unacceptable from the standpoint of cost
effectiveness.
On the basis of this analysis, EPA determined that the proposed
option, Option 2a, is cost effective. The cost-effectiveness analysis
supports the choice of Option 2a as the proposed PSES regulatory option
for indirect dischargers.
2. Cost-Effectiveness Analysis for Direct Dischargers
Table 20 summarizes the cost-effectiveness analysis for the BPT/BAT
regulatory options applicable to direct dischargers. As before, annual
compliance costs are shown in 1994 dollars and also in 1981 dollars;
and pollutant removals are reported on both an unweighted and toxic-
weighted basis. The regulatory options are listed in order of
increasing stringency on the basis of estimated toxic-weighted
pollutant removals. The ranking of annual compliance costs matches the
ranking of option stringency.
As shown in Table 20, Option 1 is estimated to achieve
approximately 1.2 million pounds of toxic pollutant removals on an
unweighted basis and 58,200 pounds-equivalent on a toxic-weighted
basis. With an estimated annual compliance cost of $11.9 million
($1981), the calculated cost effectiveness for Option 1s removals is
$204 per pound-equivalent of pollutant removed. In moving from Option 1
to Option 2, toxic-weighted pollutant removals increase by 12,500
pounds-equivalent at a cost increase of $0.6 million. Thus, the cost
effectiveness of stepping to Option 2 is a comparatively low $50 per
pound-equivalent of additional pollutant removed. EPA considers both of
these cost-effectiveness values to be acceptable in relation to the
values calculated for previous regulations.
[[Page 28255]]
Table 20.--Cost Effectiveness of Regulatory Options for the Metal Products and Machinery Industry
[Direct Dischargers (BPT/BAT)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual compliance costs Unweighted Weighted pollutant removals Incremental Cost
-------------------------------- pollutant -------------------------------- cost effectiveness
Regulatory option ($000,000, ($000,000, removals (000, Incremental ($000,000, ($/lb-eq,
1994) 1981) lbs) (000, lbs-eq) (000, lbs-eq) 1981) $1981)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 1................................ 18.2 11.9 1,152.5 58.2 58.2 11.9 204
Option 2................................ 19.1 12.5 1,232.2 70.7 12.5 0.6 50
Option 3................................ 80.5 52.6 1,446.7 133.6 62.9 40.1 638
--------------------------------------------------------------------------------------------------------------------------------------------------------
The cost effectiveness for a regulatory option is defined as the incremental cost per incremental removal in toxic pounds equivalent ($/lb-eq) for that
option. The ``increment'' for a given option is the change in costs or removals from the next less stringent option, or the baseline if there is no
less stringent option (i.e., Baseline to Option 1, Option 1 to Option 2, . . .). Regulatory options are ranked by increasing levels of toxic-weighted
removals. Cost effectiveness-values are calculated in 1981 dollars to permit consistent comparison of cost-effectiveness values among regulations
promulgated at different times.
Source: U.S. Environmental Protection Agency.
Option 3's cost effectiveness of $638 per pound-equivalent of
additional pollutant removed is substantially poorer than the cost
effectiveness of Options 1 and 2. Stepping from Option 2 to Option 3
nearly doubles the total toxic-weighted removals with a substantial
increase of 62,900 pounds-equivalent. However, Option 3's annual
compliance costs are more than four times those estimated for Option 2
and the resulting additional cost of $40.1 million yields the
relatively high cost-effectiveness value of $638 per pound-equivalent.
From this analysis, EPA determined that Option 2 is cost effective,
and the cost-effectiveness analysis supports the choice of Option 2 as
the proposed BPT/BAT regulatory option for direct dischargers.
EPA also performed the cost-effectiveness analysis with an
additional set of weighting factors called Pollutant Weighting Factors,
which are a modification of the Toxic Weighting Factors on which the
preceding analyses are based. Pollutant Weighting Factors are not
related to a benchmark pollutant (i.e., copper) and normalize toxicity
on a different scale. This additional analysis can be found in Appendix
A of the Cost Effectiveness Report.
XV. Executive Order 12866
A. Introduction
Under Executive Order 12866 [58 Federal Register 51, 735 (October
4, 1993)], the Agency must determine whether the regulatory action is
``significant'' and therefore subject to OMB review and the
requirements of the Executive Order. The Order defines ``significant
regulatory action'' as one that is likely to result in a rule that may:
(1) have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
(2) create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations or recipients
thereof; or
(4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, EPA has determined
that this rule is a ``significant regulatory action'' because it is
expected to impose an annual cost on the economy exceeding $100
million. As such, this action was submitted to OMB for review. Changes
made in response to OMB suggestions or recommendations will be
documented in the public record.
Because of the finding that the MP&M regulation is a ``significant
regulatory action'' within the meaning of Executive Order 12866, the
Agency has prepared a Regulatory Impact Assessment (RIA) for the
proposed regulatory alternative. The RIA responds to the requirements
in Executive Order 12866 to assess both the benefits and costs to
society of significant regulatory actions. The RIA is detailed in,
``Regulatory Impact Assessment of Proposed Effluent Guidelines for the
Metal Products and Machinery Industry, Phase I,'' (see Section II. for
availability of this and other supporting documents).
1. Overview of Benefits Analyzed
The RIA assesses the benefits of proposed regulations to reduce
effluent discharges in the MP&M industry. Three broad classes of
benefits are considered: human health, ecological, and economic
productivity benefits. Each class is comprised of a number of more
narrowly defined benefits categories. EPA expects that benefits will
accrue to society in all of these categories. Because of data
limitations and imperfect understanding of how society values some of
these benefit categories, however, EPA was not able to analyze all of
these categories with the same level of rigor. At the highest level of
analysis, EPA was able to quantify the expected effects for some
benefit categories and attach monetary values to them. Benefit
categories for which EPA developed dollar estimates include reduction
in cancer risk from fish consumption, increased value of recreational
fishing opportunities, and reduced costs of managing and disposing of
POTW sewage sludges. For other benefit categories, EPA was able to
quantify expected effects but not able to estimate monetary values for
them. Examples of these benefit categories include change in the
frequency with which certain aquatic species are exposed to lethal
concentrations of certain pollutants, and change in certain human
health risk indicators. Finally, EPA was able to identify and
qualitatively describe certain benefit effects but was not able to
assess them on either a quantitative or an economic value basis. These
benefit categories include but are not limited to: enhanced
diversionary uses, improved aesthetic quality of waters near discharge
outfalls, enhanced water-dependent recreation other than fishing, and
benefits to wildlife and to threatened or endangered species, option
and existence values, cultural values, tourism benefits, and
biodiversity benefits. Table 21 summarizes the benefit categories
discussed above and identifies those that were monetized, those that
were quantitatively assessed (but not monetized), and those that are
expected to result from the regulation but were neither quantitatively
assessed nor monetized.
[[Page 28256]]
Table 21.--Benefit Categories Associated With Water Quality Improvements Resulting From the Metal Products and
Machinery Effluent Guideline
----------------------------------------------------------------------------------------------------------------
Quantified and Quantified and Nonquantified and
Benefit category monetized nonmonetized nonmonetized
----------------------------------------------------------------------------------------------------------------
Human Health Benefits:
Reduced cancer risk due to consumption of X
chemically-contaminated fish.
Reduced cancer risk due to ingestion of .................. X
chemically-contaminated drinking water.
Reduced systemic health hazards (e.g. .................. X
reproductive, immunological, neurological,
circulatory, or respiratory toxicity) from
consumption of chemically-contaminated fish.
Reduced systemic health hazards (e.g. .................. X
reproductive, immunological, neurological,
circulatory, or respiratory toxicity) due to
ingestion of chemically-contaminated drinking
water.
Reduced cancer risk from exposure to unregulated .................. .................. X
contaminants in chemically-contaminated sewage
sludge.
Reduced systemic health hazards from exposure to .................. .................. X
unregulated contaminants in chemically-
contaminated sewage sludge.
Reduced health hazards from exposure to
contaminants in waters used recreationally
(e.g., swimming and boating).
Ecological Benefits:
Enhanced recreational fishing................... X
Reduced risk to aquatic life.................... .................. X
Enhanced in-stream recreation such as swimming, .................. .................. X
boating, hunting, rafting, subsistence fishing.
Improved water enhanced recreation such as .................. .................. X
hiking, picnicking, birdwatching, photography.
Increased aesthetic benefits such as enhancement .................. .................. X
of adjoining site amenities (e.g. residing,
working, traveling, and owning property near
the water).
Existence value................................. .................. .................. X
Option value.................................... .................. .................. X
Reduced risk to terrestrial wildlife including .................. .................. X
endangered species.
Protection of biodiversity...................... .................. .................. X
Protection of cultural valuation................ .................. .................. X
Reduced non-point source nitrogen contamination .................. .................. X
of water if sewage sludge is used as a
substitute for chemical fertilizer on
agricultural land.
Satisfaction of a public preference for .................. .................. X
beneficial use of sewage sludge*.
Economic Productivity Benefits:
Reduced sewage sludge disposal costs............ X
Enhanced tourism................................ .................. .................. X
Improved commercial fisheries yields............ .................. .................. X
Addition of fertilizer to crops (nitrogen .................. .................. X
content of sewage sludge is available as a
fertilizer when sludge is land applied)*.
Improved crop yield (the organic matter in land- .................. .................. X
applied sewage sludge increases soil's water
retention)*.
Reduced management practice and recordkeeping .................. .................. X
costs for appliers of sewage sludge meeting
exceptional quality criteria.
Reduced management and disposal costs for .................. .................. X
``cleaner'' sewage sludge that does not meet
land application criteria.
Avoidance of costly siting processes for more .................. .................. X
controversial sewage sludge disposal methods
(e.g., incinerators) because of greater use of
land application.
Reduced water treatment costs for municipal .................. .................. X
drinking water, irrigation water, and
industrial process and cooling water.
----------------------------------------------------------------------------------------------------------------
* Some double counting between this benefit category and ``reduced sewage sludge disposal costs'' is present.
The monetary assessment of benefits is inevitably incomplete. As
mentioned above, monetary values were estimated for only a few of the
likely benefit categories. In addition, because of data and measurement
limitations, some of the available valuation measures do not fully
account for all of the mechanisms by which society is likely to value a
given benefit event. As a result, the estimated dollar values that are
attached to certain of the estimated benefit events may understate
society's willingness-to-pay to achieve those benefit events. For
example, reduced sewage sludge disposal costs may understate society's
willingness-to-pay for less polluted sewage sludge because public
preferences as revealed through political decision-making processes
indicate that some communities would be willing to pay for beneficial
sewage sludge use (land application) even when it is more costly than
other disposal options. As a result, the estimate of the dollar value
of benefits to society is a partial, noncomprehensive estimate and, in
all likelihood, understates the economic benefits that will accrue from
the proposed regulation.
2. Overview of Costs Analyzed
The RIA compares EPA's best estimate of the monetized benefits of
the proposed MP&M regulation to the estimated costs to society for
achieving those benefits. To assess the economic costs to society of
the MP&M regulation, EPA relied foremost on the estimated costs to MP&M
facilities for the labor, equipment, material, and other economic
resources needed to meet the discharge limitations specified by the
proposed regulation. These cost estimates are the same as those used
for the zero-cost-pass-through analysis of [[Page 28257]] facility
impacts described in Section XIV of this document (i.e., in which firms
must absorb all of the regulatory compliance costs). In the societal
cost-benefit analysis, however, accounting for these costs differs from
that in the facility impact analysis. In the facility impact analysis,
costs and their impacts are considered in terms of their effects on the
financial performance of the firms and facilities affected by
regulation. To understand the significance of those costs to affected
firms and facilities and their likely responses to the proposed
regulation, the analyses explicitly considered the expected tax
treatment of the annual expenses and capital outlays for compliance. In
addition, the annual charges for the capital outlays were calculated
using private costs of capital. Thus, the total annual compliance costs
reported earlier in this document are the costs to industry and are
presented on an after-tax basis reflecting private costs of capital. In
the analysis of the costs to society, however, these compliance costs
are considered on a before-tax basis and the annualization of capital
outlays is based on an opportunity cost of capital to society. In
general, because of the elimination of tax considerations, the
estimated compliance costs are greater from the perspective of society
than from the perspective of private industry.
In addition to the estimated resource costs to society of
regulatory compliance, the estimate of social cost used in this
analysis includes two other cost elements: the cost to governments
(federal, state, and local) of administering the permitting and
compliance monitoring activities under the proposed regulation (as
discussed above at Section XIV.C.1); and the costs associated with
unemployment that may result from the proposed regulation. The
unemployment-related costs include: the cost of administering
unemployment programs for workers who are estimated to lose employment
(but not the cost of unemployment benefits, which are a transfer
payment within society); and an estimate of the amount that workers
would be willing to pay to avoid involuntary unemployment. In much the
same way that society may value the benefits of avoided adverse health
effects stemming from the regulation on the basis of willingness-to-
pay, society may also value the incurrence of unemployment as a cost of
the regulation using the same willingness-to-pay principle of
valuation.
3. Organization of Following Discussion
The following sections of this preamble discuss the estimated
benefits and costs to society of the proposed MP&M regulation. The next
section, Section B, describes the broad categories of benefits
associated with the MP&M rule as well as the estimation of these
benefits while Section C summarizes the estimated costs. Section D
summarizes the comparison of estimated national benefits and costs for
the proposed regulation.
B. Benefits Associated With the Proposed Effluent Guidelines
MP&M industry effluents contain priority and non-conventional
metals, organics and conventional pollutants. Discharge of these
pollutants into freshwater, estuarine, and marine ecosystems may alter
aquatic habitats, affect aquatic life and terrestrial wildlife, and
adversely affect human health. Many of these pollutants are human
carcinogens, human systemic toxicants, aquatic life toxicants, or all
of the above. In addition, many of these pollutants persist in the
environment, resist biodegradation, and bioaccumulate in aquatic
organisms.
The Agency's analysis of these environmental and human health risk
concerns and of the water-related benefits resulting from the proposed
effluent guidelines is contained in the ``Environmental Assessment of
the Metal Products and Machinery Industry (Phase I)'', hereafter called
the Environmental Assessment (see Section II. for availability of this
document). This assessment qualitatively and quantitatively evaluates
the potential human health benefits and water quality benefits of
controlling the discharges of 66 pollutants from the MP&M industry
group. (see the Environmental Assessment and the RIA for a discussion
of the pollutants).
In this analysis, benefits were assessed by identifying the various
ways in which the reduction in discharges from the MP&M industry would
be expected to provide benefits. Regulations that improve water quality
will generally provide benefits in several broad categories, which are
summarized below. Please refer to Table 21 for a list of the different
types of benefits that fall under each category.
Human health benefits. Reduced pollutant discharges to the nation's
waterways will generate human health benefits by a number of
mechanisms. The most important and readily analyzed of the human health
benefits stem from reduced risk of illness associated with the
consumption of water, fish or other food that is taken from waterways
affected by effluent discharges. Human health benefits are typically
analyzed by estimating the change in the expected number of adverse
human health events in the exposed population resulting from a
reduction in effluent discharges. While some health effect mechanisms
such as cancer are relatively well understood and thus may be
quantified in a benefits analysis, others are less well understood and
may not be assessed with the same rigor or at all. For example, this
analysis quantitatively examines only two health effect categories:
incidence of cancer and a composite indicator of systemic, non-cancer
health risk. However, in this analysis, only incidence of cancer is
translated into an expected number of avoided adverse health events
(i.e., avoided cancer cases) and, on that basis, monetized. Dose-
response relationships are not available for other health events that
might also be avoided by reduced pollutant exposures. The economic
valuation of these health effect events is generally based on estimates
of the monetary value that society is willing to pay for their
avoidance. Such ``willingness-to-pay'' valuations are generally
considered to provide a fairly comprehensive measure of society's
valuation of the health-related benefit in that they account for such
factors as the costs of health care,9 loss in income, and pain and
suffering (both among affected individuals and family and friends). In
some cases, less comprehensive valuations are used that are based only
on the estimated costs of health care, remedial treatments, or forgone
income.
\9\ Individuals with health insurance, however, would not
include the part of medical care cost covered by insurance in their
willingness-to-pay to avoid adverse health effects.
---------------------------------------------------------------------------
Ecological benefits. Ecological benefits stem from improvements in
habitats or ecosystems that are affected by effluent discharges. For
example, spawning grounds for important recreationally or commercially
caught fish species may be restored in response to a reduction in MP&M
effluent discharges. It is frequently quite difficult, however, to
quantify and attach economic values to benefit categories that are
referred to as ecological benefits. The difficulty in quantifying
benefit categories results from imperfect understanding of the
relationship between changes in effluent discharges and the benefit
events. In addition, it is often difficult to attach monetary values to
these benefit categories because the benefit events do not occur in
markets in which prices or costs are readily observed. Ecological
benefits may be loosely classified as non-market, use benefits, and
non-market, non-use benefits. [[Page 28258]]
Non-market, use benefits stem from improvements in ecosystems and
habitats that, in turn, lead to enhanced human use and enjoyment of the
affected areas. For example, reduced discharges may lead to increased
recreational use and enjoyment of affected waterways in such activities
as fishing, swimming, boating, hunting or birdwatching. Such uses can
be classified as either consumptive or non-consumptive. Consumptive
uses can be distinguished from non-consumptive uses in that the former
excludes other uses of the same resource. For example, if recreational
anglers consume their fish catch, the stock of the natural resource is
at least temporarily depleted. With non-consumptive uses, however, the
resource base generally remains in the same state before and after use
(e.g., birdwatching).\10\
\10\ Even some so-called non-consumptive uses may temporarily
deplete the natural resource or reduce the potential value to other
users. For example, over-use of the habitat or crowding in such
pursuits as bird-watching may diminish the value of the natural
resource to other users.
---------------------------------------------------------------------------
In some cases, it may be possible to quantify and attach partial
economic values to such benefit events on the basis of market values
(e.g., an increase in tourism activity associated with improved
recreational fishing opportunities); in this case, these benefit events
might better be classified as economic productivity related events as
explained in the next section. These events, however, are often not
able to be fully valued using information from economic markets. In
this case, they are more appropriately classified as non-market use
ecological benefits since economic markets will only capture related
expenditures made by recreational users such as food and lodging and
will not capture the value placed on the experience itself.
The second broad class of ecological benefits, non-market, non-use
benefits, includes benefit events that are not associated with current
use of the affected ecosystem or habitat but arise from the realization
of the improvement in the affected ecosystem or habitat resulting from
reduced effluent discharges. This class of benefits also includes the
value that individuals place on the potential for use sometime in the
future either by themselves or future generations. As an example of the
former, people may attach a value to protecting habitats and species
that are otherwise detrimentally affected by effluent discharges even
when they do not use or anticipate future use of the affected waterways
for recreational or other purposes. The latter can be described as a
combination of insurance and speculative value which reflects
individuals' wish to protect the option to use and enjoy a resource at
some later date. From an ecosystem standpoint, pristine habitats and
wildlife refuges are often preserved under the assumption that plant or
animal species that may yield pharmaceutical, genetic, or ecosystem
benefits yet to be discovered. These benefits may also manifest by
other valuation mechanisms, such as: cultural valuation, philanthropy,
and bequest valuation. It is often extremely difficult or even
impossible to quantify the relationship between changes in discharges
and the improvements in societal well-being associated with such
valuation mechanisms. That these valuation mechanisms exist, however,
is indisputable as evidenced, for example, by society's willingness to
contribute to organizations whose mission is to purchase and preserve
lands or habitats for the sole purpose of averting development.
Economic productivity benefits. Reduced pollutant discharges may
also generate benefits through improvements in economic productivity.
For example, economic productivity gains may occur through reduced
costs to public sewage systems (publicly owned treatment works or
POTWs) for managing and disposing of the sewage sludge that results
from treatment of effluent discharges. With less pollutant
contamination of industry's discharges to POTWs, the POTWs in turn
incur lower costs in managing and disposing of their treatment
residuals. Similarly, economic productivity may be enhanced due to
reduced treatment costs associated with irrigation water, industrial
cooling water and municipal drinking water supplies. Other economic
productivity gains may result from improved tourism opportunities in
areas that are affected by effluent discharges. In addition, ecological
benefits such as improved species survival will be translated into
economic productivity benefits such as increases in commercially caught
fish populations and yield. When such economic productivity effects can
be identified and quantified, they are generally straightforward to
value because they often involve market-place events for which prices
or unit costs are readily available.
As indicated above, some of these improvements reduce societal
costs. As such, these improvements (i.e. reduced treatment and disposal
costs) could be described as a reduced cost and be included in the
economic cost analysis rather than in the benefits analysis. For this
analysis, they are treated as a benefit of the effluent guideline.
1. Qualitative Description of the Benefits
Benefits to human health associated with the proposed rule include
reductions in cancer risk and systemic health problems (e.g.
reproductive, immunological, neurological, circulatory, or respiratory
toxicity) that are caused by consuming chemically-contaminated fish and
ingesting chemically-contaminated drinking water. With respect to fish
consumption, benefits will accrue to recreational and subsistence
fishermen and to their families. In addition, populations served by
drinking water intakes located on river reaches to which MP&M
facilities discharge will benefit from reduced pollutant concentrations
in MP&M wastewater discharges.
Benefits to aquatic life include reduction of priority and non-
conventional metals, organics, and conventional pollutants to levels
below those considered to negatively affect receiving water's biota.
Such impacts include acute and chronic toxicity, sublethal effects on
metabolic and reproductive functions, physical destruction of spawning
and feeding habitats, and loss of prey organisms. Chemical
contamination of aquatic biota may also directly or indirectly impact
local terrestrial wildlife. Reductions in such impacts will enhance
recreational fishing opportunities in terms of both the quality and
abundance of species caught. As a result, more persons may fish a given
area and the value of their fishing experience may increase on a per
fishing event basis.
Benefits from changes in sewage sludge disposal practices will be
realized as publicly owned treatment works (POTWs) are able to dispose
of cleaner (i.e. less toxic) sewage sludge by less expensive and more
environmentally beneficial methods. For example, cleaner sewage sludge
may be applied to agricultural land rather than being incinerated or
disposed of in landfills and other land sites. In addition to the
direct cost savings that may accrue to POTWS, when sewage sludge is
beneficially applied to land, its nitrogen content is available as a
valuable fertilizer. In addition, the organic matter in sludge will
generally improve the soil structure for plant growth and increase the
ability of soil to retain water. As a result, land application of
sewage sludge may yield benefits in terms of overall improvements in
soil quality and crop yields. Benefits may also accrue through greater
flexibility in managing and disposing of POTW sewage sludges and
[[Page 28259]] shifts into beneficial reuse of sewage sludge even when
the reduction in sludge contamination levels does not yield direct cost
savings to POTWs. These latter components of economic benefits from
less contamination of POTW sewage sludges are not addressed in this
analysis.
2. Quantitative Estimate of Benefits
EPA quantified and monetized human health, aquatic life,
recreational fishing, and sewage sludge disposal benefits using a site-
specific analysis for baseline conditions and for the conditions that
are expected to be achieved by BAT/PSES process changes. Quantified but
not monetized benefits include reductions in excursions of health-based
water quality toxic effects levels and aquatic life criteria as well as
reductions in the frequency with which certain aquatic species are
exposed to lethal concentrations of MP&M pollutants. It should be noted
that the benefit categories that were able to be quantified and
monetized in this analysis represent only a few of the benefits that
are likely to be achieved by the proposed regulation (see Table 21).Q
Quantified human health benefits are estimated by:
Estimating the potential reduction of carcinogenic risk
and systemic hazards from fish consumption;
Estimating the potential reduction of carcinogenic risk
and systemic hazards from ingestion of drinking water; and
Comparing estimated in-stream concentrations to health-
based water quality toxic effect levels.
Quantified aquatic life benefits are estimated by:
Comparing modeled in-stream concentrations to aquatic life
water quality criteria or toxic effect values (AWQCs); and
Comparing in-stream concentrations to estimated lethal
threshold concentrations for selected aquatic species.
Quantified recreational fishing benefits are calculated on the
basis of the estimated increase in the value per person-day of fishing
in a waterbody from which all MP&M AWQC excursions are eliminated.
Sewage sludge disposal benefits are calculated on the basis of the
incremental quantity of sludge that, as a result of reduced pollutant
discharges to POTWs, meets criteria for the generally less expensive
disposal methods, namely land application and surface disposal. The
methodologies used in these analyses, including all assumptions and
limitations, are explained in the Regulatory Impact Analysis.
a. Cancer Risk and Systemic Hazards and Benefits
Aggregate cancer risk, and systemic hazards from drinking
contaminated water were estimated for populations served by drinking
water intakes on waterbodies to which MP&M facilities discharge. In-
stream concentrations of 4 carcinogenic and 33 systemic toxicants were
estimated for 396 facilities discharging directly or indirectly to 326
receiving waterways using a model of the instream pollutant mixing and
dilution process. In-stream concentrations were estimated for the
initial discharge reach and for downstream reaches taking into account
the various mechanisms by which pollution concentrations diminish below
the initial point of discharge (e.g., dilution, adsorption,
volatilization, and hydrolysis). The calculated in-stream
concentrations were used to estimate the change in cancer risk and
systemic hazards resulting from the proposed and alternative MP&M
regulatory options for populations served by drinking water intakes.
In addition, aggregate cancer risk and systemic hazards from
consuming contaminated fish were estimated for recreational and
subsistence anglers and their families. This analysis relied on the
same estimates of instream pollutant concentrations as used for the
drinking water health effects analysis. Pollutant contamination of fish
flesh was estimated using biological uptake factors. Data on licensed
fishing population by state and county, presence of fish advisories,
fishing activity rates, and average household size were used to
estimate the population of recreational and subsistence anglers and
their families that would benefit from reduced contamination of fish.
Fish consumption rates for recreational and subsistence anglers were
used to estimate the change in cancer risk and systemic hazards among
these populations.
For combined recreational and subsistence angler populations, the
proposed BAT and PSES options are projected to eliminate approximately
2.7 cancer cases per year from a baseline of about 11.1 cases estimated
at the current discharge level, representing a reduction of about 25
percent. For the drinking water population, EPA estimated that reduced
pollutant discharges under the proposed BAT and PSES options would
reduce cancer risk by approximately 3.0 cancer cases per year. However,
EPA has published drinking water criteria for all of the chemicals for
which these avoided cancer cases were estimated. As a result, these
avoided cancer cases were excluded from the benefits evaluation because
it is assumed that public drinking water treatment systems will remove
these pollutants from the public water supply.
In addition to the estimated changes in cancer risk in exposed
populations, EPA also estimated the change in an indicator of systemic,
non-cancer risk of illness. This composite risk indicator, or systemic
hazard score, which is based on 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.
Specifically, the systemic hazard score is calculated as the sum of the
ratios of quantities of pollutants ingested into the human body
relative to the daily reference dose for each pollutant. Values above
or near one are highly suggestive of a risk of systemic health hazard.
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 on the basis of baseline and post-
compliance exposures. For each exposed population category, the change
in the distribution from baseline to the post-compliance case provides
a measure of the reduced risk of systemic health hazard from reduced
MP&M industry discharges. Analytic tractability issues prevented this
analysis from being able to be done on a sample-weighted basis. The
results are for sample discharge locations only. The results for both
the fish and drinking water analysis show movement in populations from
higher risk values to lower risk values. In addition, both analyses
show substantial increments in the percentage of exposed population
that would be exposed to no risk of systemic health hazard associated
with discharges by MP&M facilities.
b. Excursions of Health-Based Water Quality Toxic Effect Levels
In addition to the estimated changes in cancer and systemic risk in
exposed populations, EPA also estimated the effect of facility
discharges of regulated pollutants on pollutant concentrations in
affected waterways relative to ambient water criteria for protection of
human health. The estimated concentrations were compared, on both a
baseline and post-compliance basis, with EPA ambient water quality
criteria (AWQCs) for protection of human health through consumption of
[[Page 28260]] organisms and consumption of organisms and water.
Pollutant concentrations in excess of these values indicate potential
risks to human health. EPA modeling results show that 137 reaches
exceed AWQC values at baseline discharge levels. Proposed BAT and PSES
options are projected to eliminate concentrations in excess of the
criteria on 40 of these reaches, leaving an estimated 97 reaches with
concentrations in excess of AWQC values for protection of human health.
The analyses pertaining to change in human health risk described in
this and the preceding section ignore the potential for joint effects
of more than one pollutant. Each pollutant is dealt with in isolation
and the individually estimated effects are added together. The analyses
do not account for the possibility that several pollutants may combine
in a synergistic fashion to yield more adverse effects to human health
than indicated by the simple sum of the individual effects.
c. Aquatic Life Benefits
To assess aquatic life benefits, EPA estimated the effect of
facility discharges of regulated pollutants on pollutant concentrations
in affected waterways. The estimated concentrations were compared, on
both a baseline and post-compliance basis, with EPA ambient water
quality criteria (AWQCs) for acute and chronic exposure impacts to
aquatic life. Pollutant concentrations in excess of these values
indicate potential impacts to aquatic life. EPA modeling results show
that 130 reaches exceed AWQC values at baseline discharge levels.
Proposed BAT and PSES options are projected to eliminate concentrations
in excess of the criteria on 88 of these reaches, leaving an estimated
41 reaches with concentrations in excess of AWQC values for aquatic
life.
EPA also analyzed aquatic life benefits on the basis of the change
in frequency with which certain aquatic species may be expected to be
exposed to lethal concentrations of pollutants discharged by MP&M
facilities. As such, this analysis focuses solely on acute (short-term)
toxicity and does not consider chronic (long-term) toxicity. This
analysis examined the effects of specific pollutants on selected
aquatic species with a relatively wide range of sensitivity to MP&M
pollutants. Specifically, thirteen MP&M pollutants thought to be among
those having the greatest potential to cause risks to aquatic life were
analyzed. Species with socioeconomic importance such as trout, bass,
and catfish were highlighted, but all species for which data were
available, including those of less socioeconomic importance, were
evaluated. This analysis uses a species sensitivity distribution rather
than a single toxicity threshold concentration in comparison to in-
stream pollutant concentrations for the following three reasons:
1. Species sensitivity distributions, which are used by EPA to set
water quality criteria, can be used to relate exposure concentrations
to the proportion of species whose toxicological effect concentrations
(e.g., LC50 , the lethal concentration for fifty percent of a species,
or some lower lethal threshold such as an LC10 or LC1) are exceeded.
This proportion provides an indication of the percentage of aquatic
species that would be directly affected \11\ at the exposure
concentration. Unlike comparisons to water quality criteria, which
usually yield ratios of the exposure concentration to the criterion
concentration, the proportion of species that are likely to be directly
affected provides a more intuitive indicator of ecological risk. It
should be noted, however, that both indicators of ecological risk
(water quality criteria and proportion of species impacted) suffer from
the inability to account for indirect impacts on aquatic ecosystems,
such as those that result from interruption of predator-prey
relationships. Therefore, neither approach should be considered to
provide absolute measures of ecological risk.
\11\ The term ``directly affected'' is used here to reflect
impacts from direct exposure to a pollutant, rather than
``indirect'' effects such as those that occur due to the loss of
important predator or prey species.
---------------------------------------------------------------------------
2. The variation in chemical sensitivity over a group of species is
known to vary among chemicals (Erickson and Stephan, 1988). For
example, consider two chemicals both of which are at lethal effect
concentrations for five percent of a habitat's species. A given
percentage increase (e.g., doubling) of both pollutants' concentrations
will not necessarily lead to the same increase in the proportion of the
species that are exposed to lethal effect concentrations. That is,
doubling one chemical's concentration might increase the proportion of
species affected from five percent to 25 percent while doubling the
other chemical's concentration might increase the proportion of species
affected from five percent to 50 percent. This diversity of species'
response to changes in concentrations of different pollutants is better
captured by use of distributions of response over the group of species
in the habitat.
3. Because the identities of the tested species comprising the
species sensitivity distributions are known, the use of species
sensitivity distributions allowed EPA to identify which of the tested
species are at risk from exposure to regulated pollutants and which are
likely to benefit from reduced discharges.
Using species sensitivity distributions, EPA estimated the
proportion of tested species whose lethal threshold concentrations
would be exceeded at various exposure concentrations. In interpreting
these results, EPA assumed that a greater proportion of species
affected signifies a greater risk of lethal effects in the population
of species present in a habitat. This analysis found that the proposed
regulation will yield significant reductions in the expected frequency
with which certain aquatic species may be exposed to lethal
concentrations of pollutants. The reduced exposure translates into
benefits such as increased species diversity and abundance which would,
in turn, enhance recreational and commercial fishing opportunities (see
the RIA for additional discussion of this analysis and its findings in
terms of benefits to specific species).
d. Recreational Fishing Benefits
As described above, the proposed BAT and PSES options will reduce
the number of excursions of aquatic life criteria or toxic effect
values. EPA assumes that elimination of criteria excursions for all
regulated pollutants in a waterbody will achieve water quality that is
protective of aquatic life. This improvement in water quality, in turn,
generates benefits to recreational anglers by increasing the value of
their experience or the number of days they subsequently choose to fish
the waterbody. These benefits, however, do not include all of the
benefits that are associated with improvements in aquatic life. For
example, recreational benefits do not capture the benefit of increased
assimilative capacity of a receiving waterbody, improvements in the
taste and odor of the instream flow, or improvements to other
recreational activities such as swimming and wildlife observation that
may be enhanced by improved water quality. Modeling results show that,
under the proposed regulatory option, criteria excursions for all
pollutants whose discharges are affected by the MP&M regulation are
eliminated in 123 discharge locations. [[Page 28261]]
e. Avoided Sewage Sludge Disposal Costs
To estimate the quantity of sewage sludge that will be disposed of
using a less expensive method due to the proposed regulatory
requirements, EPA calculated baseline and post-compliance sewage sludge
quality and compared sewage sludge pollutant concentrations to criteria
for land application and surface disposal.12 POTWs are assumed to
choose the least expensive sewage sludge use or disposal option for
which the sludge meets pollutant criteria. For many POTWs, the least
expensive or ``preferred'' option is generally agricultural application
(a type of land application) or surface disposal of sewage sludge. As a
result of the proposed regulation, many POTWs are expected to achieve
substantial cost savings by disposing of sewage sludge through
agricultural application or surface disposal. For POTWs with limited
access to agricultural land and surface disposal sites, the cost
savings resulting from sewage sludge with lower pollutant
concentrations are expected to be less substantial. However, disposal
of sewage sludge that meets agricultural application limits through
distributing and marketing methods may achieve some cost savings for
these facilities. In the baseline, an estimated 5,559 of 6,950 POTWs
meet criteria for surface disposal or land application. Of the 5,559
POTWs meeting surface disposal or land application criteria, 5,309 meet
the more stringent criteria for beneficial land application while 250
meet only the more lenient surface disposal criteria. Under the
proposed regulation, the total of POTWs that are expected to meet
criteria for surface disposal or land application increases to 5,743.
Of this total that meet criteria for surface disposal or land
application, 5,493 POTWs (or an increase of 184 POTWs) are expected to
meet criteria for beneficial land application, while 250 POTWs continue
to meet criteria for surface disposal.
\12\ Industrial sludge'' which results from the operation of
treatment systems at MP&M facilities, will increase both in quantity
and in level of contamination as a result of the proposed
regulation. The cost of managing and disposing of this industrial
sludge is included in the estimated costs of regulatory compliance
used in the economic and regulatory impact analyses.
3. Monetization of Benefits
For this regulation, EPA estimated the monetary value of benefits
for three benefit categories: human health benefits from reduced
exposure to carcinogens in fish taken from waterways affected by MP&M
discharges; enhanced recreational fishing opportunities in waterways
affected by MP&M discharges; and reduced costs to POTWs in managing and
disposing of sewage sludge that is affected by MP&M discharges.
a. Valuation of Human Health Benefits
EPA estimated the value of a limited set of possible human health
benefits from the human health risk assessment discussed above. These
benefits are attributed to reductions in cancer risks associated with
consuming chemically-contaminated fish. The valuation of benefits is
based on estimates of society's willingness-to-pay to avoid the risk of
cancer associated with consuming chemically-contaminated fish. Little
data, however, is available regarding both dose-response relationships
for non-cancer systemic health outcomes and the monetary value of
avoiding such health outcomes. As a result, it was not possible to
monetize the systemic health effects that might be associated with
exposures to pollutants emanating from the MP&M industry such as
reproductive, immunological, neurological, or circulatory problems.
To value mortality, EPA used a range of values recommended by EPA's
Office of Policy Analysis from a review of studies quantifying
individuals' willingness to pay to avoid increased risks to life
(Fisher, Chestnut, and Violette, 1989; and Violette and Chestnut,
1986). The reviewed studies used hedonic wage or contingent valuation
analyses in labor markets to estimate the amounts that individuals
would be willing to pay to avoid slight increases in risk of mortality
(i.e., the question analyzed in these studies is: how much more must a
worker be paid to accept an occupation with a slightly higher risk of
mortality?). The willingness-to-pay values estimated in these studies
are associated with small changes in the probability of mortality; to
estimate a willingness-to-pay value for avoiding certain or high
probability mortality events, they are extrapolated to the value for a
100 percent probability event. The resulting estimates of the value of
a ``statistical life saved'' are used in analyses such as this
regulatory analysis to value regulatory effects that are expected to
reduce the incidence of mortality. From this review, the Office of
Policy Analysis recommended a range of $1.6 to $8.5 million (1986
dollars) for valuing an avoided event of premature mortality or a
statistical life saved. For this analysis, EPA adjusted the recommended
figures to 1994 using the relative change in nominal Gross Domestic
Product from 1986 to 1994 (57.2 percent) to account for increases in
society's willingness to pay to avoid risk of mortality as national
income increases. Updating to 1994 yields a range of $2.5 to $13.4
million. For this analysis, the low-point of the range is used as a
``low'' estimate while the top of the range is used as a ``high''
estimate. For the proposed Option 2a/2, the benefits associated with
reduced incidence of cancer from fish consumption are estimated to
range from $6.8 million to $36.2 million per year ($1994), depending on
the choice of willingness-to-pay value that is used to value the
avoided cancer events. Although EPA estimated the change in cancer risk
resulting from reduced exposure to MP&M pollutants via the drinking
water pathway, these effects were not included in the monetary estimate
of benefits because EPA has published drinking water criteria for the
four pollutants for which the cancer analysis was completed. Thus, the
total estimated value for human health benefits ranges from $6.8
million to $36.2 million per year ($1994).
b. Valuation of Enhanced Recreational Fishing Opportunities
EPA also estimated the value of enhanced recreational fishing
opportunities. This valuation provides a limited measure of the value
to society of improvements in aquatic habitats that are used for
recreational purposes. The estimate of benefits is limited because it
focuses on only one mechanism, enhanced recreational fishing, by which
society may value improved aquatic habitats; it ignores other
recreational effects as well as valuation mechanisms that are separate
from recreation.
EPA calculated the value of enhanced recreational fishing
opportunities by first estimating the baseline value of those fisheries
in which all instances in which AWQCs are exceeded would be eliminated.
Second, EPA estimated the value of improving the water quality in these
fisheries based on the incremental value to anglers of eliminating all
contaminants from a fishery (Lyke, 1992). Estimates of the increase in
value of recreational fishing to anglers range from $23.6 million to
$84.3 million annually ($1994).
c. Reduced Costs to POTWs in Managing and Disposing of Sewage Sludge
On the basis of the estimated reduced contamination of sewage
sludge, EPA estimated that 184 POTWs will be able to select the lower-
cost land application methods for sewage sludge disposal. The cost
savings associated with the selection of lower cost sewage sludge
management and disposal methods are [[Page 28262]] estimated to range
from $39.1 to $86.0 million annually ($1994).
d. Total Estimated Value of Benefits
For the proposed regulatory option, total benefits for the three
categories for which monetary estimates were possible range from $69.6
to $206.5 million annually. As noted above, this benefit estimate is
necessarily incomplete because it omits numerous mechanisms by which
society is likely to benefit from reduced effluent discharges from the
MP&M industry. Examples of benefit categories not reflected in this
estimate include: non-cancer related health benefits, other water
dependent recreational benefits, existence and option values, and
benefits to wildlife and endangered species.
4. Limitations and Uncertainties Associated With Estimating Benefits
The estimation of benefits is inevitably incomplete in that only a
small set of the categories by which the proposed regulation is
expected to generate benefits are able to be quantified and monetized.
Beyond this broad and overriding limitation to the assessment of
benefits, the methodologies used to assess the benefit categories that
were quantitatively analyzed and for which monetary values were
estimated also involve significant simplifications and uncertainties.
Whether these simplifications and uncertainties are likely to lead to
an understatement or overstatement of the estimated economic values for
the benefit categories that were analyzed is uncertain. Several of
these simplifications and uncertainties are noted below.
The methodology used to estimate water quality criteria excursions
assumes that MP&M facilities are the only source of each of the
regulated pollutants in the waterbody; the methodology does not
incorporate background contributions either from other upstream sources
or, in the case of water quality criteria, contaminated sediments due
to previous discharge practices. Furthermore, although the discharge of
these contaminants may cease or be minimized, sediment contamination
and subsequent accumulation of the regulated pollutants in aquatic
organisms may continue for years. Actual water quality improvements, in
terms of eliminating excursions above criteria may, therefore, be over-
or under-estimated depending on the relative magnitude of background
contributions of regulated pollutants.
In this analysis, the estimates of human health and ecological
benefits are based on the estimated changes in in-stream concentrations
of regulated pollutants. In-stream concentrations under baseline
conditions and under the proposed option are modeled for all
waterbodies to which MP&M facilities discharge. Certain data underlying
these analyses are site specific, including: flow rates under average
and low flow conditions, and flow depth. However, other basic
assumptions in the model are not site specific, including: chemistry of
the water body, mixing processes, longitudinal dispersion, flow
geometry, suspension of solids and reaction rates. Where these
assumptions differ from actual conditions, modeled results will
approximate in-stream concentrations with varying degree of accuracy.
The effect of these assumptions on benefit estimates, however, is
indeterminate.
In the analysis of benefits associated with consumption of fish
taken from affected waterways, EPA estimated the exposed population--
that is, the population expected to fish an affected waterway--from
county fishing license and fishing activity data. Some data are
specific to the counties in which MP&M sample facilities are located;
however, for some counties in which MP&M facilities are located, it was
necessary to estimate fishing population and activity rates from state-
level data or from data for nearby counties or states (see Chapter 9 of
the RIA for a detailed description of this methodology). These
approaches are necessarily approximations and may lead to an over- or
underestimates of the exposed population. The effect of these
estimation procedures on the benefits estimate, however, is not known.
A related issue involves the assumption made regarding the number
of subsistence fishermen in the exposed population. In this analysis,
subsistence fishermen are assumed to account for an additional 5
percent of the fishing population. The magnitude of subsistence fishing
in the United States or in individual states, however, is not known. As
a result, this estimate may understate or overstate the actual number
of subsistence fishermen.
Finally, recreational fishing benefits are based on the assumption
that anglers place the same value on reducing concentrations of MP&M
pollutants to levels considered protective of aquatic life as they do
on eliminating all contaminants from a fishery. While the former level
of pollutant reduction is assumed to be protective of aquatic life,
some level of contamination would still exist in a fishery. As such,
benefits of recreational fishing may be overstated.
EPA acknowledges the unavoidable uncertainty associated with
estimating benefits. EPA believes that it has used the best methodology
available for estimating benefits. EPA is soliciting comments on the
reliability and accuracy of the methods used and suggestions on
alternative methods which could be used for the final rule (see Section
XIX).
C. Costs To Society
The social costs of regulatory actions are the opportunity costs to
society of employing scarce resources in pollution control activity.
The social costs of regulation include both monetary and non-monetary
outlays made by society. Monetary outlays include private-sector
compliance costs, government administrative costs, and other adjustment
costs, such as the cost of relocating displaced workers. Non-monetary
outlays, some of which can be assigned monetary values, include losses
in consumers' and producers' surpluses in affected product markets,
discomfort or inconvenience, loss of time, and a slowdown in the rate
of innovation.
For this analysis, EPA based its estimate of the cost to society on
the following components of social cost: the cost of society's economic
resources for achieving compliance with the proposed regulatory option;
the cost to governments of administering the proposed regulation; the
cost of administering unemployment programs for job losses resulting
from regulation; and worker dislocation costs.
1. Resource Cost of Compliance
The chief component of the estimated annual social cost is the cost
of complying with the proposed regulation. The portion of this cost
that is expected to be borne directly by the MP&M Phase I industries
amounts to $160.6 million ($1994). This amount is the same as that used
for the facility impact analysis and reflects the cost of pollution
prevention and treatment systems needed to achieve compliance with the
proposed discharge limitations (see Section XIV. D. and E.). In
addition, this amount reflects the expected tax treatment of capital
outlays and annual expenses and is also based on private costs of
capital. However, as discussed in the introduction to this section, the
appropriate measure of cost of compliance to society will omit these
tax effects and will also reflect the opportunity cost of capital to
society or social discount rate. The combined effect of these
adjustments is to add an estimated $29.7 million to the estimated
private industry cost of the regulation, bringing the cost of
compliance to society to $190.3 million ($1994). This
[[Page 28263]] amount may be interpreted as the value of society's
productive resources--including labor, equipment, and other material--
that is needed annually to achieve the reductions in effluent
discharges specified by the proposed regulatory option.
2. Cost of Administering the Proposed Regulation
In addition to the resource costs for achieving effluent discharge
reductions, EPA also estimated the cost to all levels of governments
for administering the proposed regulation. The main component of this
administrative cost category is the cost of labor and material
resources for writing permits under the regulation and for compliance
monitoring and enforcement activities. EPA estimates that these costs
will range from $2.1 to $3.4 million ($1994) annually.
3. Cost of Unemployment
To account for the total social cost of unemployment, EPA estimated
the cost of worker dislocation (exclusive of cash benefits) to the
individual as well as the additional cost to governments to administer
unemployment benefits. The cost of worker dislocation is estimated
based on incremental willingness-to-pay to avoid job dislocation in a
hedonic wage framework. This framework has been used in the past to
impute a trade-off between wages and job security (Topel, 1984, Adams,
1985). Specifically, 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.
For the MP&M industry, the implied one time statistical cost of an
involuntary layoff is estimated at $83,000 to $110,000 ($1994). To
calculate the annual cost of employment displacement for the proposed
regulatory option, EPA annualized this value over the 15-year analysis
period at a social opportunity cost of deferred consumption of three
percent and multiplied the resulting annual value by the total number
of displaced workers (698 FTEs) estimated in the facility impact
analysis. In the labor requirements analysis (see Section XIV.E,
above), EPA estimated that the demand for labor for compliance with the
proposed regulation would exceed the estimated loss in employment from
facility closures. As a result, when the total number of displaced
workers is adjusted to account for compliance-related labor demand, the
net loss in employment is negative. For this analysis, EPA considered a
range of cost for displaced workers with the high end of the range
based on the cost of worker displacement considering only the job
losses in estimated facility closures and with the low end of the range
set at zero. Setting the low end of the range at zero recognizes that
labor demands for compliance may equal or exceed job losses but, to be
conservative, does not enter a negative cost based on the possible net
reduction in unemployment resulting from the regulation. On this basis,
EPA estimated that annualized worker displacement costs for the
proposed regulation would range from zero to $6.6 million.
Unemployment as the result of regulation may also impose costs to
society through the additional administrative burdens placed on the
unemployment system (the cost of unemployment benefits per se is not a
social cost but instead a transfer payment within society).
Administrative costs include the cost of processing unemployment
claims, retraining workers, and placing workers in new jobs. Using data
from the Interstate Conference of Employment Security Agencies, EPA
estimated that the per unemployed worker cost of administering
unemployment programs for job losses amounts to approximately $100 per
job loss. Multiplying this figure by the 698 job losses and annualizing
the result over the 15-year analysis period yields an annual
unemployment administration cost of less than $10,000 per year. Again,
considering that the net employment loss from the regulation may be
negative, EPA used a range of from zero to $10,000 for the additional
annual cost of unemployment administration.
Summing across all social costs results in a total social cost
estimate of $192.4 to $200.3 million annually ($1994). These social
cost estimates do not include losses in consumers' and producers'
surpluses resulting from the change in quantity of goods and services
sold in affected product markets. However, under the zero-cost-pass-
through framework in which compliance costs have been tallied, MP&M
industry product prices are assumed not to increase as a result of the
proposed regulation. In this case, the estimated resource costs of
compliance will approximate the loss in producers' surplus and, with no
increase in prices, consumers' surplus will not change.
D. Benefit-Cost Comparison
Because not all of the benefits resulting from the proposed
regulatory alternative can be valued in dollar terms, a complete cost-
benefit comparison cannot be performed. The social cost of the proposed
rule is estimated at $192.4 to $200.3 million annually ($1994). The sum
total of benefits that can be valued in dollar terms ranges from $69.6
million to $206.5 million annually ($1994).
As shown in Table 22, combining the estimates of social benefits
and social costs yields a net monetizable benefit ranging from negative
$130.7 million to positive $14.1 million annually. This assessment of
the relationship between costs and benefits is subject to severe
limitations on the ability to estimate comprehensively the expected
benefits of the proposed regulation. If all of the benefits of
regulation could be quantified and monetized, EPA estimates that in all
likelihood the benefits of regulation would exceed the social costs.
Table 22.--Comparison of National Annual Monetizable Benefits to Costs
for Effluent Limitation Guidelines and Standards for the Metal Products
and Machinery Industry, Phase I
[Millions of 1994 dollars]
------------------------------------------------------------------------
Benefit and cost categories Dollar value
------------------------------------------------------------------------
Benefit Categories:
Human Health Benefits: Fish Consumption......... $6.8-$36.2
Human Health Benefits: Water Consumption........ 0.0-0.0
Recreational Fishing Benefits................... 23.6-84.3
Avoided Sewage Sludge Disposal Costs............ 39.1-86.0
-------------------
Total Estimated Benefits.................... 86.4-208.9
Cost Categories:
[[Page 28264]]
Cost to Industry for the Proposed Regulatory
Option......................................... 160.6
Adjustments for Tax Code and Use of Social
Discount Rate.................................. 29.7
Costs of Administering the Proposed Regulation.. 2.1-3.4
Unemployment Administration and Worker
Displacement Costs............................. 0.0-6.6
-------------------
Total Social Cost........................... 192.4-200.3
Net Benefits (Benefits less Costs).......... * ($130.7)-$14.1
------------------------------------------------------------------------
* For calculating the range of net benefits, the low net benefit value
is calculated by subtracting the high value of costs from the low
value of benefits. The high net benefit value is calculated by
subtracting the low value of costs from the high value of benefits.
Source: U.S. Environmental Protection Agency.
XVI. Water Quality and Other Environmental Benefits of Proposed
Rule for the Metal Products and Machinery (MP&M) Industry
The U.S. Environmental Protection Agency (EPA, Agency) evaluated
the environmental benefits of controlling the discharges of toxic and
nonconventional pollutants from metal products and machinery (MP&M)
facilities (Phase 1) to surface waters and publicly-owned treatment
works (POTWs) in national analyses of direct and indirect discharges.
Discharges of these pollutants into freshwater and estuarine ecosystems
may alter aquatic habitats, adversely affect aquatic biota, and
adversely impact human health through the consumption of contaminated
fish and water. Furthermore, these pollutants may also interfere with
POTW operations in terms of inhibition of activated sludge or
biological treatment and contamination of sludges, thereby limiting the
method of disposal. Many of these pollutants have at least one toxic
effect (human health carcinogen and/or systemic toxicant or aquatic
toxicant). In addition, many of these pollutants bioaccumulate in
aquatic organisms and persist in the environment. Various studies
demonstrate the environmental impact of discharges from MP&M facilities
on aquatic life, human health, and the quality of receiving waters and
sediments. The National Sediment Contaminant Point Source Inventory
ranks MP&M as one of the largest ongoing sources of potentially toxic
pollutants to sediment (nearly 10 percent of the total load of
potential sediment contaminants from point sources). Forty-six (46)
direct MP&M facilities are identified by States as being point sources
causing water quality problems and are included on their 304(l) Short
List. Cases of human health impacts (production worker exposure);
aquatic life impacts (lethal and sublethal); a State fish consumption
advisory; and contamination of surface waters, ground water, and
sediments are also documented.
EPA evaluated the effects of direct wastewater discharges on
receiving stream water quality at current levels of treatment and at
proposed BAT treatment levels. EPA predicted steady-state in-stream
pollutant concentrations after complete immediate mixing with no loss
from the system, and compared these levels to EPA-published water
quality criteria or to documented toxic effect levels for those
chemicals for which EPA has not published water quality criteria. EPA
performed this analysis for a representative sample set of 55 direct
facilities discharging 61 pollutants to 55 receiving streams. This set
of 55 facilities includes 12 facilities that currently are both direct
and indirect dischargers, but are projected to become solely indirect
dischargers at the proposed option. However, the set of 55 facilities
excludes four facilities that EPA's cost model predicts to close based
on current economic conditions. EPA then extrapolated the results of
this analysis to the entire population of direct MP&M facilities
nationwide (approximately 2,035 facilities discharging to 2,035
receiving streams) with each sample facility representing a varying
number of additional facilities of the same approximate size engaged in
similar activities under similar economic conditions.
In-stream concentrations for two pollutants are projected to exceed
human health criteria (developed for consumption of water and
organisms) in 6 percent of the receiving streams nationwide at current
discharge levels. The proposed BAT regulated discharge levels will
reduce the excursions of human health criteria to 2 percent of the
receiving streams. The percentage of receiving streams nationwide with
in-stream pollutant concentrations projected to exceed chronic aquatic
life criteria or toxic effect levels will be reduced from 9 percent at
current discharge levels to 4 percent at proposed BAT discharge levels.
Thirty-nine (39) pollutants at current and six pollutants at BAT
discharge levels are projected to exceed in-stream chronic aquatic life
criteria or toxic effect levels. These projected water quality benefits
are achieved through a 17 percent reduction in current direct loadings
for the 61 evaluated pollutants by the proposed BAT regulatory option.
Including loadings of oil and grease and total suspended solids (TSS),
current pollutant loadings are reduced 36 percent by the proposed BAT
regulatory option. Current pollutant loadings (including all
conventional pollutants) are also reduced 36 percent by the proposed
BAT regulatory option.
EPA also evaluated the effects of POTW wastewater discharges of 61
pollutants on receiving stream water quality at current and proposed
pretreatment levels for a representative sample of 307 indirect
discharging MP&M facilities. This set of 307 facilities includes 10
facilities that currently are both direct and indirect dischargers, but
are projected to become solely direct dischargers at the proposed
option. As with the direct dischargers, the set of 307 facilities
excludes 52 facilities that EPA's cost model predicts to close based on
current economic conditions. These 307 facilities discharge to 264
POTWs with outfalls located on 249 receiving streams. EPA extrapolated
the results to a nationwide population of approximately 7,387
facilities which discharge to 7,016 POTWs on 6,864 receiving streams
using the same facility weighting approach described above for the
direct dischargers. EPA predicted steady-state in-stream pollutant
concentrations after complete immediate mixing with no loss from the
system, and compared these levels to EPA-published water quality
criteria or to documented toxic [[Page 28265]] effect levels for those
chemicals for which EPA has not published water quality criteria.
EPA projects that in-stream concentrations of five pollutants will
exceed human health criteria (developed for consumption of water and
organisms) in 7 percent of the receiving streams nationwide at current
discharge levels. The proposed pretreatment regulatory option reduces
excursions of human health criteria to three pollutants at 5 percent of
the receiving streams nationwide. The percentage of receiving streams
with in-stream pollutant concentrations projected to exceed chronic
aquatic life criteria or toxic effect levels are reduced from 8 percent
at current discharge levels to 3 percent at the proposed pretreatment.
A total of 19 pollutants at current and ten pollutants at proposed
pretreatment levels are projected to exceed in-stream aquatic life
criteria or toxic effect levels. Current loadings of the 61 pollutants
evaluated for water quality impacts are reduced 32 percent by the
proposed pretreatment regulatory options. Including oil and grease and
TSS, current pollutant loadings are reduced 50 percent by the proposed
pretreatment regulatory options. Including all conventional pollutants,
current pollutant loadings are also reduced 50 percent by the proposed
pretreatment regulatory options.
EPA also evaluated the potential adverse impacts on POTW operations
(inhibition of microbial activity during biological treatment) and
contamination of sludge at the 7,016 POTWs that receive wastewater from
the national projected population of 7,387 indirect discharging MP&M
facilities. Inhibition of POTW operations is estimated by comparing
predicted POTW influent concentrations to available inhibition levels.
Potential contamination of sludge is estimated by comparing projected
pollutant concentrations in POTW sludge to available EPA sludge
criteria. EPA evaluated 37 pollutants for potential POTW operation
inhibition and nine pollutants for potential sludge contamination. At
current discharge levels, EPA projects inhibition problems at 16
percent of the POTWs nationwide caused by 11 different pollutants. At
the proposed pretreatment, EPA projects inhibition problems at 15
percent of the POTWs nationwide caused by six pollutants. The Agency
projects sludge contamination at 13 percent and 9 percent of the POTWs
nationwide at current and proposed pretreatment regulatory option
levels, respectively. EPA projects that all nine evaluated pollutants
at current and proposed pretreatment levels exceed sludge criteria
levels.
For the analysis of contamination of sewage sludge EPA included
other industrial discharges in the sewage sludge model. EPA evaluated
the benefits of reducing contamination of sludge in its analysis of
projected POTW sludge disposal practices at current and proposed
pretreatment levels. EPA performed analyses for a representative sample
set of 80 POTWs with projected sludge contamination limiting its use
for land application, and extrapolated to a nationwide population of
1920 POTWs. Under the proposed pretreatment regulatory option, 184 of
the facilities will shift into qualifying for land application of
sewage sludge. Land application quality sludge meets ceiling pollutant
concentration limits, class B pathogen requirements, and vector
attraction reduction requirements. Because costs for land application
tend to be lower than those for other disposal methods, this shift away
from incineration, co-disposal, and surface disposal results in a cost
savings.
The POTW inhibition and sludge values used in this analysis are
not, in general, regulatory values. EPA based these values upon
engineering and health estimates contained in guidance or guidelines
published by EPA and other sources. Therefore, EPA does not intend to
base its regulatory approach for proposed pretreatment discharge levels
upon the finding that some pollutants interfere with POTWs by impairing
their treatment effectiveness or causing them to violate applicable
limits for their chosen disposal methods. However, the values used in
this analysis help indicate the potential benefits for POTW operations
and sludge disposal that may result from the compliance with proposed
pretreatment discharge levels.
XVII. 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. The Agency has also considered the impacts
of other ongoing EPA rulemaking efforts on MP&M Phase I sites.
This regulation was reviewed by EPA personnel responsible for non-
water quality environmental programs. 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.
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.
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. Current and upcoming
NESHAPs that may potentially affect MP&M sites are listed below.
Chromium Emissions from Hard and Decorative Chromium
Electroplating and Chromium Anodizing Tanks;
Halogenated Solvent Cleaning;
Aerospace Manufacturing; and
Miscellaneous Metal Parts and Products (Surface Coating).
These NESHAPs will define maximum achievable control technology
(MACT). Like effluent guidelines, MACT standards are technology based.
The CAA set maximum control requirements on which MACT can be based for
new and existing sources.
The use of chlorinated solvents in the MP&M industry can create a
source of hazardous emissions. The Agency believes this regulation will
not affect the use of chlorinated solvents in the MP&M industry. This
regulation neither requires nor discourages the use of aqueous cleaners
in lieu of chlorinated solvents.
EPA is addressing emissions of volatile organic compounds (VOCs)
from industrial waste water through a Control Techniques Guideline
(CTG) for industrial waste water under section 110 of the CAA (Title I
of the 1990 CAA Amendments). The MP&M industry is one of several
industries that would be covered by the industrial waste water CTG. The
industrial waste water CTG will provide guidance to states in
recommending reasonably available control technologies (RACT) for VOC
emissions from industrial waste water at sites located in areas failing
to attain the National Ambient Air Quality Standard for ozone.
B. Solid Waste
Solid waste generation includes hazardous and nonhazardous waste
water treatment sludge as well as waste [[Page 28266]] oil removed in
waste water treatment. EPA estimates that compliance with this
regulation will result in a decrease in waste water treatment sludge
and an increase in waste oil generated at MP&M Phase I sites.
EPA estimates that MP&M Phase I sites generated 33 million gallons
of waste water treatment sludge and 8.1 million gallons of waste oil in
1989 from the treatment of waste water. The amount of waste water
treatment sludge and waste oil expected to be generated at each of the
technology options is presented in Table 23.
Table 23.--Waste Treatment Sludge and Oil Generation by Option
------------------------------------------------------------------------
Waste water
treatment Waste oil
sludge generated
Option generated (million
(million gallons/
gallons/ year)
year)
------------------------------------------------------------------------
Baseline (1989)............................... 33 8.1
Option 1...................................... 31 38
Option 2...................................... 21 36
Option 3...................................... 21 36
------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
As shown in Table 23, waste water treatment sludge generation
decreased from baseline to Option 1 (which consists of end-of-pipe
treatment without in-process flow control). The net decrease is
attributed to the fact that Option 1 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. Sludge reduction is not
expected at sites which already have sludge dewatering in the baseline.
An increase of sludge is expected to occur at sites which do not have
treatment in place but are expected to install treatment under the MP&M
options.
The sludge reduction from Option 1 to Option 2 is attributed to the
water conservation and pollution prevention technologies included in
Option 2. EPA expects these technologies to result in sludge reduction
for the following reasons:
--In-process metals recovery for electroplating rinses, recycling of
coolants, and recycling of paint curtains reduce the mass of metal
pollutants in treatment system influent streams, which in turn
reduces the amount of sludge generated during metals removal;
--Bath maintenance practices included in Option 2 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 Option 2 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 does not expect Option 3 to result in additional sludge
generation or reduction over Option 2.
Sludges generated at MP&M sites are often determined to be
hazardous under the Resource Conservation and Recovery Act (RCRA) as
either a listed or characteristic waste based on the following
information:
If the site performs electroplating operations, and this
waste water is mixed with the other waste water treated on site, the
resulting sludge is a listed hazardous waste F006 (40 CFR 261.31),
or
If the sludge or waste oil from waste water treatment
exceeds the standards for the Toxicity Characteristic Leaching
Procedure (i.e. is hazardous), or exhibits other RCRA-defined
hazardous characteristics (i.e., reactive, corrosive, or flammable)
it is considered a characteristic hazardous waste. (40 CFR 261.24).
Additional federal, state, and local regulations may result in MP&M
sludges being classified as hazardous wastes. Determinations on whether
a waste is hazardous are made by permitting authorities on a case-by-
case basis.
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.
The increase in waste oil generation from baseline to Option 1 is
attributed to removal of oil from MP&M waste waters prior to discharge
to POTWs or surface waters. Option 1 includes oil-water separation for
oil-bearing waste waters. This technology removes oil from the waste
water. The waste oil is usually either recycled on site or off site, or
contract hauled for disposal as either a hazardous or nonhazardous
waste. The increase of waste oil generation reflects a transfer of oil
from the waste water to a more concentrated waste oil, and does not
reflect an increase in overall oil generation at MP&M Phase I sites.
For the purpose of compliance cost estimation, EPA assumed that all
waste oil was contract hauled for disposal; however, EPA expects that
some of the waste oil can be recycled either on site or off site.
The decrease in waste oil generation from Option 1 to Option 2 is
attributed to the 80% reduction of coolant discharge using the
recycling technology included in the Option 2 technology train. This
system recovers and recycles oil-bearing machining coolants at the
source, reducing the generation of spent coolant.
EPA does not expect Option 3 to result in additional waste oil
generation or reduction over Option 2.
The in-process technologies of ion-exchange/and electrolytic
recovery included in both Options 2 and 3 provide the pollution
prevention benefits of reclaiming 1.7 million pounds of metal annually.
This reuse reduces the solid waste generation at the end-of-pipe for
the treatment of waste water from operations using these technologies.
In addition, as stated above, the rule is expected to reduce metal
contaminants in the sludges generated by POTWs. This is expected to
allow POTWs to dispense of the lower metal content sludge by more
environmentally beneficial methods (See Section XV).
C. Energy Requirements
EPA estimates that compliance with this regulation will result in a
net increase in energy consumption at MP&M Phase I sites. Estimates of
increased energy usage by option are presented in Table 24. Option 1
requires the greatest energy usage. The in-process flow control and
recycling technologies included in Option 2 reduce the amount of water
use. While these technologies require some energy, net energy
consumption is reduced under Option 2 since the reduced hydraulic
loading reduces the end-of-pipe treatment energy required. This results
in an overall decrease in energy requirements from Option 1 to Option
2. The additional end-of-pipe technology included in Option 3 (ion-
exchange) increases energy consumption from Option 2 to Option 3.
Table 24.--Energy Requirements by Option
------------------------------------------------------------------------
Energy
required
Option (million
kilowatt
hrs/yr)
------------------------------------------------------------------------
Baseline (1989)............................................ 610
Option 1................................................... 810
Option 2................................................... 740
Option 3................................................... 760
------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
By comparison, 2,805 billion kilowatt hours of electric power were
generated in the United States in 1990. Additional energy requirements
for Option 1 (which has the greatest energy
[[Page 28267]] requirements) correspond to approximately 0.007 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 0.007 percent.
XVIII. Regulatory Implementation
A. 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 are set forth at 40 CFR Secs. 122.41(m)
and (n).
B. 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.
1. Fundamentally Different Factor 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 non-
conventional pollutants and BCT limitations for conventional pollutant
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 Sec. 125.31(d)
identifies six factors (e.g., volume of process waste water, 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 the 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 regulation
incorporate a similar requirement at 40 CFR 403.13(h) (9).
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 Waste Water 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 [[Page 28268]] in 40 CFR 122.62. Minor modifications are
generally non-substantive changes. The conditions for minor
modification are described in 40 CFR 122.63.
C. Relationship to NPDES Permits and Monitoring Requirements
The BPT, BAT and NSPS limitations in today's proposed rule would be
applied to individual MP&M Phase I plants through NPDES permits issued
by EPA or approved State agencies under section 402 of the Act. The
preceding section of this preamble discussed the binding effect of this
regulation on NPDES permits, except when variances and modifications
are expressly authorized. This section adds more detail on the
relationship between this regulation and NPDES permits.
One issue is how this regulation will affect the powers of NPDES
permit-issuing authorities. EPA has developed the limitations and
standards in the proposed rule to cover the typical facility for this
point source category. This regulation does not restrict the power of
any permitting authority to act in any manner consistent with law or
these or any other EPA regulations, guideline, or policy.
Even if a facility is totally without waste water discharge, an
NPDES permit may be requested by the facility to provide upset
provisions which would not apply to discharge in the absence of a
permit.
Another concern is the operation of EPA's NPDES enforcement
program, which was an important consideration in developing today's
proposal. The Agency emphasizes that although the Clean Water Act is a
strict liability statute, EPA can initiate enforcement proceedings at
its discretion. EPA has exercised and intends to exercise that
discretion in a manner that recognizes and promotes good faith
compliance.
D. Best Management Practices
Section 304(e) of the Act authorizes the Administrator to prescribe
``best management practices'' (BMPs). 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.
XIX. Solicitation of Data and Comments
EPA invites and encourages public participation in this rulemaking.
The Agency asks that comments address any perceived deficiencies in the
record of this proposal and that suggested revisions or corrections be
supported by data where possible.
EPA particularly requests comments and information on the following
issues:
1. Oil & Grease as Indicator for Organics. EPA believes that
today's proposal of an oil and grease pretreatment standard as a
indicator for specific organic pollutants will ensure that there is
adequate treatment and removal of the organic pollutants found in MP&M
waste water. The organic constituents originate in waste waters such as
metal working fluids, corrosion prevention coating solutions, paints
and solutions developed to clean the oils from the metal surface. EPA
believes that treatment and removal of oil and grease will effectively
remove the organics. Nonetheless, EPA's data are incomplete for all
organics, and EPA can not predict what products may serve as
substitutes for solvents that EPA is in the process of regulating under
EPA's ozone depletion policy.
Further, in recognition of the present state of changeover
occurring in the industry, it may be premature to set limits based on
today's practices. Therefore, EPA at promulgation may defer control of
organic waste water pollutants until the MP&M Phase II rule is
proposed. EPA requests comments on the establishment of oil and grease
as an indicator parameter for specific organics and on the current
practices and where industry is moving with respect to solvent cleaners
and their substitution in industrial processes. EPA is interested in
available information about current substitutions and their
effectiveness.
2. Flow Cut-offs and Administrative Burden. EPA divided the
population of existing indirect dischargers into two flow categories
for the purpose of data analysis and implementation. The existing
indirect discharger flow cut-off of 1,000,000 gallons per year was
based on a careful review of the data. For a site operating 250 days
per year, 1,000,000 gallons per year translates into an average
discharge flow rate of 4,000 gallons per day.
This approach is in response to concerns raised by Control
Authorities and Regional and state Pretreatment Coordinators regarding
the burden that would be imposed on them, if they were required to
establish mass-based discharge permits for all MP&M Phase I sites
within a three-year period.
EPA requests comments on the proposed indirect discharger flow cut-
off which was used to define the two flow categories established for
PSES. EPA requests comments on the possibility of a different cut-off
at 25,000 gallons per day to define large flow existing indirect
discharger sites (25,000 gallons per day equals approximately 6,250,000
gallons per year). The 25,000 gallons per day figure is currently used
by the Agency as one definition for a significant industrial user
(SIU). EPA requests comments on revising the flow cut-off and requiring
mass-based permits for existing sites indirectly discharging more than
25,000 gallons per day. Existing indirect sites discharging less than
25,000 gallons per day could be exempt or covered by concentration
based limits. Tables 25 and 26 compare the distribution of total annual
flow and pollutant loadings discharged from MP&M Phase I indirect
discharging sites using the 25,000 gallons per day (6,250,000 gallons
per year) cut off to the distribution using the 1,000,000 gallons per
year cut off.
Table 25.--Estimated Distribution of Indirectly Discharging Sites by Baseline Flow and Load a
----------------------------------------------------------------------------------------------------------------
Estimated
total Estimated
Estimated flowin total load Estimated Estimated Estimated
Flow Range (gal/yr/site) No. of range in range percent of percent of percent of
sites (millions (millions total sites total flow total load
of gal/ of lbs/
year) year)
----------------------------------------------------------------------------------------------------------------
0-6,250,000....................... 8,065 4,600 550 93 23 38
Greater than 6,250,000............ 641 15,000 900 7 77 62
-----------------------------------------------------------------------------
Totals........................ 8,706 19,000 1,400 100 100 100
----------------------------------------------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
[[Page 28269]]
a An estimated 364 MP&M sites discharged both directly and indirectly in the baseline. In order to evaluate
indirect and direct discharges separately, the expected post compliance discharge status was used to assign
these sites to either direct or indirect for the purpose of this table. The assignment was based on technical
factors which are included in the public record.
Table 26.--Estimated Distribution of Indirectly Discharging Sites by Baseline Flow and Load a
----------------------------------------------------------------------------------------------------------------
Estimated Estimated
total flow total load
Estimated in range in range Estimated Estimated Estimated
Flow range (gal/yr/site) No. of (millions (millions percent of percent of percent of
sites of gal/ of lbs/ total sites total flow total load
year) year)
----------------------------------------------------------------------------------------------------------------
Less than 1,000,000............... 6,708 744 138 78 4 10
Greater than 1,000,000............ 1,998 18,000 1,300 22 96 90
-----------------------------------------------------------------------------
Totals........................ 8,706 19,000 1,400 100 100 100
----------------------------------------------------------------------------------------------------------------
Source: U.S. Environmental Protection Agency.
a An estimated 364 MP&M sites discharged both directly and indirectly in the baseline. In order to evaluate
indirect and direct discharges separately, the expected post compliance discharge status was used to assign
these sites to either direct or indirect for the purpose of this table. The assignment was based on technical
factors which are included in the public record.
EPA also requests comments from Control Authorities and
Pretreatment Coordinators regarding the burden alleviated by this
proposal. Specifically, how many labor hours are estimated to be saved
by the proposed exemption, and how much money would be saved by
municipalities.
EPA understands that accurate flow measurement can be difficult and
costly, especially at sites with widely varying flow rates and at sites
with very low flow rates. Therefore, EPA also solicits comments on the
accuracy and cost of available flow monitoring devices.
EPA also solicits comments, particularly from Control Authorities
or Pretreatment Coordinators, on whether the proposed approach would be
harmful to the environment. Specifically, is there evidence that some
of the sites that would be exempt are currently causing problems at
POTWs? Secondly, would mass-based requirements alleviate the problem?
3. Exemption of Low Discharge Volume Indirect Sources. EPA is
soliciting comments on proposed exemption of existing low discharge
volume indirect sources from the MP&M Phase I categorical pretreatment
standards.
EPA considered a number of different flow cutoffs that could be
used for the proposed exemption The number of sites which discharge
less than 1,000,000 gallons per year and their contribution to the
waste water discharge flow rate from the MP&M category (only 4%of the
total) are provided in Table 26. Instead of the 1,000,000 gallons per
year flow cutoff, other flow cutoffs could be used. For a site
operating 250 days per year, 1,000,000 gallons per year would translate
into 4,000 gallons per day.
As an alternative to exempting existing low discharge volume
indirect discharges, EPA could reduce the 40 CFR part 403 requirements
on frequency of monitoring and reporting by industrial users and
frequency of inspections and testing by the Control Authorities for
these sites. If the requirements of 40 CFR part 403 were reduced
instead of exempting low volume dischargers, this change could be tied
to certain objective criteria (e.g. demonstrated compliance over time).
EPA solicits comments on whether monitoring and inspections should be
required more frequently in situations of continued non-compliance,
planned expansion, etc.
EPA solicits comments and data on the environmental impact the
proposed exemption would cause. EPA also solicits comments and data on
the burden imposed on Control Authorities by the possible inclusion of
these low discharge volume sites under this rule.
Finally, EPA solicits comments on the proposed exemption of low
discharge volume indirect dischargers in relation to possible changes
to the Clean Water Act that may reflect on the Domestic Sewage
Exclusion provided for under RCRA section 1007 [27] (40 CFR 261.4
(a)(1)). In the bill before the last Congress to amend the Clean Water
Act, the Agency took the position that the Domestic Sewage Exclusion
provisions should be limited and apply only under the following
conditions:
1. the source and wastestream are subject to or are scheduled to
be subject to a categorical pretreatment standard;
2. the pollutant and source are subject to a technically based
local limit developed by a POTW, or a technology based local limit
developed by EPA or a State;
3. the waste is generated in de minimis amounts by a household
or similar non-commercial entity; or
4. the source and wastestream are covered by a Toxicity
Reduction Action Plan (TRAP), as defined by the statute.
Considering these conditions could be included in future amendments to
the Clean Water Act, EPA solicits comments on the impact these
amendments could have on proposed exemption of low discharge volume
indirect dischargers.
4. Alternative to Mass-Based Compliance. EPA requests comments on
an alternate compliance approach for large volume existing indirect
dischargers under PSES. EPA is considering an alternate compliance
approach for the existing indirect discharging large volume sites
(sites defined in this proposal as having an annual discharge volume
greater than 1,000,000 gallons). For a site operating 250 days per
year, 1,000,000 gallons per year translates into an average discharge
flow rate of 4,000 gallons per day. These sites would have to comply
with a mass-based permit or choose the alternative of establishing
compliance with the pretreatment standards by certifying in writing to
the Control Authority that they have installed in-process technologies
equivalent to those costed as the basis of the BPT Option 2 technology.
The in-process control technologies of Option 2 include:
Flow reduction using flow restrictors, conductivity
meters, and/or timed rinses for all flowing rinses, plus
countercurrent cascade rinsing for all flowing rinses;
Flow reduction using bath maintenance for all other
process water-discharging operations;
Centrifugation and 100 percent recycling of painting
water curtains;
Centrifugation and pasteurization to extend the life of
water-soluble machining coolants reducing discharge volume by 80%;
and
In-process metals recovery using ion exchange followed
by electrolytic recovery of cation regenerants for selected
electroplating rinses. This includes first-stage drag-out rinsing
with electrolytic metal recovery.
EPA solicits comments on the list of in-process technologies above:
should [[Page 28270]] additional in-process technologies be added,
should any of the in-process technologies listed above not be included,
would problems arise with how these technologies are defined, etc. If
the alternative compliance approach is included in the final rule, the
list of in-process technologies may differ somewhat from the list above
based on public comment. EPA may include this approach of an alternate
PSES requirement in the final rule and thus requests comments on this
approach. EPA's purpose for offering this as an alternate compliance
approach is to provide relief to Control Authorities from the burden
associated with the development of mass-based permits. EPA is not
proposing this alternative compliance approach, since a decision as to
whether or not to offer this alternative will rely on comments and
additional data as to the utility of such an approach.
Specifically, EPA encourages MP&M sites to offer comments regarding
the technical feasibility of the in-process control measures that would
be required to be eligible for the alternate compliance approach, as
well as an estimate of the burden (in labor hours) associated with
submitting a certification.
EPA also solicits comments from Control Authorities and
Pretreatment Coordinators on the benefits and savings in time and
manpower expected to be achieved whenever a site takes advantage of
this alternate compliance approach. Comments should account for any
burden associated with maintaining certifications and conducting
inspections.
EPA has considered another option of requiring all indirect
dischargers to comply with concentration-based permits and mandatory
pollution prevention practices. Some Control Authorities have indicated
a preference for this type of approach for ease of enforcement and
implementation, therefore, EPA seeks comments on this option as well.
5. Cyanide Monitoring Waiver. Although cyanide is essential in many
electroplating operations, the Agency is aware that some metal products
and machinery plants do not use cyanide. In some existing regulations,
this issue has been addressed by allowing plants to only monitor
annually for cyanide if the annual waste water sample is below the
regulatory long term average and if the plant owner or operator
certifies in writing to the POTW authority or permit issuing authority
that cyanide is not and will not be used on site. For example, see 40
CFR 467.03. For MP&M, the regulatory long term average for cyanide is
0.02 mg/l.
The Agency is soliciting comments on the possibility of including
such a provision to allow plants to not monitor for cyanide. The
comments should address the utility of this provision, the amount of
unnecessary monitoring avoided, the economic impacts, the environmental
impacts, and any other information relevant to the decision. EPA also
solicits comments as to what form the certification should take and at
what frequency it should be required.
6. Other Pollutant Monitoring Waivers. Similar to the alternate
approach for cyanide discussed above, the Agency is also considering
allowing sites to opt out from monitoring specific metals if the site
can certify that the metal is not used in any way at their site. This
may be restricted to metals such as cadmium, chromium and nickel, which
are frequently plated onto a base metal or used in the surface
treatment of metals. EPA solicits comments on this approach,
specifically whether it should be limited to certain metals such as
those mentioned, or whether it could apply to all regulated metal
pollutants. EPA also solicits comments as to what form the
certification should take and at what frequency it should be required.
7. Additional Unit Operations. EPA has identified 47 unit
operations which are typically performed at MP&M sites. EPA requests
comments on additional operations which may be performed at MP&M sites
and which have not been listed in today's notice. Please specify
whether these operations have a waste water stream associated with
them, what is the estimated volume of the waste water, what is the
frequency of the operation, and whether it is similar to any of the 47
operations already identified.
8. Assignment of Industrial Sectors. EPA has discussed the
assignment of industrial sector to MP&M plants in today's notice and
has provided several examples of how to assign sites to industrial
sectors based on the products produced. EPA is soliciting comment from
any industrial site which has the potential to be covered by MP&M but
is uncertain as to their appropriate industrial sector and phase (MP&M
Phase I or MP&M Phase II) classification. Sites are requested to supply
information about what operations they are performing, what products
they are manufacturing, rebuilding or maintaining, and to what
industries they are selling their products or providing their services.
9. Possible Addition of Lead as Regulated Parameter. Lead is a
regulated parameter under several existing metals regulations (e.g.
metal finishing 40 CFR part 433), but lead was rarely found at
treatable concentrations in the raw waste water, prior to treatment, at
the sites sampled for MP&M Phase I. As a result, EPA is not proposing a
lead limitation. EPA is considering collecting additional data or
transferring data from the metal finishing category in order to
regulate lead in the final MP&M Phase I regulation. If lead were
regulated based on data transferred from the metal finishing rule, then
the limits would be similar to those listed in metal finishing. The
metal finishing daily maximum limit for lead is 0.69 milligrams per
liter, and the monthly average limit for lead is 0.43 milligrams per
liter. If lead were regulated based on the collection of additional
data, then the MP&M Phase I lead limits could be lower than the lead
limits in the metal finishing regulation. EPA is soliciting comments
and data on the possibility of adding lead to the list of regulated
parameters for MP&M Phase I. EPA is soliciting comments on the use of
lead in the MP&M Phase I category (e.g. in what operations is lead
used, how much is used, do these operations discharge process waste
water, how prevalent are these operations, etc.).
10. Possible Addition of Other Regulated Parameters. The list of
parameters which EPA proposes to regulate under MP&M Phase I are shown
in Table 2 of this document. EPA is soliciting comments and data on
additional parameters that should be considered for regulation. EPA is
proposing a total cyanide limit for MP&M Phase I. In other rules such
as metal finishing (40 CFR part 433), EPA has set a total cyanide limit
and included an alternative amenable cyanide limit. EPA is soliciting
comments on whether or not an amenable cyanide limit should be offered
as an alternative to the proposed total cyanide limit.
11. Possible Deletion of Regulated Parameters. The list of
parameters which EPA proposes to regulate under MP&M Phase I are shown
in Table 2 of this document. EPA is soliciting comments and data on
parameters that should be deleted from consideration for regulation.
12. Additional Technology Data. In this document, the Agency
proposes a new source standard equivalent to BAT, in part because,
given the available data, the Agency concludes there is no add-on
technology that is cost-effective for the entire Metal Products and
Machinery category suitable for a more stringent new source standard.
However, the Agency solicits comments [[Page 28271]] on other
technologies and pollution prevention techniques that may be
appropriate and cost-effective for new sources in subcategories of the
Metal Products and Machinery category.
For each technology or pollution prevention technique, the Agency
is particularly interested in receiving data on: (1) Technology
performance, including pollutant reduction/elimination and flow
reduction/elimination; (2) economics, including initial capital
investment, operation and maintenance costs, payback period, waste
disposal savings, material input savings, and other savings; (3)
overall energy use; (4) sludge generation, including metals
recoverability and the ability of sludge to be recycled on or off-site;
(5) applicability of a given technique across the whole MP&M Phase I
population or across a particular MP&M sector, SIC code, or other
industrial sector breakdown; and (6) air quality impacts and emissions.
In addition, as some technologies and pollution prevention techniques
eliminate or reduce discharges to water, but not to other media, the
Agency solicits comments on the environmental impacts and regulatory
costs associated with each technology's impact on other environmental
media.
Specifically, the Agency solicits information and comments
concerning the pollution prevention performance, cross-media
environmental impacts, and economic effects associated with the
following technologies and pollution prevention techniques, even if the
technology can only be applied to a subcategory of the MP&M category:
(1) Ion Exchange;
(2) Electrodialysis / Electrowinning;
(3) Reverse Osmosis;
(4) Evaporation (low pressure, conventional);
(5) Diffusion dialysis;
(6) Conductive polymer films;
(7) Alternatives to electroplating (e.g. powder coating, aqueous
soaks, ultrasonics);
(8) Flow-through barrel plating; and
(9) Micro-filtration.
The Agency particularly welcomes comments on technology performance
and cost from technology vendors and developers, in addition to
comments from industrial users.
13. Technical Assistance. The Agency is soliciting comments on the
degree to which technical assistance would help MP&M facilities
identify and choose compliance strategies which include pollution
prevention technologies and practices that are most cost-effective and
protective of the environment.
If commenters believe technical assistance would be valuable, EPA
invites comments and data to address the following questions. What
would be the most productive source (e.g. EPA, state, or local
environmental agencies; departments of commerce or development;
universities; non-profit organizations; private trade associations) of
technical assistance? What would be the most productive form (e.g.
printed material, electronic bulletin boards, telephone hotlines, on-
site visits) of technical assistance? Commenters who currently use the
technical assistance services provided in most states are requested to
respond as to the utility of the services which they use. Would
commenters be willing to pay a reasonable fee for such services?
14. Consolidated Reporting and Permitting. EPA understands that
MP&M facilities often must comply with several different reporting and
permitting requirements for different media (i.e. air, water, and solid
waste). These separate requirements could inhibit the development of
comprehensive site-wide environmental compliance strategies. For
example, some pollution prevention strategies which reduce overall
environmental impact can be complicated by having to comply with
separate media requirements. The Agency is soliciting comments on the
degree to which separate reporting and permitting programs for
different media hinder comprehensive site-wide environmental compliance
strategies or pollution prevention approaches at MP&M facilities. EPA
is soliciting data related to specific examples.
15. Impact of Procurement Practices. EPA is soliciting comments on
the degree to which certain government and private procurement
practices (product specifications) inhibit MP&M facilities from using
pollution prevention technologies and practices, especially in cases
where such technologies and practices could yield a cost effective,
quality product with less risk to the environment. EPA is soliciting
data related to specific examples.
16. Pollution Prevention Planning. Several states require MP&M
facilities to develop various types of pollution prevention plans. EPA
is soliciting comments from MP&M facilities which are currently
required to develop pollution prevention plans as to whether or not the
planning requirements were productive in identifying cost-effective
pollution prevention practices, whether the permit process inhibited
the use of such pollution prevention practices developed in the plans,
and how the permit process could be changed to encourage the use of
such pollution prevention practices.
17. Financing Pollution Prevention. EPA is soliciting comments as
to the degree to which MP&M facilities have encountered difficulty in
acquiring capital for pollution prevention projects. EPA is soliciting
data related to specific examples.
18. Contiguous Site Definition. EPA seeks comments on how to define
which parcels of property within the same fence line on a mixed use
property are contiguous. For example, should properties be divided into
a system of grids with all discharges from sites within a single sector
considered contiguous? Should discharges from a single building be
treated as a plant or portion of a plant for purposes of determining
the volume of discharge subject to regulation? Another option would be
for permit writers to make the determination case-by-case based on some
degree of proximity between industrial operations and a practical
application of the requirements for MP&M Phase I industries (with due
consideration to the amount of MP&M Phase I wastestream and its
concentration in the overall wastestream discharged to the treatment
works), the degree to which functions are related, and such other
factors as EPA considers relevant to the determination.
19. Flow Definition. In this proposal, EPA has defined existing
small volume indirect dischargers as existing indirect sites which
discharge less than one million gallons per year. EPA is soliciting
comments on whether the flow cut off for this exemption should be
provided as a daily flow rate. For example, for a site operating 250
days per year, one million gallons discharge per year is equivalent to
an average discharge of 4,000 gallons per day.
20. Municipalities. EPA has not examined the potential cost of
compliance or environmental benefit from regulating municipal
facilities which manufacture, maintains or rebuilds finished metal
parts, products or machines within one of the seven industrial sectors
in MP&M Phase I. EPA believes most municipal MP&M facilities would be
existing indirect dischargers discharging less than one million gallons
per year and would therefore be exempt from this regulation. However,
EPA is seeking comment from municipalities which would qualify as MP&M
Phase I sites and which would not qualify for the low flow exemption.
Depending on the comments and data received, EPA could perform
additional analyses to specifically cover municipal MP&M facilities, or
EPA could specifically [[Page 28272]] exempt municipal MP&M facilities,
especially if regulating such facilities is determined to be an
unfunded mandate.
21. Subcategorization. In today's notice, the Agency proposes to
treat the Metal Products and Machinery industry as one category with a
uniform BAT and new source standard. A single standard provides
simplicity and clarity in compliance, permitting, and enforcement and,
thus, may reduce compliance and implementation costs.
However, the Agency recognizes that subcategorization may provide
additional environmental benefits. Certain treatment technologies, for
example, may reduce effluent loadings but may only be economically
feasible for a subset of the regulated community. Since, according to
available data, such technologies are not applicable to the entire
industry category, the Agency has not selected such a technology for
either the BAT or new source standards. The Agency solicits comments on
how to balance the potential regulatory impacts of subcategorization
against the potential environmental benefits of a more stringent BAT or
new source standard for a subset of the Metal Products and Machinery
category.
22. Innovative Approaches to Reduce Regulatory Burden. The Agency
solicits comments on innovative regulatory approaches that offer
incentives for users to employ more effective pollution prevention or
treatment technologies by reducing their regulatory burden. For
example, a more stringent new source standard for a subcategory of the
industry could include reduced monitoring or reporting requirements
that could offset potentially higher compliance costs. In addition, the
Agency could include a program that would offer similar regulatory
flexibility to existing users who opt into permit conditions equal to a
more stringent new sources standard. Similarly, a voluntary program
that allows users to opt to meet more stringent technology standards in
return for reduced monitoring and other requirements could be offered
to both new and existing users even in the absence of either a more
stringent new source standard or BAT standard. The Agency welcomes
comments on these and other innovative approaches that could
simultaneously improve water quality and ease regulatory burdens.
23. Data Collection. With today's notice, the Agency wishes to
communicate to the regulated community its strong interest in providing
incentives for incorporating the best technologies into the final rule
using approaches that reduce regulatory burdens. The Agency hopes that
its consideration of these possible innovative approaches reduces any
potential disincentives for collecting and submitting technology cost
and performance data. While the Agency retains its authority under
section 308(q) of the Act, the Agency hopes that its consideration of
innovative and voluntary approaches will maximize voluntary data
submissions during the comment period following today's proposal.
24. Benefits Methodology. EPA acknowledges the unavoidable
uncertainty associated with estimating benefits. EPA believes that it
has used the best methodology available for estimating benefits. EPA is
soliciting comments on the reliability and accuracy of the methods used
and suggestions on alternative methods which could be used for the
final rule.
25. Unfunded Mandates. EPA believes that the proposed regulation
represents the most cost effective approach. EPA acknowledges that the
proposed regulation may not be the least burdensome, but EPA believes
that the additional costs are justified due to the additional pollutant
removals achieved. With respect to the Unfunded Mandates Act, EPA is
soliciting comments and data on cost effective alternatives which are
less burdensome. In addition, EPA solicits comment on how to interpret
``most cost effective'' in the context of the effluent guideline
program.
XX. Guidelines for Comment Submission of Analytical Data
EPA requests that commentors to today's proposed rule submit
analytical, flow, and production data to supplement data collected by
the Agency during the regulatory development process. To ensure that
commentor data may be effectively evaluated by the Agency, EPA has
developed the following guidelines for submission of data.
A. Types of Data Requested
1. EPA requests paired influent and effluent treatment data for
each of the technologies identified in the technology options, as well
as any additional technologies applicable to the treatment of MP&M
waste waters. This includes end-of-pipe treatment technologies and in
process treatment, recycling, water reuse, or metal recovery
technologies. Submission of effluent data only is not sufficient for
full analysis; the corresponding influent data must be provided.
For submissions of paired influent and effluent treatment data, a
minimum of four days of data are required for EPA to assess
variability. Submissions of paired influent and effluent treatment data
should include: a process diagram of the treatment system; treatment
chemical addition rates; sampling point locations; sample collection
dates; influent and effluent flow rates for each treatment unit during
the sampling period; sludge or waste oil generation rates; a brief
discussion of the treatment technology sampled; and a list of unit
operations contributing to the sampled wastestream. EPA requests data
for systems that are treating only process waste water. Systems
treating non-process waste water (e.g., sanitary waste water or non-
contact cooling water) will not be evaluated by EPA. In addition to
data for the analytes discussed below, data for total suspended solids
(TSS) and pH must be included with submissions of treatment data. If
available, information on capital cost, annual (operation and
maintenance) cost, and treatment capacity should be included for each
treatment unit within the system.
2. EPA also requests flow, production, and analytical data from
MP&M unit operations, rinses, and wet air pollution control devices.
Submissions of analytical data for MP&M unit operations and rinses
should include a process diagram of the unit operation; a description
of the purpose and performance of the operation; production data
associated with the sampling period; flow rates associated with the
sampling period (i.e., continuous discharge flow rates, intermittent
discharge rates and frequencies, or volume of bath and time of last
discharge for stagnant baths); sample type (grab or composite);
temperature and pH of each sample; sample collection dates; known
process bath constituents; sampling point locations; and, the volume,
discharge frequency, and destination of all process waste water, waste
oil, or sludge generated by the unit operation.
Associated production data should be provided in the following
units: mass of metal removed (for abrasive jet machining, electrical
discharge machining, grinding, machining, and plasma arc machining
operations), in standard cubic feet of air flow (for wet air pollution
control operations), or surface area of parts processed (for all other
unit operations). Flow, production, and analytical data should all
correspond to the same period of time. When applicable, a description
of any pollution prevention technologies used at the site for the unit
operations, including cost savings and pollution reduction estimates
should be provided.
[[Page 28273]]
B. Analytes Requested
EPA considered 342 metal, organic, conventional, and other
nonconventional pollutant parameters for regulation under the MP&M
Category. Based on analytical data collected by the Agency, 69
pollutant parameters were identified as MP&M ``pollutants of concern''.
Complete lists of pollutant parameters considered for regulation and
pollutants of concern (as well as the criteria used to identify each of
these pollutant parameters) are available in the Technical Development
Document for this proposal. The Agency requests analytical data for any
of the 69 pollutants of concern and for any other pollutant parameters
which commentors believe are of concern in the MP&M industry. TSS and
pH data are requested for all samples. For submissions of data
including organic pollutants, data for oil and grease (O&G) is
requested. Table 27 presents the EPA analytical methods for these
pollutants. Commentors should use these methods or equivalent methods
for analyses, and should document the method used for all data
submissions.
C. Quality Assurance/Quality Control (QA/QC) Requirements
Today's proposed regulations were based on analytical data
collected by EPA using rigorous QA/QC checks. These QA/QC checks
include procedures specified in each of the analytical methods, as well
as procedures used for the MP&M sampling program in accordance with EPA
sampling and analysis protocols. The Agency requests that submissions
of analytical data include documentation that QA/QC procedures similar
to those listed below were observed.
EPA followed the QA/QC procedures specified in the analytical
methods listed in Table 27. These QA/QC procedures include sample
preservation and the use of method blanks, matrix spikes, matrix spike
duplicates, laboratory duplicate samples, and Q standard checks (e.g.,
continuing calibration blanks). EPA requests that sites provide
detection limits for all non-detected pollutants. EPA also requests
that composite samples be collected for all flowing waste water streams
(except for analyses requiring grab samples, such as oil and grease),
sites collect and analyze 10% field duplicate samples to assess
sampling variability, and sites provide data for equipment blanks for
volatile organic pollutants when automatic compositors are used to
collect samples.
Table 27.--EPA Analytical Methods for Use With MP&M
------------------------------------------------------------------------
Parameter EPA method Sample type
------------------------------------------------------------------------
Metals.................... 1620................. Composite/Grab.
Volatile Organics......... 1624................. Composite/Grab.
Semivolatile Organics..... 1625................. Grab.
pH........................ 150.1................ Composite/Grab.
Total Dissolved Solids 160.1................ Composite/Grab.
(TDS).
Total Suspended Solids 160.2................ Composite/Grab.
(TSS).
Chloride, Fluoride, and 300.0 or 325.2, Composite/Grab.
Sulfate. 340.2, and 375.4.
Acidity................... 305.1................ Composite/Grab.
Alkalinity................ 310.2................ Composite/Grab.
Cyanide, Total............ 335.2................ Grab.
Nitrogen, Ammonia......... 350.1................ Composite/Grab.
Nitrogen, Total Kjeldahl.. 351.2................ Composite/Grab.
Phosphorus, Total......... 365.4................ Composite/Grab.
Chemical Oxygen Demand.... 410.1 or 410.2....... Composite/Grab.
Oil and Grease, Total 413.2................ Grab.
Recoverable.
Phenolics, Total 420.2................ Composite/Grab.
Recoverable.
------------------------------------------------------------------------
XXI. Unfunded Mandates Reform Act
Section 201 of the Unfunded Mandates Reform Act of 1995 (``Unfunded
Mandates Act''), signed into law on March 22, 1995, requires each
agency, unless prohibited by law, to assess the effects of federal
regulations on State, local, and tribal governments and the private
sector. Under Section 202 of the Unfunded Mandates Act, EPA must
prepare an unfunded mandate statement to accompany any proposed rule
where the estimated costs to State, local, or tribal governments, or to
the private sector, will be $100 million or more in any one year. Under
Section 205, EPA must select the most cost-effective or least
burdensome alternative that achieves the requirements, or explain why
this was not possible. Section 203 requires EPA to establish a plan for
informing and advising any small governments that may be significantly
impacted by the rule.
The unfunded mandate statement under Section 202 must include: (1)
a citation of the statutory authority under which the rule is proposed,
(2) an assessment of the costs and benefits of the rule and the federal
resources available to defray the costs, (3) where feasible, estimates
of future compliance costs and disproportionate impacts upon particular
geographic or social segments of the nation or industry, (4) where
relevant, an estimate of the effect on the national economy, and (5) a
description of EPA's prior consultation with State, local, and tribal
officials.
Since this proposed rule is estimated to impose costs to the
private sector in excess of $100 million, EPA has prepared the
following statement with respect to budgetary impacts. EPA does not
expect that this rule will impose significant costs on State, local, or
tribal governments; although EPA has taken several steps to reduce the
administrative burden of this proposed rule.
1. Statutory Authority
The statutory authority for this rulemaking is identified and
described in Sections I and II of the preamble. As required by Section
205 of the Unfunded Mandates Act and as discussed in Section IX of the
preamble, EPA has chosen to propose a rule that is the most cost-
effective alternative for regulation of these sources that meets the
statutory requirements under the Clean Water Act. EPA acknowledges that
the proposed regulation may not be the least burdensome, but EPA
believes that the additional costs are justified due to the additional
pollutant removals achieved. [[Page 28274]]
2. Costs and Benefits
The assessment of costs and benefits for this rule, including the
assessment of costs and benefits to State, local, and tribal
governments, is discussed in the Regulatory Impact Assessment for this
proposal and in Section XV of the preamble.
3. Future and Disproportionate Costs
The Unfunded Mandates 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
the Regulatory Impact Assessment for this proposal and in Section XIV
of the preamble.
EPA does not expect that there will be any disproportionate
budgetary effects of the proposed rule on any particular areas of the
country, particular governments or types of communities. This is
because the affected population of MP&M facilities is distributed
throughout the country in settings from urban to rural. The estimated
annual impact of this proposed rule on the affected industry is $161
million ($1994) as discussed in Section XIV of this preamble. A
discussion of community impacts is also included in Section XIV. The
annual administrative burden on State and local governments is
estimated to be $1.9 to 3.2 million ($1994) as discussed in Section
XIV.C. of the preamble and in the Regulatory Impact Assessment. The
administrative burden was estimated for State and local governments
combined due to the way in which direct and indirect discharge permits
are administered. The impact on tribal governments is expected to be
zero.
4. Effects on National Economy
The Unfunded Mandates Act requires that the 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 XIV of this preamble. The Federal
resources which are generally available for financial assistance to
States are included in Section 106 of the Clean Water Act.
5. Consultation With Government Officials
The Unfunded Mandates Act requires that EPA describe the extent of
the Agency's prior consultation with affected State, local, and tribal
officials, summarize the officials' comments or concerns, and summarize
EPA's response to those comments or concerns. In addition, Section 203
of the Act requires that EPA develop a plan for informing and advising
small governments that may be significantly or uniquely impacted by a
proposal.
In the development of this rule, EPA has conducted over a dozen
technical presentations to explain the content of the MP&M proposal.
Included among these presentations was a public meeting held on
February 23, 1994. Also included among these presentations were several
meetings with State and local governments. In summary, the comments and
concerns raised by government officials had to do with the potential
administrative burden of this proposed rule. EPA has addressed these
concerns by evaluating the characteristics of the industry in order to
determine if the potential administrative burden could be reduced
without significantly changing the environmental benefits of the
proposed rule. After carefully evaluating the number and size of MP&M
facilities, the estimated cost of compliance and the estimated
pollutant loadings, EPA decided to exempt existing indirect dischargers
which discharge less than one million gallons per year. This addresses
the concerns of State and local governments by significantly reducing
the administrative burden while continuing to cover the majority of the
pollutant loadings from this industry. Small governments are not
significantly impacted by this rule as discussed in Sections XIV and XV
if this preamble, and therefore no plan is required.
Appendix A To The Preamble--Abbreviation, Acronyms, and Other Terms
Used in This Notice
Act--The Clean Water Act
Agency--U.S. Environmental Protection Agency
BAT--Best available technology economically achievable, as defined by
section 304(b)(2)(B) of the Act.
BCT--Best conventional pollutant control technology, as defined by
section 304(b)(4) of the Act.
BMP--Best management practices, as defined by section 304(e) of the
Act.
BPT--Best practicable control technology currently available, as
defined by section 304(b)(1) of the Act.
CAA--Clean Air Act (42 U.S.C. 7401 et. seq., as amended inter alia by
the
Clean Air Act Amendments of 1990 (Pub. L. 101-549, 104 stat. 2394).
Clean Water Act--The Federal Water Pollution Control Act Amendments of
1972 (33 U.S.C. 1251 et seq.), as amended by the Clean Water Act of
1977 (Pub. L. 95-217), and the Water Quality Act of 1987 (Pub. L. 100-
4).
Conventional Pollutants--Constituents of waste water as determined by
section 304(a)(4) of the Act and the regulations thereunder 40 CFR
401.16, including, but not limited to, pollutants classified as
biochemical oxygen demand, suspended solids, oil and grease, fecal
coliform, and pH.
CTG--Control Techniques Guideline (applicable to NESHAPs)
DCP--Data Collection Portfolio (detailed questionnaire for MP&M)
Direct Discharger--An industrial discharger that introduces waste water
to a water of the United States with or without treatment by the
discharger.
Effluent Limitation--A maximum amount, per unit of time, production,
volume or other unit, of each specific constituent of the effluent from
an existing point source that is subject to limitation. Effluent
limitations may be expressed as a mass loading or as a concentration in
milligrams of pollutant per liter discharged.
End-of-Pipe Treatment (EOP)--Refers to those processes that treat a
plant waste stream for pollutant removal prior to discharge.
HAP--Hazardous Air Pollutant
Indirect Discharger--An industrial discharger that introduces waste
water into a publicly owned treatment works.
In-Plant Control or Treatment Technologies--Controls or measures
applied within the manufacturing process to reduce or eliminate
pollutant and hydraulic loadings of raw waste water. Typical in-plant
control measures include process modification, instrumentation,
recovery of raw materials, solvents, products or by-products, and water
recycle.
MDCP--Mini Data Collection Portfolio (screener survey for MP&M)
MP&M--Metal Products and Machinery point source category
NESHAP--National Emission Standards for Hazardous Air Pollutants
MACT--Maximum Achievable Control Technology (applicable to NESHAPs)
Nonconventional Pollutants--Pollutants that have not been designated as
either conventional pollutants or priority pollutants.
NPDES--National Pollutant Discharge Elimination system, a Federal
Program requiring industry dischargers, including municipalities, to
obtain permits to discharge pollutants to the nation's water, under
section 402 of the Act.
OCPSF--Organic chemicals, plastics, and synthetic fibers manufacturing
[[Page 28275]] point source category (40 CFR part 414).
POTW--Publicly owned treatment works.
Priority Pollutants--The 126 pollutants listed in 40 CFR part 423,
appendix A.
PSES--Pretreatment Standards for existing sources of indirect
discharges, under section 307(b) of the Act.
PSNS--Pretreatment standards for new sources of indirect discharges,
under sections 307 (b) and (c) of the Act.
RACT--Reasonably Available Control Technology (applicable to NESHAPs)
SIC--Standards Industrial Classification, a numerical categorization
scheme used by the U.S. Department of Commerce to denote segments of
industry.
Technical Development Document--Development Document for Effluent
Limitations Guidelines and Standards for the Metal Products and
Machinery Phase I Point Source Category.
VOC--Volatile Organic Compound
List of Subjects
40 CFR Part 433
Environmental protection, Metals, Waste treatment and disposal,
Water pollution control.
40 CFR Part 438
Environmental protection, Metals, Water pollution control, Water
treatment and disposal.
40 CFR Part 464
Environmental protection, Metals, Waste treatment and disposal,
Water pollution control.
Dated: March 31, 1995.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble, title 40, chapter I is
proposed to be amended as follows:
PART 433--[AMENDED]
1. The authority citation for part 433 continues to read as
follows:
Authority: Secs. 301, 304(b), (c), (e), and (g), 306(b) and (c),
307(b) and (c), 308 and 501 of the Clean Water Act (the Federal
Water Pollution Control Act Amendments of 1971, as amended by the
Clean Water Act of 1977) (the ``Act''); 33 U.S.C. 1311, 1314(b) (c),
(e), and (g), 1316(b) and (c), 1317(b) and (c), 1318, and 1361; 86
Stat. 816, Pub. L. 92-500; 91 Stat. 1567, Pub. L. 95-217.
2. Section 433.10 is amended by adding ``Metal Products and
Machinery (40 CFR Part 438)'' to the list in paragraph (b) to read as
follows:
Sec. 433.10 Applicability; description of the metal finishing point
source category.
* * * * *
(b) * * *
Metal Products and Machinery (40 CFR Part 438)
* * * * *
3. A new part 438 is proposed to be added as follows:
PART 438--METAL PRODUCTS AND MACHINERY POINT SOURCE CATEGORY
Subpart A--Metal Products and Machinery Phase I Category
Sec.
438.10 Applicability; description of the Metal Products and
Machinery Phase I point source category.
438.11 Specialized definitions.
438.12 Monitoring Requirements
438.13 Effluent limitations representing the degree of effluent
reduction attainable by applying the best practicable control
technology currently available (BPT).
438.14 Effluent limitations representing the degree of effluent
reduction attainable by applying the best conventional pollutant
control technology (BCT).
438.15 Effluent limitations representing the degree of effluent
reduction attainable by applying the best available technology
economically achievable (BAT).
438.16 Pretreatment standards for existing sources (PSES).
438.17 New source performance standards (NSPS).
438.18 Pretreatment standards for new sources (PSNS).
Subpart B--Metal Products and Machinery Phase II Category
438.20 [Reserved]
Authority: Secs. 301, 304, 306, 307, 308, and 501 of the Clean
Water Act (33 U.S.C. 1311, 1314, 1316, 1317, 1318, and 1361) and 42
U.S.C. 13101 et seq.
Subpart A--Metal Products and Machinery Category
Sec. 438.10 Applicability; description of the Metal Products and
Machinery Phase I point source category.
(a) Except as provided in paragraphs (b), (c), and (d) of this
section, the provisions of this subpart apply to process wastewater
discharges from plants or portions of plants within the Metal Products
and Machinery (hereafter referred to as MP&M) Phase I industries which
manufacture, maintain or rebuild finished metal parts, products or
machines from any basis metal.
(b) The following existing effluent limitations and standards
generally apply to the production of semi-finished products, although
wastewater from similar operations is generated within MP&M Phase I.
These part 438 limits shall not apply in cases in which one or more of
the following regulations specifically applies, nor in cases in which
either MP&M Phase I or one of the following regulations could apply to
the wastewater discharge from the same operations; in these cases, the
following regulations shall apply:
Iron and steel manufacturing (40 CFR Part 420)
Nonferrous metals manufacturing (40 CFR Part 421)
Ferroalloy manufacturing (40 CFR Part 424)
Battery manufacturing (40 CFR Part 461)
Plastic molding and forming (40 CFR Part 463)
Metal molding and casting (40 CFR Part 464)
Coil coating (40 CFR Part 465)
Porcelain enameling (40 CFR Part 466)
Aluminum forming (40 CFR Part 467)
Copper forming (40 CFR Part 468)
Electrical and electronic components (40 CFR Part 469)
Nonferrous metals forming and metal powders (40 CFR Part 471)
(c) This subpart does not apply to plants which manufacture,
maintain or rebuild finished metal parts, products or machines only
within MP&M Phase II industries.
(d) This subpart does not apply to existing indirect discharging
surface finishing job shops and independent printed wiring board
manufacturers (which are covered by 40 CFR parts 413 and 433).
Sec. 438.11 Specialized definitions.
(a) The term semi-finished shall mean mill products and other metal
products specifically covered by one of the existing regulations listed
in Sec. 438.10 (b).
(b) The term finished shall mean metal parts, products or machines
which are not specifically covered by one of the existing regulations
listed in Sec. 438.10 (b).
(c) The term T, as in Cyanide, T, shall mean total.
(d) The term surface finishing job shop shall mean a facility which
owns not more than 50% (annual area basis) of the materials undergoing
surface finishing operations.
(e) The term TSS shall mean total suspended solids.
(f) The term MP&M Phase I industries shall mean any one or more of
the following seven industries: aircraft, aerospace, electronic
equipment, hardware, mobile industrial equipment, ordnance, and
stationary industrial equipment. A list of typical products within
these seven industries is included in Appendix A of this part. If a
plant generates wastewater from operations performed in both MP&M Phase
I and MP&M Phase II industries and the wastewater from both phases is
discharged to a combined outfall, then the plant is considered MP&M
Phase I and the combined outfall is covered by this subpart. If the
plant segregates Phase I wastewater from Phase II
[[Page 28276]] wastewater, and discharges these wastewaters to separate
outfalls, then only the Phase I wastewater is covered by this subpart.
(g) The term MP&M Phase II industries shall mean any one or more of
the following eight industries: bus and truck, household equipment,
instruments, motor vehicles, office machines, railroad, ships and
boats, and precious and non-precious metals. A list of typical products
within these eight industries is included in Appendix B of this part.
(h) The term independent printed wiring board manufacturer shall
mean a facility which manufactures printed wiring boards (also referred
to as printed circuit boards) principally for sale to other companies.
(i) The term plant or portion of a plant is defined to include an
activity, facility, or mixed use facility that is engaged in performing
an MP&M-related industrial function and either located in a single
building or located on a contiguous parcel of property. For purposes of
this definition, mixed use facilities are those that have a mixture of
non-related industrial, residential, or office types of activities.
Sources or point sources located within the same fence line or property
boundary are not necessarily considered contiguous.
(j) the terms source and point source are defined as process
wastewater discharges from plants or portions of plants.
Sec. 438.12 Monitoring requirements.
Self monitoring for cyanide must be conducted after cyanide
treatment and before combining with other streams. Alternatively,
samples may be taken of the final effluent, if the plant limitations
are adjusted based on the dilution ratio of the cyanide waste stream
flow to the effluent flow.
Sec. 438.13 Effluent limitations representing the degree of effluent
reduction attainable by applying the best practicable control
technology currently available (BPT).
(a) Except as provided in 40 CFR 125.30 through 125.32, any
existing point source subject to this subpart must achieve discharges
not exceeding the quantity (mass) of pollutant determined by
multiplying the process wastewater discharge flow subject to this
subpart times the concentration listed in Table 1 of this part.
(b) No user subject to the provisions of this subpart shall augment
the use of process wastewater or otherwise dilute the wastewater as a
partial or total substitute for adequate treatment to achieve
compliance with this limitation.
Sec. 438.14 Effluent limitations representing the degree of effluent
reduction attainable by applying the best conventional pollutant
control technology (BCT).
(a) Except as provided in 40 CFR 125.30 through 125.32, any
existing point source subject to this subpart must achieve discharges
not exceeding the quantity (mass) of pollutant determined by
multiplying the process wastewater discharge flow subject to this
subpart times the concentration listed in Table 1 for oil & grease, TSS
and pH.
(b) No user subject to the provisions of this subpart shall augment
the use of process wastewater or otherwise dilute the wastewater as a
partial or total substitute for adequate treatment to achieve
compliance with this limitation.
Sec. 438.15 Effluent limitations representing the degree of effluent
reduction attainable by applying the best available technology
economically achievable (BAT).
(a) Except as provided in 40 CFR 125.30 through 125.32, any
existing point source subject to this subpart must achieve discharges
not exceeding the quantity (mass) of pollutant determined by
multiplying the process wastewater discharge flow subject to this
subpart times the concentration listed in Table 1 for all parameters
except TSS and pH.
(b) No user subject to the provisions of this subpart shall augment
the use of process wastewater or otherwise dilute the wastewater as a
partial or total substitute for adequate treatment to achieve
compliance with this limitation.
(c) An existing source subject to this subpart shall comply with
the oil & grease standard which serves as an indicator for the organic
pollutants which have the potential to be present in the wastewater.
Sec. 438.16 Pretreatment standards for existing sources (PSES).
Except as provided in 40 CFR 403.7 through 403.13, any existing
source subject to this subpart that introduces pollutants into a
publicly owned treatment works must comply with 40 CFR part 403 and by
[3 years from date the final rule is promulgated] and achieve the
following pretreatment standards for existing sources (PSES):
(a) Any source discharging 1,000,000 gallons or more per calendar
year of MP&M process wastewater must achieve discharges not exceeding
the quantity (mass) of pollutant determined by multiplying the process
wastewater discharge flow subject to this subpart times the
concentration listed in Table 1 of this part for all parameters except
TSS and pH. If mass limitations have not been developed as required,
the source shall achieve discharges not exceeding the concentration
limitations listed in Table 1 for all parameters except TSS and pH.
(b) Any source discharging less than 1,000,000 gallons per calendar
year of MP&M process wastewater is exempt from this subpart.
(c) No user introducing wastewater pollutants into a publicly owned
treatment works under the provisions of this subpart shall augment the
use of process wastewater or otherwise dilute the wastewater as a
partial or total substitute for adequate treatment to achieve
compliance with this section.
(d) An existing source subject to this subpart shall comply with
the oil & grease standard which serves as an indicator for the organic
pollutants which have the potential to be present in the wastewater and
which would pass through the publicly owned treatment works. Since oil
and grease serves as an indicator for organic pollutants, POTW removal
credits under 40 CFR 403.7 are not available for oil and grease.
Sec. 438.17 New source performance standards (NSPS).
(a) Any new source subject to this subpart must achieve discharges
not exceeding the quantity (mass) of pollutant determined by
multiplying the process wastewater discharge flow subject to this
subpart times the concentration listed in Table 1 of this part.
(b) No user subject to the provisions of this subpart shall augment
the use of process wastewater or otherwise dilute the wastewater as a
partial or total substitute for adequate treatment to achieve
compliance with this limitation.
Sec. 438.18 Pretreatment standards for new sources (PSNS).
(a) Except as provided in 40 CFR 403.7, any new source subject to
this subpart that introduces pollutants into a publicly owned treatment
works must comply with 40 CFR part 403 and achieve discharges not
exceeding the quantity (mass) of pollutant determined by multiplying
the process wastewater discharge flow subject to this subpart times the
concentration listed in Table 1 of this part for all parameters except
TSS and pH. If mass limitations have not been developed as required,
the source shall achieve discharges not exceeding the concentration
limitations listed in Table 1 of this part for all parameters except
TSS and pH.
(b) No user introducing wastewater pollutants into a publicly owned
treatment works under the provisions of this subpart shall augment the
use of process wastewater or otherwise dilute the wastewater as a
partial or total [[Page 28277]] substitute for adequate treatment to
achieve compliance with this section.
(c) A new source subject to this subpart shall comply with the oil
& grease standard which serves as an indicator for the organic
pollutants which have the potential to be present in the wastewater and
which would pass through the publicly owned treatment works. Since oil
and grease serves as an indicator for organic pollutants, POTW removal
credits under 40 CFR 403.7 are not available for oil and grease.
Subpart B--Metal Products and Machinery Phase II Category
Sec. 438.20 [Reserved]
Table 1 to Part 438.--MP&M Concentration Limitations
[Milligrams per liter (mg/l)]
------------------------------------------------------------------------
Monthly
Maximum average
Pollutant or pollutant property for 1 shall
day not
exceed
------------------------------------------------------------------------
Aluminum (T).......................................... 1.4 1.0
Cadmium (T)........................................... 0.7 0.3
Chromium (T).......................................... 0.3 0.2
Copper (T)............................................ 1.3 0.6
Iron (T).............................................. 2.4 1.3
Nickel (T)............................................ 1.1 0.5
Zinc (T).............................................. 0.8 0.4
Cyanide (T)........................................... 0.03 0.02
Oil & Grease.......................................... 35 17
TSS................................................... 73 36
pH.................................................... (\1\) (\1\)
------------------------------------------------------------------------
\1\ Within 6.0 to 9.0.
Appendix A to Part 438--Typical Products Within MP&M Phase I
Industries
Aerospace
Guided Missiles & Space Vehicle
Guided Missile & Space Vehicle Prop.
Other Space Vehicle & Missile Parts
Aircraft
Aircraft Frames Manufacturing
Aircraft Engines & Engine Parts
Aircraft Parts & Equipment
Airports, Flying Fields, & Services
Electronic Equipment
Telephone & Telegraph Apparatus
Radio & TV Communications Equipment
Communications Equipment
Electron Tubes
Electronic Capacitors
Electronic Coils & Transformers
Connectors for Electronic Applications
Electronic Components
Electric Lamps
Hardware
Cutlery
Hand & Edge Tools
Hand Saws & Saw Blades
Hardware
Screw Machine Products
Bolts, Nuts, Screws, Rivets & Washers
Metal Shipping Barrels, Drums Kegs, Pails
Iron & Steel Forgings
Crowns & Closures
Metal Stampings
Steel Springs
Wire Springs
Miscellaneous Fabricated Wire Products
Fasteners, Buttons, Needles & Pins
Fluid Power Valves & Hose Fittings
Valves & Pipe Fittings
Fabricated Pipe & Fabricated Pipe Fittings
Fabricated Metal Products
Machine Tools, Metal Cutting Types
Machine Tools, Metal Forming Types
Special Dies & Tools, Die Sets, Jigs, Etc.
Machine Tool Accessories & Measuring Devices
Power Driven Hand Tools
Heating Equipment, Except Electric
Industrial Furnaces & Ovens
Fabricated Structural Metal
Fabricated Plate Work (Boiler Shops)
Sheet Metal Work
Architectural & Ornamental Metal Work
Prefabricated Metal Buildings & Components
Miscellaneous Metal Work
Mobile Industrial Equipment
Farm Machinery & Equipment
Garden Tractors & Lawn & Garden Equipment
Construction Machinery & Equipment
Mining Machinery & Equipment, Except Oil Field
Hoist, Industrial Cranes & Monorails
Industrial Trucks, Tractors, Trailers
Tanks & Tank Components
Ordnance
Small Arms Ammunition
Ammunition
Small Arms
Ordnance & Accessories
Stationary Industrial Equipment
Steam, Gas, Hydraulic Turbines, Generator Units
Internal Combustion Engines
Oil Field Machinery & Equipment
Elevators & Moving Stairways
Conveyors & Conveying Equipment
Industrial Patterns
Rolling Mill Machinery & Equipment
Metal Working Machinery
Textile Machinery
Woodworking Machinery
Paper Industries Machinery
Printing Trades Machinery & Equipment
Food Product Machinery
Special Industry Machinery
Pumps & Pumping Equipment
Ball & Roller Bearings
Air & Gas Compressors
Blowers & Exhaust & Ventilation Fans
Packaging Machinery
Speed Changers, High Speed Drivers & Gears
Industrial Process Furnaces & Ovens
Mechanical Power Transmission Equipment
General Industrial Machinery
Automatic Vending Machines
Commercial Laundry Equipment
Refrigeration & Air & Heating Equipment
Measuring & Dispensing Pumps
Service Industry Machines
Fluid Power Cylinders & Actuators
Fluid Power Pumps & Motors
Scales & Balances, Except Laboratory
Industrial Machinery
Welding Apparatus
Transformers
Switchgear & Switchboard Apparatus
Motors & Generators
Relays & Industrial Controls
Electric Industrial Apparatus
Heavy Construction Equipment Rental
Equipment Rental & Leasing
Appendix B to Part 438--Typical Products Within MP&M Phase II
Industries
Bus & Truck
Truck & Bus Bodies
Motor Vehicle Parts & Accessories
Truck Trailers
Local & Suburban Transit (Bus & subway)
Local Passenger. Trans. (Lim., Amb., Sight See)
Intercity & Rural Highways (Buslines)
School Buses
Bus Terminal & Service Facilities
Local Trucking Without Storage
Trucking
Local Trucking With Storage
Courier Services, Except by Air
Freight Truck Terminals, W/ or W/O Maintenance.
Truck Rental & Leasing, Without Drivers
Household Equipment
Household Cooking Equipment
Household Refrig. & Home & Farm Freezers
Household Laundry Equipment
Electric Housewares & Fans
Household Vacuum Cleaners
Household Appliances
Electric Lamps
Current-Carrying Wiring Devices
Noncurrent-Carrying Wiring Devices
Residential Electrical Lighting Fixtures
Commercial, Ind. & Inst. Elec. Lighting Fixtures
Lighting Equipment
Radio & Television Sets Except Commn. Types
Radio & Television Repair Shops
Refrig. & Air Cond. Serv. & Repair Shops
Instruments
Coating, Engraving, & Allied Services
Search & Navigation Equipment
Laboratory Apparatus & Furniture
Automatic Environmental Controls
Process Control Instruments
Fluid Meters & Counting Devices
Instruments to Measure Electricity
Analytical Instruments
Measuring & Controlling Devices
Optical Instruments & Lenses
Surgical & Medical Instruments & Apparatus
Orthopedic, Prosthetic, & Surgical Supplies
Dental Equipment & Supplies
Ophthalmic Goods
Watches, Clocks, Associated Devices & Parts
Pens, Mechanical Pencils, & Parts
Manufacturing Industries
Miscellaneous repair Shops & Related Services
Motor Vehicle
Carburetors, Pistons Rings, Valves [[Page 28278]]
Vehicular Lighting Equipment
Electrical Equipment for Motor Vehicles
Motor Vehicle Parts & Accessories
Motorcycles
Miscellaneous Transportation Equipment
Automotive Stampings
Motor Vehicle & Automotive Bodies
Mobile Homes
Travel Trailers & Campers
Taxicabs
Automotive Equipment
Automobile Dealers (new & used)
Gasoline Service Stations
Recreational & Utility Trailer Dealers
Motorcycle Dealers
Auto. Dealers (Dunebuggy, Go-cart, Snowmobile)
Passenger Car Rental
Passenger Car Leasing
Utility Trailer & Recreational Vehicle Rental
Top & Body Repair & Paint Shops
Auto Exhaust System Repair Shops
Automotive Glass Replacement Shops
Automotive Transmission Repair Shops
General Automotive Repair Shops
Automotive Repairs Shops
Automobile Service (includes Diag. & Insp. Cntrs.)
Welding Shops (includes Automotive)
Office Machine
Electronic Computers
Computer Storage Devices
Computer Terminals
Computer Peripheral Equipment
Calculating & Accounting Equipment
Office Machines
Photographic Equipment & Supplies
Compute Rental & Leasing
Compute Maintenance & Repair
Computer Related Services
Electrical & Electronic Repair
Precious & Nonprecious Metals
Jewelry, Precious Metal
Silverware, Plated Ware, & Stainless
Jewelers' Materials & Lapidary Work
Musical Instruments
Costume Jewelry
Railroad
Railcars, Railway Systems
Line-Haul Railroads
Switching & Terminal Stations
Ships and Boats
Ship Building & Repairing
Boat Building & Repairing
Marines
Deep Sea Domestic Transportation of Freight
Freight Transportation on the Great Lakes
Water Transportation of Freight
Deep Sea Passenger Transportation, Except by Ferry
Water Passenger Transportation
Ferries
Towing & Tugboat Service
Water Transportation Services
PART 464--[AMENDED]
4. The authority citation for part 464 continues to read as
follows:
Authority: Secs. 301, 304(b), (c), (e), and (g), 306(b) and (c),
307, 308, and 501 of the Clean Water Act (Federal Water Pollution
Control Act Amendments of 1972, as amended by the Clean Water Act of
1977) (the ``Act''); 33 U.S.C. 1311, 1314(b), (c), (e) and (g),
1316(b) and (c), 1317 (b) and (c), 1318, and 1361; 86 Stat. 816,
Pub. L. 92-500; 91 Stat. 1567, Pub. L. 95-217.
5. Section 464.02 is amended by revising the last sentence of
paragraphs (a), (b), (c), and (d) to read as follows:
Sec. 464.02 General definitions.
* * * * *
(a) * * * Processing operations following the cooling of castings
not covered under aluminum forming, except for grinding scrubber
operations which are covered in this section, are covered under the
electroplating, metal finishing, and metal products and machinery point
source categories (40 CFR parts 413, 433 and 438).
(b) * * * Except for grinding scrubber operations which are covered
in this section, processing operations following the cooling of
castings are covered under the electroplating, metal finishing, and
metal products and machinery point source categories (40 CFR parts 413,
433 and 438).
(c) * * * Except for grinding scrubber operations which are covered
in this section processing operations following the cooling of castings
are covered under the electroplating, metal finishing, and metal
products and machinery point source categories (40 CFR parts 413, 433
and 438).
(d) * * * Processing operations following the cooling of castings
not covered under nonferrous metals forming are covered under the
electroplating, metal finishing, and metal products and machinery point
source categories (40 CFR parts 413, 433 and 438).
* * * * *
[FR Doc. 95-8885 Filed 5-26-95; 8:45 am]
BILLING CODE 6560-50-P
