United States       Office of Water      EPA-821-R-00-019
      Environmental Protection   (4303)         August 2000
      Agency	
EPA  Economic and
      Engineering Analyses of
      the Proposed §316(b) New
      Facility Rule

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   Economic and Engineering Analyses
of the Proposed §316(b) New Facility Rule
           U.S. Environmental Protection Agency
             Office of Science and Technology
             Engineering and Analysis Division

                Washington, DC 20460
                   July 20,2000

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This document was prepared by Office of Water staff.  The following contractors (in alphabetical order) provided
 assistance and support in performing the underlying analysis supporting the conclusions detailed in this report.

                                              Abt Associates,
                                 Science Applications International Corporation,
                                        Stratus Consulting Inc., and
                                                Tetra Tech.

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§316(b) EEA for New Facilities                                                          Table of Contents
                          Table  of   Contents
Chapter 1: Introduction and Overview
    1.1 Scope of the Proposed Regulation	  1-1
    1.2 Definitions of Key Concepts	  1-2
    1.3 Summary of the Proposed Regulation	  1-2
    1.4 Structure of the Economic Analysis  	  1-7
    1.5 Organization of the Economic Analysis Report  	  1-7
    References  	  1-8

Chapter 2: The §316(b) Industries and the Need  for Regulation
    2.1 Overview of Facilities Subject to §316(b) Regulation  	2-1
           2.1.1    §316(b) Industry Sectors  	2-1
           2.1.2    New Facilities  	2-3
    2.2 The Need for §316(b) Regulation	2-4
           2.2.1    The Need to Reduce Adverse Environmental Impacts	2-4
           2.2.2    The Need to Address Market Imperfections  	2-6
    References  	2-8

Chapter 3: Profile of the  Electric Power Industry
    3.1 Industry Overview	3-1
           3.1.1    Industry Sectors	3-2
           3.1.2    Prime Movers	3-2
           3.1.3    Ownership  	3-3
    3.2 Domestic Production	3-6
           3.2.1    Generating Capability  	3-6
           3.2.2    Electricity Generation  	3-7
           3.2.3    Geographic  Distribution	3-9
    3.3 Existing Plants with CWISs and NPDES Permits   	3-12
           3.3.1    Existing §316(b) Utility Plants	3-13
           3.3.2    Existing §316(b) Nonutility Plants	3-19
    3.4 Industry Outlook	3-26
           3.4.1    Current Status of Industry Deregulation  	3-26
           3.4.2    Energy Market Model Forecasts  	3-27
    Glossary 	3-29
    References  	3-31

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§316(b) EEA for New Facilities                                                                Table of Contents

Chapter 4:  Profile of Manufacturers
    4A  Paper and Allied Products	 4A-1
           4A. 1    Domestic Production  	 4A-2
           4A.2    Structure and Competitiveness of the Paper and Allied Products Industry 	  4A-11
           4A.3    Financial Condition and Performance 	  4A-19
           4A.4    Facilities Operating CWISs 	  4A-21
           References  	  4A-25
    4B Chemicals and Allied Products	4B-1
           4B. 1    Domestic Production  	4B-3
           4B.2    Structure and Competitiveness of the Chemical and Allied Products Industry	4B-13
           4B.3    Financial Condition and Performance 	4B-20
           4B.4    Facilities Operating CWISs 	4B-22
           References  	  4A-26
    4C  Petroleum and Coal Products	4C-1
           4C. 1    Domestic Production  	4C-1
           4C.2    Structure and Competitiveness of the Petroleum and Coal Products Industry	4C-12
           4C.3    Financial Condition and Performance 	4C-17
           4C.4    Facilities Operating CWISs 	4C-20
           References  	4C-23
    4D  Steel	 4D-1
           4D. 1    Domestic Production  	 4D-2
           4D.2    Structure and Competitiveness of the Steel Industry	  4D-10
           4D.3    Financial Condition and Performance 	  4D-18
           4D.4    Facilities Operating CWISs 	  4D-19
           References  	  4D-23
    4E  Aluminum 	4E-1
           4E. 1    Domestic Production  	4E-2
           4E.2    Structure and Competitiveness of the Aluminum Industry  	4E-11
           4E.3    Financial Condition and Performance 	4E-17
           4E.4    Facilities Operating CWISs 	4E-18
           References  	4E-21
    Glossary  	4Glos-l

Chapter 5:  Baseline Projections of New Facilities
    5.1  New Electric Generators 	5-1
           5.1.1    Forecast for 2001 to 2010  	5-1
           5.1.2    Forecast for 2011 to 2020  	5-6
           5.1.3    Summary of Forecasts for New Electric Generators  	5-7
           5.1.4    Uncertainties and Limitations	5-7
    5.2  New Manufacturing Facilities	5-7
           5.2.1    Methodology  	5-8
           5.2.2    Projected Number of New Manufacturing Facilities	5-8
           5.2.3    Uncertainties and Limitations	5-16
    5.3  Summary of Baseline Projections  	5-17
    References	5-18

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§316(b) EEA for New Facilities                                                              Table of Contents

Chapter 6: Facility Compliance Costs
    6.1  Unit Costs  	6-2
           6.1.1    §316(b) Technology Costs	6-2
           6.1.2    Administrative Costs 	6-9
    6.2  Facility-Level Cost 	6-12
           6.2.1    New Electric Generators 	6-13
           6.2.2    New Manufacturing Facilities	6-16
    6.3  Total Facility Compliance Costs	6-19
    6.4  Case  Study Facility Costs  	6-21
    6.5  Limitations and Uncertainties  	6-23
    References  	6-25

Chapter 7: Economic Impact Analysis
    7.1  New  Steam Electric Generators	7-1
           7.1.1    Economic Characteristics	7-2
           7.1.2    Economic Impact Analysis Results  	7-6
    7.2  New Manufacturing Facilities	7-7
           7.2.1    Economic Characteristics	7-8
           7.2.2    Economic Impact Analysis Results  	7-10
    7.3  Summary of Facility-Level Impacts	7-12
    7.4  Potential for Firm- and Industry-Level Impacts  	7-12
    7.5  Case  Study Facility Impacts  	7-13
    References  	7-16

Chapter 8: Regulatory Flexibility Analysis/SBREFA
    8.1  Electric Generation Sector	8-1
    8.2  Manufacturing Sector  	8-4
    8.3  Summary of Results	8-7
    References  	8-8

Chapter 9: UMRA and Other  Economic Analyses
    9.1  The Unfunded Mandates Reform Act of 1995  	9-1
           9.1.1    Compliance Costs for Governments  	9-2
           9.1.2    Compliance Costs for the Private Sector	9-8
           9.1.3    Summary of the UMRA Analysis  	9-8
    9.2  Social Costs of the Proposed Rule 	9-8
    9.3  Other Economic Analyses	9-10
           9.3.1    Executive Order 13132 ("Federalism")	9-10
           9.3.2    The Paperwork Reduction Act of 1995	9-10
    References  	9-12

Chapter 10:  Alternative Regulatory Options
    10.1   Alternative Option 1: Uniform Standards Option 	 10-1
    10.2   Alternative Option 2: Dry Cooling Option	 10-2

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§316(b) EEA for New Facilities                                                               Table of Contents

Chapter 11:  CWIS  Impacts and  Potential  Benefits
    11.1  CWIS Characteristics that Influence the Magnitude of I&E 	11-1
            11.1.1  Intake Location	11-1
            11.1.2  Intake Design	11-2
            11.1.3  Intake Capacity	11-2
    11.2  Methods for Estimating Potential I&E Losses	11-3
            11.2.1  Development of a Database of I&E Rates	11-3
            11.2.2  Data Uncertainties and Potential Biases	11-3
    11.3  CWIS Impacts  inRivers	11-5
    11.4  CWIS Impacts  inLakes and Reservoirs	11-7
    11.5  CWIS Impacts  in the GreatLakes	11-10
    11.6  CWIS Impacts  inEstuaries	11-12
    11.7  CWIS Impacts  in Oceans 	11-14
    11.8  Summary of I&E Data  	11-16
    11.9  Potential Benefits of §316(b) Regulation	11-16
            11.9.1  Introduction: Benefits Concepts, Categories, and Causal Links  	11-16
            11.9.2  Economic Benefit Categories Applicable to the §316(b) Rule  	11-16
            11.9.3  Benefit Category Taxonomies 	11-16
            11.9.4  Direct Use	11-18
            11.9.5  Indirect Use Benefits  	11-19
            11.9.6  Nonuse Benefits	11-19
            11.9.7  Summary of Benefits Categories  	11-21
            11.9.8  Causality: Linkingthe §316(b) Rule to Beneficial Outcomes	11-21
    11.10 Empirical Indications of Potential Benefits 	11-22
    References	11-25

APPENDICES
    Appendix A:    Detailed Information on Technologies/Development of Unit Costs 	AppA-1
    Appendix B:    Unit Cost Analyses	AppB-1
IV

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§316(b) EEA Chapter 1 for New Facilities
                                   Introduction and Overview
            Chapter   1:   Introduction   and
                                       o
verview
INTRODUCTION

EPA is proposing regulations implementing Section 316(b)
of the Clean Water Act (CWA) for new facilities (33 U.S.C.
1326(b)). The proposed rule would establish national
requirements applicable to the location, design, construction,
and capacity of cooling water intake structures (CWISs) at
new facilities. The proposed national requirements would
minimize the adverse environmental impact associated with
the use of these structures. CWISs may cause adverse
impact due to impingement (where fish and other aquatic
life  are trapped on equipment at the entrance to CWISs) and
entrainment (where aquatic organisms, eggs, and larvae are
taken into the cooling system, passed through the heat
exchanger, and then pumped back out with the discharge
from the facility).

EPA is developing these regulations pursuant to a Consent
Decree entered on October 10, 1995 in Cronin v. Reilly.1 a
lawsuit brought against the Agency by a coalition of
individuals and environmental groups headed by the
Riverkeeper (formerly known as the Hudson Riverkeeper).
With this rule, EPA will establish best technology available
(BTA) standards for new facilities which are point sources
under the CWA and which will operate CWISs that
withdraw water used for cooling purposes from a water of
the United  States.

Not covered under this proposed regulation are existing
facilities operating CWISs, including existing facilities
proposing substantial additions or modifications to their
operations. These facilities will be addressed by a separate
rule.
CHAPTER CONTENTS
.1 Scope of the Proposed Regulation 	
.2 Definitions of Key Concepts 	
.3 Summary of the Proposed Regulation . . .
.4 Structure of the Economic Analysis ....
.5 Organization of the EEA Report 	
References 	

|
. . . 1-1
. . . 1-2
. . . 1-2
. . . 1-7
. . . 1-7
. . . 1-8

        1.1   SCOPE OF THE  PROPOSED
               RESULATION

        The Economic and Engineering Analyses of the Proposed
        §316(b) New Facility Rule (EEA) assesses the economic
        impacts of the proposed §316(b) New Facility Rule.
        Facilities covered under this regulation include any facility
        that meets the "new facility" criteria established for this
        regulation, is considered a point source under Sections 301
        or 306 of the CWA, and proposes to operate a CWIS that
        will withdraw water for cooling purposes from a water of
        the United States.

        For this proposed regulation, EPA divided new facilities into
        two groups:

            *•   Electric generators: these are new facilities
               engaged in the generation of electricity using a
               steam electric prime mover; and

            >   Manufacturing facilities: these are new facilities
               engaged in a primary economic activity other than
               electricity generation.

        EPA estimates 40 new electric generators and 58 new
        manufacturing facilities will be subject to the proposed
        §316(b) New Facility Rule over the next 20 years.
    1 United States District Court, Southern District of New York,
93 Civ. 0314 (AGS).

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§316(b) EEA Chapter 1 for New Facilities
                              Introduction and Overview
1.2   DEFINITIONS OF KEY CONCEPTS

This EEA presents EPA's analyses of costs, benefits, and
potential economic impacts as a result of the proposed
§316(b) regulation. In addition to important economic
concepts, which will be presented in the following chapters,
understanding this document requires familiarity with a few
key concepts applicable to CWA §316(b) and this
regulation.  This section defines these key concepts.

    -   Cooling Water Intake Structure (CWIS): The total
        physical structure and any associated constructed
        waterways used to withdraw from a water of the
        U.S., provided at least twenty-five percent of the
        water withdrawn is used for cooling purposes. The
        CWIS extends from the point at which water is
        withdrawn from the water source to the first intake
        pump or series of pumps.

    *•   Entrainment: The incorporation offish, eggs,
        larvae, and other plankton with intake water flow
        entering and passing through a CWIS and into a
        cooling water system.

    *•   Impingement: The entrapment of aquatic
        organisms on the outer part of an intake structure or
        against screening devices during periods of intake
        water withdrawal.

    *•   Manufacturing Facility. An establishment engaged
        in the mechanical or chemical transformation of
        materials or substances into new products.
        Manufacturing facilities are classified under
        Standard Industrial Classification (SIC) Codes 20
        to 39 (U.S. DOL, 2000).

    *   New Facility. Any building, structure, facility, or
        installation which meets the definition of a "new
        source" or "new discharger" in 40 CFR 122.2 and
        122.29(b)(l), (2), and (4); commences construction
        after the effective date of this rule; and has a new
        or modified CWIS.

    *•   Steam-Electric Generator. A facility employing
        one or more generating units in which the prime
        mover is a steam turbine.  The turbines convert
        thermal energy (steam or hot water) produced by
        generators or boilers to mechanical energy or shaft
        torque. This mechanical energy is used to power
        electric generators, which convert the mechanical
        energy to electricity, including combined cycle
        electric generating units. Electric generators are
        classified under SIC Major Group 49 (Electric,
        Gas, And Sanitary Services).
1.3   SUMMARY  OF THE PROPOSED
        RESULATION

Section §316(b) is already in effect, but in the absence of
national standards, the implementation has varied widely.
The proposed §316(b) New Facility Rule establishes a
national framework that would set minimum compliance
requirements for the location, design, construction, and
capacity of CWISs for new facilities. Facilities are subject
to the rule only if they meet the following criteria:

    *   they use a CWIS to withdraw from a water of the
        U.S.;

    *•   they have or require a National Pollutant Discharge
        Elimination System (NPDES) permit issued under
        section 402 of  the Clean Water Act (CWA);

    *•   they have a design intake flow of greater than two
        million gallons per day (MOD); and

    *•   they use at least twenty-five percent of the water
        withdrawn for  cooling purposes.

The specific requirements of the proposed rule depend on
the location of the CWIS and address three of its primary
characteristics: (1) design intake flow; (2) design intake
velocity, and (3) technologies that minimize I&E of fish
eggs and larvae and maximize survival of impinged adult
and juvenile fish ("other §316(b) technologies"). The
proposed rule also provides for additional, site-specific,
requirements defined by the Director.2

The following subsections discuss the role of location in the
proposed §316(b) New  Facility Rule and present the specific
BTA standards required under the rule.

a.  Location
Location is generally considered one of the most important
factors in a CWIS's potential to cause AEI.  Everything else
being equal, CWISs located in biologically sensitive areas
are much more likely to impinge and entrain aquatic
organisms than CWISs  located in less sensitive areas. As a
result, the specific combination of flow, velocity, and
technology requirements under the proposed rule depends
on the location of the CWIS. Two aspects of location are
important: (1) the type of water body from which a facility
proposes to draw water, and (2) the proximity of the CWIS
to biologically sensitive areas within the water body.
    2 The term "Director" means the State or Tribal Director
where there is an approved National Pollutant Discharge
Elimination System (NPDES) State or Tribal program, and the
Regional Administrator where EPA administers the NPDES
program in the State.

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§316(b) EEA Chapter 1 for New Facilities
                              Introduction and Overview
«>  Water body type
Different types of water bodies have different biological and
ecological characteristics and will experience varied impacts
from the withdrawal of water by CWISs.  The proposed rule
groups water bodies into four categories: (1) freshwater
rivers or streams, (2) lakes or reservoirs, (3) tidal rivers or
estuaries, and (4) oceans. The proposed compliance
requirements vary by water body type, with the most
sensitive water body types having the most stringent
requirements.  For the purposes of this rule, these water
body types are defined as follows:

    >   Freshwater river or stream means a lotic (free-
        flowing) system that does not receive significant
        inflows of water from oceans or bays due to tidal
        action.

    *   Lake means any inland body of open water with
        some minimum surface area free of rooted
        vegetation  and with an average hydraulic retention
        time of more than seven days.  Lakes might be
        natural water bodies or impounded streams, usually
        fresh, surrounded by land or by land and a man-
        made retainer (e.g., a dam). Lakes might be fed by
        rivers, streams, springs, and/or local precipitation.
        Reservoir means any natural or constructed basin
        where water is collected and stored.

    *•   Tidal river means the most seaward reach of a river
        or stream where the salinity is less than or equal to
        0.5 parts per thousand (by mass)  at a time of annual
        low flow and whose surface elevation responds to
        the effects  of coastal lunar tides.  Estuary means  all
        or part of the mouth of a river or stream or other
        body of water having an unimpaired natural
        connection with open seas and within which the sea
        water is measurably diluted with fresh water
        derived from land drainage.  The salinity of an
        estuary exceeds 0.5 parts per thousand (by mass),
        but is less than 30 parts per thousand (by mass).

    *   Ocean means marine open coastal waters with a
        salinity greater than or equal to 30 parts per
        thousand (by mass).

Tidal rivers and estuaries are generally considered the most
sensitive biological  areas among the different water body
types.  The potential for environmental impact, and therefore
the stringency of compliance requirements, for CWISs
located in freshwater rivers and streams, lakes and
reservoirs, or oceans depends on the specific placement of
the CWIS's opening in the source water body.  This aspect
of location is discussed in the next subsection.

«>  Proximity to biologically sensitive areas
In addition to the type of water body, the requirements of the
proposed §316(b) New Facility Rule for all water body types
except tidal rivers/estuaries depend on the proximity of the
CWIS to areas of high biological productivity.  This
proposed rule considers the littoral zone of a water body to
be the area of highest biological productivity.  The littoral
zone is defined as the area where the physical, chemical, and
biological attributes of aquatic systems promote the
congregation, growth, and propagation of individual aquatic
organisms, including egg, larvae, and juvenile stages.3

All parts of tidal rivers and estuaries have the potential for
high biological productivity. Therefore, this rule only
establishes one set of requirements for CWISs located
within these areas. Facilities proposing to locate on a tidal
river or estuary are subject to the most stringent set of
requirements and are required to employ the broadest suite
of technologies.

The term "littoral zone" in a freshwater river/stream or a
lake/reservoir is defined as any nearshore area extending
from the level of highest seasonal water to (1) the deepest
point at which submerged aquatic vegetation can be
sustained (the photic zone  extending from shore to the
substrate receiving one percent of incident light); or (2)
where there is a significant change in slope that causes
changes in the habitat and/or community structure); or (3)
where there is a significant change in the composition of the
substrate (e.g., cobble to sand, sand to  mud). For freshwater
rivers/streams and lakes/reservoirs, the proposed rule
defines three categories of proximity to the littoral zone:

    >    Category 1 establishes requirements for CWISs
         located at least 50 meters outside the littoral zone.
         CWISs that meet  this location criterion are subject
         to the least stringent set of compliance
         requirements among the three categories.

    >    Category 2 establishes requirements for CWISs
         located less than 50 meters outside but not inside
         the littoral zone.  The requirements for Category 2
         CWISs are more stringent than those for Category
         1 CWISs.

    >    Category 3 establishes requirements for CWISs
         located in the littoral zone.  CWISs that meet this
         location criterion  are subject to the most stringent
         set of minimum requirements among the three
         categories.

In oceans, the littoral zone encompasses the photic zone of
the neritic region. Neritic waters are those over the
continental shelf and include the areas of marine fish and
    3 For the purposes of determining the costs of the proposed
§316(b) New Facility Rule, EPA assumed that the littoral zone of
freshwater rivers and streams, lakes and reservoirs, and oceans
begins at the shore and extends for 25 meters into the water body.
                                                                                                               1-3

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§316(b) EEA Chapter 1 for New Facilities
                              Introduction and Overview
mammal migrations.  The photic zone of neritic waters
includes those areas that are sufficiently shallow and clear,
and allow for light penetration sufficient to support primary
productivity.  This rule defines two categories of proximity
to the littoral zone for CWISs proposing to withdraw
cooling water from oceans:

    >   Category 1 addresses CWISs located outside the
        littoral zone. CWISs in this category have less
        stringent standards than CWISs located in Category
        2.

    >   Category 2 addresses CWISs located inside the
        littoral zone. These CWISs are subject to the most
        stringent set of requirements among facilities
        proposing to withdraw water from oceans.

b.  BTA Standards  for the  Proposed  Rule
The proposed §316(b) New Facility Rule specifies a number
of standards to minimize AEI. To enhance the economic
efficiency of the rule, EPA designed these standards to give
facilities maximum flexibility in meeting the regulatory
requirements while at the same time achieving the goals of
CWA §316(b).  The combination and stringency of the
compliance requirements depends on the locational variables
discussed in the previous section.  The proposed approach
allows for a trade-off between locational characteristics of a
CWIS and most of the other requirements discussed in this
section. In general, EPA considers tidal rivers, estuaries,
and the littoral zone of freshwater rivers/streams,
lakes/reservoirs, and oceans as sensitive biological areas
requiring the most stringent BTA requirements.

«>  Design intake flow
Intake flow refers to the volume of water that is withdrawn
through the intake structure.  Apart from location, the intake
flow of a CWIS is the primary factor affecting the
entrainment of organisms. Organisms entrained include
small fish and immature life stages (eggs and larvae) of
many species that lack sufficient mobility to move away
from the area of the intake structure.  Limiting the volume of
the water withdrawn from a water body can limit the
potential for these organisms to be entrained.

Design intake flow standards restrict the maximum flow a
facility may withdraw from a water body.  The proposed rule
includes two restrictions on intake flows.  First, it sets
maximum flow rates  relative to the flow of the  source water
body.  These flow rates are expressed as a percentage of the
water bodies' mean annual flow or volume and, for
freshwater rivers and streams, as a percentage of the 7-day
low flow for a period of 10 years (7Q10).  Second, for some
water body type/proximity to the littoral zone combinations,
the proposed rule  requires that facilities  reduce their intake
flow to a level that is commensurate with that which could
be attained by a closed-cycle recirculating cooling system.
The specific requirements for design intake flow depend on
the type of water body and the CWIS's proximity to the
water body's littoral zone.  These requirements are presented
in Figure 1-1 below.

«>  Design intake velocity
Velocity refers to the speed with which water is drawn into a
CWIS. Apart from location,  intake velocity is the primary
factor that affects the impingement offish and other aquatic
biota. Two measures of velocities are important in the
design of a CWIS:  approach velocity is the velocity
measured just in front of the  screen face or at the opening of
the CWIS; through-screen or through-technology velocity is
the velocity that is  measured through the screen face or just
as the organisms are entering the technology.

For most locations, a design intake velocity requirement
would restrict the through-screen or through-technology
velocity to 0.5 feet per second.  Only CWISs located at least
50 meters from the littoral zone of a lake or reservoir would
not be subject to a velocity standard.

«>  Other §316(b) technologies
The §316(b) New Facility Rule recognizes that it is not
always possible for facilities  to locate CWISs in areas
outside of sensitive biological areas.  The proposed rule
therefore allows facilities to locate CWISs in  sensitive
biological areas, as long as they implement additional
technologies that help reduce the impact on the aquatic
environment.  Such other §316(b) technologies include
measures that minimize I&E offish, eggs, and larvae, and
technologies that maximize survival of impinged adult and
juvenile fish.

Examples of technologies that minimize I&E  include
technologies that reduce intake velocities so that ambient
currents can carry the organisms past the opening of the
CWIS; intake screens such as fine mesh screens and
Gunderbooms  that  exclude smaller organisms from entering
the CWIS; passive  intake systems such as  wedge wire
screens, perforated pipes, porous dikes, and artificial filter
beds; and diversion and/or avoidance systems that serve to
guide fish away from the intake before they are impinged or
entrained. Examples of technologies that maximize survival
of organisms after they have been impinged include fish
handling systems such as bypass systems,  fish buckets, fish
baskets, fish troughs, fish elevators, fish pumps, spray wash
systems, and fish sills. These technologies either prevent
impingement by diverting organisms away from the CWIS
or increase survival of impinged organisms by collecting
them off the intake screens, protecting them from further
damage, and transferring them back to the source water.

«>  Additional requirements defined by the Director
The proposed §316(b) New Facility Rule gives the Director
discretionary authority to include more stringent permit
conditions, in addition to the  minimum requirements of the
1-4

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§316(b) EEA Chapter 1 for New Facilities                                               Introduction and Overview


rule, that are reasonably necessary to minimize adverse        Figure 1-1 displays the framework for EPA's proposed
environmental impact caused by a CWIS.                    §316(b) New Facility Rule.
                                                                                                          1-5

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§316(b) EEA Chapter 1 for New Facilities
                                                                 Introduction and Overview
                                 Figure  1-1: Section  316(b) New Facility  Rule Framework
        STANDARDS FOR
            I LOCATED IN A
                             OR
  STANDARDS FOR CMSs
  LOCATED IN A LAKE OR
        RESERVOIR
 STANDARDS FOR CVftSa
    I LOCATED IN AN  I
   MSTUARY OR TIDAL
          RIVER
 STANDARDS FOR CWtSs
 LOCATED IN THE OCEAN
        Where CWIS Is Located at
       Least 50 Meters Outside the
            Littoral Zone In a
       Freshwater River or Stream
       Total design intake flow of no
       more than the more stringent
       of 5% of the source water
       mean annual flow or 25% of
       the source water 7Q10
                  and
       Maximum design intake
       velocity no more than 0.5 ft/s
                  and
       Other requirements as
       defined by the Director in
       accordance with
       § 125.84(f) and (g)

         Where CWIS Is Located
          Less Than 50 Meters
       Outside the Littoral Zone In
          a Freshwater River or
                Stream
       Total design intake flow of no
       more than the more stringent
       of 5% of the source water
       mean annual flow or 25% of
       the source water 7Q10
                  and
       Maximum  design intake
       velocity no more than 0.5 ft/s
                  and
       Reduce intake flow to a level
       commensurate with that
       which could be attained by a
       closed-cycle recirculating
       cooling water system
                  and
       Other requirements as
       defined by the Director in
       accordance with
       § 125.84(f) and(g)
         Where CWIS Is Located
       Inside the Littoral Zone In a
       Freshwater River or Stream
       Total design intake flow of no
       more than the more stringent
       of 5% of the source water
       mean annual flow or 25% of
       the source water 7Q10
                  and
       Maximum  design  intake
       velocity no more than 0.5 ft/s
                  and
       Reduce intake flow to a level
       commensurate with that
       which could be attained by a
       closed-cycle recirculating
       cooling water system
                  and
       Implement additional
       technologies that minimize
       impingement and entrainment
       of fish eggs and larvae and
       maximize survival of
       impinged adult and juvenile
       fish
                  and
       Other requirements as
       defined by the Director in
       accordance with
       § 125.84(f) and(g)
 Where CWIS Is Located at
Least 50 Meters Outside the
  Littoral Zone In a Lake or
         Reservoir
Total design intake flow must
not upset the natural
stratification of the source
water
           and
Other requirements as
defined by the Director in
accordance with
§ 125.84(f) and (g)
  Where CWIS Is Located
   Less Than 50 Meters
Outside the Littoral Zone In
    a Lake or Reservoir
Total design intake flow must
not upset the natural
stratification of the source
water
           and
Maximum design intake
velocity no more than 0.5 ft/s
           and
Reduce intake flow to a level
commensurate with  that
which could be attained by a
closed-cycle recirculating
cooling water system
           and
Other requirements  as
defined by the Director in
accordance with
§ 125.84(f) and (g)
   Where CWIS Is Located
 Inside the Littoral Zone In a
     Lake or Reservoir
 Total design intake flow must
 not alter the natural
 stratification of the source
 water
            and
 Maximum design intake
 velocity no more than 0.5 ft/s
            and
 Reduce intake flow to a level
 commensurate with that
 which  could be attained by a
 closed-cycle recirculating
 cooling water system
            and
 Implement additional
 technologies that minimize
 impingement and entrainment
 of fish  eggs and larvae and
 maximize survival of
 impinged adult and juvenile
 fish
            and
 Other requirements as
 defined by the Director in
 accordance with
 § 125.84(f) and (g)
  Where CWIS Is Located
Anywhere In an Estuary or
        Tidal River
Total design intake volume
must be no more than 1% of
the volume of the water
column in the area centered
about the opening of the
intake with a diameter
defined by  the distance of
one tidal excursion at the
mean low water
           and
Maximum design intake
velocity no more than 0.5 ft/s
           and
Reduce intake flow to a level
commensurate with that
which could be attained by a
closed-cycle recirculating
cooling water system
           and
Implement additional
technologies that minimize
impingement and
entrainment of fish eggs and
larvae and maximize survival
of impinged adult and
juvenile fish
           and
Other requirements as
defined by the Director in
accordance with
§ 125.84(f)  and  (g)
   Where CWIS Is Located
 Outside the Littoral Zone In
         the Ocean
 Maximum design intake
 velocity no more than 0.5 ft/s
            and
 Other requirements as
 defined by the Director in
 accordance with
 § 125.84(f)and(g)
                                                                 Where CWIS Is Located
                                                                Inside the Littoral Zone In
                                                                       the Ocean
Maximum design intake
velocity no more than 0.5 ft/s
           and
Reduce intake flow to a level
commensurate with that
which could be attained by a
closed-cycle recirculating
cooling water  system
           and
Implement additional
technologies that minimize
impingement and
entrainment of fish eggs and
larvae and maximize survival
of impinged adult and
juvenile fish
           and
Other requirements as
defined by the Director in
accordance with
§ 125.84(f)  and (g)

 Source: Cooling Water Intake Structures: Section 316(b) New Facility Draft Preamble and Proposed Rule, EPA (2000).
1-6

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§316(b) EEA Chapter 1 for New Facilities
                      Introduction and Overview
1.4   STRUCTURE  OF THE ECONOMIC

        ANALYSIS

The economic analysis in support of the proposed §316(b)
New Facility Rule uses separate methodologies for new
electric generators and for new manufacturing facilities:

The methodology for new electric generators relies on data
for specific new facilities for which applications have been
filed with state permitting authorities as well as results from
the Energy Information Administration's (EIA) Annual
Energy Outlook 2000 (U.S. DOE, 1999). EPA estimated the
number of new electric generators in scope of the proposed
§316(b) New Facility Rule using facility-specific
information from a database of planned new electric
generation facilities (the NEWGen database; RDI, 2000)
and EIA's national generating capacity forecasts (U.S. DOE,
1999). EPA estimated annual compliance costs for each in
scope facility based on the expected technical characteristics
of the new facilities. The cost estimates are then used to
calculate  two impact measures: annual compliance costs as a
percentage of revenues, and initial compliance costs as a
percentage of total plant construction costs.

The economic analysis for new manufacturing facilities
relied on industry-specific growth projections to estimate the
number of new manufacturing facilities expected to be in
scope of this rule. EPA then used results from the §316(b)
Industry Screener Questionnaire: Phase I Cooling Water
Intake Structures (January 1999) on existing facilities to
project technical characteristics as well as facility and firm
employment and revenues for the new facilities. The cost
estimates for new manufacturing facilities are based on these
projected technical characteristics.  EPA calculated annual
compliance costs as a percentage of revenues as a measure
of potential economic impacts.
1.5   ORSANIZATION OF THE EEA
        REPORT

The remaining chapters of this EEA are organized as
follows:

    -   Chapter 2: The §316(b) Industries and the Need
        for Regulation provides a brief discussion of the
        industries affected by this regulation, discusses the
        environmental impacts from operating CWISs, and
        explains the need for this regulatory effort.
Chapter 3: Profile of the Electric Power Industry
presents a profile of the affected facilities, firms,
and market for electric generators.

Chapter 4: Profile of Manufacturing Industries
presents profiles of the affected facilities, firms,
and markets for manufacturing facilities.

Chapter 5: Baseline Projections of New Facilities
describes EPA's methodology and data sources for
estimating the number of new electric generators
and manufacturing facilities subject to this
regulation.

Chapter 6: Facility Compliance Costs summarizes
the technology costs detailed in Appendix A of this
regulation and estimates the costs of compliance for
each facility in scope of the proposed rule.  The
chapter also presents facility compliance costs
aggregated to the national level and provides
compliance cost estimates for eight additional case
study facilities.

Chapter 7: Economic Impact Analysis presents
the methodology used to estimate the economic
impacts of the regulation and presents the impact
analysis results.

Chapter 8: Regulatory Flexibility
Analysis/SBREFA presents EPA's estimates of
small business impacts from the proposed §316(b)
New Facility Rule.

Chapter 9: UMRA and Other Economic Analyses
outlines the requirements for analysis under the
Unfunded Mandates Reform Act and presents the
results of the analysis for this regulation. This
chapter also presents the total social cost of the rule
and addresses EPA's compliance with Executive
Order 13132 on Federalism and the Paperwork
Reduction Act of 1995.

Chapter 10: Alternative Regulatory Options
describes two alternative regulatory options
considered by EPA and their costs.

Chapter 11: CWIS Impacts and Potential Benefits
presents a discussion of environmental impacts
resulting from the operation of CWISs and
provides a qualitative assessment of potential
benefits from the proposed rule.
                                                                                                           1-7

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§316(b) EEA Chapter 1 for New Facilities                                              Introduction and Overview


REFERENCES

Resource Data International (RDI). 2000. NEWGen          U.S. Department of Labor (U.S. DOL). 2000. Occupational
Database. January 2000.                                  Safety and Health Administration (OSHA).  SIC Division
                                                       Structure @ http://www.osha.gov/cgi-bin/sic/sicser5 (as of
U.S. Department of Energy (U.S. DOE).  1999. Energy        June 2000).
Information Administration (EIA). Annual Energy Outlook
2000. Report#DOE/EIA-0383(2000). December 19, 1999.

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EA Chapter 2 for New Facilities
          The §316(b) Industries and the Need for Regulation
   Chapter   2:   The   §316(B)  Industries

            and  the  Need   for   Regulation
INTRODUCTION

Section 316(b) of the Clean Water Act (CWA) directs EPA
to assure that the location, design, construction, and capacity
of cooling water intake structures reflect the best technology
available for minimizing adverse environmental impact.
Based on this statutory language, §316(b) is already in effect
and should be implemented with each NPDES permit issued
to a directly discharging facility. However, in the absence of
regulations that establish standards for best technology
available (BTA), §316(b) has been applied inconsistently,
using a case-by-case approach, for some industries and has
not been rigorously applied to many other industries.

The proposed §316(b) New Facility Rule addresses current
§316(b) implementation problems by regulating new
facilities that operate cooling water intake structures
(CWIS), hold a National Pollution Discharge Elimination
System (NPDES) permit, and meet certain criteria with
respect to their intake flow.1 While all new CWIS that meet
these criteria are subject to the regulation, this economic
analysis focuses on facilities in two major sectors: (1) steam
electric generators; and (2) four manufacturing industry
sectors with substantial cooling water use.

This chapter provides a brief overview of the analyzed
sectors, their use of cooling water,  and the need for this
regulation in so far as relevant for purposes of this analysis.
2.1   OVERVIEW OF  FACILITIES SUBJECT
       TO §316(B) REGULATION

The proposed §316(b) New Facility Rule will apply to new
("greenfield") facilities proposing to operate CWIS that
directly withdraw water from a water of the United States.
  CHAPTER CONTENTS
  2.1  Overview of Facilities Subject to §316(b)
      Regulation	2-1
      2.1.1   §316(b) Sectors	2-1
      2.1.2   New Facilities	2-3
  2.2  The Need for §316(b) Regulation	2-4
      2.2.1   The Need to Reduce Adverse
             Environmental Impacts	2-4
      2.2.2   The Need to Address Market
             Imperfections 	2-6
  References 	2-8
    1 Only facilities that use at least twenty-five percent of their
intake flow for cooling purposes and withdraw more than two
million gallons per day will be regulated under the proposed
§316(b) New Facility Rule.
Existing facilities operating CWIS, including facilities
proposing substantial additions or modifications to their
operations, are not covered under this regulation. These
existing facilities will be addressed by a separate rule.

The following two subsections describe the §316(b) sectors
analyzed for this regulatory effort and the new facilities
expected to be built within these sectors over the next 20
years. More detail on the two sectors and their facilities,
firms, and market characteristics is provided in Chapter 3:
Profile  of the Electric Power Industry and Chapter 4:
Profile  of Manufacturing Industries.  An in-depth discussion
of how  EPA identified and estimated new facilities
potentially subject to this regulation is provided in Chapter
5: Baseline Projection of New Facilities.

2.1.1 §316(b) Sectors
EPA identified two major sectors for analysis in support of
this regulation: (1) steam electric generators; and (2)
manufacturing industries with substantial cooling water use.
Through past §316(b) regulatory efforts and EPA's effluent
guidelines program, the Agency identified steam electric
generators as the largest industrial users of cooling water.
The condensers that support the steam turbines in these
facilities require substantial amounts of cooling water. EPA
estimates that traditional steam electric utilities (SIC Codes
4911 and 493) and steam electric  nonutility power producers
(SIC Major Group 49) account for approximately 92.5
percent of total cooling water intake in the United States
                                                                                                  2-1

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EA Chapter 2 for New Facilities
           The §316(b) Industries and the Need for Regulation
(see Table 2-1).

Beyond steam electric generators, other industrial facilities
use cooling water in their production processes (e.g., to cool
equipment, for heat quenching, etc.). EPA used information
from the 1982 Census of Manufactures to identify four
major manufacturing sectors showing substantial cooling
water use: (1) Paper and Allied Products (SIC Major Group
26); (2) Chemicals and Allied Products (SIC Major Group
28); (3) Petroleum and Coal Products (SIC Major Group
29); and (4) Primary Metals Industries (SIC Major Group
33). As illustrated in Table 2-1, steam electric utilities,
steam electric nonutility power producers, and the four
major manufacturing sectors together account for
approximately 99 percent of the total cooling water intake in
the United States.
Table 2-1: Cooling Water Intake by Sector
Sectort (SIC Code)
Steam Electric Utility Power Producers (49)
Steam Electric Nonutility Power Producers (49)
Chemicals and Allied Products (28)
Primary Metals Industries (33)
Petroleum & Coal Products (29)
Paper & Allied Products (26)
Additional 14 Categoriestn
Cooling Water Intake Flow"
Billion GaL/Yr.
70,000
1,172
2,797
1,312
590
534
607
Percent of Total
90.9%
1.5%
3.6%
1.7%
0.8%
0.7%
0.8%
Cumulative Percent
90.9%
92.4%
96.0%
97.8%
98.5%
99.2%
100.0%
        t    The table is based on reported primary SIC codes.
        ^   Data on cooling water use are from the 1982 Census of Manufactures, except for traditional steam electric utilities,
            which are from the Form EIA-767 database, and the steam electric nonutility power producers, which are from the
            Form EIA-867 database.
        m   14 additional major industrial categories (major SIC codes) with effluent guidelines.

        Sources: 1982 Census of Manufactures; DOE / ElA Form EIA-867 database.
The six sectors identified for analysis comprise a substantial
portion of all U.S. industries.  As shown in Table 2-2, the
six sectors combined account for almost 50,000 facilities
and 3 million employees, and more than $1.2 trillion in sales
and $120 billion in payroll. The four manufacturing sectors
alone account for approximately 20 percent of total U.S.
manufacturing sales and 12 percent of manufacturing
employment. While existing facilities are not subject to the
proposed §316(b) New Facility Rule, construction of new
facility subject to the rule is most likely to occur in the same
sectors. The economic characteristics of these sectors are
therefore relevant to assessing potential economic impacts
on facilities subject to the proposed rule.

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EA Chapter 2 for New Facilities
           The §316(b) Industries and the Need for Regulation
Table 2-2: Summary Economic Data for Major Industry Sectors Subject to §316(b) Regulation: Facilities,
Employment, Estimated Revenue, and Payroll in Millions of 1999 Dollars
Sector (SIC)
Utilities & Nonutilities (49)
Paper & Allied Products (26)
Chemicals & Allied Products (28)
Petroleum & Coal Products (29)
Primary Metals (33)
All §316(b) Sectors
Total U.S. Manufacturing
§316(b) Manufacturing Sectors as a Percent
of Total U.S. Manufacturing^
Number of
Facilities
22,306
6,509
12,401
2,136
6,559
49,911
377,673
7.3%
Employment
844,766
623,799
843,469
106,863
509,730
2,928,627
17,633,977
11.8%
Sales, Receipts, or
Shipments
(S millions)
416,642
165,861
380,405
155,308
83,488
1,201,704
3,899,538
20.1%
Payroll
(S millions)
41,349
24,640
36,093
4,877
15,622
122,581
586,359
13.9%
 t   Dollar values adjusted from 1997 to 1999 using Producer Price Indexes from the Bureau of Labor Statistics (Series: WPU09-Pulp,
     Paper, and Allied Products, WPU061-Industrial Chemicals, WPU057-Petroleum Products, Refined, WPUlO-Metals and Metal
     Products, WPU054-Electric Power, WPUOOOOOOOO-A11 Commodities).
 ff   Only the four §316(b) manufacturing sectors (26, 28, 29, and 33) are included in the percentage. SIC 49 is not part of total U.S.
     manufacturing.

 Sources: 1997 Economic Census: Advance Comparative Statistics for the U.S. 1987 SIC Basis (preliminary data).
2.1.2 New Facilities
This section summarizes the methodology for estimating the
number of new steam electric generators and manufacturing
facilities that may be subject to §316(b) requirements and
presents the results of the analysis.

a.  New Steam Electric Generators
EPA identified new steam electric generators subject to the
proposed §316(b) New Facility Rule using the following
approach:

    *•   EPA used the New Generation Capacity
        Information Service, or "NEWGen database,"
        created and maintained by RDI Consulting (beta
        version as of January 2000) to identify planned
        steam electric generators.

    *   EPA used information from public  sources to
        determine how many of the new steam electric
        generators would meet the new facility criteria of
        this rule.

    *   Since the NEWGen database does not cover the
        entire 20-year forecasting period, the identified new
        generators only represent a subset of all projected
        future steam electric generators. EPA used steam
        electric capacity forecasts from the Energy
        Information Administration's (ElA) Annual Energy
        Outlook 2000 to extrapolate additional facilities
        projected to begin operation between 2001 and
        2020.

This approach resulted in an estimate of 40 new steam
electric generators that meet the new facility criteria
specified by this rule.

b.  New  Manufacturing  Facilities
The Agency estimated the  number of new manufacturing
facilities subject to the proposed §316(b) New Facility Rule
using a two-step approach:

    *•   EPA first determined the total number of new
        facilities in each manufacturing sector known to be
        a significant user  of cooling water.2 This
        determination was made using industry-specific
        growth rates and assumptions about the share of
    2 EPA identified significant users of cooling water at the 4-
digit Standard Industrial Classification (SIC) code level, based on
the §316(b) Industry Screener Questionnaire: Phase I Cooling
Water Intake Structures (January 1999).
                                                                                                              2-3

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EA Chapter 2 for New Facilities
           The §316(b) Industries and the Need for Regulation
        growth that would be met by new facilities (as
        opposed to expansions at existing facilities).

        EPA then used results from the §316(b) Industry
        Screener Questionnaire to determine how many of
        the new facilities in each industry sector would be
        subject to the proposed §316(b) New Facility Rule.
Based on this approach, EPA estimated that a total of 58
new manufacturing facilities in scope of the proposed
§316(b) New Facility Rule will begin operation during the
next 20 years. Forty-eight of these facilities are expected to
be chemicals manufacturers and ten metals facilities.

Table 2-3 presents the estimated number of new in scope
facilities by major sector and 4-digit SIC code.
Table 2-3: Projected Number of In Scope Facilities
SIC Code SIC Description
Projected Number of New Facilities Over
20 Years
Total i In Scope
Electric Generators
SIC 49

SIC 26
SIC 28
SIC 29
SIC 33
SIC 331
SIC 333
SIC 335
Electric Generators
Manufacturing Facilities
Paper and Allied Products
Chemicals and Allied Products
Petroleum Refining And Related Industries
Primary Metals Industries
Blast Furnaces and Basic Steel Products
Primary Aluminum, Aluminum Rolling, and
Drawing and Other Nonferrous Metals
Total Manufacturing
Total
205

0
568
2

78
22
670
875
40

0
48
0

8
2
58
98
 Source: EPA Analysis, 2000.
EPA also engaged in a consultation process with industry
associations and experts.  Information obtained from these
sources were generally consistent with the calculated
estimates.
2.2   THE NEED FOR  §316(B)
        RESULATION

Section 316(b) provides that any standard established to
address impacts from CWISs "shall require that the
location, design, construction, and capacity of cooling
water intake structures reflect the best technology
available (BTA) for minimizing adverse environmental
impact." To date, no national standard for BTA that will
minimize adverse environmental impact (AEI) from
CWISs has been established. As a result, many CWISs
have been constructed on sensitive aquatic systems with
  capacities and designs that cause severe damage to the
  water bodies from which they withdraw water.

  Several factors drive the need for this proposed national
  §316(b) regulation.  Each of these factors is discussed in
  the following subsections.

  2.2.1 The Need to  Reduce Adverse
         Environmental Impacts
  Adverse environmental impacts occur when facilities
  impinge aquatic organisms on their CWISs' intake screens,
  entrain them within their cooling system, or otherwise
  negatively affect habitats that support aquatic species.
  Exposure  of aquatic organisms to impingement and
  entrainment (I&E) depends on the location, design,
  construction, capacity, and operation of a facility's CWIS
  (U.S. EPA,  1976; SAIC, 1994; SAIC, 1996b).  The
  regulatory goals of §316(b) include the following:
 '-4

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EA Chapter 2 for New Facilities
         The §316(b) Industries and the Need for Regulation
    >•   ensure that the location, design, construction, and
        capacity of a facility's CWIS reflect BTA for
        minimizing AEI;

    >•   protect individuals, populations, and communities
        of aquatic organisms from harm (reduced viability
        or increased mortality) due to the physical and
        chemical stresses of I&E; and

    *   protect aquatic organisms that are indirectly
        affected by CWIS because of trophic interactions
        with species that are impinged or entrained.

a.  Impingement
Impingement occurs when fish are trapped against CWISs'
intake screens by the velocity of the intake flow. Fish may
die or be injured as a result of (1) starvation and
exhaustion; (2) asphyxiation when velocity forces prevent
proper gill movement; (3) abrasion by screen wash spray;
and (4) asphyxiation due to removal from water for
prolonged periods.

b.  Entrainment
Small organisms are entrained  when they pass through a
plant's condenser cooling system. Damage can result from
(1) physical impacts from pump and condenser tubing; (2)
pressure changes caused by diversion of cooling water; (3)
thermal shock experienced in condenser  and discharge
tunnels; and (4) chemical toxemia induced by the addition
of anti-fouling agents such as chlorine. Mortality of
entrained organisms is usually  extremely high.

c.  Minimizing AEI
Review of the available literature and §316(b)
demonstration studies obtained from NPDES permit files
has identified numerous documented  cases of impacts
associated with I&E and the effects of I&E on individual
organisms and on populations of aquatic organisms. For
example, specific losses attributed to  individual steam
electric generating plants include the  loss of or damage to
3 to 4 billion larvae and post larvae per year,3 23 tons of
fish and shellfish of recreational, commercial or forage
value lost each year,4 and 1 million fish lost during a three-
    3 Brunswick Nuclear Steam Electric Generating Plant of
Carolina Power and Light Company Located near Southport,
North Carolina, Historical Summary and Review of Section
316(b) Issues.  EPA Region IV, September 19, 1979.

    4 Findings and Determination under 33 U.S.C. Section
1326, In the Matter of Florida Power Corporation Crystal River
Power Plant Units 1, 2, and 3. NPDES Permit No. FL0000159.
EPA Region IV, December 2, 1986.
week study period.5 The yearly loss of billions of
individuals is not the only problem.  Often, there is a
significant loss to the whole population of the affected
species as well.  Several studies estimating the impacts of
entrainment on populations of key commercial or
recreational fish predicted declines in population size.
Studies focusing on entrainment mortality in the Hudson
River predicted reductions in the year-class strength for 6
species ranging from 4 percent to 79 percent, depending
on the species.6  A modeling effort looking at the impact  of
entrainment mortality on the population of a selected
species in the Cape Fear estuarine system predicted a 15 to
35 percent reduction in the population.7

The following are other, more recent, documented impacts
occurring as a result of CWIS:

«>  Brayton Point
PG&E Generating's Brayton Point plant (formerly owned
by New England Power Company) is located in Mt. Hope
Bay, in the northeastern reach of Narragansett Bay, Rhode
Island. In order to increase electric generating capacity,
Unit 4 was switched from closed-cycle to once-through
cooling in 1985. The modification of Unit 4 resulted in an
increase in cooling water intake flow of 45 percent.
Studies of the  CWIS's impacts on fish abundance trends
found that Mt. Hope Bay experienced a decline in finfish
species of recreational, commercial, and ecological
importance.8 In contrast, species abundance trends were
relatively stable in coastal areas and portions of
Narragansett Bay which are not influenced by the Brayton
Point CWIS. The rate of population decline increased
substantially with the full implementation of the once-
through cooling mode for Unit 4.  The modification of
Unit 4 is estimated to have resulted in an 87 percent
    5 Impingement Losses at the D. C. Cook Nuclear Power
Plant during 1975-1982 with a Discussion of Factors
Responsible and Possible Impact on Local Populations, Thurber,
Nancy J. and David J. Jude. Special Report No. 115 of the Great
Lakes Research Division. Great Lakes and Marine Waters
Center. The University of Michigan.  1985.

    6 Estimates of Entrainment Mortality for Striped Bass and
Other Fish Species Inhabiting the Hudson River Estuary,
Boreman, John and Phillip Goodyear. American Fisheries
Society Monograph 4:152-160, 1988.

    7 Brunswick Nuclear Steam Electric Generating Plant of
Carolina Power and Light Company Located near Southport,
North Carolina, Historical Summary and Review of Section
316(b) Issues. EPA Region IV, September 19, 1979.

    8 Comparison of Trends in the Finfish Assemblages ofMt.
Hope Bay and Narragansett Bay in Relation to Operations of the
New England Power Brayton Point Station. Mark Gibson, Rhode
Island Division Fish and Wildlife, Marine Fisheries Office, June
1995 and revised August 1996.
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EA Chapter 2 for New Facilities
         The §316(b) Industries and the Need for Regulation
reduction in finfish abundance based on a time series-
intervention model.  These impacts were associated with
both I&E and the thermal discharges. Entrainment data
indicated that 4.9 billion tautog eggs, 0.86 billion
windowpane eggs, and 0.89 billion winter flounder larvae
were entrained in  1994 alone.  Using adult equivalent
analyses, the entrainment and impingement of fish eggs
and larvae in 1994 translated to a loss of 30,885 pounds of
adult tauton, 20,146 pounds of adult windowpane, and
96,507 pounds of adult winter flounder.

«>  San Onofre Nuclear Generating Station
The San Onofre Nuclear Generating Station (SONGS) is
on the coastline of the Southern California Bight,
approximately 2.5 miles  southeast of San Clemente,
California.  The marine portions of Units 2 and 3, which
are once-through,  open-cycle cooling systems, began
commercial operation in August of 1993 and 1994,
respectively. Since then, many studies have been
completed to evaluate the impact of the SONGS facility on
the marine environment.9

Studies of kelp beds in near-shore waters in the vicinity of
the SONGS facility determined that operation of the CWIS
resulted in an 80 hectare (197.68 acre) reduction in the
area covered by moderate to high density kelp. This
represents a 60 percent loss in area.  Studies indicated that
poor survival and  lack of development of new kelp plants
was the result of increased turbidity due to withdrawal of
intake water at SONGS.  The loss of kelp was also
determined to be detrimental to fish communities
associated with the kelp forests.  For example, fish living
close to the cobble bottom in the impact area experienced a
70 percent decline in abundance. Fish living in the water
column in the impact areas had a 17 percent loss in
abundance and a 33 percent decline in biomass relative to
control populations. The abundance of large invertebrates
in kelp beds also declined for many species, particularly
snails.

Estimates of lost midwater fish species  due to direct
entrainment by CWIS at SONGS are between 16.5 to 45
tons per year. This loss represents a 41 percent mortality
rate for fish (primarily northern anchovy, queenfish, and
white croaker) entrained by intake water at SONGS. In a
normal year, approximately 350,000 juvenile white croaker
are estimated to be killed through entrainment at SONGS.
This number represents 33,000 adult individuals or 3.5
tons of adult fish.  Changes in densities of fish populations
within the vicinity of the plant, relative  to control
populations, were observed in species of queen fish and
white croaker.  The density of queenfish and white croaker
    9 Review of Southern California Edison, San Onofre
Nuclear Generating Station (SONGS) 316(b) Demonstration.
Prepared by SAIC, July, 20, 1993.
within three kilometers of SONGS decreased by 34 to 63
percent in shallow water samples and 50 to 70 percent in
deep water samples.

The main purpose of this regulation is to minimize losses
such as those described above.

2.2.2 The Need to Address  Market
        Imperfections
The conceptual basis of environmental legislation in
general, and the Clean Water Act and the §316(b)
regulation in particular, is the need to correct
imperfections in the markets that arise from
uncompensated environmental externalities. Facilities
withdraw cooling water from a water of the U. S. to
support electricity generation, steam generation,
manufacturing, and other business activities, thereby
impinging and entraining organisms without accounting
for the consequences of these actions on the ecosystem or
other parties who do not directly participate in the business
transactions. In effect, the actions of these §316(b)
facilities impose environmental harm or costs on the
environment and on other parties (sometimes referred to as
third parties).  These costs, however, are not recognized
by the responsible entities in the conventional market-
based accounting framework. Because the responsible
entities do not account for these costs to the ecosystem and
society, they are external to the market framework and the
consequent production and pricing decisions of the
responsible entities. In addition, because no party  is
compensated for the adverse consequences of I&E, the
externality is uncompensated.

Business decisions will yield a less than optimal allocation
of economic resources to production activities, and, as a
result, a less than optimal mix and quantity of goods and
services, when external costs are not accounted for in the
production and pricing decisions of the §316(b) industries.
In particular, the quantity of AEI caused by the business
activities of the responsible business entities will exceed
optimal levels  and society will not maximize total possible
welfare.  Adverse distributional effects  may be an
additional effect of the uncompensated environmental
externalities.  If the distribution of I&E and ensuing AEI is
not random among the U.S. population but instead is
concentrated among certain population subgroups based
on socio-economic or other demographic characteristics,
then the uncompensated environmental externalities may
produce undesirable transfers of economic welfare among
subgroups of the population.

The goal of environmental legislation and subsequent
implementing actions,  such as the §316(b) regulation that
is the subject of this analysis, is to correct environmental
externalities by requiring the responsible parties to reduce
their actions causing environmental damage.  Congress, in
 '-6

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EA Chapter 2 for New Facilities
         The §316(b) Industries and the Need for Regulation
enacting the authorizing legislation, and EPA, in
promulgating the implementing regulations, act on behalf
of society to minimize environmental impacts (i.e., achieve
a lower level of I&E and associated environmental harm).
These actions result in a supply of goods and services that
more nearly approximates the mix and level of goods and
services that would occur if the industries impinging and
entraining organisms fully accounted for the costs of their
AEI-generating activities.  The resulting allocation of
economic resources, the mix and quantity of goods and
services provided by the economy, and the quantity ofAEI
accompanying those activities will yield a higher net
economic welfare to society.

Requiring facilities to minimize their environmental
impacts by reducing levels of I&E (i.e., a lower level of
environmental harm) is one approach to addressing the
problem of environmental externalities. This approach
internalizes the external costs by turning the societal cost
of environmental harm into a direct business cost - the
cost of achieving compliance with the regulation - for the
impinging and entraining entities.  A facility causing AEI
will either incur the costs of minimizing its environmental
impacts, or will determine that compliance is not in its best
financial interest and will cease the AEI-generating
activities. This approach to addressing the problem of
environmental externalities will generally result in
improved economic efficiency and net welfare gains for
society if the cost of reducing the activities causing
environmental harm is less than the value of benefits to
society from the reduced AEI.

It is theoretically possible to correct the market
imperfection by means other than direct regulation.
Negotiation and/or litigation, for example, could achieve
an optimal allocation of economic resources and mix of
production activities within the economy. However, the
transaction costs of assembling the affected parties and
involving them in the negotiation/litigation process as  well
as the public goods character of the improvement sought
by negotiation or litigation will frequently render this
approach to  addressing the market imperfection
impractical.  Although the environmental impacts
associated with CWISs have been documented since the
first attempt at §316(b) regulation in the late 1970's,
implementation of §316(b) to  date has failed to address the
market imperfections associated with CWISs effectively.
                                                                                                              2-7

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EA Chapter 2 for New Facilities
         The §316(b) Industries and the Need for Regulation
REFERENCES
Boreman, John and Phillip Goodyear. 1988. Estimates of
Entrainment Mortality for Striped Bass and Other Fish
Species Inhabiting the Hudson River Estuary. American
Fisheries Society Monograph 4:152-160, 1988.

Gibson, Mark Gibson.  1996. Comparison of Trends in
the Finfish Assemblages ofMt. Hope Bay and
Narragansett Bay in Relation to Operations of the New
England Power Brayton Point Station.  Rhode Island
Division Fish and Wildlife, Marine Fisheries Office, June
1995 and revised August 1996.

Science Applications International Corporation (SAIC).
1996. Background Paper Number 2: Cooling Water Use
of Selected U.S. Industries. Prepared for U.S. EPA Office
of Wastewater Enforcement and Compliance, Permits
Division by SAIC, Falls Church, VA.

Science Applications International Corporation (SAIC).
1994. Background Paper Number 3: Cooling Water
Intake Technologies. Prepared for U.S. EPA Office of
Wastewater Enforcement and Compliance, Permits
Division by SAIC, Falls Church, VA.

Science Applications International Corporation (SAIC).
1993. Review of Southern California Edison, San Onofre
Nuclear Generating Station (SONGS) 316(b)
Demonstration.  July, 20, 1993.
Thurber, Nancy J. and David J. Jude.  1985. Impingement
Losses at the D. C. Cook Nuclear Power Plant during
1975-1982 with a Discussion of Factors Responsible and
Possible Impact on Local Populations, Special Report
No. 115 of the Great Lakes Research Division. Great
Lakes and Marine Waters Center. The University of
Michigan.

U.S. Environmental Protection Agency (EPA) Region IV.
1986. Findings and Determination under 33 U.S.C.
Section  1326, In the Matter of Florida Power Corporation
Crystal River Power Plant Units 1, 2, and 3.  NPDES
PermitNo.FL0000159. December 2, 1986.

U.S. Environmental Protection Agency (EPA) Region IV.
1979. Brunswick Nuclear Steam Electric Generating
Plant of Carolina Power and Light Company Located
near Southport, North Carolina, Historical Summary and
Review of Section 316(b) Issues. September 19, 1979.

U.S. Environmental Protection Agency (EPA). 1976.
Development Document for Best Technology Available for
the Location, Design, Construction, and Capacity of
Cooling Water Intake Structures for Minimizing Adverse
Environmental Impact. Office of Water and Hazardous
Materials, Effluent Guidelines Division, U.S. EPA,
Washington, DC.

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§316(b) EEA Chapter 3 for New Facilities
                 Profile of the Electric Power Industry
     Chapter   3:   Profile  of   the   Electric

                              Power   Industry
INTRODUCTION

This profile compiles and analyzes economic and
financial data for the electric power generating industry.
It provides information on the structure and overall
performance of the industry and explains important trends
that may influence the nature and magnitude of economic
impacts from the proposed §316(b) New Facility
Regulation. While this profile does not specifically
address new electric generating facilities subject to the
proposed rule, the information presented is nevertheless
relevant to new facilities as it describes the market into
which new facilities must enter and the existing facilities
against which they will compete.

The electric power industry is one of the most extensively
studied industries. The Energy Information
Administration (EIA), among others, publishes a
multitude of reports, documents, and studies on an annual
basis.  This profile is not intended to duplicate those
efforts. Rather, this profile compiles, summarizes, and
presents those industry data that are important in the
context of the proposed §316(b) New Facility Regulation.
For more information on general concepts, trends, and
developments in the electric power industry, the last section
of this profile, "References," presents a select list of other
publications on the industry.

The remainder of this profile is organized as follows:

    *    Section 3.1 provides a brief overview of the
       industry, including descriptions of major industry
       sectors, types of generating facilities, and the
       entities that own generating facilities.

    *    Section 3.2 provides data on industry production
       and capacity.

    *    Section 3.3 focuses on existing §316(b) facilities.
       Facilities affected by the proposed rule are new
       steam electric facilities that require a National
       Pollutant Discharge Elimination System (NPDES)
       permit, operate a CWIS to withdraw cooling water
       from a water of the United States, and withdraw
CHAPTER CONTENTS
3.1    Industry Overview  ..
   3.1.1
   3.1.2
         Industry Sectors  	
         Prime Movers	
   3.1.3  Ownership 	
3.2    Domestic Production  	
   3.2.1  Generating Capability	
   3.2.2  Electricity Generation	
   3.2.3  Geographic Distribution	
3.3    Existing Plants with CWISs and NPDES
      Permits	
   3.3.1  Existing §316(b) Utility Plants 	
   3.3.2  Existing §316(b) Nonutility Plants  	
3.4    Industry Outlook	
   3.4.1  Current Status of Industry Deregulation
   3.4.2  Energy Market Model Forecasts 	
Glossary  	
References	
3-1
3-2
3-2
3-3
3-6
3-6
3-7
3-9

-12
-13
-19
-26
-26
-27
-29
-31

        more than two million gallons per day (MOD).
        This section provides information on the economic
        and financial, location and technology
        characteristics of existing facilities with a CWIS
        and an NPDES permit.

        Section 3.4 provides a brief discussion of factors
        affecting the future of the electric power industry,
        including the status of restructuring, and
        summarizes forecasts of market conditions through
        the year 2020.
3.1    INDUSTRY OVERVIEW

This section provides a brief overview of the industry,
including descriptions of major industry sectors, types of
generating facilities, and the entities that own generating
facilities.
                                                                                                  3-1

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§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
3.1.1 Industry Sectors
The electricity business is made up of three major functional
service components or sectors: generation, transmission,
and distribution. These terms are defined as follows
(Beamon, 1998; Joskow, 1997):1

    *•   The generation sector includes the power plants
        that produce, or "generate," electricity.2 Electric
        energy is produced using a specific generating
        technology, e.g., internal combustion engines and
        turbines. Turbines can be driven by wind, moving
        water (hydroelectric), or steam from fossil fuel-
        fired boilers or nuclear reactions. Other methods
        of power generation include geothermal or
        photovoltaic (solar) technologies.

    -   The transmission sector can be thought of as the
        interstate highway system of the business - the
        large, high-voltage power lines that deliver
        electricity from power plants to local areas.
        Electricity transmission involves the
        "transportation" of electricity from power plants to
        distribution centers using a complex system.
        Transmission requires: interconnecting and
        integrating a number of generating facilities into a
        stable synchronized alternating current (AC)
        network; scheduling and dispatching all connected
        plants to balance the demand and supply of
        electricity in real time; and managing the system
        for equipment failures, network constraints, and
        interaction with other transmission networks.

    -   The distribution sector can be thought of as the
        local delivery system - the relatively low-voltage
        power lines that bring power to homes and
        businesses. Electricity distribution relies on a
        system of wires and transformers along streets and
        underground to provide electricity to residential,
        commercial, and industrial consumers. The
        distribution system involves both the provision of
        the hardware (e.g., lines, poles, transformers) and
        a set of retailing functions, such as metering,
        billing, and various demand management services.

Of the three industry sectors, only electricity generation
uses cooling water and is potentially affected by §316(b)
regulation. The remainder of this profile will focus on the
generation sector of the industry.
    1  Terms highlighted in bold and italic font are defined in the
glossary at the end of this chapter.

    2  The terms "plant" and "facility" are used interchangeably
throughout this profile.
3.1.2 Prime Movers
Electric power plants use a variety of prime movers to
generate electricity.  The type of prime mover used at a
given plant is determined based on the type of load the plant
is designed to serve, the availability of fuels, and energy
requirements. Most prime movers use fossil fuels  (coal,
petroleum, and natural gas) as an energy source and employ
some type of turbine to produce electricity.  The six most
common prime movers are (U.S. DOE, 2000a):

    -   Steam Turbine: Steam turbine, or "steam
        electric" units require a fuel source to boil water
        and produce steam that drives the turbine. Either
        the burning of fossil fuels or a nuclear reaction can
        be used to produce the heat and steam necessary to
        generate electricity.  These units are generally base
        load units which are run continuously to serve the
        minimum load required by the system.  Steam
        electric units generate the majority of electricity
        produced at power plants in the U.S.

    -   Gas Combustion Turbine: Gas turbine units
        burn a combination of natural gas and distillate oil
        in a high pressure chamber to produce hot gases
        that are passed directly through the turbine. Units
        with this prime mover are generally less than  100
        megawatts  in size, less efficient than steam
        turbines, and used for peak load operation serving
        the highest  daily, weekly, or seasonal loads. Gas
        turbine units have quick  startup times and can be
        installed at  a variety of site locations, making them
        ideal for peak, emergency,  and reserve-power
        requirements.

    -   Combined-Cycle  Turbine: Combined-cycle
        units utilize both steam and gas turbine prime
        mover technologies to increase the efficiency of the
        gas turbine  system.  After combusting natural gas
        in gas turbine units,  the hot gases from the turbines
        are transported to a waste-heat recovery steam
        boiler where water is heated to produce steam for a
        second steam turbine.  The steam may be produced
        solely by recovery of gas turbine exhaust or with
        additional fuel input to the steam boiler.
        Combined-cycle generating units are generally
        used for intermediate loads.

    -   Internal Combustion  Engines: Internal
        combustion engines  contain one or more cylinders
        in which fuel is combusted to drive a generator.
        These units are generally about 5 megawatts in
        size, can be installed on  short notice, and can begin
        producing electricity almost instantaneously. Like
        gas turbines, internal combustion units are
        generally used only for peak loads.
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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
        Water Turbine: Units with water turbines, or
        "hydroelectric units," use either falling water or
        the force of a natural river current to spin turbines
        and produce electricity. These units are used for
        all types of loads.
        Other Prime Movers: Other methods of power
        generation include geothermal, solar, wind, and
        biomass prime movers. The contribution of these
        prime movers is small relative to total power
        production in the U.S., but the role of these prime
        movers may expand in the future because recent
        legislation includes incentives for their use.
Table 3-1 provides data on the number of utility and
nonutility power plants by prime mover. This table includes
all plants that have at least one non-retired unit and that
submitted Forms EIA-860A (Annual Electric Generator
Report - Utilities) or EIA-860B (Annual Electric Generator
Report - Nonutilities) in 1998. Plants that use more than
one type of prime mover were classified under the prime
mover type that accounts for the largest share of the plant's
total electricity generation.
Table 3-1: Number of Utility and Is

Prime Mover
Steam Turbine
Combined-Cycle
Gas Turbine
Internal Combustion
Hydroelectric
Other
Total
•Jonutility Plants by Pri
Utility^
Number of Plants
831
40
315
615
1,202
39
3,042
me Mover, 1998
Nonutilityt
Number of Plants
962
n/a"
257
336
355
76
1,986
              t    See definition of utility and nonutility in Section 3.1.3.
              n   Nonutility combined-cycle turbines are reported by their individual gas and steam components and
                  are therefore not identifyable as combined-cycle units.
              Source: Form EIA-860A, 1998: Form EIA-860B, 1998.
Only prime movers with a steam electric generating cycle
use substantial amounts of cooling water. These generators
include steam turbines and combined-cycle turbines. As a
result, the analysis in support of the §316(b) regulation
focuses on generating plants with a steam electric prime
mover. This profile will, therefore, differentiate between
steam electric and other prime movers, and only discuss
steam electric generation when referring to §316(b)
facilities.

3.1.3 Ownership
The U.S. electric power industry consists of two broad
categories of firms that own and operate electric generating
plants: utilities and nonutilities. Generally, they can be
defined as follows (U.S. DOE, 2000a):
    >•   Utility: A regulated entity providing electric
        power, traditionally vertically integrated. Utilities
        may or may not generate electricity.
        "Transmission utility" refers to the regulated
        owner/operator of the transmission system only.
        "Distribution utility" refers to the regulated
        owner/operator of the distribution system serving
        retail customers.
    *•   Nonutility: Entities that generate power for their
        own use and/or for sale to utilities and others.
        Nonutility power producers include cogenerators,
        small power producers, and independent power
        producers. Nonutilities do not have a designated
        franchised service area and do not transmit or
        distribute electricity.

Utilities can be further divided into three major ownership
categories: investor-owned utilities, publicly-owned utilities,
and rural electric cooperatives. Each category is discussed
below.
                                                                                                              3-3

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
a.  Investor-Owned Utilities
Investor-owned utilities (lOUs) are for-profit businesses that
can take two basic organizational forms: the individual
corporation and the holding company. An individual
corporation is a single utility company with its own
investors; a holding company is a business entity that owns
one or more utility companies and may have other
diversified  holdings as well. Like all businesses, the
objective of an IOU is to produce a return for its investors.
lOUs are entities with designated franchise areas.  They are
required to charge reasonable and comparable prices to
similar classifications of consumers and give consumers
access to services under similar conditions. Most lOUs
engage in all three activities:  generation, transmission, and
distribution. In 1998, lOUs operated 1,610 facilities which
accounted for more than 66 percent of all U.S. electric
utility generation capacity (U.S. DOE, Form EIA-860B).3

b.  Publicly-Owned  Utilities
Publicly-owned electric utilities can be municipalities,
public power districts, state authorities, irrigation projects,
and other state agencies established to serve their local
municipalities or nearby communities. Excess funds or
"profits"  from the operation of these utilities are put toward
community programs and local government budgets,
increasing facility efficiency and capacity, and reducing
rates. Federally-owned facilities are also included in this
category for the purposes of this profile and analysis. Most
municipal utilities are nongenerators engaging solely in the
purchase of wholesale electricity for resale and distribution.
The larger municipal utilities, as well as state and federal
utilities, usually generate, transmit, and distribute
electricity. In general, publicly-owned utilities have access
to tax-free financing and do not pay certain taxes or
dividends, giving them some cost advantages over lOUs.

c.  Rural  Electric  Cooperatives
Cooperative electric utilities ("coops") are member-owned
entities created to provide electricity to those members.
Rural electric cooperatives operated 199 generating
facilities in 1998. These utilities, established under the
Rural Electrification Act of 1936, provide electricity to
small rural and farming communities (usually fewer than
1,500 consumers).  Fewer than ten percent of coops
generate electricity; most are primarily engaged in
distribution. Cooperatives operate in 46 states and are
incorporated under state laws.  The National Rural Utilities
Cooperative Finance Corporation, the Federal Financing
Bank, and the Bank of Cooperatives are important sources
of financing for these utilities.

Figure 3-1 presents the percent of capacity and generating
facilities providing electric power in the U.S. in  1998 by
type of ownership. This figure is based on data for all
plants that have at least one non-retired unit and that
submitted Forms EIA-860A or EIA-860B in 1998.  The
graphic  shows that nonutilities account for the largest
percentage of facilities (1,986, or 39 percent), but only
represent  12 percent of total U.S. generating capacity.
Investor-owned utilities operate the second largest number
of facilities and account for 66 percent of total U.S.
capacity.
    3 Data for 239 lOU's with at least one non-retired plant.
3-4

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§316(b) EEA Chapter 3 for New Facilities
Profile of the Electric Power Industry
                        Figure 3-1:  Percent of Capacity  and Facilities in the U.S.  Electric Power
                                            Industry by Ownership Type, 1998
                             Investor-QMied
                             PublidyO/vned
                         Cooperative Utilities
                                Nonutilities
                                                                                             l(56G\Aj|
                                       0%     10%     20%    30%    40%    50%     60%    70%
                                                  %of Facilities • %of Capacity

                       t   Capacity is a measure of a generating unit's ability to produce electricity. Capacity is
                           defined as the designed full-load continuous output rating for an electric generating
                           unit.

                       Source: Form EIA-860A, 1998; Form EIA-861, 1998; Form EIA-860B, 1998.
Plants owned and operated by utilities and nonutilities may
be affected differently by the §316(b) regulation due to
differing competitive roles in the market.  Much of the
following discussion therefore differentiates between these
two groups.
                                                                                                                3-5

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
3.2   DOMESTIC PRODUCTION

This section presents an overview of U.S. generating
capability and electricity generation. Subsection 3.2.1
provides data on generation capability, and Subsection 3.2.2
provides data on generation.  Subsection 3.2.3 presents an
overview of the geographic distribution of generation plants
and capacity.

3.2.1 Generating  Capability
Utilities own and operate the  majority of the generating
capability in the United States (88 percent).  Nonutilities
owned only 12 percent of the total generating capability in
1998 and produced less than  12 percent of the electricity in
the country (U.S.  DOE, 1999c).  Nonutility capability and
generation have increased substantially in the past few
years, however, since passage of legislation aimed at
increasing competition in the industry. Generation
capability for nonutilities has increased 103 percent since
1991, compared with a capability decrease of one percent
over the same  time period for utilities.4 Nonutility
generation shows an increasing trend since 1991 with the
most significant increases occurring in recent years as a
result of the move toward a competitive electric power
market.

Figure 3-2 shows the growth  in utility and nonutility
capability from 1991 to 1998.  The growth in nonutility
capability, combined with a slight decrease in utility
capability, has resulted in a modest growth in generating
capability overall.
   CAPACITY/CAPABILITY

   The rating of a generating unit is a measure of its ability to
   produce electricity.  Generator ratings are expressed in
   megawatts (MW). Capacity and capability are the two
   common measures:

                       is the full-load continuous output
   rating of the generating unit under specified conditions, as
   designated by the manufacturer.

                 is the steady hourly output that the
   generating unit is expected to supply to the system load, as
   demonstrated by test procedures. The capability of the
   generating unit in the summer is generally less than in the
   winter due to high ambient-air and cooling-water
   temperatures, which cause generating units to be less
   efficient. The nameplate capacity of a generating unit is
   generally greater than its net capability.

                                       U.S. DOE,2000a

    4 More accurate data were available starting in 1991,
therefore, 1991 was selected as the initial year for trends analysis.
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§316(b) EEA Chapter 3 for New Facilities
                 Profile of the Electric Power Industry
Figure 3-2: Generating Capability, 1991 to 1998


800 1
700
600
„, 500
S
ro
5 400
ro
0>
0 300
200
100

/

M






1
|C






1













5













i







i







1







]j
=











D Utility
• Non-Utility

1
1991 1992 1993 1994 1995 1996 1997 1998
Year



                      Source: U.S. DOE, 1996b; U.S. DOE,1999c.
3.2.2 Electricity Generation
Total net electricity generation in the U.S. for 1998 was
3,618 billion kWh. Utility-owned plants accounted for 89
percent of this amount. Total net generation has increased
by 18 percent over the eight-year period from 1991 to  1998.
During this period, nonutilities increased their electricity
generation by 71 percent. In comparison,  generation by
utilities increased by only 14 percent (U.S. DOE, 1999c).
This trend is expected to continue with deregulation in the
coming years, as more facilities are purchased and built by
nonutility power producers.

Table 3-2 shows the change in net generation between 1991
and 1998 by fuel source for utilities and nonutilities.
MEASURES OF GENERATION

The production of electricity is referred to as generation and
is measured in kilowatthours (kWh). Generation can be
measured as:

Gross generation: The total amount of power produced
by an electric power plant.

Net generation: Power available to the transmission
system beyond that needed to operate plant equipment. For
example, around 7% of electricity generated by steam
electric units is used to operate equipment.

Electricity available to consumers: Power available for
sale to customers. Approximately 8 to 9 percent of net
generation is lost during the transmission and distribution
process.

                                   U.S. DOE,2000a

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
Table 3-2: Net Generation by Energy Source and Ownership Type, 1991 to 1998 (6Wh)
Energy
Source
Coal
Hydropower
Nuclear
Petroleum
Gas
Renewablesn
Total
Utilities
1991
1,551
280
613
111
264
10
2,830
1998
1,807
304
674
110
309
7
3,212
% Change
17%
9%
10%
-1%
17%
-29%
14%
Nonutilitiest
1991
39
6
0
8
127
57
238
1998
68
14
0
17
240
66
406
% Change
73%
134%
0%
124%
89%
15%
71%
Total
1991
1,590
286
613
119
391
67
3,067
1998
1,876
319
674
127
550
73
3,618
% Change
18%
11%
10%
7%
40%
8%
18%
T   Nonutility generation was converted from gross to net generation based on prime mover-specific conversion factors (U.S. DOE,
    1996b). As a result of this conversion the total net generation estimates differ slightly from EIA published totals by fuel type.
n   Renewables include solar, wind, wood, biomass and geothermal energy sources.
Source: U.S. DOE, 1996b; U.S. DOE,1999c.
As shown in Table 3-2, coal and natural gas generation
grew the fastest among the utility fuel source categories,
each increasing by 17 percent between 1991 and 1998.
Nuclear generation increased by 10 percent, while
hydroelectric generation increased by 9 percent.  Utility
generation from renewable energy sources decreased
significantly (29 percent) between 1991 and 1998.
Nonutility generation has grown at a much higher rate
between 1991 and 1998 with the passage of legislation
aimed at increasing competition in the industry.  Nonutility
hydroelectric generation grew the fastest among the energy
source categories, increasing 134 percent from 1991 to
1998.  Generation from petroleum-fired facilities, either
newly constructed or purchased from utilities, also
increased substantially, with a 124 percent increase in
generation between 1991 and 1989.
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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
Figure 3-3 shows total net generation for the U.S. by
primary fuel source for utilities and nonutilities. Electricity
generation from coal-fired plants accounts for 52 percent of
total 1998 generation. Electric utilities generate 96 percent
(1,807 billion kWh) of the 1,876 billion kWh of electricity
generated by coal-fired plants. This represents
approximately 56 percent of total utility generation.  The
remaining 4 percent (68 billion kWh) of coal-fired
generation is provided by nonutilities, accounting for 17
percent of total nonutility generation. The second largest
source of electricity generation is nuclear power plants,
accounting for 19 percent of total generation and
approximately 21 percent of total utility generation.  Figure
3-3 shows that 100 percent of nuclear generation is owned
and operated by utilities.  Another significant source of
electricity generation is gas fired power plants, which
account for 59 percent of nonutility generation and 15
percent of total generation.
                      Figure 3-3: Percent of Electricity Generation By Primary Fuel Source, 1998
                                 60%-

                                 50%-

                                 40%-

                                 30%-

                                 20%-

                                 10%-
                                  0%
                                                   Primary Fuel Source

                      Renewables include biomass, other waste, solar, wind, and geothermal. Hydropower includes
                      conventional and pumped storage.

                      Source:  U.S. DOE,1999c.
The §316(b) regulation will affect facilities differently based
on the fuel sources and prime movers used to generate
electricity. As mentioned in Section 3.1.2 above, only
prime movers with a steam electric generating cycle use
substantial amounts of cooling water.

3.2.3 Geographic  Distribution
Electricity is a commodity that cannot be stored or easily
transported over long distances.  As a result, the geographic
distribution of power plants is of primary importance  to
ensure reliable supply of electricity to all customers. The
U.S. bulk power system is composed of three major
networks, or power grids:

••   the Eastern Interconnected System, consisting of one
    third of the U.S. to the east of the Missouri River;

>   the Western Interconnected System, which includes
    the Southwest and areas west of the Rocky Mountains;
    and

>   the Texas Interconnected System, the smallest of the
    three, consisting of the majority of Texas.
                                                                                                              3-9

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§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
The Texas system is not connected with the other two
systems, while the other two have limited interconnection to
each other.  The Eastern and Western systems are
integrated or have links to the Canadian grid system. The
Western and Texas systems have links with Mexico as well.

These major networks contain extra-high voltage
connections that allow for power transactions from one part
of the network to another. Wholesale transactions can take
place within these networks to reduce power costs, increase
supply options, and ensure system reliability. Reliability
refers to the ability of power systems to meet the demands of
consumers at any given time. Efforts to enhance reliability
reduce the chances of power outages.

The North American Electric Reliability Council (NERC) is
responsible for the overall reliability, planning, and
coordination of the power grids.  This voluntary
organization was formed in 1968 by electric utilities,
following a 1965 blackout in the Northeast. NERC  is
organized into nine regional councils that cover the  48
contiguous states, Hawaii, part of Alaska, and portions of
Canada and Mexico.  These regional councils are
responsible for the overall coordination of bulk power
policies that affect their regions' reliability and quality of
service. Each NERC region deals with electricity reliability
issues in its region, based on available capacity and
transmission constraints. The councils also aid in the
exchange of information among member utilities in each
region and among regions.  Service areas of the member
utilities determine the boundaries of the NERC regions.
Though limited by the larger bulk power grids described in
the previous section, NERC regions do not necessarily
follow any state boundaries. Figure 3-4 below provides a
map of the NERC regions, which include:

*   ECAR - East Central Area Reliability Coordination
    Agreement
>   ERCOT - Electric Reliability Council of Texas
*   FRCC - Florida Reliability Coordinating Council
>   MAAC - Mid-Atlantic Area Council
>   MAIN - Mid-America Interconnect Network
-   MAPP - Mid-Continent Area Power Pool (U.S.)
-   NPCC - Northeast Power Coordinating Council (U.S.)
*   SERC - Southeastern Electric Reliability Council
-   SPP - Southwest Power Pool
-   WSCC - Western Systems Coordinating Council (U.S.)

Alaska and Hawaii are not shown in Figure 3-4. Part of
Alaska is covered by the Alaska Systems Coordinating
Council (ASCC), an affiliate NERC member.  The state of
Hawaii also has its own reliability authority (HI).
                     Figure 3-4: North American Electric Reliability Council (NERC) Regions
                                                                                   MAAC
                                                                               FRCC
                Source:  EIA, 1996 http://www.eia.doe.gov/cneaf/electricity/chg_str^fuel/html/fig02.html
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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
The §316(b) regulation may affect plants located in
different NERC regions differently.  Economic
characteristics of new facilities affected by the proposed
§316(b) New Facility Rule are likely to vary across regions
by fuel mix, and the costs of fuel transportation, labor, and
construction. Baseline differences in economic
characteristics across regions may influence the impact of
the §316(b) regulation on profitability, electricity prices,
and other impact measures.  The proposed §316(b) New
Facility Rule may have little or no impact on electricity
prices in a particular region if relatively few new plants in
the region incur costs under the rule. Conversely, regions
that have a large number of new facilities with costs under
the proposed §316(b) New Facility Rule could experience a
greater impact on electricity prices.

Table 3-3 shows the distribution of all existing utilities,
utility-owned plants, and capacity by NERC region.  The
table shows that while the Mid-Continental Area Power
Pool (MAPP) has the largest number of utilities, 24 percent,
these utilities only represent five percent of total capacity.
Conversely, only five percent of the nation's utilities are
located in the Southeastern Electric Reliability Council
(SERC). These utilities are generally larger and account for
23 percent of the industry's total generating capacity.
Table 3-3: Distribution of Generation Utilities, Utility Plants, and Capacity by NERC Region, 1998
NERC Region
ASCC
ECAR
ERCOT
FRCC
HI
MAAC
MAIN
MAPP
NPCC
SERC
SPP
WSCC
Total
Generation Utilities
Number
51
96
27
18
3
21
62
211
67
42
143
125
866
% of Total
6%
11%
3%
2%
0%
2%
7%
24%
8%
5%
17%
14%
100%
Plants
Number
166
283
106
63
16
121
196
398
372
320
259
742
3,042
% of Total
5%
9%
3%
2%
1%
4%
6%
13%
12%
11%
9%
24%
100%
Capacity
Total MW
1,925
110,039
55,890
38,667
1,580
56,824
52,916
35,737
46,303
164,745
45,807
118,349
728,782
% of Total
0%
15%
8%
5%
0%
8%
7%
5%
6%
23%
6%
16%
100%
 Source: Form EIA-860A, 1998; Form EIA-861, 1998.
                                                                                                              3-11

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§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
Table 3-4 shows the distribution of existing nonutility
plants and capacity by NERC region.  The table shows that
the Western Systems Coordinating Council (WSCC) has the
largest number of plants, 585, and accounts for the largest
share of total nonutility capacity, 29 percent.
Table 3-4: Distribution of Nonutility Plants and Capacity by NERC Region, 1998
NERC Region
ASCC
ECAR
ERCOT
FRCC
HI
MAAC
MAIN
MAPP
NPCC
SERC
SPP
WSCC
Unknown
Total
Plants
Number
28
101
40
62
8
95
105
74
384
246
55
585
203
1,986
% of Total
1%
5%
2%
3%
0%
5%
5%
4%
19%
12%
3%
29%
10%
100%
Capacity
Total MW
401
7,861
7,798
3,631
706
6,035
3,361
1,562
18,115
13,501
2,319
27,957
4,295
97,542
% of Total
0%
8%
8%
4%
1%
6%
3%
2%
19%
14%
2%
29%
4%
100%
              Source: Form EIA-860B, 1998.
 3.3   EXISTINS PLANTS WITH CWISs
        AND  NPDES PERMITS

 Section 316(b) rulemaking applies to facilities that are point
 sources under the Clean Water Act and directly withdraw
 cooling water from a water of the United States. Among
 power plants, only those facilities employing a steam
 electric generating technology require cooling water and are
 therefore of interest to this analysis. Steam electric
 generating technologies include units with steam electric
 turbines and combined-cycle units with a steam component.

 The following sections describe existing utility and
 nonutility power plants that would be subject to the
 proposed §316(b) New Facility Regulation if they were new
facilities.  These are existing facilities that hold a National
Pollutant Discharge Elimination System (NPDES) permit
and operate a CWIS.5 The remainder of this chapter will
refer to these facilities as "existing §316(b) plants."

Utilities and nonutilities are discussed in separate
subsections because the data sources, definitions, and
potential factors influencing the magnitude of impacts are
different for the two sectors. Each subsection presents the
following information:

    *•   Ownership type: This section discusses existing
        §316(b) facilities with respect to the entity that
        owns them. Utilities are classified into investor-
    5  The proposed §316(b) New Facility Regulation only applies
to new facilities that withdraw more than two MOD.
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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
        owned utilities, rural electric cooperatives,
        municipalities, and other publicly-owned utilities
        (see Section 3.1.3). This differentiation is
        important because EPA is required to separately
        consider impacts on governments in its regulatory
        development (see Chapter 10: UMRA and Other
        Economic Analyses for the analysis of government
        impacts of the proposed §316(b) New Facility
        Regulation).  The utility ownership  categories do
        not apply to nonutilities. The ownership type
        discussion for nonutilities differentiates between
        two types of plants: (1) plants that were  originally
        built by nonutility power producers  ("original
        nonutility plants") and (2) plants that used to be
        owned by utilities but that were sold to nonutilities
        as the result of industry deregulation ("former
        utility plants"). For both groups, differentiation by
        ownership type is important because of the
        different economic and operational  characteristics
        of the different types.

        Ownership size: This section presents information
        on the Small Business Administration (SBA) entity
        size of the owners of existing §316(b) facilities.
        EPA is required to consider economic impacts on
        small entities when developing new regulations
        (see Chapter 9: Regulatory Flexibility
        Analysis/SBREFA for the small entity analysis of
        new facilities subject to the proposed §316(b) New
        Facility Regulation).

        Plant size: This section discusses the  existing
        §316(b) facilities by the size of their generation
        capacity.  The size of a plant is important because
        it partly determines its need for cooling water.

        Geographic distribution: This section discusses
        plants by NERC region. The geographic
        distribution of facilities is important because a high
        concentration of facilities with costs under a
        regulation could lead to impacts on a  regional
        level. Everything else being equal,  the higher the
        share of plants with costs, the higher the likelihood
        that there may be economic and/or system
        reliability impacts as a result the regulation.

        Water body and cooling system type: This  section
        presents information on the type of water body
        from which existing §316(b) facilities draw their
        cooling water and the type of cooling  system they
        operate.  The type of source water body determines
        the compliance requirements of new facilities
        subject to the proposed §316(b) New Facility
        Regulation (see Chapter 6: Regulatory Options for
        a discussion of compliance requirements for the
        different water body types under the proposed
        §316(b) New Facility Regulation). Cooling
        systems can be either once-through or recirculating
        systems.6  Plants with once-through cooling water
        systems withdraw between 80 and 98 percent more
        water than those with recirculating systems.
    WATER USE BY STEAM ELECTRIC

    POWER PLANTS

    Steam electric generating plants are the single largest
    industrial users of water in the United States. In 1995:

    >   steam electric plants withdrew an estimated 190
        billion gallons per day, accounting for 39 percent of
        freshwater use and 47 percent of combined fresh and
        saline water withdrawals for offstream uses (uses that
        temporarily or permanently remove water from its
        source);
    >   fossil-fuel steam plants accounted for 71 percent of the
        total water use by the power industry;
    >   nuclear steam plants and geothermal plants accounted
        for 29 percent and less than 1 percent, respectively;
    >   surface water was the source for more than 99 percent
        of total power industry withdrawals;
    >   approximately 69 percent of water intake by the power
        industry was from freshwater sources, 31 percent was
        from saline sources.

                                            USGS, 1995
3.3.1 Existing §316(b)  Utility Plants
EPA identified steam electric prime movers that require
cooling water using information from the EIA data
collection Forms EIA-767 and EIA-860A.7 These prime
movers include:
    6 Once-through cooling systems withdraw water from the
water body, run the water through condensers, and discharge the
water after a single use. Recirculating systems, on the other hand,
reuse water withdrawn from the source. These systems take new
water into the system only to replenish losses from evaporation or
other processes during the cooling process. Recirculating systems
use cooling towers or ponds to cool water before passing it through
condensers again.

    7 Form EIA-767 (Steam-Electric Plant Operation and Design
Report) collects annual data from all steam electric utility plants
with a generator nameplate rating of 10 MW or larger. Form EIA-
860A (Annual Electric Generator Report) collects data used to
create an annual inventory of utilities. The data collected
includes: type of prime mover; nameplate rating; energy source;
year of initial commercial operation; operating status; cooling
water source, and NERC region.
                                                                                                              3-13

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§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
    Atmospheric Fluidized Bed Combustion (AB)
    Combined Cycle Steam Turbine with Supplementary
    Firing (CA)
    Steam Turbine - Common Header (CH)
    Combined Cycle - Single Shaft (CS)
    Combined Cycle Steam Turbine - Waste Heat Boiler
    Only (CW)
    Steam Turbine - Geothermal (GE)
    Integrated Coal Gasification Combined Cycle (IG)
    Steam Turbine - Boiling Water Nuclear Reactor (NB)
    Steam Turbine - Graphite Nuclear Reactor (NG)
    Steam Turbine - High Temperature Gas-Cooled
    Nuclear Reactor (NH)
    Steam Turbine - Pressurized Water Nuclear Reactor
    (NP)
    Steam Turbine - Solar (SS)
    Steam Turbine - Boiler (ST)
Using this list of steam electric prime movers and Form
EIA-860A information on the reported operating status of
units, EPA identified 871 facilities that have at least one
generating unit with a steam electric prime mover.
Additional information from Form EIA-767 and the UDI
database was used to determine that 678 of the  871 facilities
operate a CWIS and hold an NPDES permit. Table 3-5
provides information on the number of utilities, utility
plants, and generating units, and the generating capacity in
1998. The table provides information for the industry as a
whole, for the steam electric part of the industry, and for the
"§316(b)" part of the industry.
Table 3-5: Number of Utilities, Utility Plants, Units, and Capacity, 1998

Utilities
Plants
Units
Nameplate Capacity (MW)
Totaf
866
3,042
10,208
728,782
Steam Electric"
Number
312
871
2,231
562,117
% of Total
36%
29%
22%
77%
Steam Electric with CWIS
and NPDES Permit
Number
221
678
1,781
509,313
% of Total
26%
22%
17%
70%
          t   Includes only generating capacity not permanently shut down or sold to nonutilities.
          n   Utilities and plants are listed as steam electric if they have at least one steam electric unit.

          Source: Form EIA-860A, 1998; UDI Database, 1994.
Table 3-5 shows that the 871 steam electric plants account
for only 29 percent of all plants but for 77 percent of all
capacity. The 678 plants that withdraw cooling water from
a water of the United States and hold an NPDES permit
represent 22 percent of all plants, are owned by 26 percent
of all utilities, and account for approximately 70 percent of
reported utility generation capacity. The remainder of this
section will focus on the 678 utility plants that withdraw
from a water of the United States and hold an NPDES
permit.
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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
a.  Ownership  Type
Table 3-6 shows the distribution of the 221 utilities that
own the 678 existing §316(b) plants as well as the total
generating capacity of these entities by type of ownership.
Utilities can be divided into three major ownership
categories: investor-owned utilities, publicly-owned utilities
(including municipalities,  and federal and state-owned
utilities), and rural electric cooperatives.  Table 3-6 shows
that 32 percent of plants operated by investor-owned
utilities have a CWIS and an NPDES permit. These 523
facilities account for 77 percent of all existing plants with a
CWIS and an NPDES permit.  In contrast, the percentage of
all plants that have a CWIS and an NPDES permit is much
lower for the other ownership types: 21 percent for rural
electric cooperatives, 9 percent for municipalities, and 10
percent for other publicly owned utilities.
Table 3-6: Existing Utilities, Plants, and Capacity by Ownership Type, 1998
Ownership
Type
Investor-
Owned
Coop
Municipal
Other
Public
Total
Utilities
Total
Number
of
Utilities
171
68
566
61
866
Utilities with Plants
with CWIS and
NPDES
Number
127
22
60
12
221
%of
Total
74%
32%
11%
20%
26%
Plants
Total
Number
of
Plants
1,610
199
841
392
3,042
Plants with CWIS
and NPDES
Number
523
41
76
38
678
%of
Total
32%
21%
9%
10%
22%
Capacity (MW)
Total
Capacity
549,442
25,860
43,477
110,003
728,782
Capacity with CWIS
and NPDES
MW
435,358
16,350
17,570
40,035
509,313
%of
Total
79%
63%
40%
36%
70%
 Source:  Form EIA-860A, 1998; UDI Database, 1994; Form EIA-861, 1998.
b.  Ownership  Size
EPA used the Small Business Administration (SBA) small
entity size standards for SIC code 4911 (electric output of
less than 4 million megawatt hours per year) for investor-
owned utilities and rural electric cooperatives, and the
population-based size standard established for governmental
jurisdictions (population of less than 50,000) for publicly
owned utilities to make the small entity determination.8

Table 3-7 provides information on the total number of
utilities and utility  plants owned by small entities by type of
ownership. The table shows that 62 of the 221 utilities with
existing §316(b) plants, or 28 percent, are small.  The size
distribution varies considerably by ownership type: only 14,
    8 SBA defines "small business" as firms with an annual
electric output of four million megawatthours or less and "small
governmental jurisdictions" as governments of cities, counties,
towns, school districts or special districts with a population of less
than 50,000 people.
or 11 percent, of all investor-owned utilities with existing
§316(b) plants are small, compared 36, or 60 percent, of all
municipalities.  The same is true on the plant level: only
four percent of the 523 existing §316(b) plants owned by a
investor-owned utility are owned by a small entity. The
corresponding percentages for municipalities, other publicly
owned utilities, and electric cooperatives are 49 percent, 13
percent, and 32 percent,  respectively.

Table 3-7 also shows the percentage of all small utilities
and all plants owned by  small utilities that comprise the
"§316(b)" part of the industry. Nine percent of all small
utilities operate existing §316(b) plants.  Again, the
distribution varies considerably by ownership type: only
seven percent of all small municipal utilities operate a
§316(b) plant, compared to 29 percent of all small investor-
owned utilities. At the plant level, 11 percent of plants
operated by investor-owned small  entities have CWISs  and
NPDES permits compared to only  five percent of small
municipally-owned plants.
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§316(b) EEA Chapter 3 for New Facilities
Profile of the Electric Power Industry
Table 3-7: Small Utilities and Utility Plants by Ownership Type, 1998
Ownership
Type
Total
Total Small Unknown % Small
With CWIS and NPDES Permit
Total Small % Small
Small with
CWIS and
NPDES/ Total
Small
Utilities
Investor-Owned
Coop
Municipal
Other Public
Total
171
68
566
61
866

Investor-Owned
Coop
Municipal
Other Public
Total
1,610
199
841
392
3,042
48
50
549
26
673

180
145
765
82
1,172
12
0
6
18
36

48
0
7
141
196
28%
74%
97%
43%
78%
127
22
60
12
221
Plants
11%
73%
91%
21%
39%
523
41
76
38
678
14
9
36
3
62

19
13
37
5
74
11%
41%
60%
25%
28%
29%
18%
7%
12%
9%

4%
32%
49%
13%
11%
11%
9%
5%
6%
6%
 Source:  Form EIA-860A, 1998; EIA-861, 1998.
3-16

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§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
c.  Plant Size
EPA also analyzed the steam electric facilities with a CWIS
and an NPDES permit with respect to their generating
capacity. Of the 678 plants, 336 (50 percent) have a total
nameplate capacity of 500 megawatts or less, and 480 (71
percent) have a total capacity of 1,000 megawatts or less.
Figure 3-5 presents the distribution of existing utility plants
with a CWIS and an NPDES permit by plant size.
                     Figure 3-5: Number of Existing Utility Plants with CWIS and NPDES Permit
                                                 by Plant Size, 1998
                                                   UETO
                                                     Size Category (in MW)

                     Source:  Form EIA-860A, 1998.
                                                                                                         3-17

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§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
d.  Geographic Distribution
Table 3-8 shows the distribution of existing §316(b) utility
plants by NERC region.  The figure shows that there are
considerable differences between the regions in terms of
both the number of existing utility plants with a CWIS and
an NPDES permit and the percentage of all plants that they
represent.  Excluding Alaska, which only has one utility
plant with a CWIS and an NPDES permit,  the percentage of
existing §316(b) facilities ranges from six percent in the
Western Systems Coordinating Council (WSCC) to 58
percent in the Electric Reliability Council of Texas
(ERCOT). The East Central Area Reliability Coordination
Agreement (ECAR) has the highest absolute number of
existing §316(b) facilities with 124, or 44 percent of all
facilities, followed by the Southeastern Electric Reliability
Council (SERC) with 122 facilities, or 38 percent of all
facilities. The smallest percentage of water use for utilities
is observed in the West and Southwest (the WSCC and the
Southwest Power Pool, SPP, have the lowest percentages
with six and 19 percent, respectively), where water
conservation has long been an important issue.
Table 3-8: Utility Plants by NERC Reqion, 1998
NERC
Region
ASCC
ECAR
ERCOT
FRCC
HI
MAAC
MAIN
MAPP
NPCC
SERC
SPP
WSCC
Total
Total
Number of
Plants
166
283
106
63
16
121
196
398
372
320
259
742
3.042
Plants with CWIS and
NPDES Permit
Number
1
124
61
32
6
52
60
63
59
122
50
48
678
% of Total
1%
44%
58%
51%
38%
43%
31%
16%
16%
38%
19%
6%
22%
                                                          Source:  Form EIA-860A, 1998; Form EIA-861, 1998.
z.  Water Body and Cooling System Type
The impacts of CWISs on the aquatic habitats from which
they withdraw water depend on several factors, including
the type of water body, the location of the CWIS relative to
sensitive biological areas, the intake flow volume, and the
velocity. This section characterizes existing §316(b) utility
plants with respect to two of those characteristics: water
body type and cooling system type.

Table 3-9 shows that most of the existing utility plants with
a CWIS and an NPDES permit draw water from a
freshwater river (369, or 54 percent). The next most
frequent water body types are lakes or reservoirs with 141
plants (21 percent) and estuaries or tidal rivers with 88
plants (13 percent).

The table also shows that most of these plants, 403 or 59
percent, employ a once-through cooling system.  Of the
plants that withdraw from an estuary, the most sensitive
type of water body, only five percent use a closed cycle
system while 85 percent have a once through system. In
contrast, 28 percent of plants located on freshwater rivers
and on lakes or reservoirs have a closed cycle system.
Table 3-9: Number of Utility Plants by Water Body Type and Cooling System Type
Water Body
Type
Estuary
Lake
Ocean
River
Other/ Unknown
Total
Cooling System Type
Closed Cycle
Number
4
39
1
102
22
168
%of
Total
5%
28%
6%
28%
35%
25%
Once Through
Number
75
89
16
214
9
403
%of
Total
85%
63%
89%
58%
15%
59%
Combination
Number
7
12
1
52
6
78
%of
Total
8%
9%
6%
14%
10%
12%
Unknown
Number
2
]
0
]
25
29
%of
Total
2%
1%
0%
0%
40%
4%
Total
88
141
18
369
62
678
 Source:  Form EM-767, 1997; UDI database, 1994; Form EIA-860A, 1998.
3-18

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
3.3.2 Existing  §316(b) Nonutility Plants
EPA identified nonutility steam electric prime movers that
require cooling water using information from the EIA data
collection Forms EIA-860B and EIA-867.9 These prime
movers include:
        Atmospheric Fluidized Bed Combustion (AB)
        Combined Cycle - Auxiliary (CA)
        Combined Cycle - Total Unit (CC)
        Steam Turbine - Common Header (CH)
        Combined Cycle - Single Shaft (CS)
        Combined Cycle - Waste(CW)
        Steam Turbine - Geothermal (GE)
        Combined Cycle - ICG (IG)
        Nuclear BWR (MB)
        Steam Turbine Graphite Nuclear Reactor (NG)
        Nuclear HTGR(NH)
        Nuclear LWBR(NL)
        Nuclear PWR (NP)
        Nuclear Unknown (NU)
        Steam Turbine - Flourized Bed (SF)
        Steam Turbine - Solar (SS)
        Steam Turbine - Boiler (ST)
Forms EIA-860B and EIA-867 include two types of
nonutilities: facilities whose primary business activity is the
generation of electricity, and manufacturing facilities that
operate industrial boilers in addition to their primary
manufacturing processes.  The discussion of existing
§316(b) nonutilities focuses on those nonutility facilities
that generate electricity as their primary line of business.10
Manufacturing facilities with industrial boilers are included
in the industry profiles in Chapter 4: Profile of
Manufacturing Industries.

Using the identified list of steam electric prime movers and
Form EIA-860B information on the reported operating
status of units, EPA identified  422 facilities that have at
least one generating unit with a steam electric prime mover.
Additional information from the  §316(b) Industry Screener
determined that 85 of the 422 facilities operate a CWIS and
hold an NPDES permit. Table 3-10 provides information
on the number of parent entities, nonutility plants, and
generating units, and their generating capacity in 1998.
The table provides information for the industry as a whole,
for the steam electric part of the industry, and for the
"§316(b)" part of the industry.
    9 Form EIA-860B (Annual Nonutility Electric Generator
Report) is the equivalent of Form EIA-860A for utilities. It is the
annual inventory of nonutility plants and collects data on the type
of prime mover, nameplate rating, energy source, year of initial
commercial operation, and operating status. Form EIA-867
(Annual Nonutility Power Producer Report) is the predecessor of
Form EIA-860B. Form EIA-867 contained similar, but more
detailed, information to Form EIA-860B but was confidential.
The EIA provided EPA with a list of nonutilities with steam
electric prime movers from the 1996 Form EIA-867, which formed
the basis for the EPA's screener questionnaire and this analysis.
    10 EPA identified manufacturing facilities operating steam
electric industrial boilers using SIC code information from Form
EIA-867. Those facilities were removed from the analysis. The
discussion of steam electric nonutilities and nonutilities with
CWIS and NPDES permit, therefore, only includes facilities with
electricity generation as their main line of business. However, the
same information was not available for facilities with non-steam
prime movers. Industry totals, therefore, include industrial
boilers.
                                                                                                             3-19

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
Table 3-10: Number of Nonutilities, Nonutility Plants, Units, and Capacity, 1998

Parent Entities
Plants
Units
Nameplate Capacity (MW)
Totaf
1,443
1,986
5,161
97,543
Total Steam Electric
Nonutilities"
349
422
555
39,260
Nonutilities with CWIS and NPDES
Permit"
62
85
117
21,627
 t    Includes all facilities with at least one non-retired unit in Form EIA-860B data (both nonutilities and industrial boilers).
 n   Includes only nonutility plants generating electricity as their primary line of business.

 Source:  Form EIA-860, 1998; Form EIA-860B, 1998; Form EIA-867, 1996; EPA Industry Screener Questionnaire: Phase I Cooling
          Water Intake Structures, 1999.
a.  Ownership Type
Nonutility power producers that generate electricity as their
main line of business fall into two different categories:
"original nonutility plants" and "former utility plants."

«>  Original nonutility plants
For the purposes of this analysis, original nonutility plants
are those that were originally built by a nonutility. These
plants primarily include facilities qualifying under the
Public Utility Regulatory Policies Act of 1978 (PURPA),
cogeneration facilities, independent power producers, and
exempt wholesale generators under the Energy Policy Act of
1992 (EPACT).

EPA identified original nonutility plants with a CWIS and
an NPDES permit through the §316(b) Industry Screener
Questionnaire: Phase I Cooling Water Intake Structures
which was sent to all nonutilities with a steam electric
prime mover listed in the 1996 Form EIA-867.  This profile
further differentiates original nonutility plants by their
primary Standard Industrial Classification (SIC) code, as
reported in the screener questionnaire. Reported SIC codes
include:
«>  Former utility plants
Former utility plants are those that used to be owned by a
utility power producer but have been sold to a nonutility as
a result of industry deregulation.  These were identified
from Form EIA-860B by their plant code.11
Table 3-11 shows that original nonutilities account for the
vast majority of plants (1,942 out of 1,986, or 98 percent).
Only 44 out of the 1,986 nonutility plants, or 2 percent,
were formerly owned by utilities. However, these 44
facilities account for more than 23 percent of all nonutility
generating capacity. Eighty-five of the 1,986 nonutility
plants operate a CWIS and hold an NPDES permit. Most of
these §316(b) facilities (61, or 72 percent) are original
nonutility plants.  Only 24 of the 85  §316(b) nonutility
plants are former utility plants, but they account for 78
percent of all §316(b) nonutility capacity.

The table also shows that only three percent of all original
nonutility plants have a CWIS and an NPDES permit,12
compared to 55 percent of all former utility plants.
        4911 -  Electric Services
        4931 -  Electric and Other Services Combined
        4939 -  Combination Utilities, Not Elsewhere
                 Classified
        4953 -  Refuse Systems
        4961 -  Steam and Air-Conditioning Supply
    11  Utility plants have an identification code number that is
less than 10,000 whereas nonutilities have a code number greater
than 10,000.  When utility plants are sold to nonutilities, they
retain their original plant code.

    12  This percentage understates the true share of §316(b)
nonutility plants because the total number of plants includes
industrial boilers while the number of §316(b) nonutilities does
not.
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§316(b) EEA Chapter 3 for New Facilities
                                                                               Profile of the Electric Power Industry
Table 3-11: Existing Nonutility Firms, Plants, and Capacity by SIC Code, 1998
SIC Code
4911
4931
4939
4953
4961
Former
Utility
Plants
Total
Firms
Total
Number
of Firms
1,429?
14"
1,443
Firms with Plants with
CWIS and NPDES
Number
25
11
4
7
1
14
62
%of
Total
3%
100%
4%
Plants
Total
Number
of Plants
1,942
44
1,986
Plants with CWIS
and NPDES
Number
29
15
5
12
1
24
85
%of
Total
3%
55%
4%
Capacity (MW)
Total
Capacity
75,020,663
22,522,775

97,543,438
Capacity with CWIS
and NPDES
MW
1,930,113
1,981,596
377,430
404,555
8,332
16,924,508

21,626,535
%of
Total
6%
75%
22%
 T
 TT
    Individual numbers may not add up to total due to individual rounding.
    Three firms owning former utility plants do not operate a plant with a CWIS and an NPDES permit.  However, three former
    utility plants with a CWIS and an NPDES permit are not listed in Form EIA-860B. While the number of firms with plants with
    CWIS and NPDES permit was adjusted to reflect the owners of the three missing plants, the total number of firms was not.  The
    real percentage of firms that own former utility plants with a CWIS and an NPDES permit is therefore less than 100 percent.

Source:  Form EIA-860B, 1998.
                                                                                                                3-21

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
b.  Ownership Size
EPA used the Small Business Administration (SBA) small
entity size standards to determine the number of existing
§316(b) nonutility plants owned by small firms. Table 4-12
shows that of the 61 original nonutility plants with CWISs
and NPDES permits 17 percent are owned by a small entity.
Another 26 percent are owned by a firm of unknown size
which may also qualify as a small entity.
Information on the business size for former utility plants
was not readily available.  EPA classified 14 facilities as
owned by a large firm because their plant-level electricity
generation in 1997 exceeded 4 million MWh, the SBA
threshold for SIC code 4911. All other facilities were
classified as "unknown" for the purposes of this profile.
Table 4-12: Number of Nonutility Plants with CWIS and NPDES Permit by Firm Size, 1998
SIC Code
4911
4931
4939
4953
4961
Total Original
Nonutilities
Former Utility Plants^
Large
No.
14
10
3
6
1
34
14
% of SIC
48%
69%
75%
50%
100%
57%
58%
Small
No.
6
2
1
1
0
10
0
% of SIC
20%
15%
25%
10%
0%
17%
0%
Unknown
No.
9
2
0
5
0
16
10
% of SIC
32%
15%
0%
40%
0%
26%
42%
Total
29
15
5
12
1
61
24
 t   Individual numbers may not add up to total due to individual rounding.
 T   Information on the size of nonutility firms owning former utility plants was not available.  Fourteen facilities were classified as
     large because their plant-level electricity generation in 1997 exceeded 4 million MWh, the SBA threshold for SIC code 4911.
     All other facilities were classified as "unknown."

 Source:  EPA Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999; D&B Database, 1999.
3-22

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
c.  Plant Size
EPA also analyzed the steam electric nonutilities with a
CWIS and an NPDES permit with respect to their
generating capacity.  Figure 3-7 shows that the original
nonutility plants are much smaller than the former utility
plants. Of the 61 original utility plants, 28 (46 percent)
have a total nameplate capacity of 50 MW or less and 46
(75 percent) have a capacity of 100 MW or less. No
original nonutility plant has a capacity of more than 1,000
MW. In contrast, only three (13 percent) former utility
plants are smaller than 250 MW while 13 (54 percent) are
larger than 500 MW and eight (33 percent) are larger than
1,000 MW.
                           Figure  3-6: Distribution of Existing Nonutility Plants with In-Scope
                                           Characteristics by Capacity, 1998
                                                                         D Number of Plants
                                                                           (Original)
                                                                         • Number of Plants
                                                                           (Former Utilities)
                                            Size Category (MW)

                      Data for 78 nonutility plants. Seven plants are listed without steam electric capacity in 1998
                      EIA-860B.

                      Source:  Form EIA-860B, 1998; EPA Industry Screener Questionnaire: Phase I Cooling
                              Water Intake Structures, 1999.
                                                                                                             3-23

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§316(b) EEA Chapter 3 for New Facilities
Profile of the Electric Power Industry
d.  Geographic Distribution
Table 3-13 shows the distribution of existing §316(b)
nonutility plants by NERC region.  The figure shows that
the Northeast Power Coordinating Council (NPCC) has the
highest absolute number of existing §316(b) nonutility
plants with 33, or 39 percent of all 85 plants with a CWIS
and an NPDES permit, followed by the Western System
Coordinating Council (WSCC) with 12 plants.

The East Central Area Reliability Coordination Agreement
(ECAR) and the Mid-Atlantic Area Council (MAAC) have
the largest percentage of plants with a CWIS and an
NPDES permit compared to all nonutility plants, with 11
percent each.13
    13 As explained earlier, the total number of plants includes
industrial boilers while the number of plants with a CWIS and an
NPDES permit does not. Therefore, the percentages are likely
higher than presented.
Table 3-13: Nonutility Plants by NERC Region,
1998
NERC
Region
ASCC
ECAR
ERCOT
FRCC
HI
MAAC
MAIN
MAPP
NPCC
SERC
SPP
WSCC
Not
Available
Total
Total
Number
of Plants
28
101
40
62
8
95
105
74
384
246
55
585
203
1,986
Plants with CWIS &
NPDES Permit
Number
1
11
0
2
0
10
I
1
33
8
0
12
4
85
% of Total
4%
11%
0%
4%
0%
11%
1%
2%
9%
3%
0%
2%
2%
4%




                                                          Source: Form EIA-860, 1998; Form EIA-860B, 1998;
                                                                  EPA Industry Screener Questionnaire: Phase I
                                                                  Cooling Water Intake Structures, 1999.
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§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
e.  Water  Body and Cooling System Type
Table 3-14 shows the distribution of existing §316(b)
nonutility plants by type of water body and cooling system.
Table 3-9 shows that most of the original nonutility plants
with a CWIS and an NPDES permit draw water from a
freshwater river (38, or 62 percent) while most of the
former utility plants withdraw from an ocean (8, or 33
percent).
The table also shows that most of the original nonutility
plants (37 or 60 percent) employ a closed cycle cooling
system while most of the former utility plants (18, or 75
percent) have a once through system. Ten original
nonutility plants withdraw from an estuary, with only two of
them employing a closed cycle system.  Among the former
utility plants, five withdraw from an estuary, all with a once
through system.
Table 3-14: Number of Nonutility Plants by Water Body Type and Cooling System Type
Water Body
Type
Cooling System
Closed Cycle Once Through
XT , %of XT , %of
Number Number
Total Total
Original
Estuary
Lake
Ocean
River
Other/
Unknown
Total
2
10
0
24
0
37

Estuary
Lake
Ocean
River
Other/
Unknown
Total
0
1
0
3
0
4
22%
82%
0%
64%
0%
60%

0%
100%
0%
50%
0%
17%
8
2
0
13
0
23

5
0
8
3
2
18
78%
18%
0%
33%
0%
38%
Former I
100%
0%
100%
50%
50%
75%
Combination Unknown
XT U %0f XT U %0f
Number Number
Total Total
Total
Nonut fifties
0.00
0.00
0.00
1.15
0.00
1
tility Plant
0
0
0
0
0
0
0%
0%
0%
3%
0%
2%
s
0%
0%
0%
0%
0%
0%
0
0
0
0
0
0

0
0
0
0
2
2
0%
0%
0%
0%
0%
0%
10
13
0
38
0
61

0%
0%
0%
0%
50%
8%
5
1
8
6
4
24
 Source:  Form EIA-860B, 1998; EPA Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
                                                                                                         3-25

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
3.4   INDUSTRY OUTLOOK

This section discusses industry trends that are currently
affecting the structure of the electric power industry and
may therefore affect the magnitude of impacts from §316(b)
regulation. The most important change in the electric
power industry  is deregulation - the transition from a
highly regulated monopolistic to a less regulated, more
competitive industry.  Subsection 3.4.1 discusses the current
status of deregulation.  Subsection 3.4.2 presents a summary
of forecasts from the Annual Energy Outlook 2000.

3.4.1 Current Status of Industry
        Deregulation
The electric power industry is evolving from a highly
regulated, monopolistic industry with traditionally-
structured electric utilities to a less regulated, more
competitive industry.14 The industry has traditionally been
regulated based on the premise that the supply of electricity
is a natural monopoly, where a single supplier could
provide electric services at a lower total cost than could be
provided by several competing suppliers. Today, the
relationship between electricity consumers and suppliers is
undergoing substantial change.  Some states have
implemented plans that will change the procurement and
pricing of electricity significantly, and many more plan to
do so during the first few  years of the 21st century
(Beamon, 1998).

a.  Key  Changes in  the Industry s Structure
Industry deregulation already  has and continues  to
fundamentally change the structure of the electric power
industry.  Some of the key changes include:

    >   Provision of services: Under the traditional
        regulatory system, the generation, transmission,
        and distribution of electric power were handled by
        vertically-integrated utilities.  Since the mid-1990s,
        federal and state  policies have led to increased
        competition in the generation sector of the
        industry. Increased competition has resulted in a
        separation of power generation, transmission, and
        retail distribution services.  Utilities that provide
    14 Several key pieces of federal legislation have made the
changes in the industry's structure possible. The Public Utility
Regulatory Policies Act (PURPA) of 1978 opened up
competition in the generation market by creating a class of
nonutility electricity-generating companies referred to as
"qualifying facilities." The Energy Policy Act (EPACT) of
1992 removed constraints on ownership of electric generation
facilities, and encouraged increased competition in the wholesale
electric power business (Beamon, 1998).
        transmission and distribution services will continue
        to be regulated and will be required to divest of
        their generation assets. Entities that generate
        electricity will no longer be subject to geographic
        or rate regulation.

    >   Relationship between electricity providers and
        consumers: Under traditional regulation, utilities
        were granted a geographic franchise area and
        provided electric service to all  customers in that
        area at a rate approved by the regulatory
        commission. A consumer's electric supply choice
        was limited to the utility franchised to serve their
        area. Similarly, electricity suppliers were not free
        to pursue customers outside their designated
        service territories. Although most consumers will
        continue to receive power through their local
        distribution company (LDC), retail competition
        will allow them to select the company that
        generates the electricity they purchase.

    >   Electricity prices: Under the traditional system,
        state and federal authorities regulated all aspects of
        utilities' business operations, including their
        prices. Electricity prices  were determined
        administratively for each utility, based on the
        average cost of producing and  delivering power to
        customers and a reasonable rate of return. As a
        result of deregulation, competitive market forces
        will set generation prices.  Buyers and sellers of
        power will negotiate through power pools or one-
        on-one to set the price of electricity.  As in all
        competitive markets, prices will reflect the
        interaction of supply and demand for electricity.
        During most time periods, the price of electricity
        will be set by the generating unit with the highest
        operating costs needed to meet spot market
        generation demand (i.e., the "marginal cost" of
        production) (Beamon, 1998).

b.  New Industry Participants
The Energy Policy Act of 1992 (EPACT) provides for open
access to transmission systems, to allow nonutility
generators to enter the wholesale market more easily. In
response to these requirements, utilities are proposing to
form Independent System Operators (ISOs) to operate the
transmission grid, regional transmission groups, and open
access same-time information systems (OASIS) to inform
competitors of available capacity on their transmission
systems. The advent of open transmission access has
fostered the development of power marketers and power
brokers as new participants in the electric power industry.
Power marketers buy and sell wholesale electricity and fall
under the jurisdiction of the Federal Energy Regulatory
Commission  (FERC), since they take ownership of
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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
electricity and are engaged in interstate trade. Power
marketers generally do not own generation or transmission
facilities or sell power to retail customers.  A growing
number of power marketers have filed with the FERC and
have had rates approved. Power brokers do not take
ownership of electricity and are not regulated by the FERC.

c.  State Activities
Many states are taking steps to promote competition in their
electricity markets. The status of these efforts varies across
states.  Some states are just beginning to study what a
competitive electricity market might mean; others are
beginning pilot programs; still others have designed
restructured electricity markets and passed enabling
legislation. The following states have already enacted
restructuring legislation (U.S. DOE, 2000b):

    >   Arizona
    *   Arkansas
    *   California
    *   Connecticut
    *   Delaware
    *   District of Columbia
    >   Illinois
    >   Maine
    *   Maryland
    *   Massachusetts
    >   Michigan
    *   Montana
    *   Nevada
    >   New Hampshire
    *   New Jersey
    >   New Mexico
    -   Ohio
    *   Oklahoma
    *   Oregon
    *   Pennsylvania
    *   Rhode Island
    *   Texas
    >•   Virginia
    *   West Virginia

Even in states where consumer choice is available,
important aspects of implementation may still be undecided.
Key aspects of implementing restructuring include
treatment of stranded costs, pricing of transmission and
distribution services, and the design market structures
required to ensure that the benefits of competition flow to
all consumers (Beamon, 1998).

3.4.2 Energy Market Model Forecasts
This section discusses  forecasts of electric energy supply,
demand, and prices based on data and modeling by the EIA
and presented in the Annual Energy Outlook 2000 (U.S.
DOE, 1999b). The EIA models future market conditions
through the year 2020, based on a range of assumptions
regarding overall economic growth, global fuel prices, and
legislation and regulations affecting energy markets.  The
projections are based on the results from EIA's National
Energy Modeling System (NEMS).  The following
discussion present EIA's reference case results.

«>  Electricity Demand
EIA expects electricity demand to grow by approximately
1.4 percent annually between 1998 and 2020. This growth
is driven by an estimated 1.5 percent annual increase in the
demand for electricity by residential customers.  Residential
demand growth results from an increase in the number of
households, particularly in the south where most new homes
use central air conditioning, as well as increased
penetration of consumer electronics.  EIA expects electricity
demand from the commercial sector to increase by 1.2
percent annually over the same forecast period, largely in
response to an annual increase in commercial floor space.
Industrial electricity demand is  expected to increase by 1.3
percent annually, due mostly to an increase in industrial
output.

«>  Capacity Retirements
EIA expects total nuclear generation capacity to decline by
an estimated 41 percent (40 gigawatts) between 1998 and
2020 due to nuclear power plant retirement.  To produce
this estimate, EIA compared the costs associated with
extending the life of aging nuclear generation facilities to
the cost of building new capacity to meet the need for
additional electricity  generation.  EIA determined that plant
aging related investments for most nuclear plants would
exceed the cost of building new capacity. EIA also  expects
total fossil fuel-fired generation capacity to decline due to
retirements. Retirements of fossil-steam plants is estimated
to decrease capacity in this sector by approximately 16
percent (i.e., 28 gigawatts) over the same time period.

«>  Capacity Additions
Additional generation capacity will be needed to meet the
estimated growth in electricity demand and offset the
retirement of existing capacity.  The EIA expects plant
owners to employ other options, such as life extensions or
repowering, before building new capacity.  The Agency
forecasts that utilities will choose technologies for new
generation capacity that seek to minimize cost while
meeting environmental and emission constraints. Of the
new capacity forecast to come on-line between 1998 and
2020, 90 percent is expected to be combined-cycle or
combustion turbine technology.  This additional capacity is
expected to be fueled by natural gas or both oil and natural
gas, and to supply primarily peak and intermediate capacity.
Another seven percent of additional capacity is expected to
be provided by new coal-fired plants, while the remaining
three percent is forecast to come from renewable
technologies.
                                                                                                           3-27

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§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
«>  Electricity Generation
EIA expects increased electricity generation from both
natural gas and coal-fired plants to meet growing demand
and to offset lost capacity due to plant retirements.  Coal-
fired plants are expected to continue to account for
approximately half of the industry's total generation.
Although coal-fired generation is predicted to increase
steadily between 1998 and 2020, its  share of total
generation is expected to decrease from 52 percent to an
estimated 49 percent. This decrease in the share of coal
generation is in favor of less capital-intensive and more
efficient natural gas generation technologies.  The share of
total generation associated with gas-fired technologies is
forecast to increase from approximately 14 percent in 1998
to an estimated 31 percent in 2020, replacing nuclear power
as the second largest source of electricity generation.
Generation from oil-fired plants is expected to decline over
the forecast period as oil-fired steam generators are replaced
by gas turbine technologies.

«>  Electricity Prices
EIA expects the average wholesale price of electricity, as
well as the price paid by customers in each sector
(residential, commercial, and industrial), to decrease
between 1998 and 2020 as a result of competition among
electricity suppliers.  Specific market restructuring plans
differ from state to state. Some states have begun
deregulating their electricity markets; EIA expects most
states to phase in increased customer access to electricity
suppliers. Increases in the cost of fuels like natural gas and
oil are not expected to increase electricity prices; these
increases are expected to be offset by reductions in the price
of other fuels and shifts to more efficient generating
technologies.
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§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
GLOSSARY
Combined-Cycle Turbine: An electric generating
technology in which electricity is produced from otherwise
lost waste heat exiting from one or more gas (combustion)
turbines. The exiting heat is routed to a conventional boiler
or to heat recovery steam generator for utilization by a
steam turbine in the production of electricity. This process
increases the efficiency of the electric generating unit.

Distribution: The portion of an electric system that is
dedicated to delivering electric energy to an end user.

Electricity Available to Consumers: Power available
for sale to customers.  Approximately 8 to 9 percent of net
generation is lost during the transmission and distribution
process.

Energy Policy Act (EPACT): In 1992 the EPACT
removed constraints on ownership of electric generation
facilities and encouraged increased competition on the
wholesale electric power business.

Gas Combustion Turbine: A gas turbine typically
consisting of an axial-flow air compressor and one or more
combustion chambers, where liquid or gaseous fuel is
burned and the hot gases are passed to the turbine. The hot
gases expand to drive the generator and are then used to run
the compressor.

Generation: The process of producing electric energy by
transforming other forms of energy.  Generation is also the
amount of electric energy produced, expressed in
watthours (Wh).

Gross Generation: The total amount of electric energy
produced by the generating units at a generating station or
stations, measured at the generator terminals.

Internal Combustion Engine: An internal combustion
engine has one or more cylinders in which the process of
combustion takes place, converting energy released from the
rapid burning of a fuel-air mixture into  mechanical energy.
Diesel or gas-fired engines are the principal fuel types used
in these generators.

Kilowatthours (kWh): One thousand watthours (Wh).

Nameplate Capacity: The amount of electric power
delivered or required for which a generator, turbine,
transformer, transmission circuit, station, or system is rated
by the manufacturer.

Net Capacity: The amount of electric  power delivered or
required for which a generator, turbine, transformer,
transmission circuit, station, or system is rated by the
manufacturer, exclusive of station use, and unspecified
conditions for a given time interval.

Net Generation: Gross generation minus plant use
from all plants owned by the same utility.

Nonutility: A corporation, person, agency,  authority, or
other legal entity or instrumentality that owns electric
generating capacity and is not an electric utility. Nonutility
power producers include qualifying cogenerators, qualifying
small power producers, and other nonutility  generators
(including independent power producers) without a
designated franchised service area, and which do not file
forms listed in the Code of Federal Regulations, Title 18,
Part 141.
(http://www.eia.doe.gov/cneaf/electricity/epavl/html/Glossa
ry.htm)

Other Prime Movers: Methods of power generation other
than steam turbine, combined-cycle, gas
combustion turbine, internal combustion engine,
and water turbine.  Other prime movers include:
geothermal prime mover, solar prime mover, wind prime
mover, and biomass prime mover.

Prime Movers: The engine, turbine, water wheel or
similar machine that drives an electric generator.  Also, for
reporting purposes, a device that directly converts energy to
electricity, e.g., photovoltaic,  solar, and fuel cell(s).

Public  Utility Regulatory Policies Act  (PURPA): In
1978 PURPA opened up competition in the generation
market by creating a class of nonutility electricity-
generating companies referred to as "qualifying facilities."

Reliability: Electric system reliability has two components:
adequacy and security. Adequacy is the ability of the electric
system to supply customers at all times, taking into account
scheduled and unscheduled outages of system facilities.
Security is the ability of the electric system to withstand
sudden disturbances, such as electric short circuits or
unanticipated loss of system facilities.
(http://www.eia.doe.gov/oiaf/elepri97/glossary.html)

Steam  Turbine: A generating unit in which the prime
mover is a steam turbine. The turbines convert thermal
energy (steam or hot water) produced by generators or
boilers to mechanical energy or shaft torque. This
mechanical energy is used to power electric  generators,
including combined cycle electric generating units, which
convert the mechanical energy to electricity.

Stranded Costs: The difference between revenues under
competition and costs of providing service, including the
                                                                                                         3-29

-------
§316(b) EEA Chapter 3 for New Facilities
                   Profile of the Electric Power Industry
inherited fixed costs from the previous regulated market.
(http://www.eia.doe.gov/oiaf/elepri97/glossary.html)

Transmission: The movement or transfer of electric
energy over an interconnected group of lines an associated
equipment between points of supply and points at which it
is transformed for delivery to consumers, or is delivered to
other electric systems.  Transmission is considered to end
when the energy is transformed for distribution to the
consumer.

Utility: A corporation, person, agency, authority, or other
legal entity or instrumentality that owns and/or operates
facilities within the United States, its territories, or Puerto
Rico for the generation, transmission, distribution, or sale of
electric energy primarily for use by the public and files
forms listed in the Code of Federal Regulations, Title 18,
Part 141. Facilities that qualify as cogenerators or small
power producers under the Public Utility Regulatory
Policies Act (PURPA) are not considered electric utilities.
(http://www.eia.doe.gov/cneaf/electricity/epavl/html/Glossa
ry.htm)

Water Turbine: A unit in which the turbine generator is
driven by falling water.

Watthour (Wh): An electrical energy unit of measure
equal to 1 ampere flowing under pressure of 1 volt at unity
power factor.
3-30

-------
§316(b) EEA Chapter 3 for New Facilities
                  Profile of the Electric Power Industry
REFERENCES
Beamon, J. Alan.  1998. Competitive Electricity Prices: An
Update. @ http://www.eia.doe.gov/oiaf/issues98/cep.html.

Dun and Bradstreet (D&B).  1999. Data as of April 1999.

Edison Electric Institute (EEI). Power Statistics Database.
Utility Data Institute, McGraw Hill.  1994.

Joskow, Paul L. 1997. "Restructuring, Competition and
Regulatory Reform in the U.S. Electricity Sector," Journal
of Economic Perspectives, Volume 11, Number 3 - Summer
1997-Pages 119-138.

U.S. Department of Energy (DOE). 2000a.  Energy
Information Administration (EIA). Electric Power Industry
Overview. @
http://www.eia.doe.gov/cneaf/electricitv/page/prim2.html.

U.S. Department of Energy (DOE). 2000b.  Energy
Information Administration (EIA). Status of State Electric
Industry Restructuring Activity as of July 2000. @
http://www.eia.doe.gov/cneaf/electricitv/chg str/regmap.ht
ml.

U.S. Department of Energy (DOE). 1999a.  Energy
Information Administration (EIA). "Market Trends."
Annual Energy Outlook 2000.
Report#DOE/EIA-0383(2000). December 19.

U.S. Department of Energy (DOE). 1999b.  Energy
Information Administration (EIA). Electric Power Annual
1998 Volume I.
Report#DOE/EIA-0348(98)/l.

U.S. Department of Energy (DOE). 1999c.  Energy
Information Administration (EIA). Electric Power Annual
1998 Volume II. Report#DOE/EIA-0348(98)/2.

U.S. Department of Energy (DOE). 1998. Energy
Information Administration (EIA).  Form EIA-860A and
Form EIA-860B Annual Electric Generator Reports, Form
EIA-861 Annual Electric Utility Report, @
http://www.eia.doe.gov/cneaf/electricitv/page/data.html.

U.S. Department of Energy (DOE). 1997. Energy
Information Administration (EIA).  Form EIA-767 Steam-
Electric Plant Operation and Design Report, @
http://www.eia.doe.gov/cneaf/electricitv/page/data.html.

U.S. Department of Energy (DOE). 1996a. Energy
Information Administration (EIA) Electric Power Annual
1995 Volume I.

U.S. Department of Energy (DOE). 1996b. Energy
Information Administration (EIA).  Electric Power Annual
1995 Volume II.

U.S. Department of Energy (DOE). 1996. Energy
Information Administration (EIA).  Impacts of Electric
Power Industry Restructuring on the Coal Industry.  @
http://www.eia.doe.gov/cneaf/electricitv/chg  str fuel/html/c
hapterl .html.

U.S. Environmental Protection Agency (EPA). 1999.
Industry Screener Questionnaire: Phase I Cooling Water
Intake Structures.

U.S. Geological Survey (USGS). 1995. Estimated Use of
Water in the United States in 1995. @
http://water.usgs.gov/watuse/pdfl995/html/.
                                                                                                       3-31

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§316(b) EEA Chapter 3 for New Facilities                                  Profile of the Electric Power Industry
                                This  Page Intentionally Left  Blank
3-32

-------
§316(b) EEA Chapter 4 for New Facilities
                            Profile of Manufacturers
Chapter  4:   Profile  of   Manufacturers
INTRODUCTION

Based on the 1982 Census of Manufactures and
information from effluent guideline development
materials, EPA identified four industrial categories other
than SIC Major Group 49 that are most likely to be
affected by the §316(b) regulation. These industries,
referred to collectively here as "manufacturers," were
selected because of their known use of cooling water.
They are Paper and Allied Products (SIC 26), Chemicals
and Allied Products (SIC 28), Petroleum and Coal
Products (SIC 29), and Primary Metal Industries (SIC 33).

While facilities in other industrial groups also use cooling
water and may therefore be subject to §316(b) regulations,
their total cooling water intake flow is believed to be small
relative to that of the four selected industries.  Therefore,
this Profile of Manufacturers focuses on the manufacturing
groups listed above.
CHAPTER CONTENTS
4A  Paper and Allied Products (SIC 26)  	4A-
4B  Chemicals and Allied Products (SIC 28)	4B-
4C  Petroleum and Coal Products (SIC 29)	4C-
4D  Steel (SIC 331) 	4D-
4E  Aluminum (SIC 333/5) 	4E-
Glossary	4Glos-
The remainder of this chapter is divided into five sections:1

    -   4A: Paper and Allied Products (SIC 26)
    -   4B: Chemicals and Allied Products (SIC 28)
    -   4C: Petroleum and Coal Products (SIC 29)
    •>   4D: Steel (SIC 331)
    -   4E: Aluminum (SIC 333/335)

Each industry section is further divided into the following
four subsections: (1) domestic production, (2) structure and
competitiveness, (3) financial condition and performance,
and (4) §316(b) facilities. Each sector profile only presents
data for SIC codes that were identified in the §316(b)
Industry Screener Questionnaire as important users of
cooling water directly withdrawn from a water of the United
States.2
                                                        1 Steel and aluminum are the two dominant products in the
                                                    U.S. industrial metals industry.  These two markets, however, are
                                                    structured differently and are therefore discussed in two separate
                                                    profile sections.

                                                        2 The electronic version of this report is comprised of six
                                                    separate files, one for each of the five industries and one for the
                                                    glossary of terms.
                                                                                                  4-i

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§316(b) EEA Chapter 4 for New Facilities                                             Profile of Manufacturers
                                This Page Intentionally Left Blank
4 - a

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
4A    PAPER AND ALLIED  PRODUCTS
        (SIC 26)

EP A's Industry Screener Questionnaire: Phase I Cooling
Water Intake Structures identified five 4-digit SIC codes in
the Paper and Allied Products industry (SIC 26) with at least
one existing facility that operates a CWIS, holds a NPDES
permit, and withdraws more than two million gallons per day
(MOD) from a water of the United States, and uses at least
25 percent of its intake flow for cooling purposes (facilities
with these characteristics are hereafter referred to as
"§316(b) facilities"). For each of the five SIC codes, Table
4A-1 below provides a description of the industry sector, a
list of primary products manufactured, the total number of
screener respondents, and the number and percent of
§316(b) facilities.
Table 4A-1: §316(b) Facilities in the Paper and Allied Products Industry (SIC 26)
SIC
2611
2621
2631
SIC Description
Pulp Mills
Paper Mills
Paperboard Mills
Total

.,-, Sanitary Paper
2676 „ ,
Products

Total 26
Important Products Manufactured
Pulp from wood or from other materials, such as rags,
linters, wastepaper, and straw; integrated logging and pulp
mill operations if primarily shipping pulp.
Paper from wood pulp and other fiber pulp, converted paper
products; integrated operations of producing pulp and
manufacturing paper if primarily shipping paper or paper
products.
Paperboard, including paperboard coated on the paperboard
machine, from wood pulp and other fiber pulp; and
converted paperboard products; integrated operations of
producing pulp and manufacturing paperboard if primarily
shipping paperboard or paperboard products.

Number of Screener Respondents
Total
66
286
187
539
§316(b) Facilities
No.'
43
128
45
216
Other Paper and Allied Products Sectors
Sanitary paper products from purchased paper, such as
facial tissues and handkerchiefs, table napkins, toilet paper, . .
towels, disposable diapers, and sanitary napkins and
tampons.
Total Paper and Allied Products (SIC 26)
543 219
%
65.8%
44.5%
23.9%
40.0%

100.0%

40.4%
 ]   Information on the percentage of intake flow used for cooling purposes was not available for all screener respondents.
     Facilities for which this information was not available were assumed to use at least 25% of their intake flow for cooling water
     purposes The reported numbers of §316(b) facilities may therefore be overstated.

 Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999; Executive Office of the
         President, Office of Management and Budget, Standard Industrial Classification Manual 1987.
The responses to the Screener Questionnaire indicate that
three main sectors account for the largest numbers of
§316(b) facilities in the Paper and Allied Products industry:
(1) Pulp Mills (SIC 2611), (2) Paper Mills (SIC 2621), and
(3) Paperboard Mills (SIC 2631). Fifty-eight percent of the
219 §316(b) facilities in the Paper and Allied Products
industry are paper mills. Paperboard mills and pulp mills
account for 21 and 20 percent of facilities, respectively. The
                                                                                                             4A-1

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
remainder of the Paper and Allied Products profile therefore
focuses on these three industries.

4A.1  Domestic Production
The Paper and Allied Products industry is one of the top ten
U.S. manufacturing industries. It also ranks in the top five
sectors in sales of nondurable goods. Growth in the paper
industry is closely tied to overall gross domestic product
(GDP) growth because nearly all of the industry's products
are consumer oriented. Over the past decade, however,
exports have taken on an increasingly important role, and
growth in a number of key foreign paper and paperboard
markets is expected to play an important role in the health
and expansion of the U.S. Paper and Allied Products
industry in the future  (McGraw-Hill, 1999).

The industry is one of the primary users of energy, second
only to the chemicals  and metals industries. However, 56
percent of total energy used in 1996 to 1997 was self-
generated, second only to the chemicals industry (McGraw-
Hill, 1999).

a.  Output
The U.S. Paper and Allied Products industry experienced
record sales in 1995.  The value of shipments for pulp,
paper, and paperboard mills totaled $4.7, $38.2, and $20.2
billion, respectively. In 1996, lower domestic and foreign
demand, declining prices, and inventory drawdowns led to a
decline in the industry's total shipments by 2.2 percent in
real terms (MCGraw-Hill, 1998).  More recently, however,
consecutive years of increasing demand, slowly increasing
prices, higher capacity utilization rates, and inventory
drawdowns have led to better industry performance.

Figure 4A-1 shows the trend in                     and
      added for the three profiled sectors between 1987
and 1996.3  Value of shipments and value added are two of
the most common measures of manufacturing output.  They
provide insight into the overall economic health and outlook
for an industry.  Value of shipments is the sum of the
receipts a manufacturer earns from the sale of its outputs.  It
is an indicator of the overall size of a market or the size of a
firm in relation to its market or competitors.  Value added is
used to measure the value of production activity  in a
particular industry.  It is the difference between the value of
shipments and the value of inputs used to make the products
sold.
                                                              3 Terms highlighted in bold and italic font are further
                                                          explained in the glossary.

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Paper and Allied Products
        Figure 4A-1: Value of Shipments and Value Added for Profiled Paper and Allied Products Sectors
                                                ($1999 millions)
                                        Value of Shipments ($1999 millions)
45000
40000 -
35000
30000 -
25000 -
9ft ODD
15000
10000 -
5000 -
Q


„-"••• ' ' ' -'. 	 ' 	 '' "^-



»___—— -A — - 	 ._ _jt__ _.—-*— — "




1987 1988 1989 1990 1991 1992 1993 1994 1995 1996


-•-Pulp Mills (SIC 2611)
' Paper Mills (SIC 2621)
-A— Paperboard Mills (SIC 2631)

                                           Value Added ($1999 millions)
0^ f\f\f\
1f\ f\f\f\
1 ^ f\f\f\
in r\r\r\
1U,UUU
^ nnn
n


i1 • , \

»t r
t — A
*" ^ * ^*_^— ^
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

— •— Pulp Mills (SIC 261 1)
Paper Mills (SIC 2621)
	 Paperboard Mills (SIC 263 1)


 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                          4A-3

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
b.  Prices
Most products of the Paper and Allied Products industry are
commodities. Within these almost purely competitive
markets, prices are established by supply and demand.  Price
levels in the U.S. paper industry are therefore closely tied to
domestic and foreign demand as well as industry capacity
and operating rates, which determine supply (S&P, 1999).

The paper industry suffered from low prices throughout the
early 1990s. These price depressions were the  result of the
paper boom of the late 1980s which prompted the industry
to make heavy investments in capacity expansions.
However, lengthy construction periods mean that the new
capacity often becomes operational when industry
conditions begin to slow.  When production of  a given paper
grade increases just as demand slows, the excess supply
gives rise to dramatic price declines. The capacity
expansions in the 1980s and weakening demand in the  early
1990s thus resulted in overcapacity and a period of
supply/demand imbalance which led to low prices and weak
operating conditions in the industry (S&P, 1999).
More recently, the industry has grown in a much more
disciplined manner: capacity increases in the paper and
paperboard sector were limited to 1.9 percent and 1.2
percent in 1997 and 1998, respectively, compared to an
average growth rate of 2.5 percent over the 10 preceding
years.  This is partly the result of firms seeking expansion
through the acquisition of existing mills rather than the
construction of new facilities, increasing a firm's capacity
but not of the industry overall. Prices have started to
recover as a result of the reduction in inventories and the
better balance between  supply and demand. However, the
Asian financial crisis, which began in 1997, and the ensuing
decrease in demand from affected Asian markets, have
somewhat slowed this recovery (S&P, 1999).

Figure 4A-2 shows the                 index (PPI) at the
4-digit SIC code for the profiled pulp, paper, and
paperboard sectors. The PPI is a family of indexes that
measure price changes from the perspective of the seller.
This profile uses the PPI to inflate nominal monetary values
to constant dollars.
Figure 4A-2: Producer Price Indexes for Profiled Paper and Allied Products Sectors


^c nnn
on nnn
i ^ nnn
in nnn
^ nnn
n



if"'"" 	 """"•' '"••--. '•'-•-•-,.-.,,, ,. ..•'••-''-—-'—. - - 	 -£""" ' '"""-
- t — A
^ * ^* *~~ ^*
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996



-•— Pulp Mills (SIC 261 1)
•-•—Paper Mills (SIC 2621)
Paperboard Mills (SIC 263 1)



  Source:  Bureau of Labor Statistics, Producer Price Index.
4A-4

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
c.  Number of Facilities and  Firms
The Statistics of U.S. Businesses reports that the number of
facilities and firms in the Pulp Mills sector has increased by
almost 35 percent between 1990 and 1996. One of the
reasons for this growth has been the dramatic increase in the
number of mills that produce deinked recycled market pulp.
These are secondary fiber processing plants that utilize
recovered paper and paperboard as their sole source of raw
material. Producers of deinked market pulp have
experienced strong demand over the past several years in
both U.S. and foreign markets.  As a result, the U.S. deinked
recycled market pulp capacity more than doubled between
1994 and 1998 (McGrraw-Hill, 1998).

Growth in the number of facilities and firms in the other
Paper and Allied Products sectors has been considerably
slower.  These sectors have been characterized by
overcapacity in the 1990s which has limited the rate of
construction of new facilities.  More recently, there have
been shutdowns in all three profiled Paper and Allied
Products sectors. In 1998 and 1999, 577,000 and 2.5
million tons of paper and paperboard capacity were removed
from the capacity base.  Over the same period, more than
one million tons of pulp capacity were removed (Pponline,
1999).

Tables 4 A-2 and 4 A-3 present the number of facilities and
firms for the three profiled Paper and Allied Products
sectors between 1989 and 1996.
Table 4A-2: Number of Facilities for Profiled Paper and Allied Products Sectors
Year
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1989-1996
Pulp Mills (SIC 2611)
Number of Percent
Facilities Change
46 n/a
46 0%
53 15%
44 -17%
46 5%
52 13%
53 2%
62 17%
34.8%
Paper Mills (SIC 2621)
Number of Percent
Facilities Change
322 n/a
327 2%
349 7%
324 -7%
306 -6%
316 3%
317 0%
344 9%
6.8%
Paperboard Mills (SIC 2631)
Number of Percent
Facilities Change
221 n/a
226 2%
228 1%
222 -3%
217 -2%
218 0%
219 0%
228 4%
3.2%
 Source:  Small Business Administration, Statistics of U.S. Businesses.
                                                                                                          4A-5

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Paper and Allied Products
Table 4A-3: Number of Firms for Profiled Paper and Allied Products Sectors
Year
1990
1991
1992
1993
1994
1995
1996
Percent Change
1990-1996
Pulp Mills (SIC 2611)
Number of Percent
Firms Change
31 n/a
37 19%
29 -22%
32 10%
37 16%
32 -14%
43 34%
38.7%
Paper Mills (SIC 2621)
Number of Percent
Firms Change
158 n/a
186 18%
161 -13%
153 -5%
163 7%
163 0%
186 14%
17.7%
Paperboard Mills (SIC 2631)
Number of Percent
Firms Change
102 n/a
102 0%
95 -7%
99 4%
96 -3%
93 -3%
101 9%
-1.0%
 Source:  Small Business Administration, Statistics of U.S. Businesses.
4A-6

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
d.  Employment  and  Productivity
The U.S. Paper and Allied Products industry is among the
most modern in the world. It has a highly skilled labor force
and is characterized by large capital expenditures which are
largely aimed at production improvements.

              in the three profiled paper industry sectors
has remained relatively constant between 1987 and 1992.
However, between 1992 and 1996, employment has steadily
decreased in the Paper Mills sector. This trend may partly
be the result of the continuing globalization process where
producers haven striven to implement technological
improvements covering distribution, handling, processing,
converting, and environmental protection.

Figure 4A-3 below presents employment levels for the three
profiled Paper and Allied Products sectors between 1987
and 1996.
                    Figure 4A-3:  Employment for Profiled Paper and Allied Products Sectors













~ ...: 	 — 	 r r: 	 ::> 	 <-'-. 	 	




*— — — ^_— —A————*"" 	 ~* 	 — — 4
* ~ ~ "TA 	 ~ A""™ "*"

• • • -« 	 ' 	 » . »
* 	 • • -« 	 « 	 » 	 •
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996




—•—Pulp Mills (SIC 2611)
--•—Paper Mills (SIC 2621)

-^ir- Paperboard Mills (SIC 2631)




  L

 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                         4A-7

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
Table 4 A-4 presents the change in value added per labor
hour, a measure of labor productivity, for each of the
profiled industry sectors between 1987 and 1996. The table
shows that labor productivity in the Pulp Mills sector has
been relatively volatile, posting several double-digit gains
and losses between 1987 and 1996. These changes have
been primarily driven by fluctuations in value added.
Overall, the sector's productivity decreased by 17 percent
during this period. The Paper Mills and Paperboard Mills
sectors have remained more stable and have experienced
overall labor productivity changes of 10 percent and -3
percent, respectively.
Table 4A-4: Productivity Trends for Profiled Paper and Allied Products Sectors, Millions of $1999
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent
Change
1987-
1996
Pulp Mills (SIC 2611)
Value
Added
2,554
2,881
3,199
2,910
2,631
2,824
2,119
2,354
2,813
2,128

Prod.
Hours
(mill.)
24
24
25
28
28
26
23
22
23
24

Value
Added/Hour
No.
107
121
126
105
95
107
92
108
124
89
Percent
Change
n/a
13%
4%
-17%
-9%
13%
-15%
18%
15%
-28%
-17%
Paper Mills (SIC 2621)
Value
Added
17,479
18,958
18,193
17,739
16,955
16,795
16,414
16,789
19,523
17,733

Prod.
Hours
(mill.)
213
215
214
211
212
215
212
206
201
197

Value
Added/Hour
No.
82
88
85
84
80
78
77
82
97
90
Percent
Change
n/a
7%
-4%
-1%
-5%
-2%
-1%
6%
19%
-7%
10%
Paperboard Mills (SIC 2631)
Value
Added
8,668
9,808
9,286
8,802
8,160
9,092
8,609
8,999
9,853
8,995

Prod.
Hours
(mill.)
89
91
89
91
87
88
90
94
98
95

Value
Added/Hour
No.
98
108
104
97
94
103
96
96
101
95
Percent
Change
n/a
10%
-4%
-7%
-3%
9%
-7%
0%
5%
-6%
-3%
 Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
e.  Capital Expenditures
The Paper and Allied Products industry is a highly capital
intensive industry.  Capital-intensive industries are
characterized by large manufacturing facilities which reflect
the economies of scale required to manufacture products
efficiently. New capital expenditures are needed to
extensively modernize, expand, and replace existing
capacity to meet growing demand.  Consistent high levels of
capital expenditures have made the Paper and Allied
Products industry one of the most modern industries in the
world (Stanley,  2000). The total level of capital
expenditures for the pulp, paper, and paperboard industries
was $5.8 billion in 1996  (in constant $1999). The Paper
Mills and Paperboard Mills sectors accounted for
approximately 89 percent of that spending (see  Table 4A-5).
Most of the spending is for production improvements
(through existing machine upgrades, retrofits, or new
installed equipment),  environmental concerns, and increased
recycling (McGraw Hill, 1999).
New capital expenditures for both the Pulp Mills and
Paperboard Mills sectors have dramatically increased during
the time period of 1987 to 1996, rising 161 and 127 percent,
respectively. Most of the investment occurred in the late
1980s, followed by declines in the early  1990s. The capital
investments made in the late 1980s was for capacity
expansion in response to the paper boom (S&P,  1999).
Since 1992, capital spending has leveled off in all three
profiled industries. This trend was reversed in 1996, when
industry spending returned to the level of the early 1990s as
a result of revived orders due to increased global economic
activity and dwindling customer inventories (S&P, 1999).

A fair amount of the industry's new capital expenditures has
been spent on environmental equipment. The Department of
Commerce estimates that environmental spending has
accounted for about 14 percent of all capital outlays made
by the Paper and Allied Products industry in  1996 (S&P,
1999).
Table 4A-5: Capital Expenditures for Profiled Paper and Allied Products Sectors ($1999 millions)
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1987- 1996
Pulp Mills (SIC 2611)
Capital _
„ ... Percent
Expenditures _,
($1999 millions) <-nange
242 n/a
268 104%
530 98.0%
841 58.6%
998 18.8%
800 -19.9%
494 -38.2%
332 -32.8%
311 -6.4%
632 103.4%
161%
Paper Mills (SIC 2621)
Capital _
„ ... Percent
Expenditures _,
($1999 millions) <-nange
3,346 n/a
3,618 8.1%
5,435 50.2%
4,459 -17.9%
3,879 -13.0%
3,213 -17.2%
3,160 -1.6%
3,491 10.5%
2,327 -33.3%
2,884 23.9%
-14%
Paperboard Mills (SIC 2631)
Capital _
„ ... Percent
Expenditures _,
($1999 millions) ^nange
1,022 n/a
1,790 75.1%
1,842 2.9%
3,405 84.8%
2,555 -25.0%
2,390 -6.4%
1,984 -17.0%
1,911 -3.7%
1,719 -10.0%
2,321 35.0%
127%
 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                           4A-9

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§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
f.  Capacity Utilization
                     measures actual output as a
percentage of total potential output given the available
capacity. Capacity utilization is an index used to identify
potential excess or insufficient capacity in an industry and
can help project whether new investment is likely.

The capacity utilization trends for all three profiled
industries are consistent with the trends in investments,
supply, and demand discussed earlier.  Capacity utilization
rates increased between 1989 and  1994, and then plummeted
in 1995.  This sharp drop was the result of the inventory
drawdown cycle which had begun in 1995 in response to
low demand and oversupply (McGraw-Hill, 1999).  As
inventories were sold off and global economic activity
started to pick up, capacity utilization rates began to increase
again in 1996 (S&P, 1999).

According to the U.S.  Industry and Trade Outlook, a
utilization rate in the range of 92 to 96 percent is necessary
for the Pulp Mills sector to remain productive and profitable
(McGraw-Hill,  1999).

Figure 4A-4 presents the capacity utilization indexes from
1989 to 1998 for the three profiled sectors.
Figure 4A-4: Capacity Utilization Indexes for Profiled Paper and Allied Products Sectors








88



-'" A
^ - / \ ••
y^\ / \ ^\
7 ^ VX
/


1989 1990 1991 1992 1993 1994 1995 1996 1997 1998


— 1— Pulp Mills (SIC 2611)
-•-Paper Mills (SIC 2621)
—*— Paperboard Mills (SIC 2631)



 Source: Department of Commerce, Bureau of the Census, Current Industrial Reports, Survey of Plant Capacity.
4A-10

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§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
4A.2  Structure and  Competitiveness of
        the Paper and  Allied  Products
        Industry

Paper and Allied Products companies range in size from
giant corporations having billions of dollars of sales, to
small producers with revenue bases a fraction of the size.
Because all Paper and Allied Products companies use the
same base materials in their production, most manufacture
more than one product (S&P, 1999).

Most products offered by the Paper and Allied Products
makers are commodities.  Within these almost purely
competitive markets, prices are established by the
intersection of supply and demand.  To escape the extreme
price volatility of commodity markets, many smaller
manufacturers have differentiated their products by offering
value-added grades. The smaller markets for value-added
products make this avenue less available to the larger firms
(S&P, 1999).

The paper industry has also begun to focus on consolidation.
In recent years, most companies with a desire for greater
operating capacity have looked to mergers rather than
building new pulp or paper mills (S&P, 1999).  New
capacity additions in 1999 in the Paper and Allied Products
industry were at their lowest level in the past ten years and
the trend in the future seems to remain the same
(Pponline.com, 2000).
                                                                                                      4A-11

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§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
a.  Geographic Distribution
The geographic distribution of pulp, paper, and paperboard
mills varies with the different types of mills. Traditional
pulp mills tend to be located in regions where pulp trees are
harvested from natural stands or tree farms. The Southeast
(GA, AL, NC, TN, FL, MS, KY), Northwest (WA, CA,
AK), Northeast (ME) and Northern Central (WI, MI)
regions account for the major concentrations of pulp mills.
Deinked market pulp plants, on the other hand, are typically
located close to a large metropolitan area, which can
consistently provide large amounts of recovered paper and
paperboard (McGrraw-Hill, 1998).

Paper mills are more widely distributed, located in proximity
to pulping operations and/or near converting sector markets.
Since the primary market for paperboard products is
manufacturing, the distribution of paperboard mills is
similar to that of the manufacturing industry in general.
            Figure 4A-5: Number of Facilities in Profiled Paper and Allied Products Sectors by State
       Number of Facilities
             0-2
             3-10
             11-18
             19-32
             33-47

 Source:  Department of Commerce, Bureau of the Census, Census of Manufacturers, 1992.
4A-12

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§316(b) EEA Chapter 4 for New Facilities                            Manufacturing Profile: Paper and Allied Products
b.  Facility Size                                           *   Thirty -three percent of all Paper Mills have more
Most of the facilities in the three profiled industry sectors               than 50° employees. They account for 71 percent
fall in the middle employment size categories, with either               of the sector's value of shipments.
100 to 249, or 250 to 499 employees. However, the larger
facilities (those with 500 or more employees) account for the        -   Sixteen Percent of a11 Paperboard Mills employ
majority of the industries' value of shipments.                         50° Pe°Ple or more- These facilities account for 56
                                                                  percent of the sector's value of shipments.
The number of pulp mills is noticeably smaller than that of
paper and paperboard mills, and pulp mills have               The distribution of the number of facilities and the
considerably lower value of shipments. The size distribution    industries' value of shipment are presented in Figure 4A-6
of all three profiled sectors, however, is very similar.           below.

    *•   Seventy-one percent of all Pulp Mills employ 100
        employees or more.  These facilities account for
        approximately 97 percent of the sector's value of
        shipments.
                                                                                                          4A-13

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Paper and Allied Products
             Figure 4A-6: Number of Facilities and Value of Shipments by Employment Size Category
                                   for Profiled Paper and Allied Products Sectors
                                             Number of Facilities (1992)
                  70-


                  60-


                  50-


                  40-


                  30-


                  20-


                  10-
         1 Pulp Mills (SIC 2611)
         DPaperMiUs(SIC2621)
         DPapetboaid]VHls(SIC2631)
                       1-19   2049   50-99  100-249 250499  50O999  1,000-
                                                                  2499
                                     1992 Value of Shipments (millions of $1999)
                                                                              • Pulp Mils (SIC2611)


                                                                              D Paper Mills (SIC 2621)


                                                                              D Papeitoaid MiUs (SIC 2631)
                        1-19   2049    50-99   100-249  250499  500-999 1000-2499

     Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
4A-14

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§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
c.  Firm Size
The Small Business Administration (SBA) defines small
firms in the Paper and Allied Products industries according
to the firm's number of employees. Firms in SIC codes
2611, 2621, and 2631 are defined as small if they have
fewer than 750 employees.

The size categories reported in the Statistics of U.S.
Businesses (SUSB) do not coincide with the SBA small firm
standard of 750 employees.  It is therefore not possible to
apply the SBA size thresholds precisely. The SUSB data
presented in Table 4A-6 below show the following size
distribution in 1996:

    >   27 of 43 firms in the Pulp Mills sector had less than
        500 employees. Therefore, at least 63 percent of
        firms were classified as small. These small firms
        owned 31 facilities, or 50 percent of all facilities in
        the sector.

    *•   126 of 186 (68 percent) firms in the Paper Mills
        sector had less than 500 employees. These small
        firms owned 134, or 39 percent of all paper mills.

    *•   53 of 101 firms in the PaperboardMills sector had
        less than 500 employees. Therefore, at least 52
        percent of paperboard mills were classified as
        small.  These firms owned 54, or 24 percent of all
        paperboard mills

Table 4A-6 below shows the distribution of firms, facilities,
and receipts for each profiled sector by employment size of
the parent firm.
Table 4A-6: Number of Firms, Facilities, and Estimated Receipts by Firm Size Category
for Profiled Paper and Allied Products Sectors, 1996
Employment
Size
Category
0-19
20-99
100-499
500-2499
2500+
Total
Pulp Mills (SIC 2611)
No. of
Firms
14
8
5
6
10
43
No. of
Facilities
14
8
9
9
22
62
Estimated
Receipts
($1999
millions)
23
99
95
1,011
4,034
5,262
Paper Mills (SIC 2621)
No. of
Firms
50
32
44
28
32
186
No. of
Facilities
50
33
51
52
158
344
Estimated
Receipts
($1999
millions)
36
388
2,704
3,221
26,311
32,660
Paperboard Mills SIC 2631
No. of
Firms
20
12
21
15
33
101
No. of
Facilities
20
12
22
25
149
228
Estimated
Receipts
($1999
millions)
29
143
556
1439
17405
19572
 Source:  Small Business Administration, Statistics of U.S. Businesses.
                                                                                                         4A-15

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§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
d.  Concentration  and Specialization Ratios
Concentration is the degree to which industry output is
concentrated in a few large firms.  Concentration is closely
related to entry and exit barriers with more concentrated
industries generally having higher barriers.

The four-firm concentration ratio (CR4) and the
Herfindahl-Hirschman Index (HHI) are common
measures of industry concentration.  The CR4 indicates the
market share of the four largest firms. For example, a CR4
of 72 percent means that the four largest firms in the
industry account for 72 percent of the industry's total value
of shipments. The higher the concentration ratio, the less
competition there is in the industry, other things being
equal.4 An industry with a CR4 of more than 50 percent is
generally considered concentrated.  The HHI indicates
concentration based on the largest 50 firms in the industry.
It is equal to the sum of the  squares of the market shares for
the largest 50 firms in the industry. For example, if an
industry consists of only three firms with market shares of
60, 30, and 10 percent, respectively, the HHI of this industry
would be equal to 4,600 (602 + 302 + 102). The higher the
index, the fewer the number of firms supplying the industry
and the more concentrated the industry. An industry is
considered concentrated if the HHI exceeds 1,000.

The concentration ratios for the three profiled industry
sectors remained relatively stable between 1987 and 1992.
None of the profiled industries are considered concentrated
based on the CR4 or the HHI. The Pulp Mills  sector has the
highest concentration of the three sectors with a CR4 of 48
percent and a HHI of 858 in 1992.

The specialization ratio is the percentage of the
industry's production accounted for by primary product
shipments.  The coverage ratio is the percentage of the
industry's product shipments coming from facilities from the
same primary industry.  The coverage ratio provides an
indication of how much of the production/product of interest
is captured by the facilities classified in an SIC code.

The specialization ratios presented in Table 4A-7 indicate a
relatively high degree of specialization for each profiled
Paper and Allied Products industry sector.
    4 Note that the measured concentration ratio and the HHF are
very sensitive to how the industry is defined. An industry with a
high concentration in domestic production may nonetheless be
subject to significant competitive pressures if it competes with
foreign producers or if it competes with products produced by other
industries (e.g., plastics vs. aluminum in beverage containers).
Concentration ratios are therefore only one indicator of the extent
of competition in an industry.
4A-16

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§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
Table 4A-7: Selected Ratios for Profiled Paper and Allied Products Sectors
SIC
Code
2611
2621
2631
Year
1987
1992
1987
1992
1987
1992
Total
Number
of Firms
26
29
122
127
91
89
Concentration Ratios
4 Firm
(CR4)
44%
48%
33%
29%
32%
31%
8 Firm
(CR8)
69%
75%
50%
49%
51%
52%
20 Firm
(CR20)
99%
98%
78%
77%
77%
80%
50 Firm
(CR50)
100%
100%
94%
94%
97%
97%
Herfindahl-
Hirschman
Index
743
858
432
392
431
438
Specialization
Ratio
87%
81%
91%
90%
91%
92%
Coverage
Ratio
69%
72%
96%
95%
90%
89%
 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
e.  Foreign Trade
The U.S. Paper and Allied Products industry is the most
competitive and highest-volume supplier of paper products
in the world because of its modern manufacturing base,
effective distribution network and skilled labor force. In
recent years, the importance of international trade has grown
in the Paper and Allied Products industry particularly
because of stagnant domestic sales (McGraw Hill, 1998).

The Paper and Allied Products industry has been in a period
of globalization for more than a decade.  Many U.S. Paper
and Allied Products companies are active exporters, but they
also engage in foreign production, converting, and
packaging operations,  and have joint ventures and direct
foreign capital investments in partnerships and ownerships
(Stanley, 2000).

Exports play an increasingly important role in the Paper and
Allied Products industry.  Sixty-five percent of the
industry's shipment growth between 1989 and 1998 was
derived from export sales. The expansion of international
paper markets, however, may also have negative effects.
Some of the domestic industry's key trade partners - long a
target for any excess U.S. paper production - have started to
undertake significant investments in their own world-class
production facilities (S&P, 2000).
Exports represented approximately 60 percent of the value
of shipments for the Pulp Mills sector in 1996 (see Table
4A-8). Despite improved demand in portions of Europe and
Latin America, the Asian financial crisis, which began in
1997, still affects the global pulp industry (Stanley, 2000).

This profile uses two measures of foreign competitiveness:
export dependence and import penetration.  Export
dependence is the share of value of shipments that is
exported.  Import penetration is the share of domestic
consumption met by imports. Export dependence and
import penetration for all of the profiled sectors have
remained at relatively constant levels between 1989 and
1996. Imports and exports play a much larger role in the
Pulp Mills sector than for the other two sectors. Import
penetration and export dependence levels for the Pulp Mills
sector were 55 and 61 percent, respectively, in 1996. For
the Paper and Paperboard sectors, they were 15 and 11
percent, respectively (see Table 4A-8). Another noticeable
difference between the three sectors is the presence of a
trade surplus in the Pulp Mills sector and a trade deficit in
the Paper Mills and Paperboard Mills sectors.

Table 4A-8 presents trade statistics for each of the profiled
Paper and Allied Products industry sectors.
                                                                                                          4A-17

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Paper and Allied Products
Table 4A-8: Trade Statistics for Profiled Paper and Allied Products Sectors
Y Value of imports
($1999 millions)
00 0>)

1989
1990
1991
1992
1993
1994
1995
1996
Average Annual
Growth Rate
2,321
2,274
2,158
2,179
2,166
2,407
2,519
2,355
0%

1989
1990
1991
1992
1993
1994
1995
1996
Average Annual
Growth Rate
7,935
8,095
7,817
7,674
8,364
8,039
8,530
8,719
1%
Value of Value of
exports ($1999 Shipments
millions) ($1999 millions)
(c) (d)
Pulp Mills (SIC 2611
2,771
2,623
2,942
3,351
2,878
3,111
3,160
3,041
1%
4,881
4,977
5,369
5,659
4,966
5,084
4,658
4,988
0%
Paper and Paperboard Mills (SIC
3,249
3,778
4,578
4,857
4,851
5,249
5,365
6,038
9%
54,909
55,033
53,378
55,081
54,944
58,137
58,407
56,253
0%
T» ,. Import Export
Domestic _ , r ,. tt _ *, ttt
„ ,. t Penetration" Dependence'"
Consumption' r
(e) (D (g)
)
4,430
4,629
4,585
4,487
4,254
4,379
4,017
4,302
0%
52%
49%
47%
49%
51%
55%
63%
55%
1%
57%
53%
55%
59%
58%
61%
68%
61%
1%
2621, 2631)
59,595
59,350
56,616
57,898
58,457
60,927
61,573
58,934
0%
13%
14%
14%
13%
14%
13%
14%
15%
2%
6%
7%
9%
9%
9%
9%
9%
11%
9%
 t   Implied domestic consumption based on value of shipments, imports, and exports [column d + column b - column c].
 ft   Import penetration based on implied domestic consumption and imports [column b / column e].
 tff  Export dependence based on value of shipments and exports [column c / column d].

 Source: Department of Commerce, International Trade Administration, Outlook Trends Tables.
4A-18

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§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
4A.3  Financial Condition and
        Performance
The U.S. Paper and Allied Products industry has a world-
wide reputation as a high quality, high volume, and low-cost
producer.  The industry benefits from many key operating
advantages, including a large domestic market; the world's
highest per capita consumption; a modern manufacturing
infrastructure; adequate raw material, water, and energy
resources; a highly skilled labor force; and an efficient
transportation and distribution network (Stanley, 2000).
Despite these advantages, however, the industry has faced
challenges in the past.  Domestic sales have stagnated over
the past five years, leading the industry to refocus on export
sales and direct more resources toward the world market.
Leading world producers can no longer focus on the
domestic market to achieve sales growth - they must expand
their customer base to the world market as globalization in
the industry continues into the new millennium (Stanley,
2000).
Financial performance in the Paper and Allied Products
industry is closely linked to macroeconomic cycles, both in
the domestic market and those of key foreign trade partners,
and the resulting levels of demand. Many pulp producers,
for example, have not been very profitable during most of
the 1990s as chronic oversupply, cyclical demand, rapidly
fluctuating operating rates, sharp inventory swings, and
uneven world demand has plagued the global pulp market
for more than a decade (Stanley, 2000).

Table 4A-9 presents trends in operating margins for the Pulp
Mills, Paper Mills, and Paperboard Mills sectors between
1987 and 1996. The table shows fluctuating margins in all
three sectors but especially in the Pulp Mills sector. These
fluctuation are a reflection of changes in product prices
which have resulted from oversupply in the industry.
                                                                                                         4A-19

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Paper and Allied Products
Table 4A-9: Operating Margins for Profiled Paper and Allied Products Sectors (Millions $1999)
Year

1987
1988
1989
1990
1991
1992
1993
1994
1995
1996

1987
1988
1989
1990
1991
1992
1993
1994
1995
1996

1987
1988
1989
1990
1991
1992
1993
1994
1995
Value of Shipments

4,524
4,555
4,881
4,977
5,369
5,659
4,966
5,084
4,658
4,988

35,177
36,785
36,728
36,824
35,558
36,179
35,424
37,888
38,249
36,316

18,168
18,981
18,181
18,209
17,819
18,902
19,519
20,249
20,159
Cost of Materials
Pulp Mills (SIC 2
2,118
1,870
1,938
2,302
2,911
3,063
2,885
2,824
2,140
2,969
Paper Mills (SIC
18,077
18,402
19,181
19,663
19,177
19,831
19,550
21,246
19,850
18,904
Paperboard Mills (SI
9,051
8,657
8,426
8,927
9,236
9,385
10,453
10,652
9,888
Payroll (all employees)
611)
561
484
458
533
702
714
727
642
424
635
2621)
5,604
5,234
5,114
5,277
5,570
5,981
5,920
5,929
4,703
5,139
C 2631)
2,460
2,317
2,182
2,343
2,406
2,502
2,710
2,648
2,106
Operating Margin

41%
48%
51%
43%
33%
33%
27%
32%
45%
28%

33%
36%
34%
32%
30%
29%
28%
28%
36%
34%

37%
42%
42%
38%
35%
37%
33%
34%
40%
 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
4A.4  Facilities Operating CWISs
In 1982, the Paper and Allied Products industry withdrew
534 billion gallons of cooling water, accounting for
approximately 0.7 percent of total industrial cooling water
intake in the United States.  The industry ranked 5th in
industrial cooling water use, behind the electric power
generation industry, and the chemical, primary metals, and
petroleum industries (1982 Census of Manufactures).

This section presents information from EPA''s Industry
Screener Questionnaire: Phase I Cooling Water Intake
Structures on existing facilities with the following
characteristics:

    *•   they withdraw from a water of the United States;
    -   they hold an NPDES permit;
    *   they have an intake flow of more than two MOD;
    *•   they use at least 25 percent  of that flow for cooling
        purposes.

These facilities are not "new facilities" as defined by the
proposed §316(b) New Facility Rule and are therefore not
subject to this regulation.  However,  they meet the criteria of
the proposed rule except that they are already in operation.
These existing facilities therefore provide a good indication
of what new facilities in these sectors may look like. The
remainder of this section refers to existing facilities with the
above characteristics as "§316(b) facilities."

a.  Cooling  Water Uses and Systems
Information collected in the Screener Questionnaire found
that an estimated 43 out of 66 pulp mills (65 percent),  128
out of 286 paper mills (45 percent), and 45 out of 187
paperboard mills (24 percent) meet the characteristics of a
§316(b) facility.  Most  §316(b) facilities in the profiled
Paper and Allied Products sectors use cooling water for
contact and non-contact production line or process cooling,
electricity generation, and air conditioning:

    >   Ninety-four percent of §316(b) pulp mills use
        cooling water for production line (or process)
        contact  or noncontact cooling.  The two other major
        uses of cooling water by pulp mills are electricity
        generation and air conditioning, with approximately
        73 and 64 percent of facilities, respectively.

    >•   Eighty-six percent of §316(b) paper mills use
        cooling water for production line (or process)
        contact  or noncontact cooling.  Seventy-four
        percent also use cooling water for electricity
        generation and 71 percent for air conditioning.

    *•   Almost all, 98 percent, §316(b) paperboard mills
        use cooling water for production line (or process)
        contact  or noncontact cooling.  The two other major
        uses of cooling water by pulp mills are electricity
        generation with approximately 79 percent and air
        conditioning with approximately 80 percent of
        facilities.

Table 4A-10 shows the distribution of existing §316(b)
facilities in the profiled Paper and Allied Products sectors by
type of water body and cooling system.  The table shows
that most of the existing §316(b) facilities have either a once
through system (109, or 50 percent) or employ a
combination of a once through and closed system (61, or 28
percent). The majority of existing facilities draw water from
a freshwater water stream or river (140,  or 65 percent).
Only one facility (0.5 percent) in the industry withdraws
from an ocean, and 11 (5 percent) withdraw from an estuary
or tidal river. Most of the CWISs located on an ocean or
estuary/tidal river use a once-through cooling system.

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Paper and Allied Products
Table 4A-10: Number of §316(b) Facilities by Water Body Type and Cooling System
for Profiled Paper and Allied Products Sectors
Water Body Type
Closed Cycle
No.

Estuary or Tidal River
Freshwater Stream or River
Lake or Reservoir
Lake or Reservoir/
Freshwater Stream or River
Totaf
1
7
0
0
8

Estuary or Tidal River
Freshwater Stream or River
Lake or Reservoir
Lake or Reservoir/
Freshwater Stream or River
Ocean
TotaV
0
10
5
0
0
75

Estuary or Tidal River
Freshwater Stream or River
Lake or Reservoir
Lake or Reservoir/
Freshwater Stream or River
TotaV
0
13
2
0
75
Total
Estuary or Tidal River
Freshwater Stream or River
Lake or Reservoir
Lake or Reservoir/
Freshwater Stream or River
Ocean
Totalt
1
30
7
0
0
38
%of
Total
PL
20%
33%
0%
0%
18%
PO|
0%
12%
15%
0%
0%
72%
Paper
0
0.393939
0.5
0
34%
Paper and
9%
21%
15%
0%
0%
18%
Combination
No.
Ip Mills (
2
4
2
8
16
ier Mills
1
21
6
1
0
29
board Mi
1
9
2
3
16
Allied Pro
4
34
10
12
0
61
%of
Total
SIC 2611)
40%
19%
22%
100%
39%
(SIC 2621
50%
24%
18%
20%
0%
23%
Is (SIC 2(.
0.25
0.27273
0.5
1
2 ro/
JJ /o
ducts Indi
36%
24%
21%
75%
0%
28%
Once Through
No.

2
10
4
0
16
)
1
51
22
4
1
79
>31)
3
11
0
0
14
jstry (SI
6
72
26
4
1
109
%of
Total

40%
48%
44%
0%
37%

50%
59%
65%
80%
100%
62%

0.75
0.33333
0
0
31%
C 26)
55%
51%
55%
25%
100%
51%
Unknown
No.

0
0
3
0
3

0
4
1
0
0
5

0
0
0
0
0

0
4
4
0
0
8
%of
Total

0%
0%
33%
0%
6%

0%
5%
3%
0%
0%
4%

0%
0%
0%
0%
0%

0%
3%
9%
0%
0%
4%
Grand
Total

5
21
9
8
43

1
86
34
5
1
128

4
34
4
3
45

11
140
47
16
1
216
 t   Individual numbers may not add up to total due to independent rounding.




 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.

-------
§316(b) EEA Chapter 4 for New Facilities
                                           Manufacturing Profile: Paper and Allied Products
b.  Facility Size
Paper and Allied Product facilities that withdraw more than
two MOD from a water of the U.S., hold an NPDES permit,
and use at least 25 percent of intake water for cooling
purposes are generally larger than facilities that do not meet
these criteria:

    >•   Twenty-three percent of all facilities in the overall
        Paper Mills sector have fewer than 100 employees;
        zero §316(b) facilities in that sector fall into that
        employment category.

    *•   Twenty-nine percent of all facilities in the Pulp
        Mills sector have fewer than 100 employees
        compared to 7 percent of the §316(b) facilities.
                                      >   Thirty-nine percent of all facilities in the
                                          PaperboardMills sector have fewer than 100
                                          employees compared to zero of the §316(b)
                                          facilities.

                                  The majority of §316(b) paper mills, 78 or 61 percent,
                                  employ 500-999 employees. The §316(b) paperboard mills
                                  are more evenly distributed across employment categories
                                  with 17 facilities (38 percent) employing 250-499
                                  employees, and  18 facilities (40 percent) employing 500-999
                                  employees.

                                  Figure 4A-7 shows the number of §316(b) facilities in the
                                  profiled chemical sectors by employment size category.
                        Figure 4A-7: Number of §316(b) Facilities by Employment Size
                                 for Profiled Paper and Allied Products Sectors
                     •c
60

50

40

30

20

10-

 0
                                <100        100-249       250-499      500-999

                                               Employment Size Category
                                                                               >=1000
                                     I Pulp Mills D Paper Mills Q Paperboard Mills

       Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
c.  Firm  Size
EPA used the Small Business Administration (SBA) small
entity size standards to determine the number of existing
§316(b) facilities in the three profiled Paper and Allied
Products sectors that are owned by small firms.  Firms in
this industry are considered small if they employ fewer than
750 people.

Table 4A-11 shows that §316(b) facilities in this industry
are predominantly owned by large firms. Only nine of 216
facilities, or less than five percent, are owned by a small
firm.  An additional five facilities are owned by firms of
unknown size. These may also qualify as small firms.  The
distribution of facilities by firm size is similar within the
three profiled sectors: Six and five percent of pulp and paper
mills, respectively, are owned by a small firm.  None of the
45 §316(b) facilities in the Paperboard Mills sector are
owned by a small firm.
Table 4A-11: Number of §316(b) Facilities in Profiled Paper and Allied Products Sectors by Firm Size
SIC
Code
2611
2621
2631
SIC
Description
Pulp Mills
Paper Mills
Paperboard
Mills
Total
Large
Number
38
118
45
201
% of SIC
89%
93%
100%
93%
Small
Number
3
6
0
9
% of SIC
6%
5%
0%
4%
Unknown
Number
2
3
0
J
% of SIC
5%
3%
0%
2%
Total
43
128
45
216
 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999; D&B Database, 1999.

-------
§316(b) EEA Chapter 4 for New Facilities
         Manufacturing Profile: Paper and Allied Products
 REFERENCES
Dun and Bradstreet (D&B). 1999. Data as of April 1999.

McGraw-Hill and U.S. Department of Commerce,
International Trade Administration. 1999. U.S. Industry &
Trade Outlook.

McGraw-Hill and U.S. Department of Commerce,
International Trade Administration. 1998. U.S. Industry &
Trade Outlook.

U.S. Environmental Protection Agency (EPA).  1997.  EA
for the National Emissions Standards for Hazardous Air
Pollutants for Source Category: Pulp and Paper
Production: Effluent Limitations Guidelines, Pretreatment
Standards, andNSPS: Pulp, Paper, andPaperboard
Category-Phase I. October 27, 1997.

US. Department of Energy.  Energy Information
Administration. 1997. Manufacturing Consumption of
Energy 1994.

Pponline.com.  2000.  "U.S. pulp and paper industry poised
for cyclical upswing." At:
http://www.pponline.com/db_area/archive/pponews/2000/w
k01_10_2000/28.htm. January 11,2000.

Pponline.com.  1999.  "U.S. pulp, paper, board capacity
growth'ultra slow'."  At:
http://www.pponline.com/db_area/archive/pponews/1999/w
kl2_06_1999738.htm  December 9, 1999.

Standard & Poor's (S&P). 1999. Industry Surveys. Paper
& Forest Products. October 21, 1999.

Stanley, G.L. 2000. Economic data for pulp and paper
industry shows an encouraging future. TAPPI Journal
83(l):pp. 27-32.

-------
§316(b) EEA Chapter 4 for New Facilities                          Manufacturing Profile: Paper and Allied Products
                                 This  Page Intentionally Left Blank
4A-26

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
4B     CHEMICALS AND ALLIED  PRODUCTS

        (SIC 28)

EPA's Industry Screener Questionnaire: Phase I Cooling
Water Intake Structures identified sixteen 4-digit SIC codes
in the Chemical and Allied Products Industry (SIC 28) with
at least one existing facility that operates a CWIS, holds a
NPDES permit, withdraws more than two million gallons
per day (MOD) from a water of the United States, and uses
at least 25 percent of its intake flow for cooling purposes
(facilities with these characteristics are hereafter referred to
as "§316(b) facilities"). For each of the sixteen SIC codes,
Table 4B-1 below provides a description of the industry
sector, a list of primary products manufactured, the total
number of screener respondents, and the number and percent
of §316(b) facilities.
Table 4B-1: §316(b) Facilities in the Chemicals and Allied Products Industry (SIC 28)
SIC

2812
2813
2816
2819
SIC Description

Alkalies and Chlorine
Industrial Gases
Inorganic Pigments
Industrial Inorganic Chemicals,
Not Elsewhere Classified
Total 281

Plastics Material and Synthetic
282 1 Resins, and Nonvulcanizable
Elastomers
Important Products Manufactured
Inorganic Chemicals (SIC 281)
Alkalies, caustic soda, chlorine, and soda ash
Industrial gases (including organic) for sale in
compressed, liquid, and solid forms
Black pigments, except carbon black, white pigments,
and color pigments
Miscellaneous other industrial inorganic chemicals

Plastics Material and Resins (SIC 282)
Cellulose plastics materials; phenolic and other tar
acid resins; urea and melamine resins; vinyl resins;
styrene resins; alkyd resins; acrylic resins;
polyethylene resins; polypropylene resins; rosin
modified resins; coumarone-indene and petroleum
polymer resins; miscellaneous resins
Number of Screener
Respondents
Total

28
110
26
271
435

305
§316(b) Facilities
No. t

10
4
4
17
35

14
%

35.7%
3.6%
15.4%
6.3%
8.0%

4.6%
Organic Chemicals (SIC 286)
Cyclic Organic Crudes and
2865 Intermediates, and Organic
Dyes and Pigments
Industrial Organic Chemicals,
Not Elsewhere Classified
Total 286

2823 Cellulosic Manmade Fibers
Aromatic chemicals, such as benzene, toluene, mixed
xylenes naphthalene, synthetic organic dyes, and
synthetic organic pigments
Aliphatic and other acyclic organic chemicals;
solvents; polyhydric alcohols; synthetic perfume and
flavoring materials; rubber processing chemicals;
plasticizers; synthetic tanning agents; chemical
warfare gases; and esters, amines, etc.

Other Chemical Sectors
Cellulose acetate and regenerated cellulose such as
rayon by the viscose or cuprammonium process
59
368
427

1
5
53
58

1
8.5%
14.4%
13.6%

28.6%
                                                                                                       4B-1

-------
§316(b) EEA Chapter 4 for New Facilities
                                                              Manufacturing Profile: Chemicals and Allied Products
Table 4B-1: §316(b) Facilities in the Chemicals and Allied Products Industry (SIC 28)
SIC
2824
2833
2834
2841
2873
2874
2892
2899
SIC Description
Manmade Organic Fibers,
Except Cellulosic
Medicinal Chemicals and
Botanical Products
Pharmaceutical Preparations
Soaps and Other Detergents,
Except Speciality Cleaners
Nitrogenous Fertilizers
Phosphatic Fertilizers
Explosives
Chemicals and Chemical
Preparations, Not Elsewhere
Classified
Total Other
To
Total 28
Important Products Manufactured
Regenerated proteins, and polymers or copolymers of
such components as vinyl chloride, vinylidene
chloride, linear esters, vinyl alcohols, acrylonitrile,
ethylenes, amides, and related polymeric materials
Agar-agar and similar products of natural origin,
endocrine products, manufacturing or isolating basic
vitamins, and isolating active medicinal principals
such as alkaloids from botanical drugs and herbs
Intended for final consumption, such as ampoules,
tablets, capsules, vials, ointments, medicinal
powders, solutions, and suspensions
Soap, synthetic organic detergents, inorganic alkaline
detergents
Ammonia fertilizer compounds and anhydrous
ammonia, nitric acid, ammonium nitrate, ammonium
sulfate and nitrogen solutions, urea, and natural
organic fertilizers (except compost) and mixtures
Phosphoric acid; normal, enriched, and concentrated
superphosphates; ammonium phosphates; nitro-
phosphates; and calcium meta-phosphates
Explosives excluding ammunition for small arms and
fireworks
Fatty acids; essential oils; gelatin (except vegetable);
sizes; bluing; laundry sours; writing and stamp pad
ink; industrial compounds; metal, oil, and water
treating compounds; waterproofing compounds; and
chemical supplies for foundries

tal Chemicals and Allied Products (SIC 28)

Number of Screener
Respondents
Total
32
33
91
36
60
37
10
162
468

1,635
§316(b) Facilities
No. t
6
3
4
4
8
4
1
5
37

144
%
18.8%
9.1%
4.4%
11.1%
13.3%
10.8%
10.0%
3.1%
7.9%

8.8%
 TTT
Information on the percentage of intake flow used for cooling purposes was not available for all screener respondents. Facilities
for which this information was not available were assumed to use at least 25% of their intake flow for cooling water purposes The
reported numbers of §316(b) facilities may therefore be overstated.
SIC code 281  is officially titled "Industrial Inorganic Chemicals." However, to avoid confusion with SIC code 2819, "Industrial
Inorganic Chemicals, Not Elsewhere Classified," this profile will refer to SIC code 281 as the "Inorganic Chemicals sector."
SIC code 286  is officially titled "Industrial Organic Chemicals."  However, to avoid confusion with SIC code 2869, "Industrial
Organic Chemicals, Not Elsewhere Classified," this profile will refer to SIC code 286 as the "Organic Chemicals sector."
 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999; Executive Office of the President,
          Office of Management and Budget, Standard Industrial Classification Manual 1987.
The responses to the Screener Questionnaire indicate that
three main chemical sectors account for the largest numbers
of §316(b) facilities: (1) Inorganic Chemicals (including SIC
                                                        codes 2812, 2813, 2816, and 2819); (2) Plastics Material
                                                        and Resins (SIC code 2821); and (3) Organic Chemicals
                                                        (including SIC codes 2865 and 2869). Of the 144 §316(b)
4B-.

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
facilities in the Chemical industry, 58 facilities, or 40
percent, belong to the Organic Chemicals sector, 35, or 24
percent, belong to the Inorganic Chemicals sector, and 14, or
5 percent, belong to the Plastics and Resins sector. The
remainder of the Chemicals and Allied Products profile
therefore focuses on these three industry groups.

4B.1  Domestic  Production
The U.S. Chemical and Allied products industry comprises a
wide array of companies that, in total, produce more than
70,000 different chemical substances.  These products range
from commodity materials used in other industries to
finished consumer products such as soaps and detergents.
The industry accounts for a higher share (nearly 12 percent)
of the U.S. manufacturing gross domestic product (GDP)
than any other industry sector, and produces approximately
two percent of total national gross domestic product
(McGraw-Hill, 1998).

Inorganic and organic chemicals are the major outputs of the
chemical industry.  They are derived from crude oil, natural
gas, and various other natural resources.  Raw materials
containing hydrocarbons such as oil, natural gas, and coal
are primary feedstocks for the production of organic
chemicals. Inorganic chemicals are chemicals that do not
contain carbon but are produced from other gases and
minerals (McGraw-Hill, 1998).

The Chemicals and Allied products industry is highly  energy
intensive. It is one of the largest industrial users of electric
energy and also consumes large amounts of oil and natural
gas.  In total, the industry accounts for approximately  seven
percent of total U.S. energy consumption, including 11
percent of all natural gas use.  Just over 50 percent of the
industry's energy consumption is  used as feedstock in the
production of chemical products.  The remaining energy
consumption is for fuel and power for production processes.
Oil accounts for approximately 42 percent of total energy
consumption by the industry. For some products, e.g.,
petrochemicals, energy costs account for up to 85 percent of
total production costs.  Overall, total energy costs represent
seven percent of the value of chemical industry shipments
(S&P, 2000).

a.  Output
Figure 4B-1  shows the trend in value of shipments and
value added for the three profiled sectors between 1988
and 1996.'  Value of shipments and value added are two of
the most common measures of manufacturing output.  They
provide  insight into the overall economic health and outlook
for an industry.  Value of shipments is the sum of the
receipts a manufacturer earns from the sale of its outputs.  It
is an indicator of the overall size of a market or the size of a
firm in relation to its market or competitors.  Value added is
used to measure the value of production activity in a
particular industry. It is the difference between the value of
shipments and the value of inputs used to make the products
sold.

The Organic Chemicals sector (SIC 281) experienced a
significant decrease in both value of shipments and value
added between 1994 and 1996. This decrease is a function
of increased competition in the global market for
petrochemicals which comprise the majority of organic
chemical products. The increased competition  stems from
the considerable capacity expansions for these products seen
in developing nations in recent years (McGraw-Hill, 1998).

The Plastics Material and Resin (SIC 2821) and Inorganic
Chemicals (SIC 286) sectors have remained relatively stable
over the period between 1988 and 1996. The stability in
these industry sectors reflects various trends in the markets
for their products which are heavily influenced by the
overall health and stability of the U.S. economy. In the early
1990s, domestic producers benefitted from the  relatively
weak dollar which made U.S. products more  competitive  in
the global market. In more recent years, the strength of the
U.S. economy has bolstered domestic end-use markets,
offsetting the reductions in exports that have resulted from
increased global competition and a strengthened dollar
(McGraw-Hill, 1998).

Figure 4B-1 shows the trend in value of shipments and value
added for the three profiled chemicals sectors between 1988
and 1996.
                                                              1 Terms highlighted in bold and italic font are further
                                                          explained in the glossary.
                                                                                                           4B-3

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Chemicals and Allied Products






























Figu

i f\f\ f\f\c\
On f\f\f\


oO,000
1C\ nnn
/U^UUU
£f\ f\f\f\
en f\f\f\
A(\ f\f\f\

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in nnn
ZO.,000
1 f\ f\f\f\




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r





























e 4B-1: Value of Shipments and Value Added for Profiled Chemical Sectors ($1999 million)
Value of Shipments ($1999 million)



""
,,..,_ — • — inorganic Chemicals (SIC
2812, 2813, 2816, 2819)

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
b.  Prices
Selling prices for the products of the Organic and Inorganic
Chemical sectors have increased from 1987 to 1989 and
remained stable through 1994.  Between 1994 and 1995,
prices increased  sharply, followed by a period of stable
prices through 1997. Prices for plastics material and resins
followed a trend similar to the other two chemical industry
sectors but with larger fluctuations (see  Figure 4B-2).

The fluctuations in chemical and plastics prices are in part a
function of energy prices.  Basic petrochemicals, which
comprise the majority of organic chemical products, require
energy input which can account for up to 85 percent of total
production costs. The prices of natural  gas and oil therefore
influence the production costs and the selling price for these
products. High basic petrochemical prices eventually trickle
down to affect prices for chemical intermediates and final
end products, including organic chemicals and plastics.

Another factor influencing prices for commodity chemical
products is the cyclical nature of market supply and demand
conditions. The Plastics, and Organic and Inorganic
Chemical sectors are characterized by large capacity
additions which can lead to fluctuations in prices in response
to imbalances in supply and demand.

Figure 4B-2 shows the                       (PPI) at the
4-digit SIC code for the profiled chemical sectors.  The PPI
is a family of indexes that measure price changes from the
perspective of the seller. This profile uses the PPI to inflate
nominal monetary values to constant dollars.

















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1 /U
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Figure 4B-2: Producer Price Indexes for Profile



^ 	 	 K
/" ""* >
., / .
• i"i / ~ •
' ^— ^ ^
1 /^^^
V*"
'/
m.

i i i i i i i i i i
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<^ <^ <^ <^ O^ O^ O^ O^ O^ O^ O^ O^ O^

d C














'hemical Sectors






— 1 — Inorganic Chemicals (SIC
2812,2813,2816,2819)
— •, Plastics Material and
Resins (SIC 2821)
Organic Chemicals (SIC
2865, 2869)


















 Source: Bureau of Labor Statistics, Producer Price Index.
                                                                                                            4B-5

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
c.  Number of Facilities and Firms
According to the Statistics of U.S. Businesses, the number
of facilities in the Organic and Inorganic Chemical sectors
remained relatively stable between 1989 and 1996. Table
4B-2 shows a downward trend in the number of facilities
producing inorganic chemical products following a peak in
1991. This decrease is likely the result of the recent trend
towards consolidation in the inorganic chemical sector.
Consolidation is a means of paring costs with companies
making acquisitions and consolidating operations in an
attempt to reduce costs and achieve economies of scale
(S&P, 2000).
While the Organic and Inorganic Chemical sectors have
remained stable, the Plastics Material and Resins sector has
experienced a significant increase in the number of facilities
reported between 1993 and 1996. This increase reflects the
fragmentation of the plastics market with a large number of
plastics and resins being produced for a number diverse
markets. The Plastics sector, like the Organic and Inorganic
Chemical sectors, has experienced a trend toward
consolidation. However, the largest industry sectors tend to
be less consolidated than the smaller specialty product
sectors where a small number of producers dominate
(McGraw-Hill,  1999).


Year
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1989-1996
Table 4B-2: Number of F
Inorganic Chemicals (SIC
2812, 2813, 2816, 2819)
Number of Percent
Facilities Change
1,387 n/a
1,421 2%
1,508 6%
1,466 -3%
1,476 1%
1,460 -1%
1,425 -2%
1,396 -2%
1%
"acilities for Profiled Chemical S
Plastics Material and Resins
(SIC 2821)
Number of Percent
Facilities Change
504 n/a
517 3%
529 2%
460 -13%
502 9%
499 -1%
558 12%
630 13%
25%
ectors
Organic Chemicals (SIC
2865, 2869)
Number of Percent
Facilities Change
844 n/a
837 -1%
851 2%
888 4%
908 2%
902 -1%
907 1%
868 -4%
3%
 t   There is significant variation in facility and firm counts that occur across data sources due to many factors including reporting and
     definitional differences.

 Source:  Small Business Administration, Statistics of U.S. Businesses.
4B-6

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
The trend in the number of firms between 1989 and 1996
has been similar to the number of facilities.  The number of
firms remained relatively stable for both the Organic and
Inorganic Chemical sectors.  The Plastics Material and
Resins sector experienced a significant increase in the
number of firms reported between 1993 and 1996 increasing
from 284 to 403 firms.

Table 4B-3 shows the number of firms in the three profiled
chemical sectors between 1990 and 1996.


Year
1990
1991
1992
1993
1994
1995
1996
Percent Change
1990-1996
Table 4B-3: Number 01
Inorganic Chemicals (SIC
2812, 2813, 2816, 2819)
Number of Percent
Firms Change
640 n/a
678 6%
699 3%
683 -2%
677 -1%
657 -3%
625 -5%
-2%
: Firms for Profiled Chemical Se
Plastics Material and Resins
(SIC 2821)
Number of Percent
Firms Change
301 n/a
319 6%
255 -20%
284 11%
295 4%
343 16%
403 17%
34%
:tors
Organic Chemicals (SIC
2865, 2869)
Number of Percent
Firms Change
579 n/a
584 1%
611 5%
648 6%
644 -1%
644 0%
596 -7%
3%
 t   There is significant variation in facility and firm counts that occur across data sources due to many factors including reporting and
     definitional differences.

 Source: Small Business Administration, Statistics of U.S. Businesses.
                                                                                                             4B-7

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
d.  Employment and  Productivity
              is a measure of the level and trend of activity
in an industry.  Figure 4B-3 below provides information on
employment from the Annual Survey of Manufactures.
With the exception of minor short-lived fluctuations,
employment in the Organic Chemical and Plastics and
Resins sectors remained stable between 1992 and 1996. The
Inorganic Chemicals sector, however, experienced a
significant decrease in employment from 103,400 to 80,200
employees over the same time period. This decrease reflects
the industry's restructuring and downsizing efforts intended
to reduce costs in response to competitive challenges.
Figure 4B-3: Employment for Profiled Chemical Sectors


1 A (\ (\(\(\
i^tu,uuu
1 90 nnn
i nn nnn
1UU,UUU
80,000 -
f-f\ nnn
60,000
/in nnn
itu,uuu
on nnn
zu,uuu
n


^
*~~~^ "N^^—.




1988 1989 1990 1991 1992 1993 1994 1995 1996


— • — Inorganic Chemicals (SIC
2812,2813,2816,2819)
r Plastics Material and
Resins (SIC 2821)
Organic Chemicals (SIC
2865, 2869)



 Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
4B-,

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
Table 4B-4 presents the change in value added per labor
hour, a measure of labor productivity, for each of the
profiled industry sectors between 1988 and 1996. The
trends in each sector, particularly Plastic Materials and
Resins and Organic Chemicals, show considerable volatility
throughout the early and mid 1990s. The gains in
productivity in the Inorganic Chemicals sector likely reflects
facilities' attempts to reduce costs by restructuring
production and materials handling processes in response to
maturing domestic markets and increased global competition
(S&P, 2000). The decreases in the labor productivity of the
Organic Chemicals sector is a function of the sharp declines
in value added resulting from increased competition in the
global market for petrochemicals.
Table 4B-4: Productivity Trends for Profiled Chemical Sectors, Millions of $1999
Year
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent
Change
1988-
1996
Inorganic Chemicals (SIC 2812,
2813, 2816, 2819)
Value
Added
16,020
16,291
17,880
17,366
18,643
17,811
16,703
16,561
15,774

Prod.
Hours
(mill.)
114
109
115
121
120
108
101
100
97

Value
Added/Hour
No.
141
150
156
144
155
165
166
165
163

%
Change
n/a
6%
4%
-8%
8%
6%
0%
0%
-1%
15%
Plastics Material and Resins (SIC
2821)
Value
Added
13,087
12,594
12,484
11,403
13,538
12,902
15,871
15,907
14,614

Prod.
Hours
(mill.)
80
84
83
81
79
81
89
92
81

Value
Added/Hour
No.
164
150
151
141
172
159
178
173
181

%
Change
n/a
-8%
1%
-7%
22%
-8%
11%
-2%
5%
11%
Organic Chemicals (SIC 2865, 2869)
Value
Added
36,058
36,947
36,816
32,863
33,025
34,488
37,308
34,106
27,827

Prod.
Hours
(mill.)
152
155
156
156
155
156
146
147
158

Value
Added/Hour
No.
238
239
236
211
213
221
256
232
176

%
Change
n/a
1%
-1%
-11%
1%
4%
16%
-9%
-24%
-26%
 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                           4B-9

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§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
e.  Capital Expenditures
The chemicals industry is relatively capital-intensive, with
aggregate capital spending of $28.4 billion in 1998 (S&P,
2000). Capital-intensive industries are characterized by
large, technologically complex manufacturing facilities
which reflect the economies of scale required to
manufacture products efficiently. New capital
expenditures are needed to extensively modernize,
expand, and replace existing capacity to meet growing
demand. All three profiled chemical industry sectors have
experienced substantial increases in capital expenditures
over the past ten years.  Table 4B-5 shows that capital
expenditures in the Inorganic Chemicals, the Plastics, and
the Organic Chemicals sectors have increased by 85, 75, and
41 percent, respectively, over the past ten years. Much of
this growth in capital expenditures is driven by investment
in capacity expansions worldwide to meet the increase in
global demand for chemical products. The continued
globalization of the chemical industry has expanded markets
and provided U.S. producers with the opportunity to invest
in foreign markets and improve their international
competitiveness. Domestically, the continued substitution of
synthetic materials for other basic materials and rising living
standards has resulted in consistent growth in the demand
for chemical commodities (S&P, 2000).
Table 4B-5: Capital Expenditures for Profiled Chemical Sectors ($1999 millions)
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1987-1996
Inorganic Chemicals (SIC
2812, 2813, 2816, 2819)
Capital Percent
Expenditures Change
1,028 n/a
1,043 1%
1,513 45%
1,475 -3%
1,535 4%
1,742 14%
1,345 -23%
1,449 8%
1,735 20%
1,900 9%
85%
Plastics (SIC 2821)
Capital Percent
Expenditures Change
1,514 n/a
1,592 5%
1,906 20%
2,494 31%
2,332 -7%
1,850 -21%
2,079 12%
2,630 27%
2,099 -20%
2,657 27%
75%
Organic Chemicals (SIC
2865, 2869)
Capital Percent
Expenditures Change
n/a n/a
4,326 n/a
5,149 19%
6,517 27%
6,637 2%
6,105 -8%
5,221 -14%
4,464 -15%
4,960 11%
6,107 23%
41%
 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
4B-10

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
f.  Capacity Utilization
                     measures actual output as a
percentage of total potential output given the available
capacity and is used as a key barometer of an industry's
health. Capacity utilization is an index used to identify
potential excess or insufficient capacity in an industry which
can help project whether new investment is likely.  To take
advantage of economies of scale, chemical commodities are
typically produced in large facilities.  Capacity additions in
this industry are often made on a relatively large scale and
can substantially affect the industry's capacity utilization
rates. Figure 4B-4 presents the capacity utilization index
from 1989 to 1998 for specific 4-digit SIC codes within
each of the profiled sectors in the chemicals industry.
Capacity utilization in the Organic Chemicals sector has
remained stable throughout the 1990s with only moderate
fluctuations between 1989 and 1998.  The Plastics and
Resins sector has experienced a consistent downward trend
as a result of the considerable consolidation of the industry
in the last decade.
Overall, the Inorganic Chemicals sector has demonstrated
the most volatility incapacity utilization between 1989 and
1998. The chlor-alkali industry (SIC code 2812) has
experienced an almost consistent decline in the capacity
utilization index since its high of 96 percent from 1992
through 1994. This decrease reflects the enactment of
treaties and legislation designed to reduce the emission of
chlorinated compounds into the environment.  These
regulations decreased the demand for chlorine which,
together with caustic soda, accounts for more than 75
percent of production by this sector. As demand for
chlorine declined, prices weakened and capacity utilization
contracted. The significant increase in capacity utilization in
the industrial gases sector (SIC code 2813) in the mid 1990s
reflects the expansion of key end-use markets such as the
chemicals,  primary metals, and electronics industries. In
contrast, capacity utilization in the pigments and other
inorganic chemicals sectors (SIC codes 2816 and 2819)
remained relatively stable between  1989 and 1998.  The
stability in these sectors reflects the fact that these are
essentially  mature markets where the demand for products
tend to track growth in gross domestic product (GDP)
(McGraw-Hill 1999).
                                                                                                            4B-11

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Chemicals and Allied Products
Figure 4B-4: Capacity Utilization Indexes for Profiled Chemical Sectors


i nn

95
on

Of)

7Pl

&c\

_---* 	 • 	 ^. ji-,
•^^ \ _ -*s
" " - , t — \ 1
' " -^ ' \ ^^V
.,' ""\ ^
&^_, /*•"" " v--*--.^
A , A,^^ x.
"^^T ^' ,
, » -&
\ , '
V
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Inorganic Chemicals
—»— Alkalies and Chlorine (SIC
2812)
H 	 Industrial Gases (SIC 2813)
2816)
—ST— Industrial Inorganic
Chemicals, NEC (SIC 2819)


i fin

on

Of)
7C


^.Pl

A— —A
\
a^^k^ y\
"*^" ~~~*— —^/' \
\




1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Plastics Material and Resins
— -Ar— Plastics Material and
Resins (SIC 2821)


i nn
QC
on
QC
on
7C
7O.
/;c
^n



-x^*^S^^\
>. •""^xr 	 i ^^*>^^




1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Organic Chemicals
— 1 — Cyclic Organic Crudes and
Intermediates (SIC 2865)
Industrial Organic
Chemicals, NEC (SIC 2869)




 Source:  Department of Commerce, Bureau of the Census, Current Industrial Reports, Survey of Plant Capacity.
4B-12

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
4B.2  Structure  and Competitiveness  of
        the  Chemical  and Allied  Products
        Industry
The chemicals industry  continues to restructure and reduce
costs in response to competitive challenges, including global
oversupply for commodities. In the early 1990s, the
chemical industry's cost-cutting came largely from
restructuring and downsizing. The industry recently has
moved toward trying to  improve productivity.  The
industry's trend towards consolidation is another means of
cutting costs.  In general, companies seeking growth within
maturing industry sectors are making acquisitions to achieve
production or marketing efficiencies. The Plastics Material
and Resins sector (SIC code 282), for example, has  recently
experienced sizable consolidations (S&P, 2000).

a.  Geographic Distribution
Chemical manufacturing facilities are located in every state
but almost two-thirds of U.S. chemical production is
concentrated in ten states.  Given the low value of many
commodity chemicals and the handling problems posed by
products  such as industrial gases, nearly two-thirds of the
tonnage shipped was transported less than 250 miles in 1998
(S&P, 2000).
The Industrial Organic Chemical sector is geographically
diverse. Cyclic crudes and intermediates (SIC 2865) and
unclassified industrial organic chemicals (SIC 2869) are
concentrated in Texas, New Jersey, Ohio, California, New
York, and Illinois. Facility sites are typically chosen for
their access to raw materials such as petroleum and coal
products and to transportation routes. In addition, since
much of the market for organic chemicals is the chemical
industry, facilities tend to cluster near such end-users (U.S.
EPA, 1995a).

Inorganic Chemical facilities (SIC 281) are typically located
near consumers and, to a lesser extent, raw materials.  The
largest use of inorganic chemicals is in industrial processes
for the manufacture of chemicals and nonchemical products.
Facilities are therefore concentrated in the heavy industrial
regions along the Gulf Coast, both East and West coasts,
and the Great Lakes region. Since a large portion of the
inorganic chemicals produced are used by the Organic
Chemicals manufacturing industry, the geographical
distribution of inorganic facilities is very similar to that of
organic chemicals facilities (US EPA, 1995b). Facilities in
the Plastics Material and Resins sector (SIC 2821) are
concentrated in the heavy industrial regions, similar to both
the organic and inorganic chemicals facilities.
                                                                                                         4B-13

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§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
               Figure 4B-5:  Number of Chemical Facilities by State for Profiled Chemical Sectors
       Number of Facilities
             0-14
             15-50
             51 - 102
             103 - 184
             185 - 296

 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
b.  Facility Size
The three profiled chemicals industry sectors are
characterized by a large number of small facilities, with
more than 67 percent of facilities employing fewer than 50
employees and only eight percent employing 250 or more
employees. However, the larger facilities in the three
sectors account for the majority of the industries' output.
This fact is most pronounced in the Inorganic Chemicals
sector where facilities with fewer than 20 employees
account for 63 percent of all facilities but for only 8 percent
of the industry's value of shipments.  In the Organic
Chemicals sector, approximately 29 percent of all facilities
employ 100 employees or more. These facilities account for
about 87 percent of the value of shipments for the industry.
Similarly, facilities in the Plastics Industry with more than
100 employees account for only 29 percent of all facilities
but for 80 percent of the industry's value of shipments (see
Figure 4B-6 below).
4B-14

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Chemicals and Allied Products

Figure 4B-6: Number of Facilities and Value Added by Employment Size Category for Profiled Chemical
Sectors
Number of Facilities (1992)
900-
800-
700-
600-
500-
400-
300-
200-
100-
0-

(I


/•
/I
11 n

It in <=Q_H\ m
\ \\ \ LfU ffll [nJ ^ re3 ^ __
1-19 2049 50-99 100-249 250499 500-999 1,000-2,499 2,500+

• Inorganic Chemicals (SIC 2812
2813,2816,2819)
D Plastics (SIC 2821)
D Organic Chemicals (SIC 2865, 2869)


1992 Value of Shipments (millions $1999)
$30,000-
$25,000-
$20,000-
$15,000-
$10,000-
$5,000-
$0



f~(\

f~~^ f~ \ \
m CJ — ) Oil Oil II J Ji
1-19 2049 50-99 100-249 250499 500-999 1,000-2,499

• Inorganic Chemicals (SIC 2812,
2813,2816,2819)
• Plastics (SIC 2821)
D Organic Chemicals (SIC 2865,
2869)




 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
                                                                                                           4B-15

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§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
c.  Firm Size
The Small Business Administration (SBA) defines small
firms in the chemical industries according to the firm's
number of employees. Firms in the Inorganic Chemicals
sector (SIC codes 2812, 2813, 2816, 2819) and in Industrial
Organic Chemicals, NEC (SIC code 2869) are defined as
small if they have 1,000 or fewer employees; firms in
Plastics Material and Resins (SIC 2821) and Cyclic Organic
Crudes and Intermediates (SIC code 2865) are defined as
small if they have 750 or fewer employees.

The size categories reported in the Statistics  of U.S.
Businesses (SUSB) do not coincide with the SBA small firm
standards of 750 and 1,000 employees. It is  therefore not
possible to apply the SBA size thresholds precisely.  The
SUSB data presented in Table 4B-6 show that in 1996, 483
of 625 firms in the Inorganic Chemicals sector had less than
500 employees. Therefore, at least 77 percent of firms in
this sector were classified as small. These small firms
owned 545 facilities, or 39 percent of all facilities in the
sector. In the Plastics and Resins Industry sector, 309 of
403 firms, or 77 percent, had less than 500 employees in
1996. These small firms owned 328 of 630 facilities (52
percent) in the sector. In the Organic Chemicals Industry
sector, 71 percent of facilities (423 of 596) had fewer than
500 employees, owning 53 percent of all facilities in that
sector.

Table 4B-6 below shows the distribution of firms, facilities,
and receipts in the Inorganic Chemicals, Plastics Material
and Resins, and Organic Chemicals sectors by the
employment size of the parent firm.
Table 4B-6: Number of Firms, Facilities and Estimated Receipts by Firm Size Category for Profiled Chemical
Sectors (1996)
Employment
Size
Category
0-19
20-99
100-499
500-2,499
2500+
Total
Inorganic Chemicals (SIC 2812,
2813, 2816, 2819)
No. of
Firms
296
124
63
51
91
625
Number of
Establish-
ments
296
140
109
199
652
1,396
Estimated
Receipts
($1999
millions)
380
1,238
2,589
3,457
20,318
27,981
Plastics Material and Resins (SIC
2821)
No. of
Firms
195
77
37
35
59
403
Number of
Establish-
ments
195
77
56
93
209
630
Estimated
Receipts
($1999
millions)
457
1,341
3,011
5,318
28,123
38,251
Organic Chemicals (SIC 2865,
2869)
No. of
Firms
219
139
65
61
112
596
Number of
Establish-
meats
220
149
94
119
286
868
Estimated
Receipts
($1999
millions)
642
2,638
4,845
9,499
56,572
74,195
 Source:  Small Business Administration, Statistics of U.S. Businesses.
d.  Concentration and  Specialization Ratios
Concentration is the degree to which industry output is
concentrated in a few large firms. Concentration is closely
related to entry and exit barriers with more concentrated
industries generally having higher barriers.

The four-firm concentration ratio (CR4) and the
Herfindahl-Hirschman Index (HHI) are common
measures of industry concentration. The CR4 indicates the
market share of the four largest firms. For example, a CR4
of 72 percent means that the four largest firms in the
industry account for 72 percent of the industry's total value
of shipments. The higher the concentration ratio, the less
competition there  is in the industry, other things being
equal.2 An industry with a CR4 of more than 50 percent is
generally considered concentrated. The HHI indicates
concentration based on the largest 50 firms in the industry.
It is equal to the sum of the squares of the market shares for
the largest 50 firms in the industry. For example, if an
industry consists of only three firms with market shares of
    2 Note that the measured concentration ratio and the HHF are
very sensitive to how the industry is defined. An industry with a
high concentration in domestic production may nonetheless be
subject to significant competitive pressures if it competes with
foreign producers or if it competes with products produced by other
industries (e.g., plastics vs. aluminum in beverage containers).
Concentration ratios are therefore only one indicator of the extent
of competition in an industry.
4B-16

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§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
60, 30, and 10 percent, respectively, the HHI of this industry
would be equal to 4,600 (602 + 302 + 102). The higher the
index, the fewer the number of firms supplying the industry
and the more concentrated the industry. An industry is
considered concentrated if the HHI exceeds 1,000.

Of the profiled Chemicals and Allied Products, only
Alkalies and Chlorine (SIC 2812), Industrial Gases (SIC
2813), and Inorganic Pigments (SIC 2816) would be
considered highly concentrated based on their CR4 and HHI
values. These industries are characterized by heavy capital
and technology requirements and large potential safety and
environmental liabilities which present barriers to entry into
the industry.  In contrast, Industrial Inorganic Chemicals,
NEC (SIC 2819), Plastics Material and Resins (SIC 2821),
Cyclic Crudes and Intermediates (SIC 2865), and Industrial
Organic Chemicals, NEC (SIC 2869) would be considered
competitive but not concentrated.

The specialization ratio is the percentage of the
industry's production accounted for by primary product
shipments.  The coverage ratio is the percentage of the
industry's product shipments coming from facilities from the
same primary industry.  The coverage ratio provides an
indication of how much of the production/product of interest
is captured by the facilities classified in an SIC code.  The
specialization ratios presented in Table 4B-7 indicate  a
relatively high degree of specialization for each profiled
chemical industry sector.
Table 4B-7: Selected Ratios for Four-Digit SIC Codes for Profiled Chemical Sectors
SIC
_ , Year
Code
Concentration Ratios
, „. „ „. „„ „. .„ „. Herflndahl-
4 Firm 8 Firm 20 Firm 50 Firm
(CR4) (CR8) (CR20) (CR50) Hirschman
Specialization
Ratio
Coverage
Ratio
Inorganic Chemicals
2812
2813
2816
2819

2821
87
92
87
92
87
92
87
92
72%
75%
77%
78%
64%
69%
38%
39%
93%
90%
88%
91%
76%
79%
49%
50%
99%
99%
95%
96%
94%
93%
68%
68%
100%
100%
98%
99%
99%
99%
84%
85%
Plastics Material and Res
87
92
20% 33% 61% 89%
24% 39% 63% 90%
2,328
1,994
1,538
1,629
1,550
1,910
468
677
86%
76%
98%
96%
94%
95%
91%
91%
65%
75%
94%
94%
89%
89%
80%
82%
ns
248
284
88%
86%
81%
80%
Organic Chemicals
2865
2869
87
92
87
92
34% 50% 77% 96% 542
31% 45% 72% 94% 428
31% 48% 68% 86% 376
29% 43% 67% 86% 336
80%
86%
75%
76%
61%
61%
84%
85%
 Source: Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
                                                                                                           4B-17

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§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
e.  Foreign  Trade
The chemicals industry is the largest exporter in the United
States. The industry generates more than 10 percent of the
nation's total exports.  The industry's highest exports were
$69.5 billion in 1997.  Exports were lower in 1998 because
the Asian economic crisis led to a reduction in sales to that
region in 1998. U.S. imports of chemicals, mainly from
Western Europe, rose an estimated 11 percent in 1999 (S&P,
2000).

This profile uses two measures of foreign competitiveness:
                     and                     Export
dependence is the share of value of shipments that is
exported. Import penetration is the share of domestic
consumption met by imports. Table 4B-8 presents trade
statistics for each of the profiled chemical sectors. Both
export dependence and import penetration have experienced
modest positive trends in each of these sectors between 1989
and 1996. Globalization of the market has become a key
factor influencing foreign competitiveness in the Inorganic
Chemicals sector (SIC 281). In recent years import
penetration has been increasing at a slightly higher rate than
export dependence in this sector due to a strengthened U.S.
dollar, weakness in the European and Japanese markets, and
increased production in lower-cost developing nations
(McGraw-Hill, 1998). Increased globalization has also been
a dominant trend affecting trade statistics in the Plastics
Material and Resins sector (SIC 2821). Imports and exports
of plastics and resins have increased significantly over the
past eight years reflecting the continued growth in the global
market.  Import penetration has grown more quickly than
export dependence in this sector due to declining export
opportunities and increased competition from imports driven
by increased foreign capacity. The U.S. remains a net
exporter of plastics and resins, despite these trends. The
market for organic chemicals, particularly petrochemicals,
has become increasingly competitive.  Significant capacity
expansions for petrochemicals worldwide have increased
competition from imports and begun to limit export
opportunities.  Nevertheless, exports in Organic  Chemicals
(SIC 2865, 2869) have remained slightly higher than imports
between 1989 and 1996.
4B-18

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Chemicals and Allied Products
Table 4B-8: Trade Statistics for Profiled Chemical Sectors
Year
(a)

1989
1990
1991
1992
1993
1994
1995
1996
Average Annual
Growth Rate

1989
1990
1991
1992
1993
1994
1995
1996
Average Annual
Growth Rate

1989
1990
1991
1992
1993
1994
1995
1996
Average Annual
Growth Rate
Value of
imports ($1999
millions)
(b)
Inorgan
4,880
4,955
4,917
4,921
4,753
5,170
5,400
5,707
2%

1,506
1,854
1,838
2,234
2,718
3,401
3,668
3,986
15%
Orgar
6,727
7,307
7,585
8,388
8,530
9,917
10,244
11,125
7%
Value of
exports ($1999
millions)
(c)
°c Chemicals, Ex
5,540
5,342
5,727
6,060
5,674
5,728
5,949
5,819
1%
Plastics Mate
5,351
6,411
7,645
7,592
7,751
8,739
9,284
10,106
10%
ic Chemicals, Ex
11,455
11,404
11,664
11,674
12,159
14,191
15,142
13,690
3%
Value of
Shipments ($1999
millions)
(d)
cept Pigments (SI(
24,331
26,913
27,054
28,412
27,139
23,809
22,639
22,161
-1%
.rials and Resins (5
32,241
32,067
30,616
33,917
34,049
38,687
39,094
38,275
2%
'cept Sum & Wood
82,187
83,428
79,863
81,089
82,534
88,238
76,611
73,253
-2%
Implied
Domestic
Consumption
(e)
: 2812, 2813,
23,671
26,526
26,244
27,273
26,218
23,251
22,090
22,049
-1%
5IC 2821)
28,396
27,510
24,809
28,559
29,016
33,349
33,478
32,155
2%
(SIC 2865, 28
77,459
79,331
75,784
77,803
78,905
83,964
71,713
70,688
-1%
Import
Penetration^
(f)
2819)
21%
19%
19%
18%
18%
22%
24%
26%
3%

5%
7%
7%
8%
9%
10%
11%
12%
13%
69)
9%
9%
10%
11%
11%
12%
14%
16%
9%
Export
Dependence tn
(8)

23%
20%
21%
21%
21%
24%
26%
26%
2%

17%
20%
25%
22%
23%
23%
24%
26%
7%

14%
14%
15%
14%
15%
16%
20%
19%
4%
 t   Implied domestic consumption based on value of shipments, imports, and exports [column d + column b - column c].
 ff   Import penetration based on implied domestic consumption and imports [column b / column e].
 tff  Export dependence based on value of shipments and exports [column c / column d].

 Source: Department of Commerce, International Trade Administration, Outlook Trends Tables.
                                                                                                             4B-19

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§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
4B.3  Financial Condition and
        Performance
The chemical industry is generally characterized by large
plant sizes and technologically complex production
processes reflecting the economies of scale required to
manufacture chemicals  efficiently. Because of the high
fixed costs associated with chemical manufacturing
operations, larger production volumes are required to spread
these costs over a greater number of units in order to
maintain profitability.                     for chemical
producers are generally volatile due to rapid changes in
selling prices, raw material costs, energy costs, and
production levels. Other factors that affect margins for
chemical producers include costs associated with businesses
recently acquired or divested, major new capacity additions,
or environmental costs (S&P, 2000).
Facing increased global competition, the U.S. chemical
industry has restructured and reduced costs to maintain
profitability and operating margins. Cost-cutting efforts in
the early 1990s came largely from restructuring and
downsizing, particularly in the Inorganic Chemicals sector.
The industry has recently shifted toward consolidation as a
means of paring costs by achieving production or marketing
efficiencies while maintaining growth in maturing markets
(S&P, 2000). These transactions are typically small scale
involving individual product lines or facilities and are most
common in the Organic Chemical and Plastics and Resins
Industry sectors.

Table 4B-9 presents operating margins for each of the
profiled chemical sectors between 1987 and 1996.
4B-20

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Chemicals and Allied Products
Table 4B-9: Operating Margins for Profiled Chemical Sectors, (Millions of $1999)
Year

1987
1988
1989
1990
1991
1992
1993
1994
1995
1996

1987
1988
1989
1990
1991
1992
1993
1994
1995
1996

1988
1989
1990
1991
1992
1993
1994
1995
1996
Value of Shipments
Inorgani
25,544
27,576
27,308
29,635
29,286
30,604
29,686
27,781
27,155
26,429
Pic
31,870
31,842
32,241
32,067
30,616
33,917
34,049
38,687
39,094
38,275
C
79,916
82,187
83,428
79,863
81,089
82,534
88,238
76,611
73,253
Cost of Materials
: Chemicals (SIC 2812,
10,994
11,725
11,122
12,354
12,001
12,016
11,894
11,032
10,706
10,771
sties Material and Resi
18,713
19,173
19,673
19,850
19,254
20,412
21,048
22,913
23,539
23,700
Organic Chemicals (SIC
44,562
45,531
47,294
46,779
48,290
48,006
51,032
42,985
45,565
Payroll (all employees)
2813, 2816, 2819)
3,968
4,055
3,925
4,247
4,480
4,701
4,366
4,098
3,648
3,570
ns (SIC 2821)
2,436
2,152
2,310
2,545
2,568
2,895
3,021
3,251
2,972
2,734
2865, 2869)
6,152
6,037
6,556
6,702
6,869
7,125
7,012
5,882
6,533
Operating Margin

41.4%
42.8%
44.9%
44.0%
43.7%
45.4%
45.2%
45.5%
47.1%
45.7%

33.6%
33.0%
31.8%
30.2%
28.7%
31.3%
29.3%
32.4%
32.2%
30.9%

36.5%
37.3%
35.5%
33.0%
32.0%
33.2%
34.2%
36.2%
28.9%
 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                           4B-21

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
4B.4  Facilities Operating CWISs
In 1982, the Chemical and Allied Products industry
withdrew 2,797 billion gallons of cooling water, accounting
for approximately 3.6 percent of total industrial cooling
water intake in the United States. The industry ranked 2nd in
industrial cooling water use behind the electric power
generation industry (1982 Census of Manufactures).

This section presents information from EPA''s Industry
Screener Questionnaire: Phase I Cooling Water Intake
Structures on existing facilities with the following
characteristics:

    *•   they withdraw from a water of the United States;
    -   they hold an NPDES permit;
    *   they have an intake flow of more than two MOD;
    *•   they use at least 25 percent of that flow for cooling
        purposes.

These facilities are not "new facilities" as defined by the
proposed §316(b) New Facility Rule and are therefore not
subject to this regulation. However, they meet the criteria of
the proposed rule except that they are already in operation.
These existing facilities therefore provide a good indication
of what new facilities in these sectors may look like. The
remainder of this section refers to existing facilities with the
above characteristics as "§316(b) facilities."
a.  Cooling  Water Uses and Systems
Information collected in Screener Questionnaire found that
an estimated 35 out of 435 inorganic chemical facilities (8
percent), 14 out of 305 plastics facilities (5 percent), and 58
out of 427 organic chemical facilities (14 percent) meet the
characteristics of a §316(b) facility.  Most §316(b) facilities
in the profiled Chemical and Allied Products sectors use
cooling water for contact and non-contact production line or
process cooling,  electricity generation, and air conditioning:

    >•   All §316(b) inorganic chemical facilities use
        cooling water for production line (or process)
        contact  or noncontact cooling. The two other major
        uses of cooling water are electricity generation and
        air conditioning, with approximately 31 and 27
        percent of facilities, respectively.

    *•   All §316(b) plastics facilities use cooling water for
        production line (or process) contact or noncontact
        cooling. Fifty, 22, and six percent also use cooling
        water for air conditioning, electricity generation,
        and other uses.

    >   Nintey-four percent of §316(b) organic chemicals
        facilities use cooling water for production line (or
        process) contact or noncontact cooling. Forty-five,
        41, and 17 percent of facilities use cooling water
        for air conditioning, other uses, and electricity
        generation, respectively.
4B-22

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
Table 4B-10 shows the distribution of existing §316(b)
facilities in the profiled chemical sectors by type of water
body and cooling system. The table shows that most of the
existing §316(b) facilities have either a once through system
(56, or 52 percent) or employ a combination of a once
through and closed system (30, or 28 percent).  The majority
of existing facilities draw water from a freshwater water
stream or river (82, or 77 percent).
Table 4B-10: Number of §316(b) Facilities by Water Body and Cooling System Type
for Profiled Chemical Sectors

Water Body Type
Cooling System
Closed Cycle
Number
Inorganic Che
Estuary or Tidal River1
Freshwater Stream or River
Ocean
Totalm
0
2
0
2
Plastics
Estuary or Tidal Rivern
Freshwater Stream or River
Lake or Reservoir
Totalmf
0
0
0
0
Organ
Estuary or Tidal River
Freshwater Stream or Riverttt
Ocean
Totatm
0
18
0
18
Total for P
Estuary or Tidal River1
Freshwater Stream or River
Ocean
Lake or Reservoir
Total""
0
20
0
0
20
%of
Total
micals (SIC
0%
13%
0%
6%
Material an
0%
0%
0%
0%
c Chemicals
0%
34%
0%
37%
rofiled Cher
0%
24%
0%
0%
19%
Once Through
Number
2812, 2813
o
3
9
9
22
d Resins (SI
0
4
1
5
(SIC 2865,
4
24
1
29
nical Faciliti
7
37
10
1
56
%of
Total
, 2816, 281
39%
56%
100%
63%
C 2821)
0%
33%
100%
36%
2869)
100%
45%
100%
50%
ss (SIC 28)
50%
45%
100%
100%
52%
Combination
Number
9)
5
5
0
10

1
8
0
9

0
11
0
11

6
24
0
0
30
%of
Total

61%
31%
0%
30%

100%
67%
0%
64%

0%
21%
0%
79%

43%
29%
0%
0%
28%
Total

9
17
9
35

1
12
1
14

4
53
1
58

14
82
10
1
107
 t    One of the inorganic chemical facilities on an estuary or tidal river also has a CWIS on a lake or reservoir.
 ^   One plastics facility on an estuary or tidal river also has a CWIS on a lake or reservoir.
 m   One of the organic chemicals facilities on a freshwater stream or river also has a CWIS on a lake or reservoir.
 ffff  Individual numbers may not add up to total due to independent rounding.

 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
                                                                                                               4B-23

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
b.  Facility Size
Chemical facilities that withdraw more than two MOD from
a water of the U.S., hold an NPDES permit, and use at least
25 percent of intake water for cooling purposes are generally
larger than facilities that do not meet these criteria:

    *   Ninety percent of all facilities in the Inorganic
        Chemicals sector have fewer than 100 employees
        but only 34 percent of §316(b) facilities in that
        sector fall into that employment category.

    *   Seventy-one percent of all facilities in the Plastics
        and Resins and the Organic Chemicals sectors have
        fewer than 100 employees compared to none of the
        §316(b) facilities in those sectors.

    *   The majority of §316(b) plastics facilities (64
        percent) employ over 1,000 employees.

    *   §316(b) industrial organic facilities are more evenly
        distributed across employment categories with 23
        facilities (43 percent) employing 100 to 249
        employees and 21 facilities (39 percent) employing
        over 1,000 employees.

Figure 4B-7 shows the number of §316(b) facilities in the
profiled chemical sectors by employment size category.
         Figure 4B-7: Number of §316(b)  Facilities by Employment Size Category for Profiled  Chemical
                                                     Sectors
           40

           35-

           30

           25-

           20-

           15

           10-

            5-

            0
                   <100
                               100-249
                                            250499        500-999
                                                                        =1000
                           • Inorganic Chemicals (SIC
                             2812,2813,2816,2819)
                           D Plastics (SIC 2821)

                           D Organic Chemicals (SIC
                             2865,2869)

     Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
4B-24

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
c.  Firm Size
EPA used the Small Business Administration (SBA) small
entity size standards to determine the number of existing
§316(b) facilities in the three profiled chemical sectors that
are owned by small firms. Firms in the Inorganic Chemicals
sector (SIC codes 2812, 2813, 2816, 2819) and in Industrial
Organic Chemicals, NEC (SIC code 2869) are defined as
small if they have 1,000 or fewer employees; firms in
Plastics Material and Resins (SIC 2821) and Cyclic Organic
Crudes and Intermediates (SIC code 2865) are defined as
small if they have 750 or fewer employees.
Table 4B-11 shows that of the 35 §316(b) facilities in the
Inorganic Chemicals sector, five, or 14 percent, are owned
by a small firm. None of the  19 §316(b) facilities in the
Plastics sector are owned by a small firm. In the Organic
Chemicals sector, four of the  58 §316(b) facilities, or seven
percent, are owned by a small firm.  Another two facilities,
or two percent, are owned by  a firm of unknown size which
may also qualify as a small firm.
Table 4B-11: Number of §316(b) Facilities by Firm Size for Profiled
SIC Code
Chemical Sectors
Large Small Unknown
No. % of SIC No. % of SIC No.
% of SIC
Total
Inorganic Chemicals (SIC 2812, 2813, 2816, 2819)
2812
2813
2816
2819
Total
10 100% 0 0% 0
4 100% 0 0% 0
0 0% 4 100% 0
16 94% 1 6% 0
30 86% 5 14% 0
Plastics Material and Resins (SIC 2821)
2821 | 14 I 100% ! 0 I 0% ! 0 !
0%
0%
0%
0%
0%
10
4
4
17
35

0%
14
Organic Chemicals (SIC 2865, 2869)
2865
2869
Total
5 100% 0 0% 0
46 88% 4 8% 2
57 89% 4 7% 2
Total for Profiled Chemical Facilities (SIC 28)
Total | 95 89% 9 9% 2
0%
4%
4%
5
53
58

2%
107
 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999; D&B Database, 1999.
                                                                                                         4B-25

-------
§316(b) EEA Chapter 4 for New Facilities
     Manufacturing Profile: Chemicals and Allied Products
REFERENCES

Dun and Bradstreet (D&B). 1999. Data as of April 1999.

Executive Office of the President, Office of Management
and Budget.  Standard Industrial Classification Manual
1987.

McGraw-Hill and U.S. Department of Commerce,
International Trade Administration. 1999. U.S. Industry &
Trade Outlook.

Standard & Poors.  2000. Industry Surveys.  "Chemicals:
Basic."  January 6.

Kline & Company,  Inc.  1999.  Guide to the U.S. Chemical
Industry, 6th edition.

Small Business Administration. Statistics of U.S.
Businesses. http://www.sba.gov/advo/stats/int_data.html.
U.S. Department of Commerce.  1992.  Bureau of the
Census. Census of Manufactures.

U.S. Department of Commerce.  Bureau of the Census.
Current Industrial Reports.  Survey of Plant Capacity.
http://www.census.gov/cir/www/mqclpag2.html

U.S. Department of Commerce.  1997.  International Trade
Administration. Outlook Trends Tables.

US EPA. 1999. Industry Screener Questionnaire: Phase I
Cooling Water Intake Structures.

US EPA. 1995a. Profile of the  Organic Chemicals
Industry. September, 1995.

US EPA. 1995b. Profile of the  Inorganic Chemical
Industry. September, 1995.
4B-26

-------
§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
4C    PETROLEUM  AND COAL  PRODUCTS
        (SIC CODE  29)

EPA's Industry Screener Questionnaire: Phase I Cooling
Water Intake Structures identified two 4-digit SIC codes in
the Petroleum and Coal Products Industry (SIC 29) with at
least one existing facility that operates a CWIS, holds a
NPDES permit, and withdraws more than two million
gallons per day (MOD) from a water of the United States,
and uses at least 25 percent of its intake flow for cooling
purposes (facilities with these characteristics are hereafter
referred to as "§316(b) facilities"). For both SIC codes,
Table 4C-1 below provides a description of the industry
sector, a list of primary  products manufactured, the total
number of screener respondents, and the number and percent
of §316(b) facilities.
Table 4C-1: §316(b) Facilities in the Petroleum and Coal Products Industry (SIC 29):
Weighted Screener Survey Respondents
SIC
2911
2999
SIC Description
Petroleum Refining
Products of Petroleum and Coal,
Not Elsewhere Classified
Tot
Total 29
Important Products Manufactured
Gasoline, kerosene, distillate fuel oils, residual fuel oils,
and lubricants, through fractionation or straight
distillation of crude oil, redistillation of unfinished
petroleum derivatives, cracking, or other processes;
aliphatic and aromatic chemicals as byproducts
Packaged fuel, powdered fuel, and other products of
petroleum and coal, not elsewhere classified
ol Petroleum and Coal Products (SIC 29)

Number of Facilities
Total
163
8

171
§316(b) Facilities
No.'
28
1

29
%
17.2%
12.5%

15.8%
 t   Information on the percentage of intake flow used for cooling purposes was not available for all screener respondents. Facilities
     for which this information was not available were assumed to use at least 25% of their intake flow for cooling water purposes The
     reported numbers of §316(b) facilities may therefore be overstated.

 Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures; Executive Office of the President, Office of
         Management and Budget, Standard Industrial Classification Manual 1987
Responses to the Screener Questionnaire indicate that one
sector, Petroleum Refining (SIC code 2911), accounts for 97
percent of the §316(b) facilities in SIC 29. This profile
therefore focuses on facilities in the Petroleum Refining
sector.

4C.1  Domestic Production
The petroleum refining industry accounts for about 4 percent
of the value of shipments of the entire manufacturing sector
and for 0.4 percent of the manufacturing sector's
employment (U.S. Department of Energy, 1999a).
According to the Annual Survey of Manufactures, petroleum
refineries had a value of shipments of approximately $158
billion dollars ($1996) and employed 67,200 people (U.S.
DOC 1996). Petroleum products contribute approximately
40 percent of the total energy used in the United States,
including virtually all of the energy consumed in
transportation (U.S. Department of Energy, 1999a).

U.S. DOE Energy Information Administration (EIA) data
report that there were 159 operable petroleum refineries in
the U.S. as of January 1999, of which 155 were operating
and four were idle.1  Some data reported in this profile are
taken from EIA publications. Readers should keep in mind
that the Census data reported for SIC code 2911 cover a
somewhat broader range of facilities than do the DOE/EIA
data, and the two data sources are therefore not entirely
    1  In addition, there are two operating refineries in Puerto Rico
and one in the Virgin Islands.
                                                                                                           4C-1

-------
§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
comparable.2

The petroleum industry includes exploration and production
of crude oil, refining, transportation and marketing.
Petroleum refining is a capital-intensive production process
that converts crude oil into a variety of refined products.
Refineries range in complexity, depending on the types of
products produced. Nearly half of all U.S. refinery output is
motor gasoline.

The number of U.S. refineries has declined by almost half
since the early 1980s.  The remaining refineries have
improved their efficiency and flexibility to process heavier
crude oils, by adding "downstream" capacity.3 While the
number of refineries has declined, the average refinery
capacity and utilization has increased, resulting in an
increase in domestic refinery production overall.

a.  Output
Nominal                       and
petroleum refineries increased by 33 and 26 percent,
respectively, from 1988 to 1996.4  Adjusted for changes in
petroleum product prices, real value of shipments was fairly
constant over this period, despite a decline in the number of
operating refineries (see Figure 4C-1).
    2 For comparison, preliminary 1997 Census data included 244
establishments for NAICS 3241/SIC 2911, whereas DOE/EIA
reported 164 operable refineries as of January 1997.

    3 The first step in refining is atmospheric distillation, which
uses heat to separate various hydrocarbon components in crude oil.
Beyond this basic step are more complex units (generally referred
to as "downstream" from the initial distillation) that increase the
refinery's capacity to produce a wide range of crude oils and
increase the yield of lighter (low-boiling point) products such as
gasoline. These downstream operations include vacuum
distillation, cracking units, reforming units and other processes
(U.S. Department of Energy, 1999a).
    4 Terms highlighted in bold and italic font are further
explained in the glossary.
4C-.

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Petroleum and Coal Products
      Figure 4C-1: Value of Shipments and Value Added for Petroleum Refineries ($1999 million)
     Value of Shipments ($1999 million)

-------
§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
b.  Prices
Figure 4C-2 shows the producer price index (PPI) for
the Petroleum Refinery sector. The PPI is a family of
indexes that measure price changes from the perspective of
the seller.  This profile uses the PPI to inflate nominal
monetary values to constant dollars.
The PPI for refined petroleum products showed substantial
fluctuations in petroleum product prices between 1988 and
1999, as shown in Figure 4C-2.
Figure 4C-2: Producer Price Index for Petroleum Refineries


inn
1UU
on
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en
oU
7n
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4U
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i
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1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999



 Source:  Bureau of Labor Statistics, Producer Price Index.
4C-4

-------
§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
c.  Number of Facilities and Firms
Figure 4C-3 shows historical trends in the numbers of
refineries and refinery capacity. This figure shows that the
number of operable refineries fell substantially between
1980 and 1999. This decrease resulted in part from the
elimination of the Crude Oil Entitlements Program in the
early 1980s. The Entitlements Program encouraged smaller
refineries to add capacity throughout the 1970s. After the
program was eliminated, surplus capacity and falling profit
margins led to the closure of the least efficient capacity
(U.S. Department of Energy, 1999a).
                  Figure 4C-3: Trends in Numbers of Refineries  and Refining Capacity
                                                                                        400
                                                                                                 "U.S. Crude Oil
                                                                                                  Refining Capacity

                                                                                                 ~No. of Operable
                                                                                                  Refineries
 t   Capacity data were not compiled in 1998. Estimates shown here for that date are the average of the 1997 and 1999 values.

 Source:   U.S. Department of Energy, Energy Information Administration, Petroleum Supply Annual, various years.
                                                                                                            4C-5

-------
§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
Data from the Statistics of U.S. Businesses for SIC 2911
(Table 4C-2) shows that the number of firms reporting
petroleum refining as their primary business has also
declined overall since 1990.
Table 4C-2: Number
Year
1990
1991
1992
1993
1994
1995
1996
Percent Change
1990 - 1997
of Firms and Facilities for Petroleum
Firms
Number
215
215
185
148
161
150
173
Percent Change
n/a
0%
-14%
-20%
9%
-7%
15%
-20%
Refineries
Facilities
Number
340
346
303
251
265
251
275
Percent Change
n/a
2%
-12%
-17%
6%
-5%
10%
-19%
            Source:  Small Business Administration, Statistics of U.S. Businesses.
4C-6

-------
§316(b) EEA Chapter 4 for New Facilities
      Manufacturing Profile: Petroleum and Coal Products
d.  Employment and  Productivity
Employment levels in the petroleum refining industry
declined by 8.2 percent between 1988 and 1996, to 67,200
employees, as shown in Figure 4C-4.  After increasing in the
early 1990s, employment at petroleum refineries has
declined since 1992, reflecting overall industry
consolidation.
Figure 4C-4: Employment for Petroleum Refineries


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n

* ± ^ ^ 	 * 	 -*-— — *— ___^
" *






1988 1989 1990 1991 1992 1993 1994 1995 1996



 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                        4C-7

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Petroleum and Coal Products
Production hours have remained stable between 1988 and      and a net reduction of 3 percent in real value added per
1996. There has been no change in total production hours,     production hour over the same period (see Table 4C-3).
Table 4C-3: Productivity Trends for Petroleum Refineries
Year
1988
1989
1990
1991
1992
1993
1994
1995
1996
Production
Hours (mill.)
16,020
16,291
17,880
17,366
18,643
17,811
16,703
16,561
15,774
Value Added
($1999,
millions)
114
109
115
121
120
108
101
100
97
Real Value
Added/Hour
($ 1999)
226
206
176
168
165
171
221
242
218
1988-1997 Growth Rate
Growth Rates
Production
Hours
n/a
1.9%
1.0%
0.9%
1.9%
-1.8%
2.8%
-2.7%
-3.7%
0.0%
Value Added
n/a
-7.3%
-13.6%
-3.4%
-0.3%
2.0%
32.5%
6.9%
-13.5%
-3.6%
Real Value
Added/Hour
n/a
-9.1%
-14.4%
-4.3%
-2.1%
3.9%
28.9%
9.9%
-10.1%
-3.6%
 Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
4C-,

-------
§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
e.  Capital Expenditures
Petroleum industry capital expenditures increased
substantially between 1988 and 1996 in real terms: in 1996
the industry spent $4.5 billion in constant 1999 dollars, as
compared with $2.6 billion (1999$) in 1988.
Environmentally-related investments have accounted for a
substantial portion of these capital expenditures.  Figure  4C-
5 shows pollution control expenditures reported by
American Petroleum Institute (API) members (in current
dollars).  Expenditures to control current environmental
releases (air, water and waste) account for the largest portion
of total pollution control expenditures. Of the total 1996
expenditures, approximately 3.8 billion (72 percent) was
related to control of air emissions from refineries.
Table 4C-4:
Year
1988
1989
1990
1991
1992
1993
1994
1995
1996
Capital Expenditures for Petroleum
Refineries
Capital Expenditures ($1999
millions)
2,618
2,987
3,119
5,095
5,771
5,858
5,631
5,805
4,484
                          Source:  Department of Commerce, Bureau of the Census, Annual Survey of
                                  Manufactures
                                                                                                            4C-9

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Petroleum and Coal Products
        Figure 4C-5: Environmental Expenditures by Type and Medium  for Petroleum Refineries
                                               By Type, 1966
                                 Spills  other
                    Remediation    1%    3%
                        4%   A  I
                   Wastes
                     6%
                                                                           DAir
                                                                           • Water
                                                                           DWastes
                                                                           D Remediation
                                                                           • Spills
                                                                           D Other
                 6,000
                 4,000
                 2,000
                                                By Medium
                                    /
                                                                              Air/ Water/ Waste

                                                                              Remediation/ Spills
                        1990   1991   1992  1993   1994  1995   1996
 Source:  American Petroleum Institute, STEP Report.
4C-10

-------
§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
f.  Capacity Utilization
The most commonly-used measure of refinery capacity is
expressed in terms of crude oil distillation capacity. EIA
defines refinery capacity utilization as input divided by
calendar day capacity. Calendar day capacity is the
maximum amount of crude oil input that can be processed
during a 24-hour period with certain limitations.  Some
downstream refinery capacities are measured in terms of
"stream days", which is the amount a unit can process
running full capacity under optimal crude and product mix
conditions for 24 hours (U.S. DOE, 1999a). Downstream
capacities are reported only for specific units or products,
and are not summed across products, since not all products
could be produced at the reported levels simultaneously.

Much recent investment in petroleum refineries has been to
expand and de-bottleneck units downstream from
distillation, partially in response to environmental
requirements. Changes in refinery configurations have
included adding catalytic cracking units, installing additional
sulfur removal hydrotreaters, and using manufacturing
additives such as oxygenates.  These process changes have
resulted from two factors:

    *   processing of heavier crudes with higher levels of
        sulfur and metals; and

    >•   regulations requiring gasoline reformulation to
        reduce volatiles in gasoline and production of
        diesel fuels with reduced sulfur content (EPA/OSW
        1996).

Figure 4C-6 below shows the increase in overall capacity
utilization in the petroleum industry from  1987 to 1998, as
reported by the  Census Bureau.  Figure 4C-6 shows that
overall refinery utilization has remained high over this
period.  Utilization of specific portions of refinery capacities
may vary, however, as the industry  adjusts to changes in the
desired product mix and characteristics.
Figure 4C-6: Capacity Utilization Index for Petroleum Refineries


100 -i
95
90
85
80
75-
70
65
60

A
^ r^^
S^^ \ • •

*\^ v^





1989 1990 1991 1992 1993 1994 1995 1995 1997 1998


            Source:  Department of Commerce, Bureau of the Census, Current Industrial Reports, Survey of Plant
                     Capacity.
                                                                                                           4C-11

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
AC.2  Structure  and Competitiveness  of
        the Petroleum Industry
The petroleum refining industry in the United States is made
up of integrated international oil companies, integrated
domestic oil companies, and independent domestic
refining/marketing companies. In general, the petroleum
industry is highly integrated, with many firms involved in
more than one sector. Large companies referred to as the
"majors" are fully integrated across crude oil exploration
and production,  refining, and marketing. Smaller,
nonintegrated companies referred to as the "independents"
generally specialize in one sector of the industry.

Like the oil business in general, refining has been dominated
in the 1990s by integrated internationals, specifically a few
large companies such as Exxon Corporation, Mobil
Corporation5, and Chevron Corporation - all of which
ranked in the top ten of Fortune's 500 sales ranking.
Substantial diversification by major petroleum companies
into other energy and non-energy sectors was financed by
high oil prices in the 1970s and 1980s. With lower
profitability in the 1990s, the major producers began to exit
nonconventional energy operations (e.g., oil shale) as well as
coal and non-energy operations in the 1990s. Some have
recently ceased chemical production.

During the 1990s, several mergers, acquisitions, and joint
ventures occurred in the petroleum refining industry in an
effort to cut cost and increase profitability. This
consolidation has taken place among the largest firms (as
illustrated by the acquisition of Amoco Corporation by the
British Petroleum and the mega-merger of Exxon and Mobil
Corporation) as well as among independent refiners and
marketers (e.g.,  the independent refiner/marketer Ultramar
Diamond Shamrock (UDS) acquired Total Petroleum North
America in 1997) (U.S. DOE, 1999b). BP Amoco recently
announced a deal to sell its 250,000 barrel per day Alliance
refinery in Louisiana to the leading U.S. independent
refining and marketing company Tosco Corp.
    5  Exxon and Mobil Corporations have recently merged into
one company.
4C-12

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
a.  Geographic Distribution
Petroleum refining facilities are concentrated in areas near
crude oil sources and near consumers. The cost of
transporting crude oil feed stocks and finished products is an
important influence on the location of refineries. Most
petroleum refineries are located along the Gulf Coast and
near the heavily industrialized areas of both the east and
west coasts (U.S. DOE, 1997b).  Figure 4C-7 below shows
the distribution of U.S. petroleum refineries.  In 1992, there
were 44 refineries in Texas, 32 in California, and 20 in
Louisiana, accounting for 43 percent of all facilities in SIC
code 2911 in the United States.
                      Figure 4C-7: Geographic Distribution of Petroleum Refineries
        Number of Facilities
              0-1
              2-4
              5-8
              9-20
              21-44
 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
                                                                                                         4C-13

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
b.  Establishment  Size
A substantial portion of the facilities in SIC code 2911 are
large facilities, with 41 percent having 250 or more
employees. Figure 4C-8 shows that approximately 87
percent of the value of shipments for the industry is
produced by the 41 percent of establishments with more than
250 employees. Establishments with more than 1,000
employees are responsible for approximately 36 percent of
all industry shipments.
               Figure 4C-8: Value of Shipments and Number of  Facilities for Petroleum
                                                 Refineries
                                       by Employment Size  Category
                                             Number of Facilities
                     501
                     45
                     40
                     35-
                     30
                     25-
                     20-
                     15
                     10-
                      5-
                          1-4     5-9    10-19   20-49   50-99  100-249 250-499 500-999   1,000-
                                                                                 2,499
                                   1992 Value of Shipments ($1999, millions)
                   50,000 -
                   45,000 -
                   40,000
                   35,000 -
                   30,000
                   25,000 -
                   20,000 -
                   15,000
                   10,000
                    5,000
                           1-4
                                  5-9
                                         10-19   20-49   50-99
                                                             100-249 250-499 500-999  1,000-
                                                                                  2,499

            Source: Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
4C-14

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
c.  Firm Size
The Small Business Administration defines a small firm for
SIC code 2911 as a firm with 1,500 or fewer employees.
The size categories reported in the Statistics of U.S.
Businesses (SUSB) do not correspond with the SBA size
classifications. It is therefore not possible to apply the SBA
size threshold precisely.  Table 4C-5 below shows the
distribution of firms, establishments, and receipts in SIC
code 2911 by the employment size of the parent firm. The
SUSB data show that 122 of the 275 SIC 2911
establishments reported for 1996 (44 percent) are owned by
very large firms (those with 2,500 employees or more),  127
(46 percent) are owned by small firms (those with fewer
than 500 employees), and 26 establishments (9 percent) are
owned by firms that are of unknown size but that are not
very small (those with between 500 and 2,499 employees).
Table 4C-5: Number of Firms, Establishments, and Estimated Receipts for Petroleum
Refineries
by Firm Employment Size Category (1996)
Employment Size Category
0-19
20-99
100-499
500-2499
2500+
Total
Number of
Firms
66
23
29
15
40
173
Number of
Establishments
67
24
36
26
122
275
Estimated Receipts
( $1999 millions)
300
1,019
6,065
9,928
108,495
125,808
      Source:  Small Business Administration, Statistics of U.S. Businesses.
d.  Concentration and Specialization  Ratios
Concentration is the degree to which industry output is
concentrated in a few large firms. Concentration is closely
related to entry and exit barriers with more concentrated
industries generally having higher barriers.

The four-firm concentration ratio (CR4) and the
Herfindahl-Hirschman Index (HHI) are common
measures of industry concentration. The CR4 indicates the
market share of the four largest firms. For example, a CR4
of 72 percent means that the four largest firms in the
industry account for 72 percent of the industry's total value
of shipments. The higher the concentration ratio, the less
competition there  is in the industry, other things being
equal.6 An industry with a CR4 of more than 50 percent is
    6 Note that the measured concentration ratio and the HHF are
very sensitive to how the industry is defined. An industry with a
high concentration in domestic production may nonetheless be
subject to significant competitive pressures if it competes with
foreign producers or if it competes with products produced by other
industries (e.g., plastics vs. aluminum in beverage containers).
generally considered concentrated. The HHI indicates
concentration based on the largest 50 firms in the industry.
It is equal to the sum of the squares of the market shares for
the largest 50 firms in the industry. For example, if an
industry consists of only three firms with market shares of
60, 30, and 10 percent, respectively, the HHI of this industry
would be equal to 4,600  (602 + 302 + 102).  The higher the
index, the fewer the number of firms supplying the industry
and the more concentrated the industry. An industry is
considered concentrated if the HHI exceeds 1,000.

The petroleum industry is considered competitive, based on
C4 and the HHI.  The CR4 and the HHI for SIC code 2911
are both below the benchmarks of 50 percent and 1,000,
respectively.

The specialization ratio is the percentage of the
industry's production accounted for by primary product
shipments.  The coverage ratio is the percentage of the
Concentration ratios are therefore only one indicator of the extent
of competition in an industry.
                                                                                                          4C-15

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
industry's product shipments coming from facilities from the
same primary industry.  The coverage ratio provides an
indication of how much of the production/product of interest
is captured by the facilities classified in an SIC code.  The
specialization and coverage ratios presented in Table 4C-6
show a very high degree of specialization by petroleum
refineries in 1987 and 1992: 99 percent of the value of
shipments from SIC code 2911 establishments were
classified as SIC code 2911 petroleum products. In
addition, SIC code 2911 establishments accounted for 99
percent of the value  of all petroleum products shipped
domestically.
Table 4C-6: Selected Ratios for Petroleum Refineries
SIC
Code
2911
Year
1987
1992
Total
Number
of Firms
200
132
Concentration Ratios
4 Firm
(CR4)
32%
30%
8 Firm
(CR8)
52%
49%
20 Firm
(CR20)
78%
78%
50 Firm
(CR50)
95%
97%
Herfindahl-
Hirschman
Index
435
414
Specialization
Ratio
99%
99%
Coverage
Ratio
99%
99%
 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
z.  Foreign  Trade
The United States consumes more petroleum than it
produces,  requiring net imports of both crude oil and
products to meet domestic demand. In 1997, the U.S.
imported 8.23 million barrels per day (MBD) of crude oil,
or 56 percent of the total crude oil supply of 14.77 MBD,
and imported 1.94 MBD of refined products. These
refined product imports represented ten percent of the
18.62 MBD of refined products supplied to U.S.
consumers. The U.S. exported 0.9 MBD of refined
products in 1997.

Imports of refined petroleum products have fluctuated
since 1985. Imports rose to 2.3 MB in the early 1980s,
due to rapid growth in oil consumption, especially
consumption of light products, which exceeded the
growth in U.S. refining capacity. Imports then declined
as a result of the 1990/91 recession and a surge in
upgrading of refinery capacity resulting primarily from
Clean Air Act Amendment and other environmental
requirements (U.S. DOE, 1997b). Imports are now
increasing and are expected to continue growing through
2002.

Until the early  1980s, petroleum product exports
  consisted primarily of petroleum coke, because trade in
  most other products was restricted by allowances. Export
  license requirements for various petroleum products
  imposed in 1973 were eliminated in the late 1981,
  however, and exports of other products began to grow.
  Petroleum exports continue to include heavy products
  such as residual fuel oil and petroleum coke, which are
  produced as co-products with motor gasoline and other
  light products.  Production of these heavier products often
  exceeds U.S. demand, and foreign demand absorbs the
  excess.  Petroleum coke  is the leading petroleum export
  product,  accounting for 30 percent of petroleum exports
  in 1997,  followed by distillate fuel oil (15 percent of
  exports)  and motor gasoline (almost 14 percent) (U.S.
  DOE, 1997a).  Exports generally reflect foreign demand,
  but other factors influence exports as well. For example,
  exports of motor gasoline increased due to high prices in
  Europe at the time of the 1990 Persian Gulf crisis. U.S.
  refiners and marketers have gained experience in
  marketing to diverse world markets, and U.S. products are
  now sold widely abroad  (U.S. DOE,  1997b). The real
  value of petroleum exports fluctuated during the years
  1989 to 1996, as reported by the International Trade
  Administration, with an overall increase of approximately
  23 percent over the entire period (see  Table 4C-7).
4C-16

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
Table 4C-7: Foreign Trade Statistics for Petroleum Refineries
Year
00
1989
1990
1991
1992
1993
1994
1995
1996
Average
Annual
Growth Rate
Value of imports
($1999 millions)
(b)
11,798
11,656
9,907
9,574
9,535
9,454
8,659
15,971
4%
Value of exports
($1999 millions)
(c)
4,318
4,891
5,782
5,413
5,521
5,054
5,269
5,436
3%
Value of Shipments
($1999 millions)
(d)
131,192
130,218
132,272
128,061
127,196
131,182
134,380
136,387
1%
Implied
Domestic
Consumption1
(e)
138,672
136,983
136,397
132,222
131,210
135,581
137,771
146,922
1%
Import
Penetration2
(f)
9%
9%
7%
7%
7%
7%
6%
11%
3%
Export
Dependence3
(8)
3%
4%
4%
4%
4%
4%
4%
4%
4%
  1 Implied domestic consumption based on value of shipments, imports, and exports [column d + column b - column c].
  2 Import penetration based on implied domestic consumption and imports [column b / column e].
  3 Export dependence based on value of shipments and exports [column c / column d].

  Source:  Department of Commerce, International Trade Administration, Outlook Trends Tables.
4C.3  Financial  Condition and
        Performance
Refiners' profitability depends on the spread between
product prices and crude oil and other input prices (the gross
refining margin), investment costs, and operating costs.
Operating costs in turn reflect facility configurations
(complexity), scale and efficiency, the mix of high-end
versus low-end products produced, and location. Refinery
yields vary with refinery configuration, operating practices,
and crude oil characteristics. Revenues earned from a
barrel of crude depend on the prices of different products,
the mix of products produced, and the refinery yield for each
product.  Relatively small swings in the price of gasoline
(which represents the largest product output) and the price
of crude oil can cause large changes in cash margins and
refinery profits.

Returns on investments to produce higher quality products
from a given mix of crude oil (or to produce a given product
mix from heavier crude oil)  depend on the differentials
between high and low quality crude.  Price discounts for low
quality crude have not always been enough to earn
competitive returns on investments in extra coking and
sulfur removal capacity.
Throughout the 1990s, the U.S. refining and marketing
industry was characterized by unusually low product
margins, low profitability, and substantial restructuring.
These low profit margins were the result of three different
factors: (1) increases in operating costs as a result of
governmental regulations; (2) expensive upgrading of
processing units to accommodate lower-quality crude oils;7
and (3) upgrading of operations to adapt to changes in
demand for refinery products.8  A combination of higher
cost as a result of these three trends and lower product
prices as a result of competitive pressures has led to lower
profits (American Petroleum Institute, 1999).

In the late 1990s, the U.S. majors aggressively pursued cost-
    7 Crude oils processed by U.S. refineries have become heavier
and more contaminated with materials such as sulfur. This trend
reflects reduced U.S. dependence on the more expensive high
gravity ("light"), low sulfur ("sweet") crude oils produced in the
Middle East and greater reliance on crude oil from Latin America
(especially Mexico and Venezuela), which is relatively heavy and
contains higher sulfur ("sour") (U.S. DOE,  1999a).

    8 Demand for lighter products such as gasoline and diesel fuel
has increased, and demand for heavier products has decreased.
                                                                                                             4C-17

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§316(b) EEA Chapter 4 for New Facilities                           Manufacturing Profile: Petroleum and Coal Products


cutting throughout their operations (Rodekohr, 1999). There    *•   use of new technologies requiring less labor.
were improvements in both gross and net margins.9
Reductions in costs  resulted from:                              Financial performance again declined in 1998, due to low
                                                              prices and high inventories resulting from reduced
>•    divesting marginal refineries and gasoline outlets;          worldwide oil demand. Figure 4C-9 shows the substantial
                                                              fluctuation in return on investment from 1977 through 1996,
*    divesting less profitable activities (e.g., gasoline credit      including the relatively low returns in the early 1990s.10
     cards);

*    reducing corporate overhead costs, including
     eliminating redundancies through restructuring;

>•    outsourcing some administrative activities; and
                                                                  10  The Financial Reporting System (FRS) is described in U.S.
                                                              DOE, 1997a. Quarterly financial results are collected for a group
                                                              of specialized refiner/marketers and major integrated petroleum
                                                              companies. Data are reported separately for their U.S.
                                                              refining/marketing lines of business. Companies drop in and out of
	                            the survey as a result of acquisitions and mergers.  Data include
                                                              only the U.S. operations for foreign affiliates (BP American, Fina,
    9 Gross margin is revenues per refined product barrel less raw    Shell Oil) but worldwide operations for U.S.-based companies.
materials cost (i.e., average product price minus average crude oil     The surveyed companies account for approximately 80 percent of
cost).  Net margin is gross margin minus operating costs (all out-of-    total U.S. companies' worldwide investment in petroleum and
pocket refining and retailing expenses such as energy costs and        natural gas, and approximately 25 percent of worldwide refining
marketing costs.)                                               capacity (excluding State Energy Companies) (Rodekohr, 1999).


4C-18

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Petroleum and Coal Products
                Figure 4C-9: U.S.  Petroleum and  Natural Gas Refining and Marketing,
                                   Return on  Investment 1977  -  1996
   160% -,
   140%
   120%
   100%
    80%
    60% --
    40% --
    20% --
     0%
    -20% J
         1977 1978  1979 1980  1981 1982 1983  1984 1985  1986 1987  1988 1989 1990  1991 1992  1993 1994 1995  1996 1997  1998

 Source: U.S. DOE, Financial Reporting System (FRS) historical data.
                                                                                                      4C-19

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
Table 4C-8 below shows trends in estimated operating
margins for the petroleum refining industry, based on
Census data for SIC code 2911. Margins decreased two
  percent overall between 1988 and 1996, from 15.6
  percent to 13.6 percent.  Throughout this period, margins
  fluctuated, but not sharply.
Table 4C-8: Operating Margins for Petroleum Refineries
Year
1988
1989
1990
1991
1992
1993
1994
1995
1996
Value of Shipments
$133,729
$131,192
$130,218
$132,272
$128,061
$127,196
$131,182
$134,380
$136,387
Cost of Materials
$109,523
$110,522
$113,167
$112,735
$109,891
$107,933
$107,547
$108,785
$114,654
Payroll (all employees)
$3,296
$2,984
$2,610
$3,137
$3,418
$3,656
$3,884
$3,750
$3,225
Operating Margin
15.6%
13.5%
11.1%
12.4%
11.5%
12.3%
15.1%
16.3%
13.6%
  Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
AC A  Facilities  Operating  Cooling  Water
        Intake  Structures
In 1982, the Petroleum and Coal Products industry (SIC 29)
withdrew 590 billion gallons of cooling water, accounting
for approximately 0.8 percent of total industrial cooling
water intake in the United States. The industry ranked 4th in
industrial cooling water use, behind the electric power
generation industry, and the chemical and primary metals
industries (1982 Census of Manufactures).

This section presents information from EPA's Industry
Screener Questionnaire: Phase I Cooling Water Intake
Structures on existing facilities with the following
characteristics:
    *   they withdraw from the waters of the United States;
    -   they hold an NPDES permit;
    *   they have an intake flow of more than two MOD;
    *   they use at least 25 percent of that flow for cooling
        purposes.

These facilities are not "new facilities" as defined by the
proposed §316(b) New Facility Rule and are therefore not
subject to this regulation.  However, they meet the criteria of
the proposed rule except that they are already in operation.
These existing facilities therefore provide a good indication
of what new facilities in these sectors may look like.  The
remainder of this section refers to existing facilities with the
above characteristics as "§316(b) facilities."
4C-20

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
a.  Cooling  Water Uses and Systems
Information collected in the Screener Questionnaire found
that an estimated 28 out 163 facilities, or 17 percent, meet
the characteristics of a §316(b) facility.  Ninety-six percent
of these facilities use cooling water for production line (or
process) contact or noncontact cooling.  Approximately 39
and 31 percent of the §316(b) facilities also reported use of
cooling water in electricity generation and air conditioning,
respectively.

Table 4C-9 shows the distribution of existing §316(b)
petroleum refineries by type of water body and cooling
system. Thirteen facilities, or 46 percent, obtain their
cooling water from either a freshwater stream or river.
Thirty-nine percent of refineries obtain their cooling water
from either an estuary or a tidal river.  The other two sources
of cooling water reported for petroleum refineries were
oceans and lakes/reservoirs, accounting for approximately
seven percent each.

The most common cooling water system used by petroleum
refineries is a once-through cooling system, representing
approximately 47 percent of all systems used by refineries.
Thirty-four percent of all refineries use a closed cycle
cooling system.  The remaining 18 percent use a
combination cooling system. Most §316(b) refineries are
located on either an estuary tidal river (11 facilities) or a
freshwater river/stream (13 facilities).
Table 4C-9: Number of Petroleum Refining Facilities by Water Body Type and Cooling System
Type
Water Body Type
Estuary or Tidal River
Freshwater Stream or River
Lake or Reservoir
Ocean
Total?
Cooling System
Closed Cycle
Number
fj
6
1
0
10
%of
Total
20%
50%
49%
0%
34%
Once Through
Number
7
4
1
1
13
%of
Total
60%
34%
51%
50%
47%
Combination
Number
fj
2
0

5
%of
Total
20%
17%
0%
50%
19%
Total
11
13
2
2
28
 T   Individual numbers may not add up to total due to independent rounding.

 Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
According to the American Petroleum Institute and EPA,
water use in the petroleum refining industry has been
declining because facilities are increasing their reuse of
water. These restrictions are likely to reduce §316(b)-
  related costs, and a complete phase out of once-through
  cooling water in refineries is expected (U.S. EPA, 1996).
                                                                                                            4C-21

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§316(b) EEA Chapter 4 for New Facilities
                                                              Manufacturing Profile: Petroleum and Coal Products
b.  Facility Size
§3 16(b) facilities in SIC code 29 1 1 are somewhat larger on
average than the average employment size distribution of the
industry as a whole, as reported in the Census. Figure 4C-
                                                        10 shows the number of §3 16(b) facilities by employment
                                                        size category. Sixty-four percent of §3 16(b) refineries
                                                        employ over 500 people and all employ over 100 employees.
         Figure 4C-10:  Number of §316(b) Petroleum Refineries  by Employment Size Category
           16-,-''

           14-/"

           12-x

           10-x

            8-x

            6-X

            4-X

            2--""

            0-^
                  <100
                              100-249       250-499       500-999       >=1000
   Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
c.  Firm Size
EPA used the Small Business Administration (SBA) small
entity thresholds to determine the number of existing
§316(b) petroleum refineries owned by small firms.  Firms
in this industry are considered small if they employ fewer
than 1,500 people. Table 4C-10 shows that 92 percent of all
                                                        §316(b) petroleum refineries are owned by large firms.
                                                        There are no §316(b) petroleum refining facilities that are
                                                        owned by a firm known to be small, and only eight percent
                                                        are owned by a firm of unknown size which might qualify as
                                                        a small firm.
Table 4C-10: Number of §316(b) Petroleum Refineries by Firm Size 1
SIC Code
2911
Large
No.
26
% of SIC
92%
Small
No.
0
% of SIC
0%
Unknown
No.
2
% of SIC
8%
Total 1
28 |
     Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999; D&B
             Database, 1999.
4C-22

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§316(b) EEA Chapter 4 for New Facilities
       Manufacturing Profile: Petroleum and Coal Products
REFERENCES
American Petroleum Institute.  1999. Policy Analysis and
Strategic Planning Department.  Economic State of the US
Petroleum Industry.  February 26, 1999.

American Petroleum Institute, undated. Petroleum Industry
Environmental Performance: 6th Annual Report (STEP
report.)

DRI/McGraw Hill and U.S. Department of Commerce,
International Trade Administration. 1998. U.S. Industry and
Trade Outlook '98.

Dun and Bradstreet (D&B). 1999. Data as of April 1999.

Gale Business Resources. 1999. Petroleum Refining.

Office of Management and Budget. 1987.  Standard
Industrial Classification Manual.

Office of Management and Budget. 1997.  North American
Industry Classification System.

Rodekohr, Dr. Mark. Financial Developments in '96-'97:
How the U.S. Majors Survived the 1998 Crude Oil Price
Storm, May 27, 1999 presentation,
http://www.eia.doe.gov/emeu/fmance/highlite7/sld001.htm

U.S. Department of Commerce, Bureau of the Census.
1992(a). Census of Manufactures: Industry Series.

U.S. Department of Commerce, Bureau of the Census.
1996(a). Annual Survey of Manufactures, 1996.

U.S. Department of Commerce, Bureau of the Census.
1996(b). Statistics of U.S. Businesses, 1996.

U.S. Department of Commerce, Bureau of the Census.
Current  Industrial Reports.  Survey of Plant Capacity.
http://www.census.gov/cir/www/mqclpag2.html

U.S. Department of Energy (DOE), Financial Reporting
System (FRS) historical data,
http ://ww w. eia. doe. gov/emeu/aer/finance. html

U.S. Department of Energy (DOE). 1997(a). Performance
Profiles of Major Energy Producers 1995. DOE/EIA-0615,
September, http://www.eia.doe.gov/emeu/perfpro/.

U.S. Department of Energy (DOE). 1997(b). Energy
Information Administration. September 1997. Petroleum
1996: Issues and Trends. Page 15.  DOE/EIA-0615(96).
Contact Craig H. Cranston (202) 586-6023.

U.S. Department of Energy (DOE). 1999 (a). Energy
Information Administration. Petroleum: An Energy Profile,
1999, p. 25.

U.S. Department of Energy (DOE). 1999 (b). Energy
Information Administration. The U.S. Petroleum Refining
and Gasoline Marketing Industry.  Recent Structural
Changes in U.S. Refining: Joint Ventures, Mergers, and
Mega-Mergers.
http://www.eia.doe.gov/emeu/finance/usi&to/downstream/.
July 9, 1999.

U.S. Department of Energy (DOE). 1999(c). Energy
Information Administration. December 17, 1999. "Market
Trends - Oil & Natural Gas." Annual Energy Outlook 2000.
Report#DOE/EIA-03 83 (2000).

U.S. Department of Energy (DOE). 1999 (d). Energy
Information Administration. June 1999.  Petroleum Supply
Annual, Volume 1.
http://www.eia.doe.gov/oil_gas/petroleum/data_publications
/petroleum_supply_annual/psa_volume l/psa_volume 1 .html

U.S. Department of Energy (DOE). Financial News for
Independent Energy Companies,
http://www.eia.doe.gov/emeu/perfpro/news_i/index.html

U.S. Department of Energy (DOE). Financial News for
Major Energy Companies,
http://www.eia.doe.gov/emeu/perfpro/news i/index.html

U.S. Environmental Protection Agency (EPA).  1995.
Sector Notebook: Profile of the Petroleum Refining
Industry. September. EPA 310-R-95-013.

U.S. Environmental Protection Agency (EPA).  1996(a).
"Draft:  Preliminary Regulatory Development Section
316(b) of the Clean Water Act, Background Paper Number
2:  Cooling Water Use for Selected Industries."  September
30.

U.S. Environmental Protection Agency (EPA).  1996(b).
Office of Water.  Preliminary Data for the Petroleum
Refining Category.  July. EPA-821-R-96-016.

U.S. Environmental Protection Agency (EPA).  1996(c).
Office of Solid Waste. Study of Selected Petroleum
Refining Residuals: Industry Study, August.
http://www.epa.gov/epaoswer/haswaste/id/studies/studyp.txt
                                                                                                      4C-23

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§316(b) EEA Chapter 4 for New Facilities                       Manufacturing Profile: Petroleum and Coal Products
                                 This Page Intentionally Left Blank
4C-24

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§316(b) EEA Chapter 4 for New Facilities
                             Manufacturing Profile: Steel
4D    STEEL (SIC 331)

EPA's Industry Screener Questionnaire: Phase I Cooling
Water Intake Structures identified five 4-digit SIC codes in
the Steel Works, Blast Furnaces, and Rolling and Finishing
Mills Industries (SIC 331) with at least one existing facility
that operates a CWIS, holds a NPDES permit, withdraws
more than two million gallons per day (MOD) from a water
of the United States, and uses at least 25 percent of its intake
flow for cooling purposes (facilities with these
characteristics are hereafter referred to as "§316(b)
facilities").  For each of the five SIC codes, Table 4D-1
below provides a description of the industry sector, a list of
primary products manufactured, the total number of screener
respondents, and the number and percent of §316(b)
facilities.
Table 4D-1: §316(b) Facilities in the Steel Industry (SIC 331)
SIC

3312

3315
3316
3317
SIC Description

Steel Works, Blast
Furnaces (Including Coke
Ovens), and Rolling Mills

Steel Wiredrawing and
Steel Nails and Spikes
Cold-Rolled Steel Sheet,
Strip, and Bars
Steel Pipe and Tubes
Total Steel Products

Electrometallurgical
Products, Except Steel

Total 331
Important Products Manufactured
Steel Mills (SIC 3312)
Hot metal, pig iron, and silvery pig iron from iron ore and
iron and steel scrap; converting pig iron, scrap iron, and
scrap steel into steel; hot-rolling iron and steel into basic
shapes, such as plates, sheets, strips, rods, bars, and tubing;
merchant blast furnaces and byproduct or beehive coke
ovens
Steel Products (SICs 3315, 3316, 3317)
Drawing wire from purchased iron or steel rods, bars, or
wire; further manufacture of products made from wire; steel
nails and spikes from purchased materials
Cold-rolling steel sheets and strip from purchased hot-rolled
sheets; cold-drawing steel bars and steel shapes from hot-
rolled steel bars; producing other cold finished steel
Production of welded or seamless steel pipe and tubes and
heavy riveted steel pipe from purchased materials

Other Sectors
Ferro and nonferrous metal additive alloys by
electrometallurgical or metallothermic processes, including
high percentage ferroalloys and high percentage nonferrous
additive alloys
Total Steel (SIC 331)

Number of Screener
Respondents
Total

158

122
60
130
312

6

476
§316(b) Facilities
No.*

38

>
o
i
13

1

52
%

24.1%

2.5%
15.0%
0.8%
4.2%

16.7%

10.9%
 T    Information on the percentage of intake flow used for cooling purposes was not available for all screener respondents.  Facilities
      for which this information was not available were assumed to use at least 25% of their intake flow for cooling water purposes The
      reported numbers of §316(b) facilities may therefore be overstated.

 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures; Executive Office of the President, Office of
          Management and Budget, Standard Industrial Classification Manual 1987
                                                                                                              4D-1

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
The responses to the Screener Questionnaire indicate that
two main steel sectors account for the largest numbers of
§316(b) facilities: (1) Steel Mills (SIC code 3312) and (2)
Steel Products (SIC codes 3315, 3316, and 3317). Of the 52
§316(b) facilities in the steel industry 38, or 73 percent, are
steel mills, and 13, 25 percent, are steel products facilities.
The remainder of the steel industry profile therefore focuses
on these two industry sectors.

40.1  Domestic Production
Steel is one of the dominant products in the U.S. industrial
metals industry.  For most of the twentieth century the U.S.
steel industry consisted of a few large companies utilizing an
integrated steelmaking process to produce the raw steel used
in a variety of commodity steel products.  The integrated
process requires massive capital investment to process coal,
iron ore, limestone, and other raw materials into molten iron,
which is then transformed into finished steel products (S&P,
2000). In recent decades, the integrated steel industry has
undergone a dramatic downsizing as a result of increased
steel imports, decreased consumption by the  auto industry,
and the advent of minimills, small regional steelmakers
producing limited products and using a less capital-intensive
process (S&P, 2000).

The steel industry is the fourth largest energy-consuming
sector. Energy costs account for approximately 20 percent
of the total cost to manufacture steel.  Steelmakers use coal,
oil, electricity, and natural gas to fire furnaces and run
process equipment. Minimill producers require large
quantities of electricity to operate the electric arc furnaces
used to melt and refine scrap metal while integrated
steelmakers are dependent on coal for up to 60 percent of
their total energy requirements (McGraw-Hill, 1998).
a.  Output
The two most common measures of manufacturing output
are value of shipments and value added.1  Historical
trends provide insight into the overall economic health and
outlook for an industry. Value of shipments is the sum of
the receipts a manufacturer earns from the sale of its
outputs. It is an indicator of the overall size of a market or
the size of a firm in relation to its market or competitors.
Value added is used to measure the value of production
activity in a particular industry.  It is the difference between
the value of shipments and the value of inputs used to make
the products sold.

Figure 4D-1 presents the trend in value of shipments and
value added for steel mills and steel products. The steel
products sector experienced a slow yet steady increase in
both value of shipments and value added between 1987 and
1996. This upward trend is  the result of the increasing
global demand for steel due to growing automotive and
construction markets and  stronger economies in developing
regions with substantial infrastructure needs (McGraw-Hill,
1998).

Between 1987 and 1996, value of shipments and value
added for steel mills have increased by 27 and 26 percent,
respectively. The most significant gains occurred after the
demand for steel mill products bottomed out in the early
1990s. There is a strong link between the U.S. steel industry
and the auto and construction industries and the national
economy overall. The economic expansion in recent years
has increased demand for steel products.  Another important
factor in the resurgence in the demand for steel mill products
is the technological advancements  that have improved the
competitiveness of U.S. steel. The development of the thin
slab caster/rolling mill in  1989 allowed minimills to produce
flat rolled steel, which accounts for 60 percent of domestic
shipments, with substantially lower capital and energy costs
(McGraw-Hill, 1998).

Figure 4D-1 shows the trend in value of shipments and value
added for the two profiled steel sectors between 1987 and
1996.
                                                              1  Terms highlighted in bold and italic font are further
                                                          explained in the glossary.
4D-.

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§316(b) EEA Chapter 4 for New Facilities
                             Manufacturing Profile: Steel
   Figure 4D-1: Real Value of Shipments and Value Added for Profiled Steel Industry Sectors ($1999 million)
                                        Value of Shipments ($1999 millions)
            60,000


            50,000


            40,000



            30,000


            20,000


            10,000


                0
                            -SteelMills (SIC3312)
                            - Steel Products (SIC
                             3315,3316,3317)
                    1987   1988   1989   1990    1991   1992   1993   1994    1995    1996
                                           Value Added ($1999 millions)
    25,000


    20,000


    15,000



    10,000


     5,000
                                  -SteelMils (SIC3312)
                                  •Steel Products (SIC
                                   3315,3316,3317)
             1987    1988    1989    1990   1991    1992    1993    1994    1995    1996
 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
b.  Prices
The                  ffldejf (PPI) is a family of indexes
that measure price changes from the perspective of the
seller.  It is an indicator of product prices and is used to
inflate nominal monetary values to constant dollars. This
profile uses PPIs at the 4-digit SIC code level to convert
nominal values to 1999 dollars.
                                                                                                               4D-3

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§316(b) EEA Chapter 4 for New Facilities
                                                                           Manufacturing Profile: Steel
Figure 4D-2 below shows that selling prices for steel
products and steel mill products follow very similar trends.
Prices increased from 1987 to 1989 and then decreased until
bottoming out in 1993.  After this decrease, prices
rebounded sharply through 1995 before eroding again. The
decrease in prices between 1988 and 1992 reflects the sharp
decrease in demand for steel products which resulted, in
part, from a declining global economy and decreases in the
demand for consumer durable goods, such as cars and
appliances. This decrease  in demand for steel-containing
                                               products led to an oversupply in steel and a substantial
                                               decline in prices.  The recovery in prices reflects a general
                                               economic recovery and the concomitant increase in demand
                                               for steel products from the auto and construction markets.
                                               The fluctuation in prices since the mid 1990s reflects the
                                               limited ability of steel makers to raise prices despite
                                               increased demand. An increased supply in low cost imports
                                               from foreign sources has kept prices from increasing
                                               significantly (McGraw-Hill,  1998).
                     Figure 4D-2: Producer Price Index for Profiled Steel Industry Sectors
               130
               125 -
           "§   120 H
           ^   115
Z  no
a.
               105 -
               100
                                                                                     •SteelMills (SIC
                                                                                      3312)
                                                                                      Steel Products
                                                                                      (SIC 3315,
                                                                                      3316,3317)
                                               Year

      Source:  Bureau of Labor Statistics, Producer Price Index.
4D-4

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
c.  Number of Facilities  and Firms
The number of steel mills fluctuated significantly between
1989 and 1996. Table 4D-2 shows substantial decreases in
the number of facilities in 1992 and 1993 due to a
significant decrease in the global demand for steel products
and the resulting overcapacity.  This decrease was followed
by a significant recovery in 1995 and 1996. The reversal
reflects the increased use of steel by the major steel using
industries such as construction (McGraw-Hill, 1998). The
increase in demand for steel led to an expansion in
steelmaking capacity which has been increasingly dominated
by smaller, more energy efficient minimills in favor of the
larger integrated mills (S&P, 2000).

In contrast to the volatility in the number of steel mills, the
number of facilities in the Steel Products sector has
remained relatively stable for the past eight years with only
small decreases between 1994 and 1996.
Table 4D-2: Number of
Year
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1989-1996
Steel Mills
Number of
Facilities
476
497
531
412
343
339
391
483
Facilities in the Profiled Steel Industry Sectors
(SIC 3312)
Percent Change
n/a
4.4%
6.8%
-22.4%
-16.7%
-1.2%
15.3%
23.5%
1.5%
Steel Products (SIC
Number of
Facilities
784
776
807
831
833
804
791
770
3315, 3316, 3317)
Percent Change
n/a
-1.0%
4.0%
3.0%
0.2%
-3.5%
-1.6%
-2.7%
-1.8%
        Source: Small Business Administration, Statistics of U.S. Businesses.
                                                                                                           4D-5

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§316(b) EEA Chapter 4 for New Facilities
                           Manufacturing Profile: Steel
The trend in the number of firms over the period between      of more than 53 percent in two years. The number of firms
1990 and 1996 has been similar to the trend in the number of   in the Steel Products sector has decreased steadily in recent
facilities in both industry sectors. The number of firms in      years from its peak of 661 in 1992.
the Steel Mill sector decreased from a high of 433 in 1991 to
a low of 258 in 1994. This decrease was followed by an
Table 4D-3 shows the number of firms in the two profiled
expansion in the number of firms to 397 in 1996, an increase   steel sectors between 1990 and 1996.
Table 4D-3: Number of Firms in the Profiled Steel Industry Sectors
Year
1990
1991
1992
1993
1994
1995
1996
Percent Change
1990-1996
Steel Mills
Number of Firms
408
433
321
261
258
309
397
(SIC 3312)
Percent Change
n/a
6.1%
-25.9%
-18.7%
-1.1%
19.8%
28.5%
-2.7%
Steel Products (SIC
Number of Firms
597
635
661
641
618
607
583
3315, 3316, 3317)
Percent Change
n/a
6.4%
4.1%
-3.0%
-3.6%
-1.8%
-4.0%
-2.3%
         Source: Small Business Administration, Statistics of U.S. Businesses.
4D-6

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§316(b) EEA Chapter 4 for New Facilities
                           Manufacturing Profile: Steel
d.  Employment  and  Productivity
              is a measure of the level and trend of activity
in an industry.  Figure 4D-3 below provides information on
employment from the Annual Survey of Manufactures for
the Steel Mills and Steel Products sectors. The figure shows
that employment levels in the Steel Mills  industry decreased
by a total of 21 percent between 1987 and 1996.
Employment is a primary cost component for steelmakers,
accounting for approximately 30 percent of total costs
(McGraw-Hill, 1998). Lowering labor costs enabled the
steel mills to improve profitability and competitiveness
given the limited opportunity to raise prices in the
competitive market for steel products. The steady declines
in employment reflects the aggressive efforts made by steel
mills to improve worker productivity in order to cut labor
costs and improve profits (McGraw-Hill, 1998).

Employment in the Steel Products sector over the same time
period shows a steady positive trend, increasing by 12
percent between 1987 and 1996.  This increase in
employment is due to continued growth in the demand for
steel products driven by a strong market for steel-containing
durable goods and the increased steel-intensity of the
economy, including a significant increase in the use of steel
by the construction industry (McGraw-Hill, 1998).
                         Figure 4D-3:  Employment for Profiled Steel Industry Sectors
     250,000
     200,000
     150,000
     100,000
      50,000
                              • Steel Mills (SIC
                               3312)
                                                                                   =	Steel Pro ducts
                                                                                       (SIC 3315,
                                                                                       3316,3317)
               1987  1988   1989  1990  1991   1992  1993  1994   1995  1996

 Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                        4D-7

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
Table 4D-4 presents the change in value added per labor
hour, a measure of labor productivity, for the Steel Mill
and Steel Products sectors between 1987 and 1996.  Labor
productivity at steel mills has increased substantially over
this time period.  Value added per labor hour increased 47
percent between 1987 and 1996.  This increase reflects the
efforts by steel mills to  improve worker productivity in order
to cut labor costs and improve profits.  Much of the  increase
in labor productivity can be attributed to the restructuring of
the U.S. steel industry and the increased role of minimills in
production.  Minimills are capable of producing rolled steel
from scrap with substantially lower labor needs than
integrated mills (McGraw-Hill, 1998).  Labor productivity in
the steel products sector has fluctuated somewhat but
remained generally stable, increasing five percent from 1987
to 1996.
Table 4D-4: Productivity Trends for the Profiled Steel Industry Sectors, Millions of $1999
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent
Change 1988-
1996
Steel Mills (SIC 3312)
Value
Added
15,743
18,233
17,455
16,831
13,707
15,974
17,008
18,824
18,939
19,784

Production
Hours
(millions)
306
324
348
315
279
277
268
266
262
260

Value Added/Hour
Number
51
56
50
53
49
58
64
71
72
76

Percent
Change
n/a
9%
-11%
7%
-8%
17%
10%
11%
2%
5%
15%
Steel Products (SIC 3315, 3316, 3317)
Value
Added
5,289
6,195
5,550
5,438
5,151
5,649
6,278
6,821
6,589
6,578

Production
Hours
(millions)
96
103
104
105
101
101
107
108
113
114

Value Added/Hour
Number
55
60
53
52
51
56
59
63
58
58

Percent
Change
n/a
9%
-11%
-3%
-1%
10%
5%
7%
-7%
-1%
11%
 Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
e.  Capital Expenditures
Steel production is a relatively capital intensive process.
Capital-intensive industries are characterized by large,
technologically complex manufacturing facilities which
reflect the economies of scale required to manufacture
products efficiently. The integrated production process
requires large capital investments of approximately $2,000
per ton of capacity for plants and equipment to support the
large-scale production capacities needed to keep unit costs
low.  The nonintegrated process employed in minimills is
significantly less capital intensive with capital costs of
approximately $500 per ton of capacity (McGraw-Hill,
1998).
New capital expenditures are needed to modernize,
expand, and replace existing capacity to meet growing
demand. Capital expenditures in the Steel Mills and the
Steel Products sectors between 1987 and 1996 are presented
in Table 4D-5 below. The table shows that while capital
expenditures in the Steel Mills sector haveexperienced
dramatic fluctuations from one year to another, the level of
capital expenditures by Steel Mills more than doubled
between 1987 and 1996. The majority of this increase was
realized in the late 1980s and early 1990s when capital
expenditures increased by a total of 131 percent from 1987
to 1991. This substantial increase coincides with the advent
of thin slab casting, a technology that allowed minimills to
compete in the market for flat rolled sheet steel.  Thin slab
casting is the industry's largest and most lucrative segment,
4D-,

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
accounting for approximately 60 percent of demand.  The
significant decreases in capital expenditures by steel mills
that followed this expansion reflects the bottoming out of
the demand for steel products in the early 1990s. The
recovery in capital expenditures in the mid 1990s has likely
resulted from the recovery in the demand for steel which is
due to an increase in the steel-intensity of the economy and
growth in important end use markets (McGraw-Hill, 1998).

The 20 percent growth in the Steel Products sector has been
much more modest, but the fluctuations are equally
dramatic.
Table 4D-5: Capital Expenditures for the Profiled Steel Industry Sectors ($1999
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent
Change 1987-
1996
Steel Mills (SIC
Capital Expenditures
($1999 millions)
1,216
1,765
2,255
2,351
2,810
2,131
1,689
2,372
2,365
2,522
3312)
Percent Change
n/a
45.2%
27.8%
4.3%
19.5%
-24.2%
-20.7%
40.4%
-0.3%
6.6%
107.4%
Steel Products (SIC 3315,
millions)
3316, 3317)
Capital Expenditures _ , „,
;„.„„„ .... , Percent Change
($1999 millions) 6
478
351
499
489
385
388
410
522
490
576
n/a
-26.7%
42.2%
-1.9%
-21.4%
0.7%
5.9%
27.2%
-6.1%
17.4%
20.5%
     Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                           4D-9

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
f.  Capacity Utilization
                     measures actual output as a
percentage of total potential output given the available
capacity and is used as a key barometer of an industry's
health. Capacity utilization is an index used to identify
potential excess or insufficient capacity in an industry which
can help to project whether new investment is likely. Figure
4D-4 presents the capacity utilization index from 1989 to
1998 for the 4-digit SIC codes that make up the Steel Mill
and Steel Products sectors. As shown in the figure, the
index follows similar trends in each SIC code.  For all
sectors, capacity utilization peaked in 1994 and has
decreased through the late  1990s. This trend reflects the
over-capacity in the U.S. steel industry that has followed the
substantial capacity additions in the late 1980s  and early
1990s.
Figure 4D-4: Capacity Utilization Index for Profiled Steel Industry Sectors


inn
QC
on
Q£



/re


XV
// ^~-—^^\
°'"~~~ • / * : s. 	 \
•III \
\

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998


— •— Steel Mils (SIC 3312)
Steel Wire and Related
Products (SIC 3315)
	 JjjjjJ 	 Cold Finishing of Steel
Shapes (SIC 3316)
Steel Pipe and Tubes
(SIC 3317)



 Source: Department of Commerce, U.S. Census Bureau, Current Industrial Reports, Survey of Plant Capacity.
40.2  Structure and  Competitiveness of
        the  Steel  Industry
The companies that manufacture steel operate in a highly
capital intensive industry. The steel mill industry is
comprised of two different kinds of companies, integrated
mills and minimills. The integrated steelmaking process
requires expensive  plant and equipment purchases that will
support production capacities ranging from two million to
four million tons per year. Until the early  1960s integrated
steelmaking was the dominant method of steel
manufacturing in the U.S. Since then, the  integrated steel
business has undergone dramatic downsizing due in part to
the advent of minimills, increased imports, and reduced
consumption by the auto industry which caused the industry
to lose a substantial amount of tonnage. The increased unit
costs as a result of decreases in tonnage has caused
bankruptcy, plant closures, and mergers. These trends have
reduced the number of integrated steelmakers (S&P, 2000).
Minimills vary in size from capacities of 150,000 tons at
small facilities to larger facilities with annual capacities of
between 400,000 tons and two million tons.  Integrated
companies have significant capital costs of approximately
$2,000 per ton of capacity compared with minimills' $500
per ton. Because their production method does not require
as much of an investment in capital equipment as integrated
steelmakers, minimills have been able to lower prices
driving integrated companies out of many of the commodity
steel markets (S&P, 2000).

The large reduction in the initial capital investment has made
it easier for minimills to enter the market.  There were 22
publicly listed producers in the U.S. steel market as of late
1999, a sharp contrast to the oligopoly that prevailed earlier
in this century (S&P, 2000).
4D-10

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
a.  Geographic Distribution
Steel mills are primarily concentrated in the Great Lakes
Region (New York, Pennsylvania, Ohio, Indiana, Illinois,
and Michigan).  Historically, mill sites were selected for
their proximity to water (both for transportation and for use
in cooling and processing) and the sources of their raw
materials, iron ore and coal. The geographic concentration
of the industry has begun to change as minimills can be built
anywhere where electricity and scrap are available at a
reasonable cost and where a local market exists (EPA,
1995). The Steel Products sector is concentrated in the
Great Lakes region and California. Ohio, Illinois,
Pennsylvania, Michigan, and California manufactured 41
percent of all steel products  in the U.S.

Figure 4D-5 below shows the distribution of U.S. steel mills
and steel products facilities.
            Figure 4D-5: Geographical Distribution of Facilities in the Profiled Steel Industry Sectors
       Number of Facilities
            0-3
            4-8
            9-32
            33-58
            59 - 104

 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
                                                                                                         4D-11

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§316(b) EEA Chapter 4 for New Facilities                                               Manufacturing Profile: Steel


b.  Facility  Size                                       The Steel Products sector is characterized by smaller
Steel making at both integrated mills and minimills is          facilities than steel making with only 26 percent of facilities
characterized by relatively large facilities, with 71 percent of   m ihs steel Product industry employing 100 or more
all steel mills employing 100 or more employees. Figure       employees.  While the majority of facilities in the Steel
4D-6 shows that in 1992, the vast majority, approximately      Products sector employ less than 100 people, most of the
98 percent, of the value of shipments for the industry was       ou1Put from this sector is Produced at the largest facilities.
produced by facilities with more than 100 employees.          ₯lS^rQ 4D'6 shows that steel products facilities with more
Facilities with more than 1,000 employees accounted for       than 10° employees account for approximately 74 percent of
approximately 69 percent of all steel mill shipments.           the industry's shipments.
4D-12

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Steel
    Figure 4D-6: Value of Shipments and Number of  Facilities by  Employment Size Category for the Profiled
                                              Steel Industry Sectors
                                             Number of Facilities, 1992
       2501
       200-
       150-
       100-
        50-
             1-9      10-19     20-49     50-99   100-249   250-499   500-999  1000-2499  >2500
                                                                                             1 Steel Mills (SIC 3312)
                                                                                            D Steel Products (SIC
                                                                                             3315,3316,3317)
                                     1992 Value of Shipments (millions $1999)
                                                                                            I Steel Mills (SIC 3312)
                                                                                           D Steel Products (SIC
                                                                                             3315,3316,3317)
                     10-19     20-49     50-99    100-249   250-499   500-999  1000-2499   >2500
 Source: Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.

C.  Firm  Size                                           3312) and Steel Products (SIC 3315, 3316, and 3317)
The Small Business Administration (SB A) defines small       sectors ™Q defined as small if they have 1,000 or fewer
firms in the profiled steelteel industries according to the        employees.  Table 4D-6 below shows the distribution of
firms' number of employees.  Firms in both Steel Mills (SIC    firms' facilities, and receipts by the employment size of the
                                                                                                            4D-13

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
parent firm.

The size categories reported in the Statistics of U.S.
Businesses (SUSB) do not coincide with the SBA small firm
standard of 1,000 employees.  It is therefore not possible to
apply the SBA size thresholds precisely.  The SUSB data
presented in Table 4D-6 show that in 1996, 316 of 397 firms
in the Steel Mills sector had less than 500 employees.
Therefore, at least 80 percent of firms in this sector were
classified as small.  These small firms owned 320 facilities,
or 66 percent of all facilities in the sector, and accounted for
approximately 6 percent of industry receipts. In contrast, the
34 largest firms that employ over 2,500 employees own 19
percent of all facilities in SIC 3312 and are responsible for
approximately 77 percent of all industry receipts.

Of the 583 ultimate parent firms with facilities that
manufacture steel products, 470, or 81 percent, employ
fewer than 500 employees, and are therefore considered
small businesses.  Small firms own approximately 68
percent of facilities in the industry and account for 34
percent of industry receipts. The 49 large firms that employ
over 2,500 employees own 100 of the 770 facilities in  SIC
codes 3315, 3316, and 3317 and are responsible for
approximately 30 percent of all industry receipts.
Table 4D-6: Number of Firms, Facilities, and Estimated Receipts in the Profiled Steel Industry Sectors
by Employment Size Category, 1996
Employment
Size Category
0-19
20-99
100-499
500-2,499
2,500+
Total
Steel Mills (SIC 3312)
Number of
Firms
233
50
33
47
34
397
Number of
Facilities
233
51
36
73
90
483
Estimated
Receipts
($1999
millions)
296,228
463,410
2,013,477
8,662,285
38,343,865
49,779,265
Steel Products (SIC 3315, 3316, 3317)
Number of
Firms
237
125
108
64
49
583
Number of
Facilities
237
131
153
149
100
770
Estimated
Receipts
($1999
millions)
324
1,539
4,093
6,382
5,397
17,734
 Source:  Small Business Administration, Statistics of U.S. Businesses.
4D-14

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
d.  Concentration  and Specialization Ratios
Concentration is the degree to which industry output is
concentrated in a few large firms.  Concentration is closely
related to entry and exit barriers with more concentrated
industries generally having higher barriers.

The four-firm concentration ratio (CR4) and the
Herfindahl-Hirschman Index (HHI) are common
measures of industry concentration.  The CR4 indicates the
market share of the four largest firms. For example, a CR4
of 72 percent means that the four largest firms in the
industry account for 72 percent of the industry's total value
of shipments. The higher the concentration ratio, the less
competition there is in the industry, other things being
equal.2 An industry with a CR4 of more than 50 percent is
generally considered concentrated.  The HHI indicates
concentration based on the largest 50 firms in the industry.
It is equal to the sum of the squares of the market shares for
the largest 50 firms in the industry.  For example, if an
industry consists of only three firms with market shares of
60, 30, and 10 percent, respectively, the HHI of this industry
would be equal to 4,600  (602 + 302 + 102).  The higher the
index, the fewer the number of firms supplying the industry
and the more concentrated the industry. An industry is
considered concentrated if the HHI exceeds 1,000.
    2 Note that the measured concentration ratio and the HHF are
very sensitive to how the industry is defined. An industry with a
high concentration in domestic production may nonetheless be
subject to significant competitive pressures if it competes with
foreign producers or if it competes with products produced by other
industries (e.g., plastics vs. aluminum in beverage containers).
Concentration ratios are therefore only one indicator of the extent
of competition in an industry.
                                                                                                           4D-15

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
The Steel Mills (SIC 3312) and Steel Products sectors (SICs
3315, 3316, 3317) are considered competitive, based on
standard measures of concentration. The CR4 and the HHI
for all the relevant SIC codes are below the benchmarks of
50 percent and 1,000, respectively. The concentration ratios
presented in Table 4D-7 indicate that the majority of the
output generated in these industry sectors is not concentrated
in a few large firms. Moreover, the table shows that each of
the industry sectors has became more competitive between
1987 and 1992.

The specialization ratio is the percentage of the
industry's production accounted for by primary product
shipments.  The coverage ratio is the percentage of the
industry's product shipments coming from facilities from the
same primary industry.  The coverage ratio provides an
indication of how much of the production/product of interest
is captured by the facilities classified in an SIC code.

The specialization and coverage ratios in Table 4D-7 show a
high degree of specialization by steel mills indicating that
the majority of production of steel mills is accounted for by
primary product shipments.
Table 4D-7: Selected Ratios for the Profiled Steel Industry Sectors
SIC
Code

3312
Year
Total
Number
of Firms
Concentration Ratios
4 Firm
(CR4)

1987
1992
271
135
44%
37%
8 Firm
(CR8)

63%
58%
20
Firm
(CR20)
Steel M
81%
81%
50
Firm
(CR50)
Ms
94%
96%
Herfindahl-
Hirschman
Index
Specialization
Ratio
Coverage
Ratio

607
551
98%
98%
97%
97%
Steel Products
3315
3316
3317
1987
1992
1987
1992
1987
1992
274
271
156
158
155
166
21%
19%
45%
43%
23%
19%
34%
32%
62%
60%
34%
31%
54%
54%
82%
81%
58%
53%
78%
80%
95%
96%
85%
80%
212
201
654
604
242
194
96%
96%
80%
80%
91%
95%
88%
88%
94%
95%
92%
97%
 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
z.  Foreign  Trade
The global market for steel has become and still remains
extremely competitive.  From 1945 until 1960, the U.S. steel
industry enjoyed a period of tremendous prosperity and was
a net exporter until 1959. However, by the early 1960s,
foreign steel industries had thoroughly recovered from
World War II and had begun construction of new plants that
were more advanced and efficient than the U.S. integrated
steel mills. Foreign producers also enjoyed lower labor
costs allowing them to take substantial market share from
U.S. producers (S&P, 2000). This increased competition
from foreign producers combined with decreased
consumption in some key end use markets served as a
catalyst for the restructuring and downsizing of the U.S.
steel industry.  The industry has emerged from this
restructuring considerably smaller, more technologically
advanced and internationally competitive.

This profile uses two measures of foreign competitiveness:
export dependence and import penetration. Export
dependence is the share of value of shipments that is
exported.  Import penetration is the share of domestic
consumption met by imports. Table 4D-8 presents trade
statistics for the profiled steel industry sectors from 1989 to
1996. The table shows that the trends in both export
dependence and import penetration have been relatively
4D-16

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
stable. Historically, the U.S. steel industry has exported a
relatively small share of shipments when compared to steel
industries in other developed nations (McGraw-Hill, 1998).
In 1995, U.S. exports rose to the highest level since 1941,
yet steel exports only accounted for 7 percent of shipments
that year. Imports as a percentage of implied domestic
consumption rose slightly from 14 percent in 1993 to 17
percent in 1994 and remained at that level through 1996.
This gradual increase in imports reflects excess steel
capacity worldwide and the competitiveness of foreign steel
producers.
Table 4D-8: Trade Statistics for the Profiled Steel Industry Sectors
Year
(a)
1989
1990
1991
1992
1993
1994
1995
1996
Average
Annual
Growth Rate
Value of
imports ($1999
millions)
(b)
9,844
9,244
8,767
9,034
9,662
13,335
12,178
13,356
4%
Value of
exports ($1999
millions)
(c)
3,058
3,066
4,064
3,388
3,104
3,179
4,616
4,190
5%
Value of
Shipments ($1999
millions)
(d)
59,203
58,321
53,958
57,036
60,099
64,361
65,147
67,197
2%
Implied
Domestic
Consumption1
(e)
65,990
64,499
58,662
62,682
66,657
74,517
72,709
76,363
2%
Import
Penetration2
(f)
15%
14%
15%
14%
14%
18%
17%
17%
2%
Export
Dependence3
(g)
5.2%
5.3%
7.5%
5.9%
5.2%
4.9%
7.1%
6.2%
3%
  1 Implied domestic consumption based on value of shipments, imports, and exports [column d + column b - column c].
  2 Import penetration based on implied domestic consumption and imports [column b / column e].
  3 Export dependence based on value of shipments and exports [column c / column d].

  Source: Department of Commerce, Bureau of the Census, Annual Survey of Manufactures; U.S. Dept. of Commerce, Bureau of the
         Census, International Trade Administration. Outlook Trends Table, 1997.
                                                                                                            4D-17

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
40.3  Financial  Condition and Performance
The steel industry is generally characterized by relatively
large plant sizes and technologically complex production
processes which reflect the economies of scale required to
manufacture steel efficiently. Because of the high fixed
costs associated with  steel manufacturing operations, larger
production volumes are required to spread these costs over a
greater number of units in order to maintain profitability.
Operating margins for steel producers can be volatile
due to changes in raw material costs, energy costs, and
production levels (S&P, 2000).

Table 4D-9 presents trends in operating margins for steel
mills and steel products manufacturers. The table shows
that operating margins were relatively stable in both industry
sectors between 1987 and 1996.  The significant decrease in
operating margins for steel mills and, to a lesser extent, steel
products producers resulted from a significant decrease in
steel consumption worldwide (McGraw-Hill, 1998).
Table 4D-9: Operating Margins for the Profiled Steel Industry Sectors (Millions $1999)
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1987-1996
Steel Mills (SIC 3312)
Value of
Shipments
$38,418
$44,371
$43,195
$42,301
$38,368
$40,699
$42,526
$46,046
$46,579
$48,773
27%
Cost of
Materials
$22,782
$26,877
$26,140
$25,739
$24,249
$24,480
$25,547
$27,488
$27,962
$29,257
28%
Payroll (all
employees)
$6,397
$6,558
$6,464
$6,746
$6,530
$6,783
$6,649
$6,612
$6,441
$6,668
4%
Operating
Margin
24.1%
24.6%
24.5%
23.2%
19.8%
23.2%
24.3%
25.9%
26.1%
26.3%

Steel Products (SIC 3315, 3316, 3317)
Value of
Shipments
$14,864
$16,460
$16,008
$16,020
$15,591
$16,337
$17,573
$18,314
$18,569
$18,424
24%
Cost of
Materials
$9,591
$10,594
$10,481
$10,548
$10,341
$10,628
$11,322
$11,661
$12,131
$11,868
24%
Payroll (all
employees)
$1,982
$2,015
$1,950
$2,039
$2,045
$2,184
$2,293
$2,253
$2,234
$2,319
17%
Operating
Margin
22.1%
23.4%
22.3%
21.4%
20.6%
21.6%
22.5%
24.0%
22.6%
23.0%

  Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
4D-18

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
40.4  Facilities  Operating  Cooling  Water
        Intake Structures
In 1982, the Primary Metals industries withdrew 1,312
billion gallons of cooling water, accounting for
approximately 1.7 percent of total industrial cooling water
intake in the United States. The industry ranked 3rd in
industrial cooling water use, behind the electric power
generation industry, and the chemical  industry (1982 Census
of Manufactures).

This section presents information from EPA's Industry
Screener Questionnaire: Phase I Cooling Water Intake
Structures on existing facilities with the  following
characteristics:

    *   they  withdraw from a water of the United States;
    -   they  hold an NPDES permit;
    *•   they  have an intake flow of more than two MOD;
    *•   they  use at least 25 percent of that flow for cooling
        purposes.

These facilities are not "new facilities" as defined by the
proposed §316(b) New Facility Rule and are therefore not
subject to this regulation.  However, they meet the criteria of
the proposed rule except that they are  already in operation.
These existing facilities therefore provide a good indication
of what new facilities in these sectors  may look like. The
remainder of this section refers to existing facilities with the
above characteristics as "§316(b) facilities."
a.  Cooling Water Uses  and Systems
Information collected in EPA's Industry Screener
Questionnaire: Phase I Cooling Water Intake Structures
found that an estimated 38 out of 158 steel mills (24
percent) and 13 out of 312 steel product manufacturers (4
percent) meet the characteristics of a §316(b) facility.

Minimills use electric-arc-furnace (EAF) to make steel from
ferrous scrap. The electric-arc-furnace is extensively cooled
by water and recycled through cooling towers (U.S. EPA,
1995).

Most §316(b) facilities in the profiled Steel sectors use
cooling water for contact and non-contact production line or
process cooling, electricity generation, and air conditioning:

    *•   All §316(b) steel mills use  cooling water for
        production line (or process) contact or noncontact
        cooling.  The  two other major uses of cooling water
        by steel mills  are electricity generation and air
        conditioning,  accounting for approximately 38 and
        48 percent, respectively.

    *   All §316(b) steel product facilities use cooling
        water for production line (or process) contact or
        noncontact cooling.  Electric generation and other
        uses are the two other uses of cooling water, both
        accounting for approximately 8 percent.
                                                                                                          4D-19

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Steel
Table 4D-10 shows the distribution of existing §316(b)         (22, or 43 percent) or employ a combination of a once
facilities in the profiled steel sectors by type of water body      through and closed system (21, or 40 percent). The largest
and cooling system. The table shows that most of the          proportion of existing facilities draw water from a
existing §316(b) facilities have either a once through system    freshwater stream or river (25, or 49 percent).
Table 4D-10: Number of §316(b) Facilities in the Profiled Steel Industry Sectors
by Water Body Type and Cooling System Type
Water Body Type
Cooling Systems
Closed Cycle Combination Once Through
„ , %of _T , %of _T , %of
Number _ , Number _ , Number _ ,
Total Total Total
Steel Mi Is (SIC 3312)
Estuary or Tidal River
Freshwater Stream or
River
Lake or Reservoir
Total?
0 0% 0 0% 5 100%
1 4% 14 60% 5 23%
1 13% 5 61% 2 26%
2 6% 19 52% 13 34%
Unknown
ivr u % of
Number _ ,
Total
Total

0 0%
3 13%
0 0%
3 8%
5
24
9
38
Steel Products (SIC 3315, 3316, 3317)
Freshwater Stream or
River
Lake or Reservoir
Lake or
Reservoir/Freshwater
Stream or River
Total?
0
0
3
3
Total for
Estuary or Tidal River
Freshwater Stream or
River
Lake or Reservoir
Lake or
Reservoir/Freshwater
Stream or River
Total?
0
1
1
3
5
0%
0%
100%
23%
Profiled £
0%
3%
11%
100%
10%
0
1
0
1
teel Indus
0
14
6
0
21
0%
100%
0%
9%
try (SIC ;.
0%
43%
66%
0%
40%
9
0
0
9
(312, 331E
5
14
2
0
22
100%
0%
0%
69%
5, 3316, 3
100%
44%
23%
0%
43%
0
0
0
0
317)
0
3
0
0
3
0%
0%
0%
0%
9
1
3
13

0%
10%
0%
0%
6%
5
33
10
3
57
 T   Individual numbers may not add up to total due to independent rounding.

 Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
4D-20

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
b.  Facility Size
The distribution of employment for both §316(b) steel mills
and steel products facilities follow the same general pattern
as employment distribution in their respective industries.
Steel mills predominantly employ over 1,000 people while
steel product manufacturers tend to be much smaller.
                Figure 4D-7: Number of §316(b) Facilities in the Profiled Steel Industry Sectors
                                              by Employment Size
             30-i
             25-
             20-
             15-
             10-
              5-
                   <100      100-249   250-499    500-999    >=1000
                         Steel Mills (SIC
                         3312)
                       D Steel Products (SIC
                         3315,3316,3317)

 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
                                                                                                         4D-21

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§316(b) EEA Chapter 4 for New Facilities
                            Manufacturing Profile: Steel
d.  Firm Size
EPA used the Small Business Administration (SBA) small
entity size standards to determine the number of existing
§316(b) profiled chemical industry facilities owned by small
firms. Table 4D-11 shows that of the 38 §316(b) steel mills
22 percent are owned by small firms. There are no §316(b)
steel product facilities that are owned by a small firm.
Table 4D-11: Number of §316(b) Facilities by Firm Size for the Profiled Steel
Sectors
SIC Code
Large
Number
Stee
3312 | 29
Steel Produc
3315
3316
3317
TotalT
3
9
1
13
Total for Profiled Steel Fc
Total? | 42
% of SIC
' Mills (SIC 3 3
78%
•ts (SIC 3315, 3
100%
100%
100%
100%
cilities (SIC 2
83%
Small
Number
12)

316,3317)
0
0
0
0
312, 3315,
8
% of SIC
Total

22%
38

0%
0%
0%
0%
3
9
1
13
3316, 3317)
17%
51
                Individual numbers may not add up to total due to independent rounding.

                Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999;
                       D&B Database.
4D-22

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§316(b) EEA Chapter 4 for New Facilities
                           Manufacturing Profile: Steel
REFERENCES

Dun and Bradstreet (D&B). 1999. Data as of April 1999.

Executive Office of the President, Office of Management
and Budget.  Standard Industrial Classification Manual
1987.

McGraw-Hill and U.S. Department of Commerce,
International Trade Administration. 1998. U.S. Industry d
Trade Outlook.
U.S. Department of Commerce. 1992. Bureau of the
Census. Census of Manufactures.

U.S. Department of Commerce. Bureau of the Census.
Current Industrial Reports.  Survey of Plant Capacity.
http://www.census.gov/cir/www/mqclpag2.html

U.S. Department of Commerce. 1997. International Trade
Administration. Outlook Trends Tables.
Standard & Poors (S&P). 2000. Industry Surveys.
"Metals."  January 6.

Small Business Administration.  Statistics of U.S.
Businesses, http://www.sba.gov/advo/stats/int data.html
U.S. Environmental Protection Agency (EPA). 1999.
Industry Screener Questionnaire: Phase I Cooling Water
Intake Structures.

U.S. Environmental Protection Agency (EPA). 1995.
Profile of the Iron and Steel Industry. September.  EPA
310-R-95-005.
                                                                                                      4D-23

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§316(b) EEA Chapter 4 for New Facilities                                          Manufacturing Profile: Steel
                                This Page  Intentionally Left Blank
4D-24

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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
4E ALUMINUM (SIC 333/5)

EPA's Industry Screener Questionnaire: Phase I Cooling
Water Intake Structures identified four 4-digit SIC codes in
the nonferrous metals industries (SIC codes 333/335) with at
least one existing facility that operates a CWIS, holds a
NPDES permit, withdraws more than two million gallons
per day (MOD) from a water of the United States, and uses
at least 25 percent of its intake flow for cooling purposes,
(facilities with these characteristics are hereafter referred to
as "§316(b) facilities"). For each of the four SIC codes.
Table 4E-1 below provides a description of the industry
sector, a list of products manufactured, the total number of
screener survey  respondents (weighted to represent national
results), and the number and percent of §316(b) facilities.
Table 4E-1 §316(b) Facilities in the Nonferrous Industries (SIC 333/335)
SIC SIC Description Important Products Manufactured
Number of Screener Respondents
(Weighted)
Total
§316(b) Facilities
No. t I %
Primary Aluminum Production and Aluminum Shapes (SIC 3334 & 3353)
,,,, . Primary Production of
Aluminum
Aluminum Sheet,
Plate, and Foil
Total

Primary Smelting and
Refining of
3339 Nonferrous Metals,
Except Copper and
Aluminum
Drawing and
3357 Insulating of
Nonferrous Wire
Total

Total 333/5
Producing aluminum from alumina and in
refining aluminum by any process
Flat rolling aluminum and aluminum-base alloy
basic shapes, such as rod and bar, pipe and tube,
and tube blooms; producing tube by drawing

Other SIC 333/335
Smelting and refining nonferrous metals, except
copper and aluminum
Drawing, and/or insulating wire and cable of
nonferrous metals from purchased wire bars,
rods, or wire; insulated fiber optic cable

Total Nonferrous

31
57
88

6
48
53

141
10
6
16

1
0
1

17
32.6%
10.9%
18.5%

19.6%
0.0%
2.1%

12.3%
 f   Information on the percentage of intake flow used for cooling purposes was not available for all screener
     respondents. Facilities for which this information was not available were assumed to use at least 25% of their intake
     flow for cooling water purposes The reported numbers of §316(b) facilities may therefore be overstated.

 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999; Executive Office of the President,
         Office of Management and Budget, Standard Industrial Classification Manual 1987.
                                                                                                           4E-1

-------
§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
The responses to the Screener Questionnaire indicate that
aluminum producers account for the largest number of
nonferrous metals §316(b) facilities.  Of the 17 §316(b)
facilities in the four nonferrous SIC codes, 16 facilities, or
94 percent, are either primary aluminum producers (SIC
code 3334) or producers of flat-rolled aluminum and
aluminum shapes (aluminum sheet, plate and foil, SIC code
3353.) This profile therefore focuses on the primary
aluminum production and aluminum shapes sectors.

4E.1  Domestic  Production
Commercial production of aluminum using the electrolytic
reduction process, known as the Hall-Heroult process, began
in the late  1800s. The production of primary  aluminum
involves mining bauxite ore and refining it into alumina, one
of the feedstocks for aluminum metal. Direct electric
current is used to split the alumina into molten aluminum
metal and carbon dioxide. The molten aluminum metal is
then collected and cast into ingots.  Technological
improvements over the years have improved the efficiency
of aluminum smelting, with a particular emphasis on
reducing energy requirements. There is currently no
commercially viable alternative to the electrometallurgical
process (Aluminum Association, 2000).

Almost half of all U.S.-produced aluminum (48.1 percent of
U.S. output in 1998) comes from recycled scrap. Recycling
consists of melting used beverage cans and scrap generated
from operations.  Recycling saves approximately 95 percent
of the energy costs involved in primary smelting from
bauxite (S&P, 2000). No secondary smelters (included,
along with secondary smelting of other metals, in SIC code
3341) were reported in EPA's screener survey.  These
facilities are therefore not addressed in this profile.

Facilities in SIC code 3353 produce semifabricated products
from primary or secondary aluminum. Examples of
semifabricated aluminum products include (Aluminum
Association, undated):

*   sheet (cans, construction materials and automotive
    parts);
>•   plate (aircraft and spacecraft fuel tanks);
*•   foil (household aluminum foil, building insulation and
    automotive parts)
*   rod, bar and wire (electrical transmission lines); and
>•   extrusions (storm windows, bridge structures and
    automotive parts).

U.S. aluminum companies are generally vertically
integrated.  The major aluminum companies own large
bauxite reserves,  mine bauxite ore and refine it into alumina,
produce aluminum ingot, and operate the rolling mills and
finishing  plants used to produce semifabricated aluminum
products (S&P, 2000).
4E-.

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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
a.  Output
The largest single source of demand for aluminum is the
transportation sector, primarily the manufacture of motor
vehicles. Demand for lighter more fuel efficient vehicles
has led to increased demand for aluminum in auto
manufacturing, at the expense of steel (S&P, 2000).
Production of beverage cans is also a major use of aluminum
sheet, and aluminum has almost entirely replaced steel in the
beverage can market.  Other major uses of aluminum include
construction (including aluminum siding, windows and
gutters) and consumer durables (source).

Demand for aluminum reflects the overall state of the
domestic and world economies, as well as long-term trends
in materials use in major end-use sectors. The years 1990
through 1999 have include strong demand for aluminum
from domestic  sources and variable demand from overseas
customers, due in large part to stagnant economies in Asia in
the late 1990s.

Table 4E-2 shows trends in output of aluminum by primary
aluminum producers and recovery of aluminum from old
and new scrap. Secondary production has grown from 37
percent to almost half of total domestic supply over the
period from 1990 to  1999.
Table 4E-2: Quantities of Aluminum Produced (thousand metric
tons)
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999f
Aluminum Ingot
Primary Production
4,048
4,121
4,042
3,695
3,299
3,375
3,577
3,063
3,713
3,800
Secondary Production
(from old & new scrap)
2,390
2,290
2,760
2,940
3,090
3,190
3,310
3,550
3,440
3,490
                        T Forecast

                        Source:  U.S. Industry and Trade Outlook '99, American Metal Market Metal
                                Statistics 1999, USGS 2000.
Value of shipments and value added are two measures    trends in value of shipments and value added for the primary
of the value of manufacturing output.1  Figure 4E-1 presents    aluminum and aluminum sheet, plate, and foil sectors
                                                         between 1987 and 1996.
    1  Terms highlighted in bold and italic font are further
explained in the glossary.
                                                                                                         4E-3

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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
Figure 4E-1: Real Value of Shipments and Value Added for Profiled Aluminum Sectors ($1999 million)



4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
<



/
«k
/ -SV*^^AL ^*^
j ^»-^ 	 *^ ^^ ^
>tr


£ ^ ^ ^ ^ ^ ^ ^ ^ ^

••— VA - Primary
Aluminum
Production (SIC
3334)
•A — VA - Aluminum
Sheet, Plate, and Foil
(SIC 3353)




I/I 000
12 000
10 000
8 000
6 000 -
4000 -
2000 -
0 -




^^— *-^
^ ^ ^^^^


1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

— »— VOS - Primary
Aluminum Production
(SIC 3334)
	 >•• •-.- 	 VOS - Aluminum
Sheet, Plate, and Foil
(SIC 33 53)



 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
Figure 4E-1 shows that real value added and value of
shipments in the primary aluminum sector decreased steadily
from 1988 to 1993. This decrease coincided with a period
of rapidly declining prices resulting from a decrease in the
demand for aluminum and oversupply in the global market
that occurred when large amounts of Russian aluminum
entered the market in the early 1990s. The recovery in the
mid-1990s resulted from an increased demand for
aluminum, driven by increased consumption by the
transportation, container, and construction sectors.

Value added in the aluminum sheet, plate, and foil sector
increased between 1989 and 1992 and decreased thereafter.
Demand for semifinished aluminum products reflects
demand from the transportation, container, and building
industries. The increases in value added through the early
1990s were fueled by strong demand from the container and
packaging sector.  The decreases seen in the mid-1990s
reflect a decrease in demand from this sector resulting from
improved technology for producing aluminum cans and a
stagnant demand for products packaged in cans.

Value of shipments for both of the profiled aluminum
sectors follow similar trends between 1989 and 1996.
4E-4

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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
b.  Prices
Figure 4E-2 shows the                       (PPI) at the
4-digit SIC code for the profiled aluminum sectors.  The PPI
is a family of indexes that measure price changes from the
perspective of the seller. This profile uses the PPI to inflate
nominal monetary values to constant dollars. Sharp changes
in prices reflect the cyclical nature of this industry and major
changes in world markets.

During the early 1980s, the aluminum industry experienced
oversupply, high inventories, excess capacity, and weak
demand, resulting in falling prices for aluminum.  By 1986,
much of the excess capacity had been permanently closed,
inventories had been worked down, and worldwide demand
for aluminum increased dramatically. This resulted in
dramatic price  increases through 1988.

In the early 1990s, the dissolution of the Soviet Union had a
major impact on aluminum markets. Large quantities of
Russian aluminum that had formerly been consumed
internally, primarily in military applications, were sold in
world markets to generate hard currency.  At the same time,
world demand for aluminum was decreasing. The result was
increasing inventories and depressed aluminum prices.

The United States and five other primary aluminum
producing nations signed an agreement in January 1994 to
curtail global output, in response to the sharp decline in
aluminum prices. At the time of the agreement, there was an
estimated global overcapacity of 1.5 to 2.0 million metric
tons per year (S&P, 2000).

By the mid-1990s, production cutbacks, increased demand,
and declining inventories led to a sharp rebound of prices.
Prices have again declined since the late  1990s, when the
economic crises in Asian markets reduced the demand for
aluminum (USGS, 2000).  Russian exports remain high, and
there is a continuing potential for depressed prices if
substantial amounts of idled capacity are brought back on-
line in response to improving world  economic conditions.
                       Figure 4E-2: Producer Price Indexes for Profiled Aluminum Sectors
      170^

      160-

      150-

      140-

      130-

      120-

      110-

      100-

      90-

      80-
                               - Primary Aluminum
                               Production (SIC 3334)
                               - Aluminum Sheet, Plate,
                               and Foil (SIC 3353)
           1987  1988  1989  1990 1991  1992 1993  1994 1995  1996  1997  1998  1999

 Source:  Bureau of Labor Statistics, Producer Price Index.
                                                                                                          4E-5

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§316(b) EEA Chapter 4 for New Facilities
                     Manufacturing Profile: Aluminum
c.  Number of  Facilities and Firms
The primary aluminum sector is dominated by a few very
large integrated, multinational U.S. companies which own
the majority of smelting facilities operating today. In
1999, there were 23 primary aluminum reduction plants
operating in the U.S., owned by 12 companies (USGS,
2000).  These 12 companies owned total primary  capacity
of 4.2 million metric tons. The three largest firms
account for 62 percent of U.S. primary capacity (Alcoa
Inc. for 45 percent, Reynolds for almost 11 percent, and
Kaiser Aluminum Corp. for almost 7 percent) (S&P,
2000).

Statistics of U.S. Businesses data show considerable
variation in the number of primary aluminum facilities
between 1989 and 1996.  Table 4E-3 shows that the
number of primary aluminum facilities decreased by 30
percent between 1991 and 1995, with the majority of this
decrease, 27 percent, occurring between 1991 and 1993.
The fluctuation in the number of facilities reflects the
market conditions described earlier.

The number of facilities in the aluminum sheet, plate, and
foil sector has shown a more consistent trend, increasing
each year except  1993. The upward trend in numbers of
facilities in the early 1990s reflects the high levels of
capacity utilization and dramatic increase in demand for
aluminum prevalent at that time. The sharp decrease in
the number of facilities in 1993 resulted from declining
economic conditions and oversupply in the global market
for aluminum.  This decrease was followed by another
period of increases in the number of facilities.
Table 4E-3: Number of Facilities for Profiled Aluminum Sectors
Year
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1989-1996
Primary Aluminum Production
(SIC 3334)
Number of
Establishments
56
54
57
52
44
41
40
51
Percent Change
n/a
-3.6%
5.6%
-8.8%
-15.4%
-6.8%
-2.4%
27.5%
-8.9%
Aluminum Sheet, Plate, and Foil
(SIC 3353)
Number of
Establishments
61
64
73
73
63
69
76
81
Percent Change
n/a
4.9%
14.1%
0.0%
-13.7%
9.5%
10.1%
6.6%
32.8%
            Source: Small Business Administration, Statistics of U.S. Businesses.
4E-6

-------
§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Aluminum
The trend in the number of firms over the period between
1989 and 1996 has been similar to the trend in the number of
facilities in both industry sectors.  Table 4E-4 presents
information on the number of firms in each sector between
1989 and 1996.
Table 4E-4:
Year
1990
1991
1992
1993
1994
1995
1996
Percent Change
1990-1996
Number of Firms for Profiled Aluminum Sectors
Primary Aluminum Production (SIC
3334)
Number of Firms Percent Change
38
41
36
33
30
30
40
n/a
7.9%
-12.2%
-8.3%
-9.1%
0.0%
33.3%
5.3%
Aluminum Sheet, Plate,
3353)

and Foil (SIC
Number of Firms Percent Change
43
53
53
45
47
51
56
n/a
23.3%
0.0%
-15.1%
4.4%
8.5%
9.8%
30.2%
      Source:  Small Business Administration, Statistics of U.S. Businesses.
                                                                                                           4E-7

-------
§316(b) EEA Chapter 4 for New Facilities
                       Manufacturing Profile: Aluminum
d.  Employment and Productivity
Figure 4E-3 below provides information on employment
from the Annual Survey of Manufactures for the primary
aluminum and aluminum plate, sheet, and foil sectors.  The
figure shows that employment trends in the primary
aluminum production sector increased throughout the late
1980s and early 1990s. Employment in this sector declined
each year from its peak in 1992 through 1996 as a result of
the market conditions described previously.
Employment in the aluminum sheet, plate, and foil sector
has been declining since 1987.  There were 26,100 people
employed in the aluminum sheet sector in 1987 but only
23,500 in 1996. This decrease in employment reflects the
technological advances seen in the production of aluminum
cans, a major end user of aluminum sheet and foil, and a
decreased demand from the container and packaging sector
(McGraw-Hill, 1998).


















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zu,uuu
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i^rwi
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Figure 4E-3: Employment for Profiled Aluminum Sec



^^* — ^^^^
^v ^^^--+
^*-"~~"^

.. -





1987 1988 1989 1990 1991 1992 1993 1994 1995 19%

:to















-s






—i,— Primary Production of
Aluninum(SIC3334)

— *— Aluminum Sheet, Plate,
and Foil (SIC 3353)






















 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
4E-,

-------
§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
Table 4E-5 presents the change in value added per labor
hour, a measure of labor productivity, for the primary
aluminum and aluminum plate, sheet, and foil sectors
between 1987 and 1996.  The trend in labor productivity in
both sectors has shown a fair amount of volatility over this
period. Value added per hour in the primary aluminum
sector decreased 47 percent between 1988 and 1993 but only
one percent between 1987 and 1996.

Value added per hour in the aluminum sheet, plate, and foil
sector saw substantial increases in the early 1990s
improving by 48 percent between 1989 and 1992 and 40
percent between 1988 and 1996.
Table 4E-5: Productivity Trends for Profiled Aluminum Sectors
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1988-1996
Primary Production of Aluminum (SIC 3334)
Value
Added
(million
$1999)
1740
2559
2127
1917
1691
1799
1354
1753
2113
1763

Production
Hours
(millions)
28
32
30
32
32
32
29
27
28
29

Value Added/Hour
$1999
63
80
70
60
53
56
47
65
75
62

Percent
Change
n/a
27%
-12%
-15%
-12%
6%
-16%
40%
15%
-17%
-1%
Aluminum Sheet, Plate, and Foil (SIC 3353)
Value
Added
(million
$1999)
2356
2109
1928
2700
2900
3630
3065
2967
2633
3174

Production
Hours
(millions)
40
41
41
40
39
40
39
37
38
39

Value Added/Hour
$1999
59
51
47
68
74
91
79
81
69
82

Percent
Change
n/a
-13%
-8%
44%
8%
23%
-13%
2%
-15%
19%
40%
 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
                                                                                                         4E-9

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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
e.  Capital Expenditures
Aluminum production is a highly capital intensive process.
Capital expenditures are needed to modernize, replace, and
when market conditions warrant, expand capacity.
Environmental issues also require major capital
expenditures. Possible measures required to reduce
greenhouse gas (GHG) emissions may require significant
expenditures by aluminum producers.  The industry expects
to spend a few hundred million dollars to reduce toxic air
emissions by half and to reduce paniculate emissions under
Clean Air Act requirements (McGraw-Hill, 1998).

 Capital expenditures in the primary aluminum and
aluminum plate, sheet, and foil sectors between 1987 and
1996 are presented in Table 4E-6 below. The table shows
that capital expenditures in the primary aluminum sector
increased throughout the early 1990s, peaking in 1993. This
period of increased capital investment was followed by a
significant decrease of 54 percent between 1993 and 1995.
These decreases resulted from the production cutbacks and
capacity reductions implemented in response to oversupply
conditions prevalent in the market for aluminum.

Capital expenditures in the aluminum plate, sheet, and foil
sector have also fluctuated considerably between 1987 and
1996. Producers of aluminum plate, sheet and foil reduced
capital expenditures by 35 percent between  1988 and 1996.
Table 4E-6: Capital Expenditures
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Percent Change
1987-1996
for Profiled Aluminum Sectors ($1999
Primary Aluminum Production (SIC 3334)
Capital Expenditures Percent Change
159
103
132
163
213
240
197
118
111
181
n/a
-35%
29%
24%
30%
13%
-18%
-40%
-5%
62%
14%
millions)
Aluminum Sheet, Plate, and Foil (SIC 3353)
Capital Expenditures
578
564
571
733
638
470
275
300
319
376
Percent Change
n/a
-2%
1%
28%
-13%
-26%
-42%
9%
6%
18%
-35%
   Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
f.  Capacity Utilization
Capacity utilization measures actual output as a percentage
of total potential output given the available capacity.
Capacity utilization reflects excess or insufficient capacity in
an industry and is an indication of whether new investment
is likely.

Figure 4E-4 presents the capacity utilization index from
1989 to  1998 for the primary aluminum and aluminum sheet,
plate, and foil sectors. The figure shows that for most of the
1990s, the primary aluminum industry was characterized by
excess capacity. The capacity utilization index for this
sector was near 100 percent between 1990 and 1992, and
then decreased sharply in 1993 as large amounts of Russian
aluminum entered the global market for the first time
(McGraw-Hill, 1999).  Capacity utilization remained low
through 1996, reflecting the continued oversupply in the
global aluminum market.

There continues to be a substantial amount of idled capacity
4E-10

-------
§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
in the U.S. that could be brought on-line as demand
improves, which is likely to limit construction of new
capacity and to limit price increases for aluminum (S&P,
2000). The annual USGS report on aluminum for 1998
reported that capacity expansions were being planned or
studied at three primary smelters, that capacity was being
brought back on-line at five facilities, and that capacity had
been or would soon be idled at another four smelters during
1998. There has not been any new smelter capacity
constructed in the United States since 1980 (McGraw-Hill,
1999). Deregulation of the U.S. power industry may
encourage some smelter expansions in the U.S., if electricity
prices decrease significantly once electricity markets are
deregulated.

There are some aluminum minimills in the U.S., but in
contrast to the steel industry, their impact on the profitability
of traditional aluminum companies has been limited.
Aluminum minimills are not able to produce can sheet of the
same quality as that produced by integrated facilities. They
are able to compete only in production of commodity sheet
products for the building and distributor markets, which are
considered mature markets.  According to Standard &
Poor's, construction of new minimill capacity is unlikely
given the potential that added capacity would drive down
prices in the face of slow growth in the markets for minimill
products (S&P, 2000).

Capacity utilization in the aluminum sheet, plate, and foil
sector has fluctuated but shows an overall positive trend
between 1989 and 1998. This positive trend is largely
driven by the continued strength of rolled aluminum
products which account for more than 50 percent of all
shipments from the aluminum industry. Increased
consumption by the transportation sector, the largest end-use
sector for aluminum, is responsible for bringing idle
capacity into production (McGraw-Hill 1999).
                     Figure 4E-4:  Capacity Utilization Index for Profiled Aluminum Sectors
                                                                            •*— Primary Production of
                                                                               Aluminum (SIC 3334)

                                                                            •   Aluminum Sheet, Plate,
                                                                               and Foil (SIC 3353)
           1989  1990  1991  1992  1993 1994 1995 1996 1997 1998

 Source:  Department of Commerce, Bureau of the Census, Current Industrial Reports, Survey of Plant Capacity.
4E.2  Structure  and Competitiveness
Aluminum production is a highly-concentrated industry.  A
number of large mergers among aluminum producers that
have occurred recently that will increase the degree of
concentration in the industry. For example, Alcoa (the
largest aluminum producer) acquired Alumax (the third
largest producer) in 1998. Some sources speculate that, with
increased consolidation resulting from mergers, aluminum
producers might refrain from returning idle capacity to
production as demand for aluminum grows.  This could
reduce the cyclical volatility in production and aluminum
prices that has characterized the industry in the past (S&P,
2000).
                                                                                                         4E-11

-------
§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
a.  Geographic Distribution
The cost and availability of electricity is a driving force
behind decisions on the location of new or expanded smelter
capacity.

The primary aluminum producers (SIC 3334) are generally
located in the Pacific Northwest (OR, MT, WA) and the
Ohio River Valley (IL, IN, KY, MI, MO, OH, PA). In
1998, approximately 39 percent of the domestic production
capacity was located in the Pacific Northwest and 32 percent
in the Ohio River Valley.  Primary smelters are located in
these regions due to the abundant supplies of hydroelectric
and coal-based energy.

The aluminum sheet, plate, and foil industry is located
principally in California and the Appalachian Region
(Alabama, Kentucky, Maryland, Ohio, Pennsylvania,
Tennessee, Virginia, and West Virginia).

Figure 4E-5 shows the distribution of all facilities in both
profiled aluminum sectors (primary smelters and
semifabricated product producers), based on the 1992
Census of Manufactures.
                   Figure 4E-5:  Number of Facilities by State for Profiled  Aluminum Sectors

 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
4E-12

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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
b.  Facility  Size
The primary aluminum production and aluminum sheet,
plate, and foil industries are both characterized by large
facilities, with 59 percent and 37 percent of all
establishments  employing 250 or more employees,
respectively. Figure 4E-6 shows that 93 percent of the value
of shipments for the primary aluminum production industry
is produced by  establishments with more than 250
employees. Approximately 88 percent of value of shipments
for the aluminum sheet, plate, and foil industry is produced
by establishments with more than 250 employees.
Establishments in the primary aluminum production and
aluminum sheet, plate, and foil sectors with more than 1,000
employees are responsible for approximately 37 and 53
percent of all industry shipments, respectively.
                                                                                                       4E-13

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§316(b) EEA Chapter 4 for New Facilities
Manufacturing Profile: Aluminum
  Figure 4E-6: Value of Shipments and  Number of Facilities by Employment Size Category for Profiled  Aluminum
                                                     Sectors
                                               Number of Facilities
                                                                                               I Primary Production of
                                                                                                Ahmiinum(SIC3334)
                                                                                              Q Aluminum Shed, Plate,
                                                                                                and Foil (SIC 3353)
            1-9      10-19     2049     50-99     100-249   250499    500-999  1,000-2,499   2500f
                                     1992 Value of Shipments (millions $1999)
          2000 n
          1800-
          1600-
          1400-
          1200-
          1000-
           800-
           600-
           400-
           200-
             0
  • Primary Production of
    Alummum (SIC 3334)
  D Aluminum Sheet, Plate.
    and Forl (SIC 3353)
                  1-19    20-49   50-99   100-249  250-499  500-999  1000-   >2500
                                                                  2499

 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
4E-14

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§316(b) EEA Chapter 4 for New Facilities
                         Manufacturing Profile: Aluminum
c.  Firm  Size
The Small Business Administration (SBA) defines a small
firm for SIC codes 3334 and 3353 as a firm with 1,000 or
fewer and 750 or fewer employees, respectively. The size
categories reported in the Statistics of U.S. Businesses
(SUSB) do not provide data for firms with more and fewer
than 750 and 1,000 employees, and it is therefore not
possible to  apply the SBA size threshold precisely.

    *•   27 of the 40 firms in the Primary Aluminum
        Production sector had less than 500 employees.
        Therefore, at least 68 percent of firms are classified
        as small.  These small firms owned 51  facilities, or
        53 percent of all facilities in the sector.
     *   41 of the 56 firms in the Aluminum Sheet, Plate
         and Foil sector had less than 500 employees.
         Therefore, at least 73 percent of firms are classified
         as small. These small firms owned 41 facilities, or
         51 percent of all facilities in the sector.

 Table 4E-7 below shows the distribution of firms, facilities,
 and receipts in SIC 3334 and 3353 by the employment size
 of the parent firm. While there are some very small firms in
 each four-digit SIC code, it is unlikely that these small firms
 operate the facilities that are most likely to be affected the
 §316(b) requirements.
Table 4E-7: Number of Firms, Establishments and Estimated Receipts by Employment Size Category
for the Profiled Aluminum Sectors, 1996
Employment
Size
Category
0-19
20-99
100-499
500-2,499
2,500+
Total
Primary Aluminum Production (SIC 3334)
Number of
Firms
20
4
3
5
8
40
Number of
Facilities
20
4
3
6
18
51
Estimated Receipts
($1999 millions)
(D)
814
4,120
4,934
Aluminum Sheet, Plate, and Foil (SIC 3353)
Number of
Firms
24
9
8
2
13
56
Number of
Facilities
24
9
8
4
36
81
Estimated Receipts
($1999 millions)
33
125
484
(D)
11,331
  (D) Withheld by SBA to avoid disclosure of information on individual operations.

  Source:  Small Business Administration, Statistics of U.S. Businesses.
d.  Concentration  and Specialization Ratios
Concentration is the degree to which industry output is
concentrated in a few large firms.  Concentration is closely
related to entry and exit barriers with more concentrated
industries generally having higher barriers.

The four-firm concentration ratio (CR4) and the
Herfindahl-Hirschman Index (HHI) are common
measures of industry concentration.  The CR4 indicates the
market share of the four largest firms. For example, a CR4
of 72 percent means that the four largest firms in the
industry account for 72 percent of the industry's total value
of shipments. The higher the concentration ratio, the less
competition there is in the industry, other things being
equal.2 An industry with a CR4 of more than 50 percent is
generally considered concentrated. The HHI indicates
concentration based on the largest 50 firms in the industry. It
is equal to the sum of the squares of the market shares for the
largest 50 firms in the industry.  For example, if an industry
consists of only three firms with market shares of 60, 30, and
10 percent, respectively, the HHI of this industry would be
equal to 4,600 (602 + 302 + 102).  The higher the index, the
fewer the number of firms supplying the industry and the
    2 Note that the measured concentration ratio and the HHF are
very sensitive to how the industry is defined. An industry with a
high concentration in domestic production may nonetheless be
subject to significant competitive pressures if it competes with
foreign producers or if it competes with products produced by other
industries (e.g., plastics vs. aluminum in beverage containers).
Concentration ratios are therefore only one indicator of the extent of
competition in an industry.
                                                                                                           4E-15

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§316(b) EEA Chapter 4 for New Facilities
                         Manufacturing Profile: Aluminum
more concentrated the industry. An industry is considered
concentrated if the HHI exceeds 1,000.

The four largest firms in primary aluminum production
accounted for 59 percent of total U.S. primary capacity in
1992.
The specialization ratio is the percentage of the
industry's production accounted for by primary product
shipments.  The coverage ratio is the percentage of the
industry's product shipments coming from facilities from
the same primary industry. The coverage ratio provides an
indication of how much of the production/product of
interest is captured by the facilities classified in an SIC
code.
Table 4E-8: Selected Ratios for the Profiled Aluminum Sectors
SIC
Code
3334
3353
Year
1987
1992
1987
1992
Total
Number
of Firms
34
30
39
45
Concentration Ratios
4 Firm
(CR4)
74%
59%
74%
68%
8 Firm
(CR8)
95%
82%
91%
86%
20 Firm
(CR20)
99%
99%
99%
99%
50
Firm
(CR50)
100%
100%
100%
100%
Herfindahl-
Hirschman
Index
1934
1456
1719
1633
Specialization
Ratio
95%
n/a
96%
96%
Coverage
Ratio
100%
99%
98%
98%
 Source:  Department of Commerce, Bureau of the Census, Census of Manufactures, 1992.
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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
e.  Foreign  Trade
U.S. aluminum companies have a large overseas presence,
which makes it difficult to analyze import data. Reported
import data may reflect shipments from an overseas facility
owned by a U.S. firm. The import data therefore do not
provide a completely accurate picture of the extent to which
foreign companies have penetrated the domestic market for
aluminum.
The International Trade Administration also does not report
the value of imports and exports for the two SIC codes of
interest. Instead, data are reported for aluminum and
bauxite combined (for imports) and for aluminum and
alumina combined (for exports). Table 4E-9 provides the
value of imports and exports for these categories. The table
shows that while exports remained relatively steady over the
nine year period, imports have been increasing.
Table 4E-9: Trade Statistics
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
Average Annual
Growth Rate
Value of imports
($1999 millions)
2,708
3,354
4,087
5,769
5,237
4,767
5,830
6,210
6,400
10%
for Aluminum
Value of exports
($1999 millions)
3,516
2,922
2,443
2,882
3,143
3,068
3,592
3,450
3,382
-2%
                             Source:  U.S. Dept. of Commerce, Bureau of the Census;
                                     Foreign Trade Statistics.
4E.3  Financial Condition and
        Performance
The production of primary aluminum is an
electrometallurgical process, which is extremely energy
intensive.  The aluminum industry is therefore a major
industrial user of electricity, spending more than $2 billion
annually. Electricity accounts for approximately 30 percent
of total production costs for primary aluminum smelting.
The industry has therefore pursued opportunities to reduce
its use of electricity as a means of lowering costs. In the last
50 years, the average amount of electricity needed to  make a
pound of aluminum has declined from 12 kilowatt hours to
approximately 7 kilowatt hours.  (Aluminum Association,
undated).

Like integrated steel mills, aluminum manufacturers require
massive capital investments to transform raw material into
finished product. Because of the high fixed costs of
production, earnings can be very sensitive to production
levels, with high output levels relative to capacity needed for
plants to remain profitable.

Operating margin is a measure of how efficiently companies
in an industry manage their costs. Relatively small changes
in output or prices can have large positive or negative
impacts on operating margins (S&P, 2000). Operating
margins do not reflect the recovery of capital costs,
however, and therefore are only a limited measure of
profitability.

Table 4E-10 below shows trends in operating margins for
the primary aluminum and aluminum plate, sheet, and foil
sectors between 1987 and 1996.  The table shows
considerable volatility in the trends for each sector.
Operating margins for the primary aluminum sector
                                                                                                         4E-17

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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
decreased between 1989 and 1993, reflecting the conditions
of oversupply in the market which led to decreasing
shipments from U.S. producers (McGraw-Hill, 1998).
Those same conditions of oversupply in the market for
aluminum led to a steady decrease in prices.  Lower prices
for aluminum were responsible for lower material costs for
the aluminum plate, sheet, and foil sector and a modest
increase in operating margins between 1989 and 1992.
Table 4E-10: Operating Margins for the Profiled Aluminum Sectors (Millions $1999)
Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Primary Aluminum Production (SIC 3334)
Value of
Shipments
4,583
5,452
5,545
6,114
6,355
6,538
6,100
5,448
4,909
5,178
Cost of
Materials
2,792
2,913
3,434
4,211
4,656
4,725
4,737
3,710
2,865
3,347
Payroll (all
employees)
521
467
520
652
796
901
859
690
548
655
Operating
Margin
28%
38%
29%
20%
14%
14%
8%
19%
30%
23%
Aluminum Sheet, Plate, and Foil (SIC 3353)
Value of
Shipments
12,499
12,537
12,224
11,971
12,110
11,970
11,015
11,600
11,721
11,883
Cost of
Materials
10,320
10,683
9,997
9,345
8,795
8,176
7,847
9,006
9,192
8,491
Payroll (all
employees)
1,201
1,037
1,027
1,099
1,124
1,140
1,166
1,076
868
1,014
Operating
Margin
8%
7%
10%
13%
18%
22%
18%
13%
14%
20%
 Source:  Department of Commerce, Bureau of the Census, Annual Survey of Manufactures.
4E.4  Facilities  Operating  CWISs
In 1982, the Primary Metals industries withdrew 1,312
billion gallons of cooling water, accounting for
approximately 1.7 percent of total industrial cooling water
intake in the United States. The industry ranked 3rd in
industrial cooling water use, behind the electric power
generation industry, and the chemical  industry (1982 Census
of Manufactures).

This section presents information from EPA's Industry
Screener Questionnaire: Phase I Cooling Water Intake
Structures on existing facilities with the  following
characteristics:

    *   they  withdraw from a water of the United States;
    -   they  hold an NPDES permit;
    *•   they  have an intake flow of more than two MOD;
    *   they  use at least 25 percent of that flow for cooling
        purposes.

These facilities are not "new facilities" as defined by the
proposed §316(b) New Facility Rule and are therefore not
subject to this regulation.  However, they meet the criteria of
the proposed rule except that they are  already in operation.
These existing facilities therefore provide a good indication
of what new facilities in these sectors may look like. The
remainder of this section refers to existing facilities with the
above characteristics as "§316(b) facilities."

a.  Cooling Water Uses and  Systems
Information collected in EPA's Industry Screener
Questionnaire: Phase I Cooling  Water Intake Structures
found that an estimated 11 out of 31 primary aluminum
producers (34 percent) and 6 out of 57 aluminum sheet,
plate, and foil manufacturers (11 percent) meet the
characteristics of a §316(b) facility. Most §316(b) facilities
in the profiled Aluminum sectors use cooling water for
contact and non-contact production line or process cooling,
electricity generation, and air conditioning:

    *•   All §316(b) primary aluminum producers use
        cooling water for production line (or process)
        contact or noncontact cooling. Another 60 percent
        use cooling water for air conditioning, 11 percent
        use cooling water for electricity, and 30 percent
        have other uses for cooling water.

    *   All §316(b) aluminum sheet, plate, and foil
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§316(b) EEA Chapter 4 for New Facilities
                         Manufacturing Profile: Aluminum
        manufacturers use cooling water for production line
        (or process) contact and noncontact cooling.
        Thirty-three percent also use cooling water for air
        conditioning.

Nine of the 10 §316(b) primary aluminum producers obtain
their cooling water from a freshwater stream or river. The
other §316(b) primary producer draws from a lake or
reservoir.  Half of the §316(b) aluminum sheet, plate, and
foil manufacturers obtain their cooling water from either a
freshwater stream or river, and the other half draw from both
lakes or reservoirs and freshwater streams or rivers.
Table 4E-11: Number of §316(b) Facilities by Water Body Type and Cooling System Type for the Profiled
Aluminum Sectors
Water Body Type
Cooling System
Closed Cycle
Number
Primar
Freshwater Stream or River
Lake or Reservoir
Total
3
1
4
Alumin
Freshwater Stream or River
Lake and Reservoir and
Freshwater Stream and River
Total
0
3
3
Total for Prc
Freshwater Stream or River
Lake or Reservoir
Lake and Reservoir and
Freshwater Stream and River
Total
3
1
3
7
%of
Total
y Productior
33%
100%
40%
Combination
XT U % Of
Number Total
of Aluminum (SIC 333-
3 33%
0 0%
3 30%
Once Through
Number
»)
3
0
3
urn Sheet, Plate, and Foil (SIC 3353)
0% 0 0% 3
100% 0 0% 0
50% 0 0% 3
>filed Aluminum Facilities (SIC 3334, 3353)
25% 3 25% 6
100% 0 0% 0
100% 0 0% 0
44% 3 19% 6
%of
Total
Total

33%
0%
30%
9
1
10

100%
0%
50%
3
3
6

50%
0%
0%
38%
12
1
3
16
   Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
b.  Facility  Size
Both primary §316(b) aluminum producers and §316(b)
aluminum sheet, plate, and foil manufacturers are large
facilities, measured by employment size. All of the
establishments employ over 500 people and 40 percent of
primary aluminum producers and 50 percent aluminum
sheet, plate, and foil manufacturers employ over 1,000
employees. Figure 4E-7 shows the number of §316(b)
facilities by employment size category.
        Figure 4E-7: Number of §316(b) Facilities by Employment Size for the Profiled Aluminum Sectors
                10-,
             .-
             41
             .Q

             z
                 6-
                 4-
           ]Primary Aluminum
            Production (SIC 3334)
          [] Aluminum Sheet, Plate, and
            Foil (SIC 3353)
                        < 500         500-999        >=1000

                            Employment Size Category

 Source:  EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999.
d.  Firm Size
EPA used the Small Business Administration (SBA) small
entity size standards to determine the number of existing
§316(b) profiled aluminum industry facilities owned by
small firms.  Table 4E-12 shows that three of the ten
§316(b) primary aluminum producers are owned by small
firms.  Another 3 are owned by a firm of unknown size
which may qualify as a small firm.  None of the §316(b)
aluminum sheet, plate, and foil facilities are owned by a
small firm. One-half of these facilities, however, are owned
by firm of unknown size which may qualify as small firms.
Table 4E-12: Number of §316(b) Facilities by Firm Size for the Profiled Aluminum Sectors
SIC Code
3334
3353
Total
Large
Number
4
O
7
% of SIC
40%
50%
44%
Small
Number
3
0
3
% of SIC
30%
0%
19%
Unknown
Number
3
0
6
% of SIC
30%
50%
38%
Total
10
6

       Source: EPA, Industry Screener Questionnaire: Phase I Cooling Water Intake Structures, 1999; D&B Database.
4E-20

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§316(b) EEA Chapter 4 for New Facilities
                        Manufacturing Profile: Aluminum
REFERENCES

The Aluminum Association. Undated. Aluminum: An
American Industry in Profile, http://www.aluminum.org

Bureau of Labor Statistics.  Producer Price Index.

D&B Database(D&B).  1999. Data as of April 1999.

Executive Office of the President, Office of Management
and Budget. Standard Industrial Classification Manual
1987.

McGraw-Hill and U.S. Department of Commerce,
International Trade Administration. 1999. U.S. Industry c
Trade Outlook.

Standard & Poor's (S&P). 2000. Industry Surveys.
"Metals:  Industrial." January 20.

U.S. Department of Commerce.  1992. Bureau of the
Census.  Census of Manufactures.

U.S. Department of Commerce.  Bureau of the Census.
Annual Survey of Manufactures.
U.S. Department of Commerce. Bureau of the Census.
Current Industrial Reports.  Survey of Plant Capacity.
http://www.census.gov/cir/www/mqclpag2.html

U.S. Department of Commerce. 1997.  Bureau of the
Census. International Trade Administration. Outlook
Trends Tables.

U.S. Environmental Protection Agency (EPA).  1985.
Office of Enforcement and Compliance Assurance.  Profile
of the Nonferrous Metals Industry, EPA Office of
Compliance Sector Notebook Project. EPA 310-R-95-010.
September.

U.S. Environmental Protection Agency (EPA).  1999.
Industry Screener Questionnaire: Phase I Cooling Water
Intake Structures.

United States Geological Survey (USGS). 1998.  Minerals
Yearbook.  Aluminum, author: Patricia Plunkert.

United States Geological Survey (USGS). 2000. Mineral
Commodity Summaries. Aluminum, author: Patricia
Plunkert.

U.S. Small Business Administration. Statistics of U.S.
Businesses. http://www.sba.gov/advo/stats/int_data.html.
                                                                                                       4E-21

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§316(b) EEA Chapter 4 for New Facilities                                       Manufacturing Profile: Aluminum
                                This Page Intentionally Left Blank
4E-22

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§316(b) EEA Chapter 4 for New Facilities                                            Manufacturing Profile: Glossary
GLOSSARY

Capital expenditures: As reported in the Economic Censuses, reflects permanent additions and major alterations, as well
as replacements and additions to capacity, for which depreciation, depletion, or Office of Minerals Exploration accounts are
ordinarily maintained. Reported capital expenditures include work done on contract, as well as by the mine forces.  Totals
for expenditures include the costs of assets leased from other concerns through capital leases.  Excluded are expenditures for
land and cost of maintenance and repairs charged as current operating expenses.  Also excluded are capital expenditures for
mineral land and rights which are shown as a separate item.

Capacity utilization: Indicates the extent to which plant capacity is being used and shows potential excess or insufficient
capacity. This profile reports capacity utilization as published by the U. S. Bureau of Census in the Survey of Plant Capacity
published in the Current Industrial Reports. The utilization rate is equal to an output index divided by a capacity index.
Output is measured by seasonally adjusted indexes of industrial production, and is based on actual output in 1992. The
capacity indexes attempt to capture the  concept of sustainable practical capacity, which is defined as the greatest level of
output that a plant can maintain within the framework of a realistic work schedule, taking account of normal downtime, and
assuming sufficient availability of inputs to operate  the machinery and equipment in place.

Concentration ratio: The combined percentage of total industry output accounted for by the largest producers in the
industry. For example, the four-firm concentration  ratio (CR4) refers to the market share of the four largest firms. The
higher the concentration ratio, the more concentrated the industry. A market is generally considered highly concentrated if
the CR4 is greater than 50 percent.

Coverage ratio: The ratio of primary products shipped by the establishments classified in the industry to the total
shipments of such products that are shipped by all manufacturing establishments, wherever classified. An industry with a
high coverage ratio accounts for most of the value of shipments of its primary products, whereas an industry with a low
coverage ratio produces a smaller portion of the total value of shipments of its  primary products produced by all sources.

Employment: Total number of full-time equivalent employees, including production workers and non-production workers.

Export dependence: The share of shipments by  domestic producers that is  exported; calculated by dividing the value of
exports by the value of domestic shipments.

Herfindahl-Hirschman index (HHI): An alternative measure of concentration. Equal to the sum of the squares of the
market shares for the largest 50 firms in the industry.  The higher the index, the more concentrated the industry. The
Department of Justice uses the HHI for antitrust enforcement purposes. The benchmark used by DOJ is 1,000, where any
industry with an HHI less than 1,000 is considered to be unconcentrated. The  advantage of the HHI over the concentration
ratio is that the former gives information about the dispersion of market share among all the firms in the industry, not just the
largest firms (Arnold, 1989).

Import penetration: The share of all consumption in the U.S. that is provided by imports; calculated by dividing imports
by reported or apparent domestic consumption (the  latter calculated as domestic value of shipments minus exports plus
imports).

Labor productivity: Amount of output produced  per unit of labor input on average. Calculated in this profile as real value
added divided by production hours.  This measure indicates how an industry uses labor as an input in the production process.
Changes over time in labor productivity may reflect changes in the relative use of labor versus other inputs to produce output,
due to technological changes or cost-cutting efforts. Changing patterns of labor utilization  relative to output are particularly
important in understanding how regulatory requirements may translate into job losses, both in aggregate and at the
community level.

Nominal values: Dollar values  expressed in current dollars.

Operating margin: Measure of the relationship between input costs and the  value of production, as an indicator of
financial performance and condition. Everything else  being equal, industries and firms with lower operating margins will
generally have less flexibility to absorb the costs associated with a regulation than those with higher operating margins.


                                                                                                        4Glos - 1

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§316(b) EEA Chapter 4 for New Facilities                                            Manufacturing Profile: Glossary


Operating margins were calculated in this profile by subtracting the cost of materials and total payroll from the value of
shipments. Operating margin is only an approximate measure of profitability, since it does not consider capital costs and
other costs.  It is used to examine trends in revenues compared with production costs within an industry; it should not be
used for cross-industry comparisons of financial performance.

Primary product shipments: An establishment is classified in a particular industry (4-digit SIC codes) if its shipments of
the primary products of that industry exceed in value its shipments of the products of any other single industry.  An
establishment's primary product shipments are those products considered primary to its industry.

Producer production indexes (PPI): A family of indexes that measures the average change over time in selling prices
received by domestic producers of goods and services (Bureau of Labor Statistics, PPI Overview).  Used in this profile to
convert nominal values into real 1997 dollar values.

Real values: Nominal values normalized using a price index to express values in a single year's dollars. Removes the
effects of price inflation when evaluating trends in dollar measures.

Secondary product shipments: An establishment's products that are considered secondary to the industry in which the
establishment is classified and primary to other industries. For example, a petroleum refinery classified in SIC code 2911
would produce petroleum products as primary products, but might produce organic chemicals as secondary products.

Specialization ratio: The ratio of primary product shipments to total product shipments (primary and secondary, excluding
miscellaneous receipts) for the establishments classified in a particular industry (4-digit SIC code).  An industry with a
specialization ratio of 100 percent would, by definition, produce only its primary products. In contrast, a low specialization
ratio indicates that much of an industry's output consists of secondary products.

Value added: A measure of manufacturing activity, derived by subtracting the cost of purchased inputs (materials, supplies,
containers, fuel, purchased electricity, contract work, and contract labor) from the value of shipments (products
manufactured plus receipts for services rendered), and adjusted by the addition of value added by merchandising operations
(i.e., the difference between the sales value and the cost of merchandise sold without further manufacture, processing,  or
assembly) plus the net change in finished goods and work-in-process between the beginning-and end-of-year inventories.
Value added avoids the duplication in value of shipments as a measure of economic activity that results from the use of
products of some establishments as materials by others. Value added is considered to be the best value measure available for
comparing the relative economic importance of manufacturing among industries and geographic areas.

Value of shipments: Net selling values of all products shipped as well as miscellaneous receipts.  Includes all items made
by or for an establishments from materials owned by it, whether sold, transferred to other plants of the same company, or
shipped on consignment. Value of shipments is a measure of the dollar value of production, and is often used as a proxy for
revenues.  This profile uses value of shipments to indicate the size of a market and how the size differs from year to year, and
to calculate operating margins.
4Glos - 2

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§316(b) EEA Chapter 5 for New Facilities
                  Baseline Projections of New Facilities
    Chapter   5:    Baseline   Projections   of

                                New   Facilities
INTRODUCTION

Facilities regulated under the §316(b) New Facility Rule are
new greenfield manufacturing facilities and electric
generators that operate a cooling water intake structure
(CWIS), require a National Pollutant Discharge Elimination
System (NPDES) permit, have a design intake flow of
greater than two million gallons per day (MOD), and use at
least 25 percent of their intake water for cooling purposes.
The overall costs and economic impacts of the proposed rule
depend on the number of new facilities subject to the rule,
and on the proposed construction, design, location, and
capacity of their CWISs.

This chapter presents forecasts of the number of new electric
generators and manufacturing facilities subject to the
proposed §316(b) New Facility Rule that will begin
operating between 2001 and 2020. The chapter consists of
three sections.  The first section presents estimates of the
number and characteristics of new electric generating
facilities. The  second section presents estimates of the
number of new manufacturing facilities. Each section
discusses uncertainties about the estimated number and type
of facilities that will be constructed in the future.  The third
section summarizes the results of the new facilities
forecasts.
5.1   NEW ELECTRIC GENERATORS

EPA used two data sources to estimate the number of new
electric generators subject to the proposed §316(b) New
Facility Rule: capacity forecasts from the Energy
Information Administration's (EIA) Annual Energy Outlook
2000 (AEO2000) and a database of planned new generating
capacity (the NEWGen database created and maintained by
RDI Consulting). The analysis involved two steps in
estimating the number and characteristics of new generators
for the first ten years (2001 to 2010) and for the second ten
years (2011 to 2020) of the forecast period.
   CHAPTER CONTENTS
   5.1  New Electric Generators	5-1
       5.1.1   Forecast for 2001 to 2010	5-1
       5.1.2   Forecast for 2011 to 2020	5-6
       5.1.3   Summary of Forecasts for New Electric
              Generators	5-7
       5.1.4   Uncertainties and Limitations	5-7
   5.2  New Manufacturing Facilities	5-7
       5.2.1   Methodology	5-8
       5.2.2   Projected Number of New Manufacturing
              Facilities	5-8
       5.2.3   Uncertainties and Limitations	5-16
   5.3  Summary of Baseline Projections	5-17
  References
5-18

5.1.1     Forecast for 2001 to  2010
EPA used the NEWGen database to identify specific new
electric generators that would be affected by the proposed
rule, based on their cooling water source and their CWIS
location and characteristics.  Since the NEWGen database
only covers a portion of the 10-year forecasting period, EPA
supplemented this facility-specific information with macro-
level electric capacity forecasts from EIA's AEO2000.1

a.  NEWGen Sample Facilities
The NEWGen database is created and maintained by
Resource Data International's (RDI) Energy Industry
Consulting Practice.  EPA used this database (beta version
as of January 2000) to identify planned utility and nonutility
electric generators that are subject to the proposed §316(b)
New Facility Rule.
    'According to RDI, the lead time for permitting and
construction of a new electric generating facility is
approximately three years. Projects that might be
constructed substantially beyond three years in the future are
therefore not likely to be reflected in this data set.  The
NEWGen database alone therefore cannot provide a
complete forecast of new electric generating facilities for the
entire analysis period.
                                                                                                   5-1

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§316(b) EEA Chapter 5 for New Facilities
                    Baseline Projections of New Facilities
The database provides facility-level data on 466 electric
generation projects, including new (greenfield) facilities and
additions and modifications to existing facilities, proposed
over the next several years. Information in the NEWGen
database includes: generating technology, fuel type,
generation capacity, owner and holding company, electric
interconnection, project status, on-line dates, and other
operational details.  The majority of the information
contained in this database is obtained from trade journals,
developers, local authorities, siting boards, and state
environmental agencies.

The 466 facilities contained in the NEWGen database
include new facilities in Canada and Mexico and existing
facilities in the U.S. These facilities are irrelevant to the
proposed §316(b) New Facility Rule and were therefore
excluded from the analysis. The Agency evaluated each of
the remaining 331 facilities to assess whether they would be
subject to the proposed rule, based on the following factors:

    >   Project status: EPA included only projects that are
        in "Early Development," "Advanced
        Development," or "Under Construction." The
        analysis did not include projects that were listed as
        "Canceled" or "Tabled" because those projects are
        unlikely to be completed.

    >   Date of initial commercial operation: The rule
        only covers facilities that will begin commercial
        operation on or subsequent to the assumed
        promulgation date of August 13, 2001.2 The
        analysis therefore excluded facilities with an
        operation date before August 13, 2001.

    >   Facility type: The analysis focuses on the subset of
        facilities that uses steam as a prime mover.
        Therefore,  EPA included only those new facilities
        that will use steam electric generators (including
        steam turbine and combined-cycle prime movers).3
        The analysis excluded facilities using internal
        combustion turbines, hydroelectric turbines,
        combustion turbines, and wind or solar
        technologies, because they generally do not require
        cooling water and will therefore not be subject to
        this proposed regulation.
    2EPA also included facilities for which no date of
commercial operation was reported.

    3A combined-cycle prime mover is an electric
generating technology in which electricity is produced from
otherwise lost waste heat exiting from one or more gas
(combustion) turbines.
    >   Availability ofCWIS information: EPA analyzed
        only those facilities that have filed sufficient
        information with their permitting authorities to
        determine their proposed cooling water source.4

A total of 56 facilities in the NEWGen database met these
criteria. The following discussion refers to this subset of 56
facilities as the "NEWGen sample facilities."

The steam electric facilities in the NEWGen database reflect
a strong trend toward combined-cycle generation
technologies. Figure 5-1 shows that the large majority of the
new facilities,  88 percent, are proposed with a combined-
cycle prime  mover. This trend is of significance to the
proposed §316(b) New Facility Rule because combined-
cycle technologies require less cooling water per unit of
output than do other steam electric generating technologies.
Analyses show that a combined-cycle facility uses
approximately one third of the cooling water compared to a
facility of the same size using steam turbines.  Combined-
cycle/cogeneration facilities are the second most common
type of new  facility in the NEWGen sample, representing
approximately five percent of the new  steam electric
facilities.5 Two facilities are planned with a combustion
turbine/cogeneration technology.  Only one coal facility and
one geothermal facility are among the 56 sample facilities.
The 56 sample facilities account for over 40,000 megawatts
(MW) of new capacity.  The combined-cycle facilities
represent over 91 percent of these new capacity additions,
the three combined-cycle/cogeneration facilities account for
approximately five percent of the sample facility capacity,
and the other three facility types represent less than three
percent each of the sample facility capacity.
    "Information on a facility's permitting status and
proposed cooling water source was obtained from state
permitting authorities.  Facilities for which cooling water
source information is not available will not be disregarded
when determining overall impacts from the proposed rule.
The extrapolation methodology presented in subsection
5.1.1 .c accounts for these facilities by including sufficient
new facilities to account for the total projected growth in
steam electric generating capacity.

    5Cogeneration is the combined production of electricity
and another form of useful thermal energy (such as heat or
steam) which is used for industrial, commercial, heating, or
cooling purposes.
5-.

-------
§316(b) EEA Chapter 5 for New Facilities
                  Baseline Projections of New Facilities
Figure 5-1: Number of NEWSen Sample Facilities by Facility Type


3 2 11
f^)
^~==^
49

D Combined Cycle
• Combined Cyde/Cogen
D Comb. Turtine/Cogen
QCoal
• Geothermal




                  Source:  RDI, 2000.
b.  Regulated  Facilities in the NEWSen
    Sample
Not all 56 new steam electric facilities identified from the
NEWGen database will be subject to the rule. EPA
obtained information on the CWIS characteristics of the 56
electric generators, to determine the number of new
facilities that would fall within the scope of the regulation.
Facilities subject to the proposed rule must:

    >•   withdraw from a water of the United States
        through a new CWIS;
    *   hold or require an NPDES permit;
    *   have a design intake flow of more than two million
        gallons per day (MOD); and
    >•   use at least 25 percent of the total intake flow for
        cooling purposes.

An analysis of permit applications for the 56 sample
facilities showed that only seven of the 56 facilities meet all
of these criteria, and thus fall within the scope of the
proposed §316(b)  New Facility Rule. Table 5-1 indicates
why 49 of the 56 NEWGen sample facilities are not in
scope and hence will not incur any regulatory costs.
Table 5-1: In Scope Status of NEWSen Sample
Facilities
In Scope Status
In Scope
Out of Scope
Does not withdraw
from waters of the U.S.
Existing CWIS
No NPDES permit
Design intake flow less
than 2 MOD
Less than 25% of intake
water used for cooling
purposes
Number of
Facilities
7
49
45
3
1
0
0
Percent of
Sample
Facilities
12.5%
87.5%
80.4%
5.4%
1.8%
0.0%
0.0%
Source:  EPA analysis of information from state permitting
        authorities, 2000.
                                                          The majority of the sample facilities (80 percent) fall
                                                          outside the scope of the proposed rule because they do not
                                                          withdraw from a water of the U.S.  As shown in Figure 5-2,
                                                          municipal water, groundwater, and gray water (treated
                                                          effluent from sewage systems) are the most common
                                                          alternative sources of cooling water.  Four of the 56 new
                                                          facilities are planning to use a dry cooling system.
                                                                                                            5-3

-------
§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
Figure 5-2: Number of NEWSen Sample Facilities by Cooling Water Source


7
sivc"^^

— "^"-^ 16
b^
10 11


n Municipal Water
• Water of the U.S.
QGroundwater
n Gray Water
• Dry Cooling
D Several Sources -
Non-Water of the U.S.



                      Source:  EPA analysis of information from state permitting authorities, 2000.
Table 5-2 describes the operational characteristics of the
seven in scope sample facilities.
Table 5-2: Operational Characteristics of In Scope NEWSen Sample Facilities
Facility Name
GenA
GenB
GenC
GenD
GenE
GenF
GenQt
NERC Region
NPCC
MAIN
ERCOT
NPCC
NPCC
NPCC
SERC
Facility Type
CC
cc
CC
cc
CT/Cogen
CC
CC/Cogen
CT
Fuel Source
Natural Gas
Natural Gas
Natural Gas
Natural Gas
Natural Gas
Natural Gas
Natural Gas
Natural Gas
Capacity (MW)
750
1,100
510
525
475
544
650
150
Projected On-Line Date
2002
2001 -2003
2001-2003
2001
2002
2001
2002
2002
 t GenG is proposing to begin operation of its units in two phases.

 Source:  EDI, 2000.
The majority of the in scope facilities are concentrated in
the Northeast: four of the seven facilities, or 57 percent, will
be built in the Northeast Power Coordinating Council
(NPCC). The remaining three facilities will be located in
three different regions: the Mid-America Interconnect
Network (MAIN), the Electric Reliability Council of Texas
(ERCOT), and the Southeastern Electric Reliability Council
(SERC).

The seven in scope facilities range in capacity from 475 to
1,100 MW.  All seven will use natural gas as their primary
fuel source.  Five facilities (GenA, GenB, GenC, GenD, and
5-4

-------
§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
GenF) plan on using combined-cycle (CC) technologies to
generate electricity.  GenE will use a combined-
cycle/cogeneration technology, and GenG plans to use two
units, one combined-cycle/cogeneration unit and one
smaller combustion turbine.

c.  Extrapolation  of NEWSen  Data to 10
    Years
The NEWGen database only covers a portion of the 10-year
forecasting period. EPA therefore used the U.S.
Department of Energy  capacity forecast described in EIA's
AEO2000 to estimate the total number of new facilities for
the period between 2001 and 2010.  EIA's National Energy
Modeling System (NEMS) projects future market
conditions using a range of assumptions about overall
economic growth, global fuel prices, and legislation and
regulation affecting energy markets. NEMS forecasts are
based on modeled equilibrium of supply and demand for
electricity (EIA, 1999b).

The NEMS "Reference Case" forecasts for steam electric
capacity provided the basis for estimating the number of
new steam electric generating facilities constructed over the
next ten years. The total number of new steam electric
facilities is calculated by dividing the projected capacity,
73,591 MW, by the average capacity of the 56 NEWGen
facilities, 723 MW.6 Based on this methodology, EPA
estimates that a total of 102 new steam electric facilities will
be constructed over the next 10 years.  Assuming that the
proportion of these 102 facilities that will be in scope of this
regulation is the same as for the NEWGen 56 facilities
results in a forecast of 13 new in scope facilities  (Table 5-
3).  This approach assumes that all new projected steam
electric capacity will come from new greenfield facilities
and may overestimate the number of new electric generators
potentially affected by this rule, since some of the capacity
growth may come from expansions or repowering of
existing facilities.
                                                              6Steam electric capacity additions include planned and
                                                          unplanned additions of coal steam and combined-cycle.
                                                          EIA does not project any additions from nuclear power or
                                                          other fossil steam (including oil-, gas-, and dual-fired
                                                          capacity) over the next 20 years (AEO, 2000).
                                                                                                           5-5

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§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
Table 5-3: Projection of New and Affected Electric Generators over 10 Years

Number of Facilities
Number of In Scope Facilities Incurring
Compliance Costs
Sample Facilities (NEWGen)
56
10-Year Projection
102
1 13f
        T (7/56 * 102)

        Source:  EPA analysis based on EDI, NEWGen Database, January 2000; AEO 2000.
The electric power industry is currently experiencing a rapid
expansion due the transition from a highly regulated
monopolistic industry to a more competitive industry. This
expansion has contributed to a surge in the number of
generating plants being planned or under construction. As
discussed earlier, only steam electric facilities use
substantial amounts of cooling water and were considered
for this analysis. The NEWGen sample data for new steam
electric facilities show a trend toward combined-cycle
generating technologies. This trend may  reflect the
transition toward competitive pricing for  electricity. In
competitive markets,  prices will reflect the interaction of
supply and demand for electricity.  During most time
periods, the price of electricity will be set by the generating
unit with the highest operating costs needed to meet spot
market generation demand (i.e., the "marginal cost" of
production). The lower capital and operating cost usually
associated with gas generation technologies may be one
reason for the trend toward combined-cycle generating units
in new facilities.

The NEWGen sample data also show a trend away from the
use of a water of the U.S. as cooling water. Table 5-1
shows that 80 percent of the sample facilities use alternative
sources of cooling water. EPA believes this trend reflects
the increased competition for water and an increasing
awareness of the need for water conservation.

Taken together, the trend toward combined-cycle generating
technologies, which have small cooling water requirements
per unit of output, and the trend away from the use of
waters of the U.S. as  cooling water result in a low projected
number of regulated facilities, despite the expected
expansion in new generating capacity.

5.1.2     Forecast for 2011  to  2020
For the second 10 years of the analysis, 2011 to 2020, no
facility-specific information on new electric generators and
their CWIS characteristics is available. EPA therefore
relied onEIA's capacity forecasts in the AEO2000 and
assumptions about the size, location, and operational
characteristics of facilities projected to begin operation
between 2011 and 2020.

The AEO2000 forecasts additions of 17,190 MW of coal
steam capacity and 61,584 MW of combined-cycle capacity
between 2011 and 2020. No new capacity additions are
expected for other types of steam electric power, including
nuclear power and other fossil steam.  EPA made the
following assumptions about the number of new facilities
that will provide this additional capacity and their projected
in scope status with respect to this proposed rule:

Coal steam capacity
    *•   82 percent of projected capacity additions will
        come from new facilities;718 percent will come
        from repowering or additions to existing facilities
        which are not covered under this proposed rule.
        Of the 17,190 MW of coal steam capacity
        additions, new facilities will therefore account for
        approximately 14,100MW.

    >•   New coal steam facilities will have a generating
        capacity of 800 MW. Eighteen new coal-fired
        facilities of 800 MW each will be required to
        provide the 14,100 MW of new capacity.

    >•   Ten percent of new coal  steam facilities will not be
        in scope of this regulation. This assumption results
        in a total of 16 new coal facilities that are expected
        to begin operation between 2011 and 2020 and be
        subject to this regulation.

Combined-cycle capacity
    *•   New facilities will account for all combined-cycle
        capacity additions projected to come on-line
        between 2011 and 2020.
    7This estimate is based on the share of coal capacity
additions from new facilities reported in the NEWGen
database.
5-6

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§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
        The average size of a new combined-cycle facility
        is the same as the average size of the 56 sample
        NEWGen facilities, i.e., 723 MW. Eighty-five
        facilities of 723 MW each will be required to
        provide the forecasted 61,584 MW of additional
        combined-cycle capacity.

        The in scope rate of new combined-cycle facilities
        is the same as that of the 56 NEWGen facilities,
        12.5 percent.  Based on this assumption, a total of
        11 new combined-cycle facilities are expected to
        begin operation between 2011 and 2020 and be
        subject to this regulation
 5.1.3     Summary of Forecasts for  New
            Electric Generators
 EPA estimates that a total of 205 new steam electric
 generators will begin operation between 2001 and 2020.
 102 new facilities are expected to begin operation in the
 first ten years and 103  in the second ten years. Of the total
 number of new plants, EPA projects that 40 will be in scope
 of the proposed §316(b) New Facility Rule. Sixteen are
 expected to be coal-fired facilities and 24 combined-cycle
 facilities.

 Table 5-4 summarizes the results of the analysis.
Table 5-4: Number of Projected New Electric Generators (2001 to 2020)
Year of
Initial
Operation
2001-2010
2011-2020
| Total
Total Number of New Facilities
Coal
0
18
18
Combined-Cycle
102
85
187
Total
102
103
205
Facilities In Scope of the Proposed Rule
Coal
0
16
16
Combined-Cycle
13
11
24
Total
13
27

 Source.-EPAAnalysis, 2000.
5.1.4     Uncertainties and  Limitations
There are substantial uncertainties inEPA's projections of
the number of new electric generators that will be subject to
the proposed §316(b) New Facility Rule. EPA used two
main data sources to derive the estimates: RDFs NEWGen
database and EIA's AEO2000.  While EPA has a high
degree of confidence in the projection of total new steam
electric capacity over the next ten years, there is more
uncertainty about the number of new facilities over the
second ten years. In addition, there is uncertainty about the
portion of new capacity that will be provided by new in
scope facilities. The projected number of new facilities for
2001 to 2010 assumes that the mix in new generating
capacity over the next ten years will be identical to the mix
planned over the next few years, as reflected in the
NEWGen database. This assumption is realistic only if
there are no significant changes in the relative efficiency and
cost of constructing and employing the various steam
electric generating technologies.

In addition, the electric power industry is in the middle of a
major restructuring as the result of industry deregulation.
While predictions about economic and technological trends
20 years into the future are always challenging, this is
particularly the case for an industry undergoing substantial
structural changes.
EPA believes that the trend toward closed-cycle cooling and
the use of alternative cooling water sources, as observed in
the NEWGen sample data, stems from an increasing
consciousness in many parts of the country of the value of
aquatic resources and the need to conserve water. As a
result, EPA expects that the characteristics observed in the
NEWGen database are not short-term phenomena that are
tied to economic conditions but represent developments that
are likely to continue beyond the current business cycle.
The Agency therefore believes that the projected aggregate
number of new in scope facilities is realistic, although there
are uncertainties about specific characteristics of the new
facilities.
5.2   NEW MANUFACTURINS FACILITIES

Data on industrial water use presented in Chapter 2 showed
that the Paper and Allied Products (SIC 26), Chemicals and
Allied Products (SIC 28), Petroleum and Coal Products (SIC
29), and Primary Metals (SIC 33) industries account for
more than the 90 percent of the water used for cooling
purposes in the manufacturing sector. The economic
analysis for manufacturing facilities therefore focuses on
these industries. Other industrial sectors draw relatively
small volumes of water for cooling purposes, and it is
                                                                                                           5-7

-------
§316(b) EEA Chapter 5 for New Facilities
                    Baseline Projections of New Facilities
unlikely that significant numbers of facilities in these
industries will exceed the two MOD threshold. The
forecasts of new in scope facilities presented in this section
cover the same 20-year time frame used for the projections
of electric generation facilities.

5.2.1     Methodology
Forecasts of the number of new greenfield facilities that will
be built in the various industrial sectors are generally not
available over the 20-year time period required for this
analysis.  Information on the likely design and location
characteristics of new facilities that will determine their
status under the proposed rule is also not generally available
for planned manufacturing facilities. EPA therefore
estimated the number of new facilities based on general
industry growth forecasts and other information for each
industry, and used information on the characteristics of
existing facilities in each industry to project the portion of
these new facilities that will be subject to the proposed rule.

Information on existing facilities from the §316(b) Industry
Screener Questionnaire provided a starting point for the
forecast.  The screener questionnaire results include
information on the number and characteristics of existing
facilities  in the four industry sectors of interest. The Agency
reviewed these facilities to determine how many of the
screener facilities in each industry have NPDES permits, use
CWISs that draw from a water of the U.S., have an intake
flow of more than two MOD, and use at least 25 percent of
that flow for cooling purposes.

Projected growth rates for value  of shipments in each
industry were used to project future growth in capacity. A
number of sources provide forecasts, including the annual
U.S.  Industry Trade & Industry Outlook, USGS industry
profiles for metals industries, and other sources specific to
each industry.8 EPA assumed that the growth in capacity
will equal growth in the value of shipments, except where
industry-specific information supported alternative
assumptions.  This assumption will overstate the growth in
capacity to the extent that some growth in shipments will be
provided by underutilized existing capacity.  Some of the
projected growth in capacity may also result from increasing
efficiency or expansions in capacity at existing facilities
rather than building new facilities.  Information from
industry sources provided a basis for estimating the potential
for construction of new greenfield facilities for some
industries.  In other cases, EPA assumed as a default that 50
percent of the projected growth in capacity will be attributed
to new greenfield facilities.

EPA also assumed that new greenfield plants will be the
same size on average as the existing screener plants in the
same industry. Therefore, the projected capacity growth rate
multiplied by the percentage of capacity growth that is
expected to come from new facilities is applied to the
number of screener plants in each industry to calculate the
total number of new plants.

Not all of the projected new facilities will be subject to
requirements under the proposed rule. EPA assumed that
the characteristics of new facilities will be similar to the
characteristics of existing screener facilities (i.e., the same
proportion of new as existing facilities would have NPDES
permits, would draw cooling water from a water of the U.S.,
and would have specific intake volumes and types of
CWIS). Therefore, the number of new in scope facilities is
calculated by applying the percentage of screener facilities
that have NPDES permits, draw from a water of the U.S.,
have an intake flow of more than two  MOD, and use 25
percent of intake flow for cooling purposes to the total
number of projected new plants. This approach most likely
overstates the number of new facilities that will incur
regulatory costs, because new facilities may be more likely
than existing ones to recycle water and use cooling water
sources other than a water of the U.S.

Section 5.2.2 below presents EPA's projection of the
number of new facilities over the first ten years of the rule
(2001 to 2010).  EPA made the simplifying assumption that
the same number of facilities would begin operation during
the second ten years (2011 to 2020), and that these facilities
would have characteristics similar to the facilities that will
begin operation during the first ten years.9

5.2.2     Projected Number of New
            Manufacturing Facilities

a.  Paper  and Allied Products (SIC  26)
The §316(b) Industry Screener Questionnaire identified four
4-digit SIC codes in the Paper and Allied Products Industry
(SIC 26) which are likely to be relevant to the proposed rule:

2611    -   Pulp Mills
2621    -   Paper Mills
2631    -   Paperboard Mills
2676   -   Sanitary  Paper Products

EPA analyzed these industry segments to estimate the
number of new in scope facilities in the Paper and Allied
Products Industry.
    8A complete list of data sources used can be found in
the References at the end of this chapter.
    9The Summary of Baseline Projections presented in
Section 5.3 shows the estimated number of new facilities for
the entire forecasting period.
5-,

-------
§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
«>  Projected growth in shipments
Shipments of pulp and paper products are closely tied to the
overall state of the U.S. and world economies (McGraw-
Hill, 1999).  Product exports are expected to increase as
barriers to foreign market access are reduced through the
North American Free Trade Agreement (NAFTA) and the
General Agreement on Tariffs and Trade (GATT) (Stanley,
2000). Industry sources project the following growth rates
for different segments of the market (Stanley, 2000):

    *•   Pulp mill shipments (SIC 2611) are expected to
        increase by 1.75 percent annually over the 5-year
        period 2000 through 2004, with most of the growth
        representing increased exports.

    *•   Shipments from the paper and paperboard mills
        sector (SICs 2621, 2631) are expected to increase
        about 1.8 percent annually from 2000 through
        2004.

    *   No specific forecasts  for sanitary paper products
        (SIC 2676) are available. EPA therefore assumed
        that between 1999 and 2003 shipments from these
        facilities will grow at the same rate as the overall
        U.S. GDP, or 2.5 percent annually (U.S. DOE,
        2000).

«>  Projected number of new facilities
Most sectors of the paper industry have been consolidating,
with slower growth in capacity than in the past. According
to the S&P Paper and Forest Products Industry Survey
(S&P, 1999a), most companies that have increased operating
capacity in recent years have taken over existing mills rather
than constructing new mills. Those firms which cannot find
a merger partner or an acquirable mill are often modernizing
existing facilities rather than constructing a major new
facility.

New capacity additions in 1999 in the pulp and paper
industry were at their lowest level in the past 10 years, and
the same is expected for 2000.  According to the 40th annual
Capacity Survey by the American Forest & Paper
Association (AF&PA), U.S. capacity to produce paper and
paperboard will increase by an annual average of 0.9 percent
over the period 1999 to 2001 (pponline.com, 1999).  This
represents the lowest level of extended capacity additions in
almost 40 years.  The AF&PA survey cites several factors to
explain the slow growth in capacity, including a highly
competitive trade environment for some  grades, competing
demands for the industry's capital, and mill and machine
shutdowns.  Although most conditions influencing the
industry are conducive to some growth, certain grades are
experiencing reduced demand.  Several pulp mills closed
during the second half of 1998, and additional market pulp
capacity was closed during 1999. According the AF&PA
survey, 577,000 tons of paper and paperboard capacity was
removed in 1998 and 2.5 million tons in 1999, mostly in the
containerboard grades.  Standard and Poor's (S&P)
estimates that 6 percent of U.S. containerboard capacity was
shut down between late 1998 and early 1999 (S&P, 1999).
The recent reduced investment in new capacity is likely to
continue. Any growth in production in the pulp, paper, and
paperboard mill sectors (SICs 2611, 2621, and 2631) will
likely result from increased efficiency at existing facilities,
reopening of capacity that is currently idle, or perhaps
rebuilding or expanding existing facilities (Stanley, 2000;
Jensen, 2000). Therefore, EPA assumed that none of the
projected growth in these industries would result from new
greenfield facilities.

Substantial growth has occurred in the secondary fiber deink
sector since 1990. The number of deink facilities has grown
from 43 (1990) to about 77 over the past ten years.  The
sanitary paper products sector (SIC 2676) potentially
includes deink facilities and may therefore experience
construction of new greenfield facilities. EPA does not
expect these new deink facilities to be in scope, however,
because evidence suggests that cooling water intake flows of
stand-alone deink facilities are well below the 2 MOD
minimum flow threshold of the proposed §316(b) New
Facility Rule (Environmental Assessment for Wisconsin
Tissues, Weldon, N.C.).  The existing facilities in SIC 2676
identified in the screener questionnaire all have intake flows
substantially above two MOD, and are therefore likely to be
in the non-deink part of SIC 2676.  No growth is projected
for new non-deink facilities  in SIC 2676.

Table 5-5 presents the number of existing facilities in the
four analyzed SIC codes and the projected industry growth
(both the annual  growth rate and the compounded growth
rate over ten years) but shows that none of the growth in  SIC
26 is expected to result from new facilities.
                                                                                                            5-9

-------
§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
Table 5-5: Projected Number of New Pulp and Paper Facilities (SIC 26)
SIC
2611
2621
2631
26765
Total
Number of Existing Facilities1
Total
Screener
Facilities
(1998)
66.1
285.5
185.9
3.8
541
With CWIS,
NPDES Permit,
Flow > 2 MGD, and
25% for Cooling
43.2
127.5
44.8
3.8
219
Projected Industry Growth
Annual
1.75%
1.80%
1.80%
2.50%

Over 10
Years2
18.94%
19.53%
19.53%
28.01%

Share of
Growth from
New Facilities
0.0%
0.0%
0.0%
0.0%

Estimated Number of
New Facilities
Total3
0
0
0
0
0
In Scope4
0
0
0
0
0
 1 From screener survey results.
 2 Total percentage growth over 10 years, based on the forecasted annual growth rate [(1 + annual rate)10 - 1].
 3 Equal to total number of screener facilities * (1 + 10-year growth rate) * share of growth from new facilities.
 4 Equal to estimated total number of new facilities * ratio of number of screener facilities with CWIS, NPDES permit, flow > 2 MGD,
 and at least 25% use for  cooling to the total number of screener facilities.
 5 Screener respondents in this SIC code are assumed to be facilities other than deink facilities.

 Source: §316(b) Industry Screener Questionnaire and various industry sources.
b.  Chemicals  Manufacturing (SIC 28)
The §316(b) Industry Screener Questionnaire identified
sixteen 4-digit SIC codes in the Chemicals Manufacturing
Industry (SIC 28) that include facilities with NPDES
permits, that use a CWIS, draw from a water of the U.S.,
and use at least 25 percent of the intake for cooling
purposes:

2812    -   Alkalies and Chlorine
2813    -   Industrial Gases
2616    -   Inorganic Pigments
2819    -   Industrial Inorganic Chemicals, NEC
2821    -   Plastics Material and Synthetic Resins, and
            Nonvulcanizable Elastomers
2823    -   Cellulosic Manmade Fibers
2824    -   Manmade Organic Fibers, Except Cellulosic
2833    -   Medicinal Chemicals and Botanical Products
2834    -   Pharmaceutical Preparations
2841    -   Soaps and Other Detergents, Except Speciality
            Cleaners
2865    -   Cyclic Organic Crudes and Intermediates, and
            Organic Dyes and Pigments
2869    -   Industrial Organic Chemicals, NEC
2873    -   Nitrogenous Fertilizers
2874    -   Phosphatic Fertilizers
2892    -   Explosives
2899    -   Chemicals and Chemical Preparations, NEC
EPA analyzed each of these sixteen industry segments to
estimate the number of new in scope facilities in the
Chemicals Manufacturing Industry.

«>  Projected growth in shipments
The Kline Guide to the U.S. Chemical Industry projects that
shipments of the products from the chemical industry will
generally follow the pattern of overall industrial growth
over the next decade (Kline, 1999). The Chemical
Manufacturers Association (CMA) reported that most
chemical companies have been experiencing tough
competition, with strong downward pressure on pricing, the
loss of some export markets, and growing over-capacity. In
response to an uncertain outlook for global chemical
demand, firms are accelerating the pace of restructuring,
joint venture, de-merger, and merger. Industry
consolidation,  competition, and continuing globalization has
led to high capacity in many products and generally lower
profitability than in the past (S&P, 2000). Industry
employment will decline slightly during the next few years
as a result of continued downsizing and outsourcing efforts.
Some of the uncertainties facing the U.S. chemical industry
include rising oil prices and global over-capacity in
petrochemicals (Swift, 1999). More specifically, industry
sources project the following growth rates for value of
shipments in different chemicals market segments (Kline,
1999, except where noted):
5-10

-------
§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
        Shipments of industrial gases (SIC 2813) are
        projected to grow at a rate of 2.8 percent annually
        through 2003, while the rest of the inorganic
        chemicals sector (SIC 281) will  grow at a rate of
        1.9 percent annually.

        Shipments in the plastics industry (SIC 2821) are
        forecasted to grow more than 4 percent annually
        through 2003 (McGraw-Hill, 1999; Kline, 1999).

        Man-made fibers production (SICs 2823 and 2824)
        is expected to grow 1.9 percent annually through
        2000. EPA assumed that this trend will continue in
        the near future.

        Medicinal chemicals shipments  (SIC 2833) are
        expected to grow by 2.8 percent per year through
        2003. The growth will be fueled by new products
        and increased demand for Pharmaceuticals
        (McGraw-Hill, 1999). Growth in shipments of
        U.S. pharmaceutical products (SIC 2834) are
        projected to average "in the mid-single digits" for
        five years (McGraw-Hill, 1999). EPA assumed an
        annual growth rate of 5 percent for SIC  2834.

        Shipments of soaps and detergents (SIC 2841)  are
        projected to increase by 2.4 percent per year
        through 2003.

        Basic petrochemical shipments (SIC 2865) are
        expected to grow by 3.3 annually through 2003
        (Kline, 1999). There have been supply shortages
        for the largest volume organic chemical (ethylene),
        and capacity is expected to expand over the next
        year to ease the tightness in supply. Two facilities
        in Texas, each with annual capacity of about 1.8
        billion pounds of ethylene, are expected to be
        completed by late 2000 (S&P, 2000).

    >•   Shipments of industrial organic chemicals not
        elsewhere classified (SIC 2869) are projected to
        increase by 3 percent annually through 2003
        (McGraw-Hill, 1999).

    >•   Shipments of fertilizers are projected to increase
        by 2.4 percent annually through 2003  (Kline,
        1999).  The fertilizer industry (SICs 2873 and
        2874) reflects a modest projected growth in the
        underlying American farm economy.  The industry
        has undergone significant consolidation in recent
        years (McGraw-Hill, 1999).

    >•   Shipments of explosives (SIC 2892) are expected
        to grow 4.1 percent per year.

    >•   Shipments of miscellaneous chemicals (SIC 2899)
        are expected to increase by 3 percent annually
        through 2003  (McGraw-Hill,  1999).

«>  Projected number of new facilities
EPA estimates that 284 new facilities may be constructed
over the next ten years in the relevant SIC 28 segments, as
shown in Table 5-6.  Of these, 24 are expected to be in
scope of the proposed §316(b) New Facility Rule. Nine of
the in scope facilities are expected to produce industrial
organics (SIC 2869), and three are plastics manufacturing
facilities (SIC 2821).
                                                                                                          5-11

-------
§316(b) EEA Chapter 5 for New Facilities
Baseline Projections of New Facilities
Table 5-6: Projected Number of New Chemical Manufacturing Facilities (SIC 28)
SIC
2812
2813
2816
2819
2821
2823
2824
2833
2834
2841
2865
2869
2873
2874
2892
2899
Total
Number of Existing Facilities1
Total
Screener
Facilities
(1998)
28.1
109.8
25.3
270.8
305.1
6.7
31.3
33.3
91.4
35.9
59.3
367.9
59.7
37.8
9.7
163.1
1,635
With CWIS,
NPDES Permit,
Flow > 2 MGD, and
25% for Cooling
9.7
4.1
4.1
16.7
14.5
2.2
6.3
3.4
4.1
4.1
5.2
52.6
8.2
4.5
1.1
5.2
146
Projected Industry Growth
Annual
1.9%
2.8%
1.9%
1.9%
4.0%
1.9%
1.9%
2.8%
5.0%
2.4%
3.3%
3.0%
2.4%
2.4%
4.1%
3.0%

Over 10
Years2
20.7%
31.8%
20.7%
20.7%
48.0%
20.7%
20.7%
31.8%
62.9%
26.8%
38.4%
34.4%
26.8%
26.8%
49.5%
34.4%

Share of
Growth from
New Facilities
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%

Estimated Number
of New Facilities
Total3
3
17
3
28
73
1
3
5
29
5
11
63
8
5
2
28
284
In Scope4
1
1
0
2
o
5
0
i
i
i
i
i
9
1
1
0
1
24
  1 From screener survey results.
  2 Total percentage growth over 10 years, based on the forecasted annual growth rate [(1 + annual rate)10 - 1].
  3 Equal to total number of screener facilities * (1 + 10-year growth rate) * share of growth from new facilities.
  4 Equal to estimated total number of new facilities * ratio of number of screener facilities with CWIS, NPDES permit, flow > 2 MGD,
  and at least 25% use for cooling to the total number of screener facilities.

  Source:  §316(b) Industry Screener Questionnaire and various industry sources.
5-12

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§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
c.  Petroleum and Coal Products  (SIC 29)
Responses to the industry screener survey indicate that two
Petroleum and Coal Product sectors, SIC 2911 - Petroleum
Refining; and SIC 2999 - Products of Petroleum and Coal,
Not Elsewhere Classified, are likely to be relevant to the
proposed regulation. These two industry segments are
analyzed to determine the number of new in scope facilities
in the Petroleum and Coal Products Industry.

«>  Projected growth in shipments
EIA forecasts that U.S. petroleum consumption will
increase by 6.2 million barrels (bbl) a day between 1998 and
2020. More than 90 percent of the projected demand
growth results from increased consumption of "light
products," including gasoline, diesel,  heating oil, jet fuel,
and liquified petroleum gases. Expansions at existing
refineries (SIC 2911) are expected to  meet  only half of the
projected increase in demand. The  remainder is expected to
result from increased imports  of petroleum product (U.S.
DOE, 1999a).

No forecasts of shipments specific to  Miscellaneous
Products of Coal and Petroleum (SIC 299)  are available.
Therefore,  EPA assumed that shipments from this industry
will grow at the same 2.5 percent annual rate as forecast for
overall GDP.
«>  Projected number of new facilities
EIA projects that domestic refinery capacity (SIC 2911) will
grow from 16.3 million bbl per day in 1998 to between 17.6
million bbl per day (low economic growth case) and 18.3
million bbl per day (high economic growth case) in 2020.
This expansion will result from expanded capacity at
existing refineries. No new refineries are likely to be
constructed in the U.S. due to financial and legal constraints
(U.S. DOE, 1999a). For the purpose of this analysis, EPA
therefore assumed that there will be no new petroleum
refineries constructed in the U.S. over the next 10 years.

No information on expected capacity growth specific to SIC
2999 was identified. EPA therefore assumed that one-half
of the projected growth in shipments will result from new
facilities in these industries. Table  5-7 shows that one new
facility is expected in SIC 2999. However, given the low
numbers of screener facilities with in scope characteristics
in that industry sector, EPA's forecast methodology results
in a projection that no new in scope facilities will be
constructed in SIC code 2999 over the next 10 years.
Table 5-7: Projected Number of New Petroleum and Coal Products Facilities
(SIC 29)
SIC
2911
2999
Total
Number of Existing Facilities1
Total
Screener
Facilities
(1998)
162.8
7.8
171
With CWIS,
NPDES Permit,
Flow > 2 MGD, and
25% for Cooling
27.9
1.1
29
Projected Industry Growth
Annual
2.5%
2.5%

Over 10
Years2
28.0%
28.0%

Share of
Growth from
New Facilities
0.0%
50.0%

Estimated Number of
New Facilities
Total3
0
1
1
In Scope4
0
0
0
  1 From screener survey results.
  2 Total percentage growth over 10 years, based on the forecasted annual growth rate [(1 + annual rate)10 - 1].
  3 Equal to total number of screener facilities * (1 + 10-year growth rate) * share of growth from new facilities.
  4 Equal to estimated total number of new facilities * ratio of number of screener facilities with CWIS, NPDES permit, flow > 2 MGD,
  and at least 25% use for cooling to the total number of screener facilities.

  Source: §316(b) Industry Screener Questionnaire and various industry sources.
                                                                                                             5-13

-------
§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
d.  Steel (SIC 331)
The §316(b) Industry Screener Questionnaire identified five
4-digit SIC codes in the Steel Industry (SIC 331) that are
most likely to be most relevant to the proposed §316(b)
New Facility Rule:

3312    -   Steel Works, Blast Furnaces (Including Coke
            Ovens), and Rolling Mills
3313    -   Electrometallurgical Products, Except Steel
3315    -   Steel Wiredrawing and Steel Nails and Spikes
3316    -   Cold-Rolled Steel Sheet, Strip, and Bars
3317    -   Steel Pipe and Tubes

EPA analyzed each of these five industry segments to
determine the number of new in scope facilities in the Steel
Industry.

«>  Projected growth in shipments
Demand for North American steel is expected to increase
over the long term. Domestic demand for steel mill
products, which dropped precipitously during the 1980's,
rebounded sharply during the 1990's.  This increase  in
demand is attributed to overall growth in steel-consuming
industries and increased steel use in some areas such as
construction.  The U.S. steel industry is considerably
smaller, internationally competitive, and more innovative,
after a decade of restructuring in the 1990's (McGraw-Hill,
1999). Steel shipments are expected to rise at a 1 to 2
percent annual rate through 2003, assuming continued
moderate economic growth (McGraw-Hill, 1999).

«>  Projected number of new facilities
Recent growth in new steelmaking capacity has been in
minimills. The success of the thin slab caster/flat rolling
mill has resulted in construction of as much as  11 million
tons of new minimill steel capacity in the U.S. between
1997 and 2000. Table 5-8 provides information on six new
EAF minimill projects planned between late 1998 and early
2001. Higher demand is expected to absorb some of the
new capacity  from these mills. Imports are also likely to be
displaced and exports will increase (McGraw-Hill,  1998).
While new low-cost minimills have been starting up, some
antiquated, less efficient integrated mills have been shut
down and other integrated producers have increased output
efficiencies at their existing blast furnaces (McGraw-Hill,
1999).

Company
Nucor
Nucor
Chapparal
Nucor
Steel Dynamics
Ipsco
Table 5-8
Project
Structural mill
Cold mill
Structural mill
Plate mill
Structural mill
Plate mill
Major New Minimill Projects
Location
Berkeley County, S.C.
Hickman, AR
Dinwiddie County, VA
Hertford County, NC
Whitley County, IN
Mobile County, AL
1998-2001
Completion
Late 1998
Early 1999
Mid- 1999
Early 2000
Early 2000
Early 2001

Cost
$150 million
$120 million
$400 million
$300 million
$285 million
$425 million
 Source:  Metal Center News Online, 2000.
EPA assumed that one-half of the projected growth in
shipments in all potentially-affected steel industries will
result from new facilities, and that all of the new facilities in
the basic steel sector (SIC 3312) will be new minimills
rather than new integrated facilities.  Table 5-9 shows the
projected number of new in scope facilities in this sector.
EPA estimates that 39 new facilities will be constructed
over the next 10 years, of which four will be in scope of the
proposed §316(b) New Facility Rule.
5-14

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§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
Table 5-9: Projected Number of New Iron and Steel Facilities (SIC 331)
SIC
33125
3313
3315
3316
3317
Total
Number of Existing Facilities1
Total
Screener
Facilities
(1998)
156.6
5.6
121.9
59.8
129.6
474
With CWIS,
NPDES Permit,
Flow > 2 MGD, and
25% for Cooling
37.7
1.1
3.1
9.3
1.1
52
Projected Industry Growth
Annual
1.5%
2.5%
1.5%
1.5%
1.5%

Over 10
Years2
16.1%
28.0%
16.1%
16.1%
16.1%

Share of
Growth from
New Facilities
50.0%
50.0%
50.0%
50.0%
50.0%

Estimated Number of
New Facilities
Total3
13
1
10
5
10
39
In Scope4
o
5
0
0
1
0
4
 1 From screener survey results.
 2 Total percentage growth over 10 years, based on the forecasted annual growth rate [(1 + annual rate)10 - 1].
 3 Equal to total number of screener facilities * (1 + 10-year growth rate) * share of growth from new facilities.
 4 Equal to estimated total number of new facilities * ratio of number of screener facilities with CWIS, NPDES permit, flow > 2 MGD,
 and at least 25% use for cooling to the total number of screener facilities. All new facilities in SIC 3312 are assumed to be minimills
 rather than integrated steel mills.

 Source:  §316(b) Industry Screener Questionnaire and various industry sources.
e.  Aluminum and Other Nonferrous Metals
    (SICs 333,  335)
The §316(b) Industry Screener Questionnaire identified
three 4-digit SIC codes in the Aluminum and Other
Nonferrous Metals Industry (SICs 333 and 335) that are
potentially relevant to the proposed §316(b) New Facility
Rule:

3334    -   Primary Production of Aluminum
3339    -   Primary Smelting and Refining of Nonferrous
            Metals, Except Copper and Aluminum
3353    -   Aluminum Sheet, Plate, and Foil

EPA analyzed each of these three industry segments to
determine the number of new in scope facilities in the
Aluminum and Other Nonferrous Metals Industry.

«>  Projected growth in shipments
Total shipments for all sectors of the aluminum industry are
expected to increase 3 percent annually from 1999 through
2003 (McGraw-Hill, 1999). EPA therefore assumed that
shipments of primary aluminum smelters (SIC  3334) and
aluminum sheet, plate, and foil (SIC 3353) will increase at
an annual rate of 3 percent.  No information  is  available on
the specific products produced by the screener facilities in
SIC code 3339.  EPA therefore assumed that shipments for
this industry sector will grow at the same rate as overall
GDP (2.5 percent annually).

«>  Projected number of new facilities
There is a substantial amount of idled aluminum capacity in
the U.S. that could be brought on-line as demand improves
(McGraw-Hill, 1999). This idle capacity is likely to limit
construction of new capacity and to limit price increases for
aluminum (S&P, 2000).  The 1997 capacity utilization rate
of 86 percent was well below the 1987  rate of
approximately 97 percent.  Domestic production has
increased since 1995, bringing some idled capacity back on-
line, and domestic smelters are now operating at about 90
percent of rated or engineered capacity (USGS, 2000).
These conditions make it likely that any capacity  increases
will involve using existing capacity or expansions at
existing facilities, rather than construction of new greenfield
facilities (Plunkert, 2000).  No new primary smelters have
been constructed in the U.S. since  1980 (McGraw-Hill,
1999). According to  Standard & Poor's, construction of
new minimill capacity is also unlikely given the potential
that added capacity would drive down prices in the face of
slow growth in the markets for minimill products (S&P,
2000). EPA therefore assumed that all projected  growth in
primary aluminum shipments (SIC 3334) will result from
using the currently-idled capacity or from expansions at
existing facilities.
                                                                                                            5-15

-------
§316(b) EEA Chapter 5 for New Facilities
                    Baseline Projections of New Facilities
In the absence of specific information for SIC codes 3339
and 3357, EPA assumed that half of the growth in
shipments would result from new facilities, rather than from
idled capacity or expansions at existing facilities.
Table 5-10 shows that 11 new facilities could be
constructed over the next ten years with one new in scope
Aluminum Sheet, Plate and Foil facilities (SIC 3353).
Table 5-10: Projected Number of New Aluminum and Other Nonferrous Metal Facilities (SIC 333,335)
SIC
3334
3339
3353
Total
Number of Existing Facilities1
Total
Screener
Facilities
(1998)
30.7
5.2
56.9
93
With CWIS,
NPDES Permit,
Flow > 2 MGD, and
25% for Cooling
10.5
1.1
6.2
18
Projected Industry Growth
Annual
3.0%
2.5%
3.0%

Over 10
Years2
34.4%
28.0%
34.4%

Share of
Growth from
New Facilities
0.0%
50.0%
50.0%

Estimated Number of
New Facilities
Total3
0
1
10
11
In Scope4
0
0
1
1
  1 From screener survey results.
  2 Total percentage growth over 10 years, based on the forecasted annual growth rate [(1 + annual rate)10 - 1].
  3 Equal to total number of screener facilities * (1 + 10-year growth rate) * share of growth from new facilities.
  4 Equal to estimated total number of new facilities * ratio of number of screener facilities with CWIS, NPDES permit, flow > 2 MGD,
  and at least 25% use for cooling to the total number of screener facilities.

  Source: §316(b) Industry Screener Questionnaire and various industry sources.
5.2.3      Uncertainties and Limitations
There are substantial uncertainties inEPA's projections of
the number of new manufacturing facilities that will be
subject to the proposed §316(b) New Facility Rule. While
3-to-5 year forecasts of industry shipments are available for
most of the relevant industries, forecasts of the likely
growth in capacity and numbers of new facilities are less
readily available and those that are available generally apply
only for the next few years.

To account for the 20-year time frame of this analysis, EPA
assumed that the projected growth for the next three to five
years will continue over the next 20 years. This assumption
increases the uncertainty about the projected number of new
facilities. In addition, it is often not clear how much of any
new growth in capacity will result from expansions at
existing facilities as opposed to construction of new
greenfield facilities.  EPA relied on general information
about trends in each industry for assumptions about the
relationship between growth in shipments and growth in
domestic capacity, and about the portion of new capacity
that will be in new greenfield facilities.

EPA's forecasts assume that the characteristics of new
facilities that determine their regulatory status under the
proposed rule are the same as those of the screener facilities
in the same industries.  A variety of factors may lead new
facilities to use municipal or ground water instead of a
water of the U.S. or to recycle the process water more often
than do existing facilities, however. Thus, this assumption
may overstate the number of new facilities.
5-16

-------
§316(b) EEA Chapter 5 for New Facilities
                                                       Baseline Projections of New Facilities
5.3   SUMMARY OF  BASELINE
        PROJECTIONS

EPA estimates that over the next 20 years a total of 875 new
greenfield facilities will be built in the industry sectors
analyzed for this proposed regulation. Two hundred and
five of these new facilities will be steam electric generating
                                    facilities and 670 will be manufacturing facilities. As Table
                                    5-11 shows, only 98 of the 875 new facilities are projected
                                    to be in scope of the proposed §316(b) New Facility Rule,
                                    including 40 electric generators, 48 chemical facilities, and
                                    10 primary metals facilities.  No new in scope pulp and
                                    paper or petroleum facilities are projected over the next 20
                                    years.
Table 5-11: Projected Number of In Scope Facilities (2001 to 2020)
SIC

SIC 49

SIC 26
SIC 28
SIC 29
SIC 33
SIC 331
SIC 333
SIC 335
SIC Description
Electric Generators
Electric Generators
Manufacturing Facilities^
Paper and Allied Products
Chemicals and Allied Products
Petroleum Refining And Related Industries
Primary Metals Industries
Blast Furnaces and Basic Steel Products
Primary Aluminum, Aluminum Rolling, and
Drawing and Other Nonferrous Metals
Total Manufacturing
Total
Projected Number of New Facilities
Over 20 Years
Total

205

0
570
2

77
21
670
875
With Costs

40

0
48
0

8
2
58
98
 T   The number of new

 Source:  EPA Analysis,
manufacturing presented in this table is twice the 10-year forecast presented in Section 5.2.

2000.
                                                                                                          5-17

-------
§316(b) EEA Chapter 5 for New Facilities
                   Baseline Projections of New Facilities
REFERENCES

Jensen, Carl. 2000. Miller Freeman. Phone conversation
with Nancy Hammett, Abt Associates Inc., April 11.

Kline & Company, Inc.  1999. Guide to the U.S. Chemical
Industry, 6th edition.

McGraw-Hill and U.S. Department of Commerce,
International Trade Administration.  1999. U.S. Industry &
Trade Outlook.

Metal Center News Online. 2000.  "The Struggle to
Compete",
http://www.metalcenternews.eom/metaldistribution/mdmill.h
tm

Plunkert, Patricia.  2000.  USGS Minerals Information
Commodity Specialist for Aluminum. Phone conversation
with Nancy Hammett, Abt Associates Inc., April 11.

pponline.com.  1999.  "U.S. pulp, paper, board capacity
growth 'ultra slow'."
http://www.pponline.com/db area/archive/pponews/1999/w
k!2 06  1999/38.htm. December 9.

Resource Data International (RDI).  2000.  NEWGen
Database.  January 2000.

Standard & Poor's (S&P). 2000. Industry Surveys -
Chemicals: Basic.  January 6, 2000.
Standard & Poor's (S&P). 1999. Industry Surveys - Paper
and Forest Products. October 21, 1999.

Stanley, Gary.  2000. U.S. Department of Commerce,
International Trade Administration, Forest Products Service.
Phone Conversation with Nancy Hammett, Abt Associates
Inc., April 11.

Swift, T. Kevin. 1999. "Mid-Year Review of the US
Economy and the Chemical Industry." Economic News and
Information. June 1999.  [Chemical Manufacturers
Association]

U.S. Department of Energy(U.S. DOE).  2000. Energy
Information Administration. Assumptions to the Annual
Energy Outlook 2000 (AEO2000) With Projections to 2020.
DOE/EIA-0554(2000). January 2000.

U.S. Department of Energy (U.S. DOE). 1999a.  Energy
Information Administration. "Market Trends - Oil &
Natural Gas." Annual Energy Outlook 2000.
Report#DOE/EIA-0383(2000). December 19.

U.S. Department of Energy (U.S. DOE). 1999b.
Supporting Analysis for the Comprehensive Electricity
Competition Act. Document number DOE/PO-0059.  Office
of Economic, Electricity, and Natural Gas Analysis, Office
of Policy, U.S.  Department of Energy, Washington, DC
20585.
5-18

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§316(b) EEA Chapter 6 for New Facilities
                            Facility Compliance Costs
         Chapter   6:    Facility   Compliance

                                             Costs
INTRODUCTION

This chapter presents the estimated costs to facilities of
complying with the proposed §316(b) New Facility Rule.
EPA developed costs at three levels: (1) unit costs of
complying with the various requirements of this regulation,
including costs of §316(b) technologies and administrative
costs; (2) facility-level costs for each projected in scope
facility; and (3) total facility compliance costs aggregated to
the national level. This chapter also presents cost estimates
for eight additional case study facilities.  The last section of
this chapter discusses uncertainties and limitations in EPA's
compliance cost estimates.

Facilities generally have several alternatives for complying
with the proposed rule's requirements.1 Alternative
compliance responses include:

    >    Compliance Response 1: Change the cooling
        system design so the facility would no longer be
        subject to regulation under the proposed §316(b)
        New Facility Rule: A facility may choose to use an
        alternative (a water other than those of the U. S.)
        cooling source, e.g., gray water or dry cooling, or to
        redesign its cooling water system to withdraw less
        than two million gallons per day (MOD). Under
        both scenarios, a facility would no longer be in
        scope of this regulation but might incur costs
        associated with these design changes.

    *    Compliance Response 2: Change the source water
        body type and make alterations to meet
        requirements based on the new water body type
        and the distance from the littoral zone: A facility
        may choose to locate on a different type of water
        body to reduce the stringency of its compliance
        requirements (e.g., locate on a lake or river instead
        of an estuary).  This alternative may involve costs
        of redesigning the facility or acquiring land  near the
CHAPTER CONTENTS
6.1  Unit Costs  	6-2
    6.1.1   §316(b) Technology Costs	6-2
    6.1.2   Administrative Costs  	6-9
6.2  Facility-Level Costs	6-12
    6.2.1   New Electric Generators	6-13
    6.2.2   New Manufacturing Facilities  .... 6-16
6.3  Total Facility Compliance Costs	6-19
6.4  Case Study Facility Costs 	6-21
6.5  Limitations and Uncertainties  	6-23
References
6-25
    1 Compliance requirements vary with water body type and
distance from the water body's littoral zone. See Chapter 1:
Introduction and Overview for a summary of this rule's
requirements.
      substitute water body as well as the cost of any
      requirements associated with the new water body
      type and distance from the littoral zone.

      Compliance Response 3: Change the distance
      from the littoral zone and make alterations to
      meet requirements based on water body type and
      the new distance from the littoral zone: A facility
      may choose to relocate the entrance of its intake
      structure within the water body to reduce the
      stringency of its compliance requirements (i.e.,
      locate the intake outside of the littoral zone or more
      than 50 meters away from the littoral zone). This
      alternative may involve additional capital costs to
      extend the facility's intake pipe or to dredge an
      intake canal to make the intake deeper, as well as
      the cost of any requirements based on the new
      distance from the littoral zone.

      Compliance Response 4: Make alterations to meet
      requirements based on the baseline water body
      type and distance from littoral zone: A facility
      may choose to retain its planned location (water
      body type and distance from the littoral zone) and
      implement all measures required by the regulation.
      This alternative may involve costs of widening the
      intake structure or installing a velocity cap or
      passive screens to reduce velocity; and switching to
      a recirculating system to reduce intake flow;
                                                                                                     6-1

-------
§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
        implementing additional technologies to reduce
        impingement and entrainment (I&E).

The remainder of this chapter presents the estimated costs of
compliance and the methodology and unit costs used to
develop the estimates. The chapter is organized as follows:

    >•   Section 6.1 presents the unit costs associated with
        various compliance actions that facilities may take
        as part of the compliance alternatives described
        above.  The unit costs include average costs of
        implementing specific changes to a facility's
        cooling water intake structure (CWIS) or its
        cooling water system and are based on certain
        facility characteristics such as volume of flow.
        Unit costs are also estimated for administrative
        activities.

    *   Section 6.2 discusses the development of
        compliance cost estimates for the 98 projected new
        in scope facilities and presents the estimated costs.

    *   Section 6.3 presents the estimated facility
        compliance costs aggregated to the national level.

    *   Section 6.4 presents an estimate of facility costs for
        eight additional case study facilities.

    *•   The final Section 6.5 discusses the limitations and
        uncertainties in EPA's compliance cost estimates.
6.1    UNIT COSTS

Unit costs are estimated costs of certain activities or actions,
expressed on a uniform basis (i.e., using the same units), that
a facility may take to comply with the regulatory
requirements. Unit costs are developed to facilitate
comparison of the costs of different actions. For this
analysis, the unit basis is dollars per gallon per minute
($/gpm) of cooling water intake flow. All capital and
operating and maintenance (O&M) costs were estimated in
those units.  These unit costs are the building blocks for
developing costs at the facility and national levels.
Individual facilities will incur only a subset of the unit costs,
depending on the extent to which they would already comply
with the requirements as originally designed (in the baseline)
and on the compliance response they select. The unit costs
presented in this section are engineering cost estimates,
expressed in 1999 dollars.  More detail on the development
of these unit costs is provided in the appendices.

6.1.1 §316(b) Technology Costs
New facilities that in their original design do not comply
with the §316(b) New Facility Rule framework would have
to implement one or more technologies to reduce I&E.
These technologies reduce I&E through one of four general
methods:

    >•   changing the location of the CWIS in a water body;
    >•   reducing the design intake flow;
    *   reducing the design intake velocity; or
    *   implementing other design and construction
        technologies (referred to as other technologies) to
        reduce damage from I&E.

The remainder of Section 6.1.1 discusses specific §316(b)
technologies and their respective costs.

a.  Changing the Location  of the CWIS  in a
    Water Body
EPA analyzed two options for altering the location of a
planned facility's CWIS: extending the intake pipe to
increase the distance from the littoral zone, and deepening
the intake canal to withdraw water from below the littoral
zone.

«>  Extending the intake pipe
There are a number of different methods for underwater pipe
laying, including use of conventional pipe laying vessels,
bottom-pulling, and micro-tunneling.2 Each of these
methods requires the use of skilled labor and specialized
equipment and materials.  The following general
assumptions were used to estimate costs associated with
extending an intake pipe:

    *•   The littoral zone ends approximately 25 meters
        from the shoreline.3 If a pipe extends 75 meters
        from the shoreline it would be 50 meters outside
        the littoral zone.  The maximum necessary
        extension of the intake pipe to be at least 50 meters
        outside of the littoral zone therefore is 75 meters.

    *   The source water body is  wide enough so that a
        pipe extending 75 meters  from one  shore/river bank
        will also be at least 75 meters from the opposite
        shore/bank. The intake structure would therefore
        meet the requirement of being at least 50 meters
        outside of the littoral zone on both sides of the
        source water body.

Table 6-1 presents a summary of the estimated costs
associated with installing intake pipes of 25 meters and 125
meters in length using each method of installation. The
table shows that for the pipe-laying vessel and bottom-pull
    2 See Appendix A for a more detailed discussion on the pipe
extension technologies.

    3 The littoral zone may extend for more or less than 25
meters, depending on site-specific characteristics of the water body.
The assumption of 25 meters is used for costing purposes only.
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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
methods, the length of the pipe has a minimal impact on the
total cost (the main cost components being the equipment
and labor costs). The total cost associated with the micro-
tunneling technique, on the other hand, does vary with the
length of the pipeline. For micro-tunneling, to develop cost
curves and equations based on flow, EPA assumed a pipe
extension distance of 125 meters. Further details on the
development of cost estimates are provided in Appendix A.
Table 6-1: Costs of Extending the Intake Pipe ($1999)
Method of
Installation
Pipe Laying
Vessel
Bottom-Pull
Method
Micro-
Tunneling
Cost
Rent Equipment / Labor
$90,000 -$110,000 per day
(all inclusive)
$20,000 per day for a barge
and labor
$2,000 - $4,000 per day for
a crane
$500 per day for welders
$1,350 per day for a
bulldozer
Pipe/
Materials
minimal
minimal
$1,000 - $2,000 per foot of piping (includes
installation and material costs)
Necessary Days to Complete
Work
25 meters
.
1


2
n/a
125 metersn
1
1
1
1
2
n/a
Total Cost
25 meters
$90,000 -
$110,000
$25,200-
$27,000
$82,000-
$164,000
125 meters"
$90,000 -
$110,000
$25,200-
$27,000
$410,000-
$820,000
 T    See Appendix A for cost curves and further details on the development of cost estimates.
 n    The costs presented in this table are based on extending the pipe for 125 meters rather than 75 meters.  The cost for extending the
      pipe for only 75 meters may be as much as 30 to 40 percent lower, depending on the pipe extension method used. This potential
      decrease in costs would have minimal impact on the overall estimated cost of the proposed rule.
«>  Deepening the intake canal
Shoreline intakes often have a dredged canal with a baffle or
skimmer wall and withdraw water from below the surface.
Deepening the canal such that the intake opening is below
the littoral zone may require additional dredging.4 For the
smallest size canal, EPA assumed that an additional 10,000
cubic yards (CY) of sediments will be removed using a
dredger.5 For large size canals, EPA assumed that
increasing the depth below the littoral zone entails the
dredging of an area of 10 by 40 by 100 yards.  Widening,
dredging, and dumping operations are assumed to be
accomplished using a 2,000 gallons per CY dredger at a cost
of $12.25 per CY. Based on these estimates, the costs
associated with deepening an intake canal to comply with
the proposed §316(b) New Facility Rule range between
    4 The same assumptions were made here for the dimension of
the littoral zone as in the section on extending the intake pipe.

    5 This estimate assumes that the canal dimensions are 10 by
100 yards and the canal will be deepened by an additional 10 yards.
$122,500 for a small canal to $490,000 for a large canal.  A
cost curve is included in Appendix A.

These costs apply to situations where sediments are disposed
of onsite with no preparation costs. If  sediments are
contaminated, the permitting authority  may require transport
to and disposal at an offsite facility, which may double or
triple the operational costs and may also delay construction
of the new facility.

b.  Reducing  Design Intake  Flow
New facilities that do not comply with the flow criteria
established by the proposed §316(b) regulatory framework
have a number of alternatives for reducing their intake flow
to meet the rule's requirements.  EPA analyzed two options
for reducing the design intake flow and developed cost
estimates for these two options: switching to a recirculating
system and using a water other than those of the U. S.

By switching to a recirculating system  or using an
alternative cooling water source, it is possible for a new
facility to reduce its intake flow to less than two MOD and
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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
therefore be exempt from the proposed §316(b) New
Facility Rule. For some facilities, the cost of reducing the
intake flow such that they are exempt from regulation under
§316(b) may be lower than that of any other compliance
response.

«>  Switching to  a recirculating system
Switching to a recirculating system involves redesigning the
proposed facility to replace the planned once-through
cooling system. Cooling towers are by far the most common
type of recirculating system. EPA therefore assumed that all
planned facilities switching to recirculating systems will use
cooling towers.

Cooling tower configurations differ with respect to design
characteristics such as the type of air flow (either natural or
mechanical draft), the  materials used in tower construction
(wood, fiberglass, steel, and/or concrete), and whether water
is recirculated or discharged to a receiving water body after
cooling (only configurations that involve recirculating will
be useful in meeting the regulatory requirements).  The cost
of installing cooling towers and their associated intakes and
equipment is largely determined by the volume of cooling
water needed, the  material used to construct the tower (e.g.,
redwood, steel), and the special features of the tower (e.g.,
plume abatement). The volume of water needed for cooling
depends on the following factors: source water temperature
and quality; the type of cooling tower installed (i.e., whether
it is natural or mechanical draft); type and make of
equipment to be cooled (e.g., coal fired equipment, natural
gas powered equipment);  and the plant size/generating
capacity (e.g., 50 megawatt vs. 200 megawatt).

Table 6-2 presents estimated capital and installation costs
for different types of basic cooling towers and associated
equipment, broken down by the volume of water used.
Based on conversations with industry experts, installation
costs are assumed to be 80 percent of the cooling tower
equipment cost. The costs presented in Table 6-2 are the
installation costs for a "basic" cooling tower (i.e., standard
fill without special features) and associated equipment. For
costing purposes, EPA assumed that a red-wood, splash-
filled cooling tower would be installed because this type of
tower has typical average costs.  Site-specific conditions
may require the installation of additional equipment to
mitigate environmental impacts, such as drift, plume, and
noise controls, at additional cost.
Table 6-2: Capital and Installation Costs for Cooling Towers ($1999)
Flow (gpm)
2,000-18,000
22,000-36,000
45,000-67,000
73,000-102,000
112,000-204,000
Douglas Fir
Cooling Tower
$108,000-
$972,000
$1,148,400-
$1,879,200
$2,268,000-
$3,3768,00
$3,679,200-
$4,957,200
$5,443,200-
$9,180,000
Redwood Tower
$121,000-
$1,089,000
$1,286,000-
$2,105,000
$2,540,000-
$3,782,000
$4,121,000-
$5,552,000
$6,096,000-
$10,282,000
Concrete Tower
$151,000-
$1,361,000
$1,608,000-
$2,631,000
$3,175,000-
$4,728,000
$5,151,000-
$6,940,000
$7,620,000-
$12,852,000
Steel Tower
$146,000-
$1,312,000
$1,550,000-
$2,537,000
$3,062,000-
$4,559,000
$4,967,000-
$6,692,000
$7,348,000-
$12,393,000
Fiberglass-
Reinforced Plastic
Tower
$157,000-
$1,409,000
$1,665,000-
$2,725,000
$3,289,000-
$4,896,000
$5,335,000-
$7,188,000
$7,893,000-
$13,311,000
      See Appendix A for cost curves and further details on the development of cost estimates.
EPA also estimated O&M costs for cooling towers.  These
O&M costs tend to be driven by factors such as:

    *   the size of the cooling tower,
    *   the material from which the cooling tower is built,
    *•   various features of the cooling tower,
    *•   the source of make-up water,
    *   the disposition of blowdown water, and
    *   the tower's remaining useful life (maintenance
        costs increase as useful life diminishes).
To calculate estimated annual O&M costs, EPA made the
following assumptions:

    *•   For small cooling towers, five percent of capital
        costs is attributed to chemical costs and routine
        maintenance. To account for economies  of scale,
        that percentage is gradually decreased to  two
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§316(b) EEA Chapter 6 for New Facilities
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        percent for the largest cooling tower. This
        assumption is based on discussion with industry
        representatives.

    >•   Two percent of tower flow is lost to evaporation
        and/or blowdown and/or drift, based on discussions
        with industry representatives.

    *•   Make-up water was assumed to come from a water
        of the U.S., and disposal of blowdown was
        assumed to be to either a pond or back to the
        original water source, at a combined cost of
        $0.50/1000 gallons.

    *   Maintenance costs are 15 percent of capital costs,
        averaged over a 20 year period, based on
        discussions with industry representatives.

Cost curves developed based on the above assumptions and
used to estimate costs are included in Appendix A, along
with further details on the development of estimated costs.

«>  Using a water other than those of the U.S.
The use of a recirculating cooling water system does not
eliminate the need for a supply of water. Facilities using
cooling towers need a supply of cooling water to "make-up"
for the water that is lost from the cooling process because of
evaporation, blow down, and drift. This make-up water can
come from a water of the U.S., ground water, a municipal
domestic water supply, or the treated wastewater that is
discharged from municipal wastewater treatment plants
(gray water).  Data from various existing utility databases,
the §316(b) Screener Questionnaire, and the NEWGen
database indicate a trend toward increased use of cooling
towers and waters other than those of the U.S. for make-up
water for power generation units coming on-line in recent
years or planned to come on-line in the near future. Make-
up water obtained from a domestic water supply or treated
wastewater must be purchased.

EPA contacted several water and wastewater treatment
plants in the Washington, DC area to develop cost estimates
for using gray water as cooling tower make-up water.  Cost
data from power plant siting applications submitted to siting
boards by utilities were also obtained.  The cost for gray
water varies  greatly from one geographic area to another
based on the availability of alternative sources of cooling
water. Rate schedules for gray water supply are typically set
such that costs per gallon increase with consumption.  A
review of cost estimates from wastewater treatment plants
and siting applications indicates that the cost of gray water
ranges from approximately $1.5 to $3 per 1,000 gallons for a
facility with daily flows typical of electric generating
facilities with recirculating cooling towers.  Based on this
review, EPA estimated a unit cost of $3/1000 gallons for the
purchase of make-up gray water from a wastewater
treatment plant. These costs do not include treatment or
discharge costs. However, if on-site treatment is necessary,
EPA estimates that the cost would be approximately
$0.5/1000 gallons.

EPA also contacted the Washington Suburban Sanitary
Commission to gather cost estimates for municipal domestic
water for use as cooling water.  A facility using municipal
sources for clean make-up water and disposing of the blow
down water into a publicly-owned treatment works (POTW)
sewer line would incur a combined cost of $4/1000 gallons.

c.  Reducing Design Intake Velocity
A facility not in compliance with the velocity criteria
established by  the proposed §316(b) regulatory framework
may need to alter its CWIS to reduce the design intake
velocity. This  reduction can be achieved by branching the
intake into a greater number of openings/pipes, installing
velocity caps, or constructing a passive screen system. Each
of these options is discussed below.

«>  Passive screens
Passive intake  systems are those devices which screen-out
debris and biota with little or no mechanical activity
required. Most of these systems are based on the principle
of achieving very low  withdrawal velocities at the screening
media. Passive screens reduce velocity by exploiting
hydrodynamics. Hydrodynamic exclusion results from
maintenance of a low through-slot velocity which allows
organisms to escape the flow field. The physical shape and
dimension (width and  depth) of passive screens are
determined by  the application and site-specific conditions.
See Appendix  A for a  more detailed description of the
screen technologies.

Estimated capital costs for passive screens are shown in
Table 6-3.  These costs are based on discussions with
industry representatives. The table presents costs for basic
passive screens, made  of carbon steel with a coating of
epoxy paint. Passive screens larger than those presented in
Table 6-3 will  correspond to flows greater than 50,000
gallons per minute (gpm). Intake structures with flows in
excess of 50,000 gpm  are typically very large and the
network fanning required for the total number of intake
points and screens generally make passive screen systems
infeasible.
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§316(b) EEA Chapter 6 for New Facilities
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Table 6-3: Capital Costs for Passive Screens - Stainless Steel ($1999)
Well Depth (ft)"
10
25
50
75
100
Screen Panel Width (ft)nt
2
$34,200
$49,800
$74,400
$99,000
$135,600
5
$56,100
$84,900
$122,700
N/A
N/A
10
$91,800
$140,400
N/A
N/A
N/A
14
$128,700
N/A
N/A
N/A
N/A
      T    See Appendix A for cost curves and further details on cost estimate development.
      n   Well depth includes the height of the structure above the water line.
      tn   N/A indicates that costs were not estimated because passive screen systems of this size are not feasible.
Generally, there are no appreciable O&M costs for passive
screens.  In situations with biofouling problems or zebra
mussels in the environment, special materials for the screens
and periodic mechanical cleaning may be needed. Air
backwash systems require periodic maintenance. These
costs, however, are minimal.

«>  Velocity caps
A velocity cap is used on vertical intakes located offshore.
The velocity cap is a cover placed over the intake which
converts vertical flow into horizontal flow at the entrance
into the intake. The device works on the premise that fish
will avoid rapid changes in horizontal flow. These devices
have shown good performance for the protection of aquatic
organisms. The primary cost driver for velocity caps is the
installation costs.  Installation is carried out underwater
where the water intake mouth is modified to fit the velocity
cap over the intake. Costs for installing velocity caps were
estimated based on the following  assumptions:
    >   Four velocity caps can be installed per day.
    *   Cost of the installation crew is similar to the cost of
        water screen installation crews (see Appendix A).
    >•   To account for the difficulty of deep water
        installations, an additional work day is assumed for
        every increase in depth category.
    >•   Equipment cost for a velocity cap is assumed to be
        25 percent of the velocity cap installation cost.

Table 6-4 presents the estimated capital and installation
costs for installing velocity caps at various depths. The
number of velocity caps needed for various flow sizes is
estimated based on a flow velocity of 0.5 ft/sec and assumes
that the intake area to be covered by the velocity  cap is 20
square feet.
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§316(b) EEA Chapter 6 for New Facilities
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Table 6-4
Flow (gpm)
(No. of velocity caps)
Up to 18,000 (4 VC)
1 8,000 < flow < 35,000 (9 VC)
35,000 < flow < 70,000 (15 VC)
70,000 < flow < 100,000 (23 VC)
157,000(35 VC)
204,000 (46 VC)
Capital and Installation Costs for Velocity Caps ($1999)
Water Depth (feet)
8
$10,000
$15,625
$26,875
$38,125
$55,000
$71,875
20
$15,625
$21,250
$32,500
$43,750
$60,625
$77,500
30
$21,250
$26,875
$38,125
$49,375
$66,250
$83,125
50
$26,875
$32,500
$43,750
$55,000
$71,875
$88,750
65
$32,500
$38,125
$49,375
$60,625
$77,500
$94,375
      See Appendix A for cost curves and further details on cost estimate development.
«>  Branching the intake pipe to increase the number of
openings or widening the intake pipe
Facilities can reduce the intake velocity to meet the
requirements of the proposed §316(b) New Facility Rule by
branching their intake pipe using a Tee to withdraw water
from a greater number of openings or widening the pipe
opening using an enlarger. For costing purposes, EPA
assumed that the intake pipes were originally designed to
withdraw water at a 3 ft/sec velocity (a reasonable low
velocity at which silt will not settle in the pipe) and that a
Tee or an enlarger will be fitted at the pipe opening to
achieve the desired 0.5 ft/sec velocity. The cost of fittings
for branching an intake pipe to reduce intake flow velocity is
assumed to be 15 percent of pipe capital cost.6  These
estimated costs are given by the cost curves in Appendix A.

d.  Implementing Other Design and
    Construction  Technologies to  Reduce
    Damage from I&E
Facilities may also have to employ additional technologies
that reduce the extent of I&E,  depending on their CWIS
location and velocity. EPA considered adding traveling
screens with fish baskets or adding fish baskets to existing
screens, as ways to limit I&E.

«>  Installation of traveling screens with fish baskets
Vertical traveling screens contain a series of wire mesh
screen panels that are mounted end to end on a band to form
a vertical loop.  As water flows through the panels, debris
and fish that are larger than the screen openings are caught
on the screen or at the base of each panel in a basket. As the
screen rotates, each panel passes through a series of spray
    6 This cost estimate is based on best professional judgement
and was verified with costs reported in R.S. Means (1997).
wash systems which remove debris and fish from the basket.
The first system is a low pressure spray wash which is used
to release fish to a bypass/return trough. Once the fish have
been removed, a high pressure jet spray wash system is used
to remove debris.  As the screen continues to rotate, the
clean panels move down and back into the water to screen
intake flow.

Two components were analyzed in estimating total capital
costs associated with the installation of traveling screens
with fish baskets:  equipment costs and installation costs.
Equipment costs for a basic traveling screen with fish
baskets include costs for screens constructed of carbon steel
coated with epoxy paint, a spray system, a fish trough,
housings and transitions, continuous operating features, a
drive unit, frame seals, and engineering. Installation costs
include costs for site preparation and earthwork, clearing the
site, excavation, paving and surfacing, and structural
concrete work and underwater installation (personnel,
equipment, and mobilization, including their cost of a barge
equipped with a crane and the crew to operate it.

Table 6-5 presents the total capital costs associated with the
installation of traveling screens with fish baskets.  Costs are
presented for screen panels of various widths and for
selected well depths.  Well depth includes the height of the
structure above the water line and can exceed water depth by
a few to tens of feet.  Costs are calculated based on vendor
estimates and information from Heavy Construction Cost
Data 1998 (R.S. Means, 1997) and Paroby (1999).

O&M costs for traveling screens vary by type,  size, and
mode of operation of the screen. Based on discussions with
industry representatives, EPA estimated that the annual
O&M cost factor ranges between eight percent of total
capital cost for the smallest traveling screen (with and
without fish baskets) and five percent for the largest
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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
traveling screen since O&M costs do not increase
proportionateley with screen size. See Appendix A for
further information on O&M costs.
Table 6-5: Capital Costs for Traveling Screens with Fish Baskets ($1999)
Well Depth (ft)
10
25
50
75
100
Screening Basket Panel Width (ft)
2
$90,500
$129,250
$191,500
$253,750
$336,000
5
$132,000
$194,000
$287,000
$381,500
$477,000
10
$202,000
$307,000
$458,000
$589,000
$720,000
14
$285,000
$453,000
$647,000
$831,000
$1,010,000
          See Appendix A for cost curves and further detail on the development of cost curves.
«>  Adding fish baskets to existing traveling screens
The costs associated with adding fish baskets to existing
traveling screens were assumed to include equipment costs,
installation costs, and costs associated with upgrading
existing control systems from intermittent to continuous
operation. Equipment costs include the cost of a spray
system, a fish trough, housings and transitions,  a drive unit,
frame seals, and engineering.  EPA assumed that installation
costs would be 75 percent of the underwater portion of the
installation costs of a traveling screen (based on best
professional judgement). The use of a barge and crane
would generally not be needed, and site preparation costs
would be minimal.

Table 6-6 presents the total estimated capital costs for
adding fish baskets to an existing traveling screen.  Costs are
presented for screen panels of various widths and for
selected well depths. Costs are calculated based on vendor
estimates from Heavy Construction Cost Data 1998 (R.S.
Means, 1997), Paroby (1999), and best professional
judgement.
Table 6-6: Capital Costs for Adding Fish Baskets to Existing Traveling Screens ($1999)
Well Depth (ft)
10
25
50
75
100
Screening Basket Panel Width (ft)
2
$46,200
$68,250
$100,500
$132,750
$165,000
5
$55,575
$79,125
$121,875
$161,625
$201,375
10
$71,550
$107,100
$161,850
$216,600
$271,350
14
$100,725
$154,275
$239,025
$323,775
$408,525
          See Appendix A for cost curves and further detail on the development of cost curves.

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§316(b) EEA Chapter 6 for New Facilities
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The additional O&M costs incurred as a result of adding fish
baskets to existing traveling screens were estimated by
taking the difference between estimated O&M costs for
traveling screens with fish handling features and the
estimated O&M costs for traveling screens without fish
handling features.

6.1.2 Administrative Costs
Compliance with the proposed §316(b) New Facility Rule
requires facilities to carry out certain administrative
functions. These are either one-time requirements
(compilation of information for the initial NPDES permit) or
recurring requirements (compilation of information for
NPDES permit renewal, and monitoring and record
keeping).  This section describes each of these
administrative requirements and their estimated costs.

«>  Initial NPDES permit application
The proposed §316(b) New Facility Rule requires all new
facilities subject to this regulation to submit information
regarding the location, construction, design, and capacity of
their proposed CWIS as  part of their initial NPDES permit
application.  Activities and costs associated with the initial
permit application include:

    >   start-up activities: reading and understanding  the
        rule; mobilizing and planning; and training staff;

    >   general permit application activities: developing
        drawings that show  the physical characteristics of
        the source water; documenting the littoral zone;
        developing a description of the CWIS's
        configuration; developing a facility water balance
        diagram; developing a narrative of operational
        characteristics;  submitting materials for review by
        the Director; and keeping records;
source water baseline characterization activities:
developing a sampling plan; biweekly sampling;
profiling the source water biota; identifying critical
species; submitting the study for review by the
Director; record keeping; and developing a final
study based on review by the Director;

source water baseline monitoring capital and
O&M costs: laboratory analysis of samples;

CWIS flow standard activities: developing
information characterizing flow; performing
engineering calculations; submitting data and
analysis for review; and keeping records;

CWIS velocity standard activities: developing a
narrative description; performing engineering
calculations; submitting data and analysis for
review; revising analysis based on state review; and
keeping records;

CWIS 100percent recirculation standard
activities: developing a narrative description;
performing engineering calculations; documenting
blowdown minimization; submitting data and
analysis for review; and keeping records;

additional design and construction  technology
implementation plan: developing a narrative
description; performing engineering calculations;
submitting data and analysis for review; and
keeping records.
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Table 6-7 lists the estimated costs of each of the initial
NPDES permit application activities described above.  The
specific activities that a facility will have to undertake
depend on the facility's source water body type and the
location of its CWIS relative to the water body's littoral
zone. The typical cost a facility that is required to
implement all the activities would incur for its initial
NPDES permit application is estimated to be $53,382.
Table 6-7: Cost of Initial NPDES Permit
Activity
Start-up activities^
General permit application activities1
Source water baseline characterization activities^
Source water baseline monitoring capital and O&M costs1
CWIS flow standard activities
CWIS velocity standard activities
CWIS 100 percent recirculation standard activities
Additional design and construction technology implementation plan
Typical Initial NPDES Permit Application Cost
Application Activities ($1999)
Estimated Cost
$1,380
$7,012
$12,405
$20,000
$2,595
$4,690
$2,878
$2,422
$53,382
 T    The costs for these activities are incurred in the year prior to the permit application.

 Source:  U.S. EPA, Information Collection Request for Cooling Water Intake Structures, New Facility Proposed Rule, July 2000.
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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
«>  NPDESpermit renewal
Each new facility operating a CWIS will have to renew its
NPDES permit every 5 years.  Permit renewal requires
collecting and submitting the same type of information as
required for the initial permit application. EPA expects that
facilities can use some of the information from the initial
permit.  Building upon existing information is expected to
require less effort than developing the data the first time.
Table 6-8 lists the estimated costs of each of the NPDES
repermit application activities.  The typical cost a facility
that is required to implement all the renewal activities would
incur for its NPDES permit renewal is estimated to be
$44,230.
Table 6-8: Cost of NPDES Repermit Application
Activity
Start-up activities^
General permit application activities1
Source water baseline characterization activities^
Source water baseline monitoring capital and O&M costs1
CWIS flow standard activities
CWIS velocity standard activities
CWIS 100 percent recirculation standard activities
Additional design and construction technology implementation plan
Typical Initial NPDES Permit Application Cost
Activities ($1999)
Estimated Cost
$471
$3,287
$11,319
$20,000
$2,595
$3,425
$2,151
$982
$44,230
 T   The costs for these activities are incurred in the year prior to the application for a permit renewal.

 Source:  U.S. EPA, Information Collection Request for Cooling Water Intake Structures, New Facility Proposed Rule, July 2000.
                                                                                                             6-11

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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
«>  Monitoring, record keeping, and reporting
All new facilities subject to the proposed §316(b) New
Facility Rule are required to monitor to show compliance
with the standards set forth in the rule. Facilities must keep
records of their monitoring activities and report the results in
a yearly status report. Monitoring, record keeping, and
reporting activities and costs include:

    >   biological monitoring (impingement): collecting
        monthly samples; identifying and enumerating
        organisms; performing statistical analyses; and
        record keeping;

    >   biological monitoring (entrainment): collecting
        biweekly samples; identifying and enumerating
        organisms; performing statistical analyses; and
        record keeping;

    *•   velocity monitoring: monitoring average through-
        technology velocity; analyzing data; and record
        keeping;
    >   weekly visual inspections: visually inspecting all
        installed technologies; and record keeping;

    >   yearly status report activities: reporting on
        inspection and maintenance; detailing velocity
        monitoring results; detailing biological monitoring
        results; compiling and submitting the report; and
        record keeping;

Table 6-9 lists the estimated costs of each of the monitoring,
record keeping, and reporting activities described above.
The specific activities that a facility will have to undertake
depend on the facility's source water body type and the
location of its CWIS relative to the water body's littoral
zone. The typical cost a facility will incur for its
monitoring, record keeping, and reporting activities is
estimated to be $79,245.
Table 6-9: Cost of Annual Monitoring,
Activity
Biological monitoring (impingement)
Biological monitoring (entrainment)
Velocity monitoring
Weekly visual inspections
Yearly status report activities
Typical Monitoring, Record Keeping, and Reporting Cost
Record Keeping, and Reporting Activities ($1999)
Estimated Cost
$17,986
$38,675
$4,269
$6,931
$11,384
$79,245
 Source:  U.S. EPA, Information Collection Request for Cooling Water Intake Structures, New Facility Proposed Rule, July 2000.
6.2   FACILITY - LEVEL  COSTS

The cost estimates presented in this section are based on the
unit costs presented in the previous section and assume that
a facility will always choose the least-cost response among
the feasible compliance responses.  Some compliance
responses may not be feasible for certain facilities because
of facility-specific characteristics or conditions. EPA
developed unit costs and evaluated facility-level costs
associated with Compliance Response 1 (reconfiguring
cooling water systems from once-through to recirculating or
switching to a water other than those of the U.S.),
Compliance Response 3 (changing the distance from the
littoral zone and implementing requirements based on the
new distance from the littoral zone), and Compliance
Response 4 (implementing requirements based on water
body type and distance from littoral zone).  The feasibility of
some methods of changing the cooling system design so that
the facility would no longer be subject to the proposed
§316(b) New Facility Rule (part of Compliance Response 1)
or changing the source water body type (Compliance
Response 2) could not be evaluated and costed with the
information publicly available for new facilities. The
estimated facility-level and national-level costs may be
overstated, if these excluded responses are less expensive
than the assumed response for some facilities.
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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
6.2.1 New Electric Generators
EPA used the unit cost estimates discussed in Section 6.1 to
estimate potential compliance costs of the 40 projected in
scope electric generators.7 Facility-specific information on
proposed CWIS characteristics was available for the seven
facilities identified from the NEWGen database. For these
facilities, EPA determined the likely requirements to comply
with the proposed §316(b) New Facility Rule.  Six of the
remaining 33 facilities are assumed to have characteristics
similar to the seven analyzed facilities. These are assumed
to be combined-cycle facilities projected to begin operation
between 2004 and 2009.  The Agency calculated the average
cost for the seven facilities and applied this average to the
remaining six facilities.  Costs for the additional 27 facilities
projected to begin operation between 2011 and 2020 were
calculated based on the characteristics of five model plants.

The following sections present brief profiles of the
characteristics of the seven NEWGen electric generating
facilities, their compliance requirements and costs, and a
summary of the assumptions used to cost the 27 facilities
projected to begin operation between 2011 and 2020.

*  GenA
The GenA facility proposes to withdraw water from a
freshwater stream or river for its planned 750 MW plant.
The facility plans to use an infiltration gallery or a radial
well (Ranney collector) which would be located at the
bottom of the river in a pool between two dams and is
assumed to be  adequately below/outside the littoral zone to
be considered to be in the category of at least 50 meters
outside the littoral zone. Based on the information provided
by the state siting board, EPA estimates that the facility will
not need to make  any alterations to meet the criteria of the
proposed §316(b) New Facility Rule. The facility's
estimated water withdrawal needs of 1.9 to 4.4 MOD
(average annual flow expected to be 2.6 MOD) for its
cooling tower make-up water are less than 25 percent of the
source water 7Q10 and less than 5 percent of the source
water mean annual flow.  The facility estimates that its
intake velocity will be less than 0.1 fps under maximum
sustained withdrawal conditions.

*  GenB
The GenB facility proposes to withdraw cooling water from
either a freshwater stream or river or from shallow ground
wells for its planned 1,100 MW plant.  The facility plans to
use a multiple cell evaporative cooling tower, so the cooling
water will serve as make-up water for the tower.  EPA
estimates that the  facility meets all the technological and
locational criteria for the proposed §316(b) New Facility
Rule based on the information in its NPDES permit
    7 See Chapter 5: Baseline Projections of New Facilities for
detailed information on EPA's methodology for determining the
number of new facilities.
application on (1) the length of its proposed intake pipeline
(about 300 feet from the shoreline which is assumed to be
more than 50 meters outside the littoral zone); (2) the
estimated volume of cooling water needed (19.4 MOD,
which is less than 25 percent of the 7Q10 flow; this flow
volume is also less than 5 percent of the 7Q10 flow  and
therefore is assumed to be less than 5 percent of the mean
annual flow since waterbody 7Q10 flow is lower than
average flow); (3) that the facility will use a recirculating
system; and (4) the expected intake velocity of less than 0.5
fps (a wedge wire screen will be used).

*  GenC
For the GenC facility, EPA only had access to limited
facility and intake information from its raw water supply
contract. The facility plans to withdraw cooling water from
a lake or reservoir for its planned 510 MW plant.  Based on
the volume of available water the agreement specifies, EPA
used an estimated intake flow of 10 MOD (6944 gpm).
From the site map attached to  the agreement, EPA surmised
that the facility uses either two canals or a canal and an
intake pipe to draw water from the lake. Based on the
diversion point and site maps, EPA estimated that the
facility would need to increase the depth of both intake
canals or extend its intake pipe and increase the depth of its
one canal to locate its intake outside the littoral zone.
Dredging and widening the canals is estimated to cost
$236,000. If the total design intake flow alters the natural
stratification of the lake, the facility may incur additional
costs to further alter the intake. This seems unlikely given
the size of the lake.

*  GenD
The GenD facility plans to withdraw cooling water from an
estuary or tidal river for use in the cooling towers of its
planned 525 MW plant. Based on its application to  the state
site evaluation committee, the facility's estimated design
intake flow of 6.5 MGD will be less than 1 percent of the
tidal prism volume.  The facility will use cooling towers for
a recirculating cooling system. The intake will incorporate a
modified, Ristroph type traveling screen with an intake
velocity of less than or equal to 0.5 fps. The relatively low
intake flow and velocity, and the facility's plans to use a
traveling screen equipped with fish baskets, a spray  wash
system, and a fish return channel to return impinged marine
life back to the river is likely to meet the requirement for
implementing technologies that maximize survival of
impinged fish and minimize entrainment of eggs and larvae.
EPA believes that the facility meets all the technological and
locational criteria for the proposed §316(b) New Facility
Rule.

*  GenE
GenE proposes to withdraw cooling water from a freshwater
stream or river for use in the wet/dry cooling tower of its
planned 475 MW plant. EPA assumed that the intake pipe
would be within the littoral zone, in the absence of
                                                                                                             6-13

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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
information on intake location.  Since the source water is a
sizable river and the facility will use a recirculating system
with a relatively small flow of 6.9 to  10.4 MOD, EPA
assumed that the facility would meet  the requirements for
design intake flow and recirculation.  The facility plans to
use Johnson screens or the equivalent, which should meet
the criteria for a design intake flow of no more than 0.5 fps.
Using Johnson screens and a relatively small intake flow and
velocity, the facility is likely to meet  the requirement for
implementing technologies that maximize survival of
impinged fish and minimize entrainment of eggs and larvae.
Therefore, the facility is expected to meet all the
technological and vocational criteria  for the proposed
§316(b) New Facility Rule.

*  GenF
Only limited information is available for the GenF facility,
including a drawing of the planned collector well (radial
well) cooling water intake system.  The facility plans to
withdraw up to 3.5 MOD of cooling water from a freshwater
stream or river through collector laterals that appear to lie 20
feet below the river bottom.  EPA assumed that the lateral
wells are adequately below/outside the littoral zone to be
considered to be in the category of at least 50 meters outside
the littoral zone. Based on the relatively small flow, which
the facility information indicates is less than 0.5 percent of
the lowest flow recorded in the river, the facility's total
design intake flow meets the flow requirements. A radial
well is highly likely to withdraw water at a rate of less than
0.5 fps, so the Agency assumed that the facility would meet
the intake velocity criteria.

*  GenG
The GenG facility plans to withdraw  cooling water from a
system of reservoirs for its planned 1,016 MW plant. The
intake pipes appear to be nearly 75 meters from shore and
about 15 feet below the surface of the water at normal water
level. Based on this estimated location, EPA assumed that
the CWIS would be located less than 50 meters outside the
littoral zone. The facility is likely planning to use a
recirculating system since the design intake flow of 8.8
MOD is relatively small. The facility plans to use Johnson
screens on its intakes, which provide an intake velocity of no
more than 0.5 fps.  Using Johnson screens and a relatively
small intake flow and velocity, the facility is likely to meet
the requirement for not altering the natural stratification of
the source water. The facility is projected to extend its
intake pipes in order to move the location to 50 meters
outside the littoral zone and therefore no longer be subject to
the technology criteria (Compliance Response 3). Extending
its intake piping is estimated to cost $162,000.  The facility
may also incur costs related to the criteria for design intake
flow not to alter the natural stratification of the source water.

*  2011 to 2020 facilities
EPA used five model plants to develop the costs for the 27
facilities projected to begin operation between 2011 and
2020.  The first three model plants are coal-fired facilities
with 800 MW capacity and the following characteristics:

    *   once though system on an estuary (Coall, 9, and
        13);
    *•   recirculating system on an estuary (Coal 2-4, 6-8,
        10-12, and 14-16); and
    *   once through system on a nontidal river (Coal5).

The other two model facilities  are 723 MW combined-cycle
facilities with the following characteristics:

    *   once through system on an estuary (CC1, 5, and 9);
        and
    *•   recirculating system on a nontidal river (CC2-4, 6-
        8, and 10-11).

EPA assumed that these facilities would continue the trend
of offshore submerged intakes with screens systems.

Table 6-10 summarizes the expected compliance response
and the associated costs for each facility.  Appendix B
provides more detailed information on each facility,
including its water body type, the expected compliance
response of each facility, and the capital costs, if any,
associated with the expected action.
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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
Table 6-10: Estimated Compliance Costs for Specific Electric Generator Facilities ($1999)
Facility
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Genl-6
Coall,9, 13
Coal2-4, 6-8,
10-12, 14-16
Coal5
CC1,5, 9
CC2-4, 6-8,
10-11
Category (Source Water)
Freshwater stream or river
Freshwater stream or river
Lake or reservoir
Estuary or tidal river
Freshwater stream or river
Freshwater stream or river
Lake or reservoir
n/a
Estuary or tidal river
Estuary or tidal river
Freshwater stream or river
Estuary or tidal river
Freshwater stream or river
Projected Compliance Response
None
None
Deepen two canals
None
None
None
Extend piping
n/a
Install a cooling tower; widen the intake; add
traveling screens with fish handling equipment
Add fish handling equipment
Widen the intake; extend the pipe
Install a cooling tower; add fish handling
equipment
Extend the pipe
Estimated Cost
$0
$0
one-time: $236,000
$0
$0
$0
one-time: $162,000
one-time: $56,856
one-time: $15,227,000
annual: $3,378,000
one-time: $33,000
annual: $5,700
one-time: $5,364,200
one-time: $2,940,000
annual: $697,400
one-time: $162,000
 T   Not including administrative costs.

 Source: Summary information from Appendix B.
Each facility subject to the proposed §316(b) New Facility
Rule will incur administrative costs in addition to the
estimated capital costs.  These costs include one-time costs
(initial permit application) and recurring costs (permit
depend on the facility's water body type and the location of
its CWIS relative to the water body's littoral zone.  Table 6-
11 presents the costs for the administrative activities and the
estimated capital, and operation and maintenance costs for
renewal, and monitoring, record keeping, and reporting), and    the 40 new electric generators.
                                                                                                               6-15

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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
Table 6-11: Cost Estimates for Electric Generating Facilities
(unit costs, $1999)
Facility Name
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Genl-6
Coall,9, 13
Coal2-4, 6-8,
10-12, 14-16
Coal5
CC1,5, 9
CC2-4, 6-8,
10-11
No. of
Facilities
1
1
1
1
1
1
1
6
3
12
1
3
8
One-Time Costs
Capital Initial Permit
Technology Application
$0 $48,082
$0 $50,960
$236,000 $43,392
$0 $53,382
$0 $53,382
$0 $48,082
$162,000 $53,382
$56,857 $50,095
$15,227,000 $53,382
$33,000 $53,382
$5,364,200 $48,082
$2,940,000 $53,382
$162,000 $53,382
Recurring Costs
Permit Monitoring, Record
Renewal Keeping, & Reporting
$0 $41,098 $72,314
$0 $43,250 $72,314
$0 $37,673 $68,045
$0 $44,232 $79,245
$0 $44,232 $79,245
$0 $41,098 $72,314
$0 $44,232 $79,245
$0 $42,259 $74,675
$3,378,000 $44,232 $79,245
$5,700 $44,232 $79,245
$0 $41,098 $72,314
$697,400 $44,232 $79,245
$0 $44,232 $79,245
 Source: Summary information from Appendix B and the Information Collection Request for Cooling Water Intake Structures, New
         Facility Proposed Rule, July 2000.
6.2.2 New Manufacturing Facilities
EPA used the following process to develop cost estimates
for new manufacturing facilities affected by the proposed
§316(b) New Facility Rule:

    *   Project the likely characteristics of new in scope
        manufacturing facilities.

    >•   Assess whether each facility is likely to be in
        compliance with the requirements of the proposed
        §316(b) New Facility Rule.  If a facility is
        projected to be out of compliance, determine likely
        compliance responses.

    *   Estimate costs for the likely compliance responses
        at each facility.
«>  Projected characteristics of new facilities
As described in Chapter 5, EPA projected the number of
new manufacturing facilities for each SIC code in the
manufacturing categories that typically use the greatest
amount of cooling water and therefore are the most likely
facilities to be subject to the proposed §316(b) New Facility
Rule.  To determine if these facilities must take compliance
actions to meet the proposed requirements, EPA needed to
estimate the likely characteristics of these new facilities.
Important characteristics in assessing facility compliance
with the rule's requirements and determining estimated
compliance costs include: source water body type,  intake
flow volume, use of once-through or recirculating cooling
systems, intake location (e.g., shoreline, offshore
submerged), and intake control technologies already in
place.  Since facilities with the same SIC code generally
have similar operations and generate similar products, EPA
assumed that the characteristics of new facilities in a given
SIC code will be similar to the  characteristics of existing
facilities in that same SIC code. EPA also considered
current trends in facilities that have begun operation in more
6-16

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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
recent years.  For example, a review of available data for
facilities starting up in the last ten years indicates that newer
facilities are much more likely to have at least partially
recirculating cooling systems than older facilities.
Therefore, EPA projected that a higher percentage of the
new facilities would be recirculating than was indicated by
existing facility data.  EPA used available data from existing
manufacturing facilities that responded to the §316(b)
Screener Questionnaire.

EPA evaluated the characteristics listed above for all the
existing facilities in each SIC code, and used those
characteristics to project the characteristics for the one or
more projected new facilities. If only one new facility was
projected for a given SIC code, EPA generally used the
following conventions:

    >   source water type: most common water body
        among the existing facilities;

    >   flow: median of the flows for existing facilities;

    *•   intake location: most common intake location
        among existing facilities;

    >   control technology type: most common
        technologies in use at existing facilities; and

    *•   cooling system type: most common type, with a
        bias toward recirculating or combined recirculating
        and once-through when the type of system among
        existing facilities was very mixed.

When more than one new facility was projected for a given
SIC code, EPA generally split the existing facilities by
waterbody type or by recirculating versus once-through and
determined one new projected facility's characteristics based
on one set of existing facilities and another new projected
facility's characteristics based on the other set of existing
facilities.  Based on trends, EPA used a bias toward certain
characteristics such as recirculating cooling systems,
offshore intakes, and passive screens.  Since  the trend for
new facilities is toward the use of cooling towers, flows
used may be lower than those for the existing facilities in
some cases.

«>  Projected baseline compliance
Based on the new manufacturing facility characteristics,
determined as described above, EPA assessed whether a
facility is likely to comply with the requirements of the
proposed §316(b) New Facility Rule for its particular type
of waterbody and intake location. Assumptions made in
this assessment include the following:

    *•   A facility with a shoreline, canal, or bay/cove
        intake was assumed to be in the littoral zone.  A
        facility with an offshore intake was  assumed to be
        less than 50 meters outside the littoral zone.8

    *   A facility with a passive screen was assumed to
        meet the 0.5 fps velocity criteria.

    *   A facility with a recirculating system is assumed to
        meet the intake flow criteria since most existing
        facilities (e.g., more than 90 percent of utilities)
        with recirculating systems would meet the intake
        flow criteria. Most once-through facilities were
        also assumed to meet the intake flow criteria since
        manufacturing facilities typically have much lower
        intake flows than utilities.  If a once-through
        facility was projected to not meet the intake flow
        criteria, it was projected to switch to a recirculating
        system and then meet the criteria.

    *   All facilities were assumed to have one intake,
        which seems reasonable for manufacturers since
        most utilities have one or two intakes and typically
        have much higher flows.

«>  Estimated costs
The unit costs discussed in Section 6.1 were used to develop
cost estimates for each of the new projected manufacturing
facilities that needs to take compliance actions to meet the
requirements of the proposed §316(b) New Facility Rule.
Unit costs were based on flow.  Costing assumptions related
to flow include the following:

    *   If a facility has a once-through system only and is
        projected to switch to a 100 percent recirculating
        system as a compliance response, the flow used for
        costing the recirculating cooling tower is  15 percent
        of the original flow since the flow will be reduced
        in the new recirculating system.

    *•   If a facility is planned as a combined once-through
        and recirculating system, the facility is assumed to
        have 10 percent of the  initial flow attributed to
        recirculating and 90 percent to the once-through
        part of the system.

    *   If a facility is planned as a combined once-through
        and recirculating system and is projected to switch
        to a 100 percent recirculating system as part of its
        compliance response, the estimated cost of a
        cooling tower is based on the 90 percent of the
        original flow that was attributed to the once-
        through portion of the system. This 90 percent
        portion of the original flow is reduced to  15 percent
        of its original value and then added to the other 10
    8 The majority of the intakes of units in the EIA-767 database
that are likely to use a water of the U.S. are less than 75 meters
from shore, with a median distance of about 15 meters.
                                                                                                              6-17

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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
        percent of the original flow to calculate the
        estimated flow once the system becomes 100
        percent recirculating.  This new flow is then used to
        calculate the estimated cost of any other technology
        compliance actions.

Estimated costs were calculated for all projected compliance
responses, including adding technologies (for example,
cooling towers to switch to a recirculating system), and
administrative costs such as monitoring and permitting.
Other technology costs (e.g., passive screens, cooling
towers, widening intakes) include a capital cost for the
equipment itself and associated installation costs.  Some of
these technologies also include an annual O&M cost, since
these costs were significant for some technologies (e.g.,
cooling towers and traveling screens with fish baskets).
O&M costs are negligible for some other technologies.
Administrative costs were estimated as either annual costs or
periodic costs based on the frequency of the activity. For
example, monitoring and reporting occurs annually while
applying for a permit occurs once every five years. For
comparison purposes, all costs are annualized over a 30 year
period using a seven percent discount rate.

Table 6-12 shows the estimated compliance costs for the
projected new manufacturing facilities.  The table only
shows the 29 facilities projected for the forecasting period
2001 to 2010. As explained in Chapter 5: Baseline
Projections of New Facilities, the 29 facilities projected to
begin operation between 2011 and 2020 are assumed to be
identical to the first 29 facilities.  Therefore, each
manufacturing facility presented in Table  6-12 represents
two future facilities. Appendix B provides more detailed
information on the estimated cost for each facility, including
its water body type, whether the facility's  baseline design
meets compliance requirements, the expected compliance
response of each facility and the capital costs, if any,
associated with the expected action.
Table 6-12: Cost Estimates for Manufacturing Facilities
(unit costs, $1999)
Facility ID
new 2812-1
new2813-l
new2819-l
new2819-2
new2821-l
new2821-2
new2821-3
new2824-l
new2833-l
new2834-l
new2841-l
new2865-l
new2869-l
new2869-2
new2869-3
new2869-4
new2869-5
One-Time Costs
Capital
Technology
$24,000
$1,752,000
$320,000
$1,512,000
$170,000
$300,000
$47,000
$0
$0
$410,000
$375,000
$0
$605,000
$605,000
$21,000
$21,000
$21,000
Initial Permit
Application
$50,960
$53,382
$7,194
$53,382
$48,082
$43,392
$50,504
$53,382
$48,082
$7,194
$7,194
$48,082
$7,194
$7,194
$50,960
$50,960
$50,960
Recurring Costs
O&M
$0
$419,300
$89,000
$357,000
*cn
3>\J
$0
$0
$0
*cn
3>\J
$111,000
$102,000
$0
$157,000
$157,000
$0
$0
$0
Permit Renewal
$43,249
$44,231
$4,654
$44,231
$41,098
$37,673
$42,080
$44,231
$41,098
$4,654
$4,654
$41,098
$4,654
$4,654
$43,249
$43,249
$43,249
Monitoring, Record
Keeping, & Reporting
$72,314
$79,245
$0
$79,245
$72,314
$72,314
$79,245
$79,245
$72,314
$0
$0
$72,314
$0
$0
$72,314
$72,314
$72,314
6-18

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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
Table 6-12: Cost Estimates for Manufacturing Facilities
(unit costs, $1999)
Facility ID
new2869-6
new2869-7
new2869-8
new2869-9
new2873-l
new2874-l
new2899-l
new3312-l
new3312-2
new3312-3
new3316-l
new3353-l
One-Time Costs
Capital
Technology
$400,000
$481,000
$481,000
$0
$91,000
$44,000
$299,000
$1,450,000
$21,000
$700,000
$0
$3,000
Initial Permit
Application
$48,082
$48,082
$48,082
$53,382
$53,382
$50,960
$7,194
$50,504
$50,960
$43,392
$53,382
$50,960
Recurring Costs
O&M
$0
$483,700
$483,700
$0
$5,200
$0
$84,000
$342,000
$0
$0
$0
$0
Permit Renewal
$41,098
$41,098
$41,098
$44,231
$44,231
$43,249
$4,654
$42,080
$43,249
$37,673
$44,231
$43,249
Monitoring, Record
Keeping, & Reporting
$72,314
$72,314
$72,314
$79,245
$79,245
$72,314
$0
$79,245
$72,314
$72,314
$79,245
$72,314
 Source:  Summary information from Appendix B and the Information Collection Request for Cooling Water Intake
          Structures, New Facility Proposed Rule, July 2000.
6.3   TOTAL FACILITY COMPLIANCE
        COSTS

EPA estimated the national compliance costs for the
proposed §316(b) New Facility Rule based on the facility-
level costs discussed in Section 6.2.  The costs developed in
this section represent the total compliance costs for new
facilities expected to begin operation between 2001 and
2020.9 EPA estimated total compliance costs over the first
30 years of the proposed regulation (i.e., 2001 to 2030).
Accordingly, the Agency considered all compliance costs
incurred by each of the 98  facilities over this 30-year time
period.10
    9 The national cost estimate presented in this chapter only
accounts for private costs directly incurred by facilities.  It does not
represent total social cost of the proposed §316(b) New Facility
Rule.

    10 This approach does not account for all compliance costs
incurred by the 98 projected facilities because the analysis
disregards costs incurred after 2030.  For example, for a facility
estimated to begin operation in 2015, the analysis would only
The analysis assumes the following distribution of new
facilities over the 20-year forecasting period:

    >•   The seven NEWGen facilities will begin operation
        in the "projected on-line year" reported in the RDI
        database.  For these facilities, the dates  of initial
        commercial operation range between 2001 and
        2003.

    *   The six extrapolated generators will begin
        operation between 2004 and 2009.

    *   The on-line dates of the 33 generators expected to
        begin operation between 2011 and 2020 are based
        on the relative magnitude of forecasted  capacity
        additions over that time period.

    *   The years of initial operation for the 58 projected
        manufacturing facilities are assumed to  be evenly
        distributed over the 20-year forecasting period.
include the first 16 years of costs in the national aggregate.
                                                                                                             6-19

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§316(b) EEA Chapter 6 for New Facilities
               Facility Compliance Costs
EPA calculated the present value of each cost category using
a seven percent discount rate.  The following formula was
used to calculate the present value of each year's cost:11
          Present Value   =
                            X
                                    Cost
                                           .
where:
        Costxt  =   Costs in category x and year t
        x       =   Cost category
        r       =   Discount rate (7% in this analysis)
        t       =   Year in which cost is incurred (2001
                    to 2030)

Total present value for each cost component was derived by
summing the present value of each year's cost. Finally, EPA
calculated annualized costs using the following formula:
                                                          Annualizea

                                                          where:

                                                                  x   =
                                                                  PV =
                      r x  (1   +  r)n
                      (1  +  r)n  -  1
Cost category
Present value of compliance costs in
category x
Discount rate (7% in this analysis)
Amortization period (30 years)
                                                          Table 6-13 presents the estimated national aggregate of
                                                          facility compliance costs of the proposed §316(b) New
                                                          Facility Rule by cost category. The table shows that the
                                                          present value of total facility compliance costs is estimated
                                                          to be $150.5 million. The 40 electric generators account for
                                                          $79.7 million of this total, and the 58 manufacturing
                                                          facilities for $70.7 million.  Total annualized cost for the 98
                                                          facilities is estimated to be $12.1 million.  Of this, $6.4
                                                          million will be incurred by electric generators and $5.7
                                                          million by manufacturing facilities.
    11 Calculation of the present value assumes that the cost is
incurred at the end of the year.
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§316(b) EEA Chapter 6 for New Facilities
                               Facility Compliance Costs
Table 6-13: Total Facility Costs of Compliance with the Proposed §316(b) New Facility Rule
(in millions $1999)
Industry Category
(Number of
Facilities Affected)
One-Time Costs
Capital
Technology
Initial Permit
Application
O&M
Recurring Costs
Permit Monitoring, Record
Renewal Keeping & Reporting
Total
Total Compliance Costs (present value)
Electric Generators
(40)
Manufacturing
Facilities (58)
Total (98)
$22.45
$12.22
$34.67
$1.05
$1.38
$2.43
$39.33
$34.26
$73.60
Annual ized Compliance
Electric Generators
(40)
Manufacturing
Facilities (58)
Total (98)
$1.81
$0.98
$2.79
$0.08
$0.11
$0.20
$3.17
$2.76
$5.93
$1.53 $15.38
$2.14 $20.74
$3.67 $36.12
Costs
$0.12 $1.24
$0.17 $1.67
$0.30 $2.91
$79.74
$70.74
$150.49

$6.43
$5.70
$12.12
 Source: Summary information from Appendix B and the Information Collection Request for Cooling Water Intake
         Structures, New Facility Proposed Rule, July 2000.
6.4   CASE STUDY FACILITY COSTS

Estimating compliance costs for the §316(b) New Facility
Rule requires projecting the types of facilities that will be
built in the future. EPA's projections do not include some
facility types that could incur higher costs than estimated
here or more significant impacts, if these types of plants
were constructed. EPA estimated compliance costs for eight
additional case studies.  These are four high flow "worst
case" electric generators and four manufacturing facilities in
industries not covered in the previous sections. The costs
for these case study facilities are not included in the
estimated national costs of the rule, because EPA has no
information to indicate that these types of facility are being
planned.

EPA determined the worst case scenario for new electric
generators would be a large nuclear or coal-fired power
plant located on an estuary. Therefore, the Agency
estimated costs for hypothetical large nuclear and coal-fired
electricity generating plants. These plants' characteristics
were defined as follows:

    >   source water type: estuary, no specific location
        (state or region) is assumed;
    >   flow: maximum flow for a recirculating system and
        the average flow for the highest third of the once-
        through systems based on the EIA 767 database for
        both coal-fired and nuclear plants;

    >   intake location: shoreline intake;

    >   control technology type: minimal control
        technologies were assumed (i.e., fixed screen);

    >   cooling system type: recirculating and once-
        through systems based on EIA 767 database.

Based on the power plant characteristics, determined as
described above, EPA assessed the modifications these
plants would have to make to comply with this rule's
requirements. Assumptions made in this assessment include
the following:

    *   Plants with a shoreline intake were assumed to be
        in the littoral zone.

    >•   Plants with these high flows would not meet the
        velocity requirement.
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§316(b) EEA Chapter 6 for New Facilities
                               Facility Compliance Costs
    >•   Each plant was assumed to have one intake, which
        seems reasonable since most power plants have one
        or two intakes.

Based on these initial basic assumptions, EPA assumed that,
in the baseline, plants with recirculating systems would meet
only the 100 percent recirculating requirement for estuaries
in the proposed rule and plants with once-through systems
would not meet any of the requirements.  Therefore, all the
new plants would need to make modifications to their
original design in order to comply.

EPA used the same assumptions for the new manufacturers
in these analyses as it did for the analyses of new
manufacturers performed in Section 6.2.

The unit costs discussed in Section 6.1  were used to develop
cost estimates for these hypothetical plants.  Unit costs for
technologies were based on flow, so the estimated flow for a
plant was important in calculating the estimated cost for a
given technology.  Two of the plants were assumed to be
once-through only  and are projected to switch to a 100
percent recirculating system as a compliance action. The
flow used for costing the recirculating cooling tower is  10
percent of the original flow since the flow will be reduced in
the  new recirculating system.

For the new manufacturing facilities flows were estimated
using the following assumptions:

    *   If a facility is once-through only and is projected to
        switch to a 100 percent recirculating system as a
        compliance response, the flow used for costing the
        recirculating cooling tower is  15 percent of the
        original flow since the flow will be reduced in the
        new recirculating system.

    *   If a facility is planned as a combined once-through
        and recirculating system, the facility is assumed to
        have 10 percent of the initial flow attributed to
        recirculating and 90 percent to the once-through
        part of the system.

    >•   If a facility is planned as a combined once-through
        and recirculating system and is projected to switch
        to a 100 percent recirculating system as part of its
        compliance response, the estimated cost of a
        cooling tower is based on the 90 percent of the
        original flow that was attributed to the once-
        through portion of the system.  This 90 percent
        portion of the original flow is reduced to 15 percent
        of its original value and then added to the other 10
        percent of the original flow to calculate the
        estimated flow once the system becomes 100
        percent recirculating. This new flow is then used to
        calculate the estimated cost of any other technology
        compliance actions.

Estimated costs were calculated for all projected compliance
actions, including adding technologies and for
administrative costs.  Technology costs (e.g., traveling
screens with fish baskets, cooling towers, or widening
intakes) always include a capital cost portion for the
equipment itself and associated installation. Some of these
technologies also include an annual O&M cost since these
costs were significant for some technologies (e.g., cooling
towers or traveling screens with fish baskets).
Administrative costs were estimated as either annual costs
(monitoring) or periodic costs (permit renewal) based on the
frequency of the activity.

Table 6-14 presents the estimated facility compliance costs
for the eight hypothetical case study facilities:

    *   two coal-fired electricity generating plants, one
        with the maximum flow for a recirculating system
        ("CoalMax") and the other with the average flow
        for the highest third of the once-through systems
        ("CoalAvg") based on the 1995 Form EIA-767
        database;

    *   two nuclear electricity generating plants, one with
        the maximum flow for a recirculating system
        ("NucMax") and the other with the average flow
        for the highest third of the once-through systems
        ("NucAvg") based on the 1995 Form EIA-767
        database; and

    *•   four manufacturing facilities, one each in four of
        the two-digit SICs for which existing in scope
        facilities were reported in the screener database
        ("New SIC xx HF").  These are SIC codes 20
        (Food and Kindred Products), 26 (Pulp and Paper),
        29 (Petroleum Refining),  and 32 (Stone, Clay,
        Glass and Concrete).
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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
Table 6-14: Case Study Facility Compliance Costs
(unit costs, $1999)
Facility
CoalMax
CoalAvg
NucMax
NucAvg
New SIC 20
New SIC 26
New SIC 29
New SIC 32
One-Time Costs
Capital
Technology
$13,291,000
$23,471,000
$27,812,000
$57,450,000
$1,076,000
$124,000
$217,000
$4,970,000
Initial Permit
Application
$53,382
$53,382
$53,382
$53,382
$48,082
$48,082
$50,960
$50,960
Recurring Costs
O&M
$400,000
$5,275,000
$900,000
$15,690,000
$220,000
$0
$0
$1,100,000
Permit Renewal
$44,232
$44,232
$44,232
$44,232
$41,098
$41,098
$43,250
$43,250
Monitoring, Record
Keeping & Reporting
$79,245
$79,245
$79,245
$79,245
$72,314
$72,314
$72,314
$72,314
 Source: Summary information from Appendix B and the Information Collection Request for Cooling Water Intake
 Structures, New Facility Proposed Rule, July 2000.
Capital costs for the case study facilities range from $13.3
million to $57.5 million for electric generating plants, and
from $124,000 to $5.0 million for manufacturing plants.
Except for CoalMax, the costs for electricity generators are
substantially higher than the corresponding costs estimated
for the 33 projected electric generators.  The estimated costs
for the additional manufacturing facilities, on the other hand,
fall within the range of capital costs estimated for the 58
projected manufacturing plant characteristics.  The
exception is NewSIC32, which has a total capital cost
almost three times that of the highest cost facility among the
58 projected manufacturers.

The results for these case study scenarios show that
compliance costs can be sensitive to the specific
characteristics of each regulated plant, and that the rule
could discourage the construction of very high flow electric
generating plants in the future.  Given the lack of evidence
that such plants are likely to be constructed in the future,
however, EPA does not consider the disincentives to
construct such very high flow plants as a significant cost of
the rule.
6.5   LIMITATIONS AN& UNCERTAINTIES

EPA's estimates of the compliance costs associated with the
proposed §316(b) New Facility Rule are subject to
limitations because of uncertainties about the number and
characteristics of the new plants that will be subject to the
rule. Projecting the number of new plants in different
industries is subject to uncertainties about future industry
growth rates and about the portion of new capacity that will
come from new greenfield facilities as opposed to
expansions at existing plants.  This is especially the case
when extending forecasts 20 years into the future.

To the extent possible, EPA used information on the
characteristics of plants that are now being planned to
project the baseline characteristics of facilities affected by
the rule.  Information on these planned plants and on the
characteristics of existing plants that have CWIS provided a
basis for projecting the characteristics of new plants beyond
those for which plans are available. The estimated national
facility compliance costs may be over- or understated if the
projected number of new plants is incorrect or if the
characteristics of new plants are different from those
assumed in the analysis.  In particular, the analysis may
overestimate the number of plants that will withdraw  from a
water of the U.S. and thus be subject to the proposed rule,
given observed trends toward greater use of recirculating
systems and away from the use of water of the U.S. to
provide cooling water.

Limitations in EPA's ability to consider a full range of
compliance responses may result in an overestimate of
facility compliance costs. The Agency was not able to
consider certain compliance responses, including the  costs
of relocating the plant to use a different source water body
type and the cost of some methods of changing the cooling
system design. Costs will be overstated if these excluded
compliance responses are less expensive than the projected
                                                                                                             6-23

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§316(b) EEA Chapter 6 for New Facilities
                                Facility Compliance Costs
compliance response for some facilities.

The estimated costs may be overstated if some compliance
responses result in savings in facility construction or
operating costs compared with the baseline plant design.
Savings such as reduced water pumping costs, smaller pipes,
smaller pumping station housing, and smaller size screens
due to reduced water use have not been included in the cost
estimates. For example, the costs for installing a
recirculating cooling tower do not reflect the reduced cost of
pumping water that will result from the use of less cooling
water.  EPA's facility-level and national-level cost estimates
also exclude these potential savings to facilities from their
compliance responses, and therefore overstate the costs
associated with the rule for facilities that choose compliance
responses that result in such savings.  Finally, estimated
costs do not account for reduced energy efficiencies that
may result from switching to the use of cooling towers from
a once-through cooling system. This energy "penalty" may
be considerable and is dependent on specific site
characteristics, such as plant type.
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§316(b) EEA Chapter 6 for New Facilities                                              Facility Compliance Costs


REFERENCES

R.S. Means.  1997. Heavy Construction Cost Data 1998.

Paroby, Rich.  1999. Personal communication between Rich
Paroby, District Sales Manager, Water Process Group and
Deborah Nagle, U.S. EPA. E-mail dated May 12, 1999.
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                                This  Page Intentionally Left Blank
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§316(b) EEA Chapter 7 for New Facilities
                            Economic Impact Analysis
            Chapter   /   :   economic  Impact

                                         Analysis
INTRODUCTION

The proposed §316(b) New Facility Rule applies to a
number of industries, but only affects a small number of
facilities in each industry.  EPA conducted a screening
analysis to assess whether it is likely that the proposed rule
will have a significant economic impact on any of the 98
projected new facilities. This chapter presents EPA's
analysis of economic impacts for the affected new facilities.
Later chapters consider impacts on small entities (Chapter
8) and on governments (Chapter 9) as special cases.

The economic impact analysis is conducted at the facility-
level.  EPA would be concerned about potential firm- and
industry-level impacts only if facility-level results indicated
the potential for significant impacts or if one firm owned
multiple facilities. The facility-level analysis showed that
eight of the 98 projected new facilities would have annual
compliance costs of more than one percent of revenues.
Only one of these eight facilities is expected to have a cost-
to-revenue ratio of more than five percent. EPA therefore
concludes that compliance with this regulation is both
economically practicable and achievable at the facility-,
firm-, and national levels.

The remainder of this chapter is organized as follows:

    *   Section 7.1 discusses the methodology used to
        assess economic impacts for the 40 new electric
        generators, including the data sources and
        approach for estimating the economic
        characteristics of the regulated facilities, the
        specific economic impact measures used, and the
        results of the analysis.

    *   Section 7.2 presents the economic impact analysis
       for the 58 new manufacturing facilities. This
        section discusses the same information as Section
        7.1 for electric generators.

    *   Section 7.3 provides a summary of the economic
        impact analysis at the facility-level.

    *   Section 7.4 discusses the potential for firm- and
    CHAPTER CONTENTS
    7.1  New Steam Electric Generators	7-1
        7.1.1   Economic Characteristics	7-2
        7.1.2   Economic Impact Analysis Results  . 7-6
    7.2  New Manufacturing Facilities	7-7
        7.2.1   Economic Characteristics	7-8
        7.2.2   Economic Impact Analysis Results  7-10
    7.3  Summary of Facility-Level Impacts	7-12
    7.4  Potential for Firm- and Industry-Level
        Impacts 	7-12
        Case Study Facility Impacts  	7-13
7.5
References
                                              7-16
       industry-level impacts as a result of the proposed
       §316(b) New Facility Rule.

       The final Section 7.5 presents the impact analysis
       for the eight case study facilities for which costs
       were developed in Chapter 6: Facility Compliance
       Costs.
7.1    NEW STEAM ELECTRIC GENERATORS

EPA projected that 40 new steam electric generators in
scope of the proposed §316(b) New Facility Rule will begin
commercial operation within the next 20 years (see Chapter
5: Baseline Projections of New Facilities).  Seven of the 40
facilities are "real" facilities identified from a database of
planned new electric generation facilities (the NEWGen
database; RDI, 2000). For these facilities, some actual data
on capacity, location, and technical characteristics were
available. The remaining 33 facilities are projected
facilities that are estimated to begin operation between 2004
and 2010. These are hypothetical, or "extrapolated,"
facilities for which no actual information is available.

EPA used the following measures to assess economic
impacts for new electric generators:

    *    annualized compliance costs as a percent of
        expected annual revenues; and
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§316(b) EEA Chapter 7 for New Facilities
                                                                       Economic Impact Analysis
    *   initial compliance costs as a percent of plant
        construction cost.1

7.1.1 Economic  Characteristics
Calculating the two economic impact measures requires the
following information for each new in-scope steam electric
generator:

    >•   total annualized compliance cost,
    >•   expected annual revenues,
    >•   initial compliance cost, and
    >•   construction cost of the plant.

Chapter 6: Facility Compliance Costs summarized the
methodology and results of EPA's cost estimation. The
remainder of this section will therefore focus on the
estimation of revenues and the total cost of the plant.

a.  Expected Annual  Revenues
EPA estimated expected annual revenues by making
assumptions about future electricity sales for each facility.
This calculation used the following formula:
     Revx = GenCapx  *  ESF   *  Price
where:
Revx
GenCap
ESFy

Pricev
Annual revenues of facility x
Generation capacity of facility x (in MW)
Projected electricity sales factor in NERC
region y (in MWh/MW)
Projected electricity price in NERC region
y (in $1999)
Each component of this calculation is further explained
below.

«>  Generating capacity
The NEWGen database provided information on the
planned capacity (in MW) of the seven electric generators
found to be in scope of this regulation. Total planned
                                         capacity for the seven facilities ranges between 475 MW
                                         and 1,100 MW. The generating capacity of the six
                                         extrapolated generators projected to begin operation
                                         between 2004 and 2009 is assumed to be equal to the
                                         average capacity for the seven NEWGen facilities, or 672
                                         MW each. The capacities for the 16 coal and 11 combined-
                                         cycle plants expected to begin operation between 2011 and
                                         2020 are assumed to be 800 MW and 723 MW,
                                         respectively.2

                                         «>  Electricity sales factor
                                         EPA estimated the average amount of electricity sold per
                                         MW of generating capacity for each NERC region using
                                         forecasts from the Energy Information Administration's
                                         (EIA) Annual Energy Outlook 2000 (DOE,  1999a). The
                                         calculation was made by dividing the NERC region's
                                         projected annual electricity sales between 2001 and 2010 by
                                         the region's projected capacity over the same time period,
                                         using the following formula:
                                                      2010
                                                            Electricity Sold
                                                          ESFy  =
                                                                     t=2ooi
                                                                           2010
                                                                          f=2001
                                                                 GenCap
where:
ESFy

Electricity Soldy  =

GenCapy

t
Projected electricity sales factor in
NERC region y
Projected annual electricity sales in
NERC region y (in MWh)
Projected annual generating capacity
in NERC region y (in MW)
Year of forecast (from 2001 to 2010)
                                         Table 7-1 presents the calculated average electricity sales
                                         per MW of capacity for each NERC region and the U.S.
                                         average.
    1  Initial compliance costs include the compliance costs of the
proposed §316(b) New Facility Rule that will be incurred before a
new facility can begin operation. These are capital technology
costs and initial permit application costs.
                                               The combined-cycle plants' capacity is the average of the
                                         56 analyzed NEWGen facilities. Fifty-five of these 56 facilities
                                         are combined-cycle facilities.
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§316(b) EEA Chapter 7 for New Facilities
                               Economic Impact Analysis
Table 7-1: Estimated Average Electricity Sales Factors
NERC Region
ECAR - East Central Area Reliability Coordination Agreement
ERCOT - Electric Reliability Council of Texas
FRCC - Florida Reliability Coordinating Council
MAAC - Mid-Atlantic Area Council
MAIN - Mid- America Interconnected Network
MAPP - Mid-Continent Area Power Pool
NPCC/NE - Northeast Power Coordinating Council/New England
NPCC/NY - Northeast Power Coordinating Council/New York
SERC - Southeastern Electric Reliability Council/Excl. Florida
SPP - Southwest Power Pool
WSCC/CNV - Western Systems Coordinating Council/California-Southern Nevada Power
WSCC/NWP - Western Systems Coordinating Council/N.W. Power Pool Area
WSCC/RMPA - Western Systems Coordinating Council/Rocky Mountain Power Area &
Arizona
U.S. Average
by NERC Region
Projected Electricity Sales per
(2001 - 2010) in MWh/MW
5,230
4,351
4,079
4,427
4,225
4,882
4,140
3,644
5,139
4,119
3,304
5,157
5,116
4,575
 Source:  U.S. DOE, 1999a.
EPA applied the NERC region-specific average sales per
MW of capacity to the seven NEWGen facilities to calculate
total annual electricity sales (in MWh). The national
average was used for the 33 extrapolated facilities that do
not have a known NERC region.

The actual amount of electricity that is generated and sold
by a facility depends on how often the facility's units are
dispatched.  Using the calculated average factors may
therefore over- or underestimate actual facility sales. The
factors would overestimate electricity sales, and therefore
estimated revenues, if the 40 electric generators were
dispatched less than the average facility; they would
underestimate sales and revenues if the 40 facilities were
dispatched more than the average.
Dispatch frequencies are often correlated with the type of
prime mover used at the facility.3 Estimating the sales per
MW of capacity by prime mover would require information
on both sales and capacity by prime mover type.  Published
electricity generation and sales estimates are only available
by fuel type and not by prime mover, however, while
capacity is only available by prime mover.

EPA believes that using the calculated average factors by
NERC region will generally provide a robust estimate of
plant-level generation and sales, and therefore impacts, for
the projected new facilities. Twenty-four of the 40 facilities
are expected to be combined-cycle facilities, which are
primarily designed to supply peak and intermediate capacity
but can also be used to meet baseload requirements (U.S.
DOE, 1999a, p. 65), and are therefore likely to have
dispatch frequencies close to the average for all facilities.
                                                                3 For example, gas turbines are generally peaking units that
                                                            are dispatched less frequently than the average facility while coal
                                                            or nuclear plants are generally baseload units that are dispatched
                                                            more frequently than the average.
                                                                                                                7-3

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§316(b) EEA Chapter 7 for New Facilities
                               Economic Impact Analysis
The estimated average factor may underestimate generation
and sales for the projected 16 coal plants because these are
relatively large facilities that can be expected to operated as
baseload units. Using the average electricity sales factor
may therefore understate revenues relative to compliance
costs and would provide a conservative estimate of
economic impacts for these facilities.

«>  Electricity price
The final component needed to calculate annual revenues is
the price of electricity. EPA used a regional price of
generation, excluding transmission and distribution
charges, forecasted by the U.S. Department of Energy's
Policy Office Electricity Modeling System (POEMS). The
generation price reflects the amount of revenue plants are
likely to receive in a deregulated electricity market in which
transmission and distribution services are separated from
the generation function. POEMS forecasts electricity prices
for several years into the future under a reference case and a
competitive case. For this analysis, EPA considered the
forecasted prices under the competitive case for 2000 and
2005. To provide a conservative estimate of revenues, EPA
used the lower of the reported prices in each NERC region
(U.S. DOE, 1999b).4

Table 7-2 presents the forecasted electricity prices per MWh
for each NERC region and the U.S. average.5
                                                                4 EPA also considered using the EIA's National Energy
                                                           Modeling System (NEMS) forecasts, but the available NEMS
                                                           results do not distinguish the price of generation from the
                                                           distribution and transmission charges.

                                                                5 Prices were adjusted from 1998 to 1999 dollars using the
                                                           electric power Producer Price Index (PPI).
7-4

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§316(b) EEA Chapter 7 for New Facilities
                               Economic Impact Analysis
Table 7-2: Minimum Forecasted Electricity
NERC Region
ECAR - East Central Area Reliability Coordination Agreement
ERCOT - Electric Reliability Council of Texas
FRCC - Florida Reliability Coordinating Council
MAAC - Mid-Atlantic Area Council
MAIN - Mid- America Interconnected Network
MAPP - Mid-Continent Area Power Pool
NPCC/NE - Northeast Power Coordinating Council/New England
NPCC/NY - Northeast Power Coordinating Council/New York
SERC - Southeastern Electric Reliability Council/Excl. Florida
SPP - Southwest Power Pool
WSCC - Western Systems Coordinating Council
U.S. Average
Prices by NERC Region
Electricity Price (Minimum of 2000 and
2005) in S/MWh
21.0
29.7
30.7
29.7
23.5
17.1
34.3
31.3
24.9
24.7
27.2
26.7
  Source:  U.S. DOE, 1999b.
EPA applied the NERC region-specific electricity prices to
the projected electricity sales (in MWh) of the seven
NEWGen facilities to calculate total annual revenues.  The
national average was used for the 33 extrapolated facilities
that do not have a known NERC region. Projected annual
facility revenues range from approximately $54 million to
$109 million, or from $99,000 to $142,000 per MW of
generating capacity.

b.   Plant Construction  Costs
EPA used two data sources to estimate the total construction
cost of the new electric generating facilities. The NEWGen
database contains "Total Plant Cost" among its data on
facility financing.  This information is available for most
but not all facilities in the database.6 According to RDI,
however, these data may not provide a good basis for
analysis because of uncertainty about which specific cost
components are included by facilities when reporting this
plant cost.  EPA therefore used a second source, the
Assumptions to the Annual Energy Outlook 2000 (U.S.
DOE, 2000), to estimate plant construction cost. Table 37
of the Assumptions presents the cost and performance
characteristics of new generating technologies assumed in
EIA's electricity forecasts. The following technology-
specific overnight capital costs were used in the analysis:7

     -    Advanced Gas/Oil Combined Cycle     $594/kW
     •>    Scrubbed Coal New                   $l,128/kW
     -    Advanced Nuclear                    $2,447/kW

Overnight capital costs are the base costs estimated to build
a plant in a hypothetical Middletown, USA. Regional
multipliers for new construction, reported  in Table 38 of the
Assumptions, were applied to these base costs to account for
construction cost differences between the various NERC
regions.8

EPA used the  smaller plant cost of the two data sources to
    6 EPA supplemented missing plant costs with information
from permit applications and facility websites, where available.
    7 Overnight capital costs were adjusted from 1998 to 1999
dollars using the Engineering News-Record Construction Cost
Index. The analysis of the 44 new electric generators presented in
this section used the overnight capital costs for advanced gas/oil
combined cycle and scrubbed new coal facilities. The costs for
scrubbed new coal and advanced nuclear were used in the analysis
of worst case electric generator impacts in Section 7.5.

    8 The regional multipliers used in this analysis are calculated
as the average of reported multipliers for factory equipment, site
labor, and site material.
                                                                                                                7-5

-------
§316(b) EEA Chapter 7 for New Facilities
                                Economic Impact Analysis
estimate the ratio of initial compliance costs to plant
construction costs.  This approach provides a conservative
measure of potential economic impacts on new electric
generators.
Table 7-3 presents EPA's estimates of the economic and
financial characteristics of the 40 new in scope electric
generators.
Table 7-3: Economic and Financial Characteristics of New In Scope Electric Generators ($1999 thousands)
Facility
Name
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Genl-
Gen6T
Coall,
9,13
Coal2-4,
6-8, 10-
12, 14-
16
Coal5
CC1,5,
9
CC2-4,
6-8, 10-
11
No. of
Facilities
1
1
1
1
1
1
1
6
3
12
1
3
8
NERC
Region
NPCC/NE
MAIN
ERCOT
NPCC/NE
NPCC/NY
NPCC/NE
SERC
n/a
n/a
n/a
n/a
n/a
n/a
Planned
Capacity
(MW)
750
1,100
510
525
475
544
800
672
800
800
800
723
723
Electricity
Sales
Factor
4,140
4,225
4,351
4,140
3,644
4,140
5,139
4,575
4,575
4,575
4,575
4,575
4,575
Annual
Electricity
Sales
(MWh)
3,104,815
4,647,151
2,218,769
2,173,371
1,730,765
2,252,026
4,111,273
3,074,119
3,659,665
3,659,665
3,659,665
3,307,422
3,307,422
Price
(S/MWh)
34.3
23.5
29.7
34.3
31.3
34.3
24.9
26.7
26.7
26.7
26.7
26.7
26.7
Expected
Annual
Revenues
$106,639
$109,137
$66,002
$74,647
$54,195
$77,349
$102,184
$82,226
$97,888
$97,888
$97,888
$88,467
$88,467
Plant Construction
Cost
RDI
$300,000
n/a
$170,000
$175,000
$680,000
$340,000
$397,000
$343,667
n/a
n/a
n/a
n/a
n/a
EIA
$519,502
$661,796
$291,693
$363,651
n/a
$376,812
$406,894
$436,724
$902,449
$902,449
$902,449
$429,257
$429,257
 t    Genl through Gen6 are the six extrapolated facilities. Their characteristics represent the national average for the electricity
      sales factor and the electricity price, and the average of the seven NewGen facilities for capacity and plant construction cost.

 Source:  Analysis based on RDI, 2000; U.S. DOE, 1999a; U.S. DOE, 1999b.
7.1.2  Economic  Impact Analysis Results
EPA used two economic impact measures for the 40 new
electric generators: (1) the ratio of total annualized
compliance cost to estimated revenues ("cost-to-revenue
ratio") and (2) the ratio of initial compliance costs to the
construction cost of the plant ("initial cost-to-plant
construction cost ratio"). Estimating these ratios required
discounting costs that occur in the future.  For the cost-to-
revenue ratio, EPA first calculated the present value of the
streams of compliance costs over the first 30 years of each
plant's life.9  The present value was then annualized over 30
years to derive the constant annual value of the stream of
    9 The impact analysis presented in this chapter considers the
first 30 years of each facility's life.  This is different from the
total cost estimate presented in Chapter 6 which only considered
costs over the first 30 years of the rule, i.e., 2001 to 2030. EPA
believes that including 30 years of compliance costs for each
facility is a better indicator of potential facility-level impact than
limiting costs to the first 30 years of the rule.
7-6

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§316(b) EEA Chapter 7 for New Facilities
                              Economic Impact Analysis
future compliance costs, using a seven percent discount rate
(see formulas in Chapter 6: Facility Compliance Costs,
Section 6.3).

Estimation of the initial cost-to-plant construction cost ratio
involved dividing initial compliance costs, including capital
technology and initial permit application costs, by the
smaller of the two plant construction cost values.
Table 7-4 presents the results of the economic impact
analysis for the 40 new electric generators.  The table shows
that the cost-to-revenue ratio for the new electric generators
ranges between 0.07 and 4.16 percent.  The initial cost-to-
plant cost ratio ranges between 0.01 and 1.48 percent.
Based on the low values of these impact measures, EPA
believes that the  economic impacts of the proposed §316(b)
New Facility Rule on new electric generators will be
minimal.
Table 7-4: Economic Impacts for New Electric Generators
Facility
Name
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Genl-6
Coall,9,
13
Coal2-4, 6-
8, 10-12,
14-16
Coal5
CC1,5,9
CC2-4, 6-
8,10-11
No. of
Facilities
1
1
1
1
1
1
1
6
3
12
1
3
8
Total
Annualized
Compl.
Cost
$72,638
$73,147
$84,742
$84,794
$79,448
$77,508
$90,850
$78,987
$4,070,476
$86,696
$450,210
$889,074
$90,850
Expected
Annualized
Revenues
$106,638,872
$109,136,681
$66,002,195
$74,647,211
$54,195,202
$77,348,729
$102,183,962
$82,226,151
$97,888,275
$97,888,275
$97,888,275
$88,466,529
$88,466,529
Total
Annualized
Compl. Cost/
Expected
Annualized
Revenues
0.07%
0.07%
0.13%
0.11%
0.15%
0.10%
0.09%
0.10%
4.16%
0.09%
0.46%
1.01%
0.10%
Net Present
Value of
Initial
Compl. Costt
$44,491
$47,004
$246,526
$49,889
$49,120
$44,936
$190,617
$95,910
$13,348,971
$77,943
$4,729,791
$2,617,030
$190,617
Minimum
Plant
Construction
Cost
$300,000,000
$662,000,000
$170,000,000
$175,000,000
$680,000,000
$340,000,000
$397,000,000
$344,000,000
$902,000,000
$902,000,000
$902,000,000
$429,000,000
$429,000,000
NPV of Initial
Compl. Cost/
Minimum
Plant
Construction
Cost
0.01%
0.01%
0.15%
0.03%
0.01%
0.01%
0.05%
0.03%
1.48%
0.01%
0.52%
0.61%
0.04%
 t   Initial compliance cost includes the one-time costs presented in Table 6-11, i.e., capital and initial permit application costs.

 Source: EPA Analysis, 2000.
7.2   NEW  MANUFACTURINS FACILITIES

EPA projected that 58 new manufacturing facilities in scope
of the proposed §316(b) New Facility Rule will begin
commercial operation within the next 20 years (see Chapter
5: Baseline Projections of New Facilities). Forty-eight of
the 58 facilities are chemical facilities and ten are primary
metals facilities.  All 58 facilities are hypothetical facilities
for which no actual information on capacity, location,
technical, or economic characteristics are available.

EPA used annualized compliance costs as a percent of
expected annual revenues ("cost-to-revenue ratio") as a
                                                                                                             7-7

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§316(b) EEA Chapter 7 for New Facilities
                               Economic Impact Analysis
measure of economic impacts. The comparison of initial
compliance costs to plant construction costs used for electric
generators could not be estimated for manufacturing
facilities because information on facility construction cost is
not readily available for the manufacturing SIC codes of
interest.

7.2.1 Economic  Characteristics
Estimation of the cost-to-revenue ratio requires the
following information for each new in scope manufacturing
facility:

     >•   total annualized compliance cost, and
     >•   expected annual revenues.

EPA estimated facility-level employment and revenues and
firm-level employment for the 29 projected facilities
expected to begin operation between 2001 and 2010, using
information for existing facilities  in the relevant
industries.10  The Agency used results from the §316(b)
Industry Screener Questionnaire: Phase I Cooling Water
Intake Structures (January 1999) to project employment and
revenues, using the following methodology:

     *   Identify existing facilities from the Screener
        Questionnaire that serve as  "model facilities" for
        the proposed new facilities: EPA analyzed
        screener respondents in each 4-digit SIC code that
        has at least one projected new facility. Only those
        screener respondents that meet the "in scope"
        characteristics of the proposed §316(b) New
        Facility Rule were used as model facilities.11

     >   Assign economic characteristics to each new in
        scope facility: EPA grouped the screener model
        facilities by SIC code and sorted them by their
        reported facility employment. EPA then selected
    10 This section only presents information for the 29 facilities
expected to begin operation in the first ten years of the rule. The
characteristics, both revenues and compliance costs, of the 29
facilities projected to begin operation in the second ten years are
assumed to be identical to the first 29 facilities.  Facilities
beginning operation between 2011 and 2020 would therefore
experience the same impacts as the 29 facilities discussed in this
section.

    11 Screener respondents that meet the in scope characteristics
of the proposed §316(b) New Facility Rule (1) operate a CWIS;
(2) hold an NPDES permit;(3) have a design intake flow of greater
than two million gallons per day (MOD); and (4) use at least 25
percent of the water withdrawn for cooling purposes.  Information
on the percentage of intake water for cooling purposes was not
available for all screener respondents. Where this information
was unavailable, EPA assumed that the facility would meet this
criterion.
        one screener model facility to represent the
        economic characteristics of the projected new
        facility.  Where only one new in scope facility is
        projected in an SIC code, the screener facility with
        the median facility employment served as the
        representative facility. In SIC codes where EPA
        projects more than one new in scope facility, all
        screener model facilities in that SIC code were
        evenly divided into as many groups as there are
        projected new facilities.  The model facility with
        the median facility employment in each group
        served as the representative facility.12 EPA
        assumed that the facility- and firm-level
        employment and revenues of the projected new
        facilities is the same as the facility- and firm-level
        employment and revenues of these representative
        screener facilities.

    >   Supplement missing data, where necessary: Some
        of the representative facilities identified among the
        screener model facilities did not report facility
        revenues or firm employment in the screener
        questionnaire.  The missing information for these
        facilities was supplemented by data from the 1992
        Census of Manufactures and the Dun and
        Bradstreet (D&B) database. EPA supplemented
        missing facility revenues by using average facility-
        level revenues by employment size category from
        the Census of Manufactures.13 EPA supplemented
        missing firm-level information by identifying the
        DUNS numbers of the firms owning the screener
        model facilities and by retrieving each firm's
        employment data from the D&B database.

Table 7-5 presents the economic characteristics of the
projected new in scope facilities using model facilities
developed from the Industry Screener database and
supplemented with facility revenue data from the Bureau of
the Census and the D&B database.
    12  For example, an SIC code may have 45 screener model
facilities and three projected in scope facilities.  The 45 screener
model facilities would be sorted in ascending order by their
facility employment and divided into three groups of 15 facilities
each. The first group would contain the 15 facilities with the
fewest employees; the second group would contain the 15 facilities
with middle employment levels; the third group would contain the
15 facilities with the most employees.  Within each group, EPA
assigned the median employment level of the model  facilities to
the new facility.  The median facilities in this case are the
facilities that rank eighth, 23rd, and 38th in employment.

    13  For example, a projected new facility in SIC  code 2824
with an employment level of 1,200 employees would be assigned
average facility revenues reported in the Census for the
employment size category from 1,000 to 2,499 employees.
7-,

-------
§316(b) EEA Chapter 7 for New Facilities
Economic Impact Analysis
Table 7-5: Projected Economic Characteristics of New Manufacturing Facilities (2001 to 2010)
(Revenues in $1999 thousands)
Facility ID

new 2812-1
new 2813-1
new 2819-1
new 28 19-2
new 2821-1
new 282 1-2
new 282 1-3
new 2824-1
new 2833-1
new 2834-1
new 2841-1
new 2865-1
new 2869-1
new 2869-2
new 2869-3
new 2869-4
new 2869-5
new 2869-6
new 2869-7
new 2869-8
new 2869-9
new 2873-1
new 2874-1
new 2899-1
SIC

2812
2813
2819
2821
2824
2833
2834
2841
2865
2869
2873
2874
2899
SIC Description
Chemical and Allied Produ
Alkalies and Chlorine
Industrial Gases
Industrial Inorganic Chemicals,
N.E.C.
Plastics Materials, Synthetic
Resins, and Nonvulcanizable
Elastomers
Manmade Organic Fibers, Except
Cellulosic
Medicinal Chemicals and
Botanical Products
Pharmaceutical Preparations
Soaps and Other Detergents,
Except Speciality Cleaners
Cyclic Organic Crudes and
Intermediates, and Organic Dyes
and Pigments
Industrial Organic Chemicals,
N.E.C.
Nitrogenous Fertilizers
Phosphatic Fertilizers
Chemicals and Chemical
Preparations, NEC
Number of
New
Facilities
:t Facilities (£
1
1
2
3
1
1
1
1
1
9
1
1
1
Facility
FTEs
1C 28)
650
18
75
140
567
1,000
1,610
1,446
600
273
460
139
170
200
200
240
452
1,160
1,290
1,290
1,780
170
350
135
Facility
Annual
Revenuef

$125,271
$24,951
$26,345
$94,502
$113,521
$455,816
$1,142,768
$472,593
$605,178
$228,029
$283,962
$874,267
$68,898
$97,698
$107,064
$67,566
$334,647
$615,280
$1,214,590
$1,214,590
$1,214,590
$46,543
$268,721
$30,360
Firm FTEs

12,380
25,388
81,600
5,500
10,500
70,400
290,000
98,000
53,800
40,000
26,946
39,362
17,000
17,000
98,000
260
39,362
98,000
13,300
13,300
15,000
8,390
9,000
135
                                                                                                   7-9

-------
§316(b) EEA Chapter 7 for New Facilities
                               Economic Impact Analysis
Table 7-5: Projected Economic Characteristics of New Manufacturing Facilities (2001 to 2010)
(Revenues in $1999 thousands)
Facility ID

new 33 12-1
new 33 12-2
new 33 12-3
new 3316-1
new 3353-1
Number of
SIC SIC Description New ™"1
T-! -I'^' ^ 1 JlS
Facilities
Primary Metals Industries (SIC 33)
3312
3316
3353
Steel Works, Blast Furnaces
(Including Coke Ovens), and
Rolling Mills
Cold-Rolled Steel Sheet, Strip,
and Bars
Aluminum Sheet, Plate, and Foil
3
1
1
260
1,000
5,000
240
690
Facility
Annual
Revenuef

$5,828
$225,286
$1,503,693
$28,871
$404,434
Firm FTEs

14,880
41,620
16,400
4,580
690
 T    Facility revenues from the screener were updated from 1997 to 1999 using Producer Price Indexes (PPI) compiled at the four-
      digit SIC level; revenues from the Census of Manufacturers were updated from 1992 to 1999 using the PPIs.
 n   Facility annual revenues are based on Census data for the employment range from 100 to 249 employees.

 Source: §316(b) Industry Screener Questionnaire, 1999; Bureau of the Census, 1992; D&B, 1999.
7.2.2 Economic Impact Analysis Results
EPA used the ratio of total annualized compliance cost to
estimated revenues ("cost-to-revenue ratio") to determine
facility-level impacts from the proposed §316(b) New
Facility Rule.  Estimating this ratio required discounting
compliance costs that occur in the future. EPA first
calculated the present value of the stream of costs over the
first 30 years of each facility's life.14 This present value was
then annualized over 30 years to derive the constant annual
value of the stream of future costs. This calculation used a
seven percent discount rate (see formulas in Chapter 6:
Facility Compliance Costs, Section 6.3).

Table 7-6 presents the results of the economic impact
analysis for the 29 new manufacturing facilities projected to
begin operation between 2001 and 2010.  The table shows
that the cost-to-revenue ratio for the 29 facilities ranges
between 0.01 percent and 8.75 percent. Only two facilities
are expected to have a cost-to-revenue ratio of greater than
one percent, and only one facility is expected to have a ratio
of greater than three percent.  Based on the low values of
this impact measure, EPA believes that the economic
impacts of the proposed §316(b) New Facility Rule on new
manufacturing facilities will be minimal.
    14 The impact analysis presented in this chapter considers the
first 30 years of each facility's life. This is different from the
total cost estimate presented in Chapter 6 which only considered
costs over the first 30 years of the rule, i.e., 2001 to 2030.  EPA
believes that including 30 years of compliance costs for each
facility is a better indicator of potential facility-level impact than
limiting costs to the first 30 years of the rule.
7-10

-------
§316(b) EEA Chapter 7 for New Facilities
Economic Impact Analysis
Table 7-6: Economic Impacts for New Manufacturing Facilities
Facility ID

new 2812-1
new 28 13-1
new 28 19-1
new 28 19-2
new 2821-1
new 282 1-2
new 282 1-3
new 2824-1
new 2833-1
new 2834-1
new 2841-1
new 2865-1
new 2869-1
new 2869-2
new 2869-3
new 2869-4
new 2869-5
new 2869-6
new 2869-7
new 2869-8
new 2869-9
new 2873-1
new 2874-1
new 2899-1

new 3312-1
new 33 12-2
new 33 12-3
new 3316-1
new 3353-1
Total Annualized
Compl. Cost
Chemical and Al
$79,860
$604,465
$100,678
$494,390
$84,604
$92,936
$82,246
$79,448
$72,638
$126,025
$115,784
$72,638
$179,504
$179,504
$74,626
$74,626
$74,626
$100,793
$524,504
$524,504
$79,448
$90,347
$76,245
$94,879
Primary M
$509,697
$74,626
$121,090
$74,250
$73,359
Expected Annual
Revenues
lied Product Facilities (£
$125,270,979
$24,951,488
$26,345,174
$94,502,418
$113,521,036
$455,815,465
$1,142,767,830
$472,593,447
$605,177,537
$228,029,293
$283,961,823
$874,267,070
$68,897,959
$97,698,290
$107,063,884
$67,565,540
$334,647,230
$615,279,734
$1,214,590,376
$1,214,590,376
$1,214,590,376
$46,543,017
$268,721,097
$30,360,360
etals Industries (SIC 3c
$5,827,925
$225,285,745
$1,503,693,468
$28,870,812
$404,433,726
Total Annualized Compl. Cost/
Expected Annualized Revenues
1C 28)
0.06%
2.42%
0.38%
0.52%
0.07%
0.02%
0.01%
0.02%
0.01%
0.06%
0.04%
0.01%
0.26%
0.18%
0.07%
0.11%
0.02%
0.02%
0.04%
0.04%
0.01%
0.19%
0.03%
0.31%
0
8.75%
0.03%
0.01%
0.26%
0.02%
 Source:  EPA Analysis, 2000.
                                                                                                       7-11

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§316(b) EEA Chapter 7 for New Facilities
                              Economic Impact Analysis
7.3   SUMMARY OF  FACILITY-LEVEL
        IMPACTS

The economic impact analysis for the proposed §316(b)
New Facility Rule shows that the requirements of this
regulation would have minimal impacts on projected new
electric generators and manufacturing facilities.  Of the 98
projected facilities, only eight facilities are expected to incur
annualized costs greater than one percent of revenues.
Initial compliance costs compared to the plant construction
cost are also expected to be small for electric generators.
Table 7-7 summarizes the results of the impact analysis by
industry sector.
Table 7-7: Compliance Costs and Economic Impacts by Sector
Sector
SIC 49 Steam
Electric Generating
SIC 26 Pulp &
Paper
SIC 28 Chemicals
SIC 29 Petroleum
SIC 331 Steel
SIC 333/335
Aluminum
| Total
Number of
Projected New In
Scope Facilities
40
0
48
0
8
2
98
Total Annualized
Compliance Costs
(Smill 1999)^
$18.1
$0.0
$8.2
$0.0
$1.6
$0.1
$28.0
Total Annualized Compl. Cost/
Annual Revenues
Lowest
0.07%
n/a
0.01%
n/a
0.01%
0.02%

Highest
4.2%
n/a
2.4%
n/a
8.75%
0.02%

NPV of Initial Compl.
Cost/
Plant Construction Cost
Lowest
0.01%






Highest
1.48%






 t   Total Annualized costs represent the costs for the first 30 years of each facility's life. These costs therefore do not match the
     compliance costs for the first 30 years of this rule presented in Chapter 6.

 Source: EPA Analysis, 2000.
7.4   POTENTIAL FOR FIRM- AND
        INDUSTRY-LEVEL IMPACTS

The previous section presented EPA's estimate of facility-
level impacts as a result of the proposed §316(b) New
Facility Rule. Given the insignificant impacts on the
facility-level, EPA did not conduct a formal impact analysis
at the firm- or industry-levels. Based on the analysis
presented in this chapter, EPA concludes that the proposed
§316(b) New Facility Rule will not cause impacts on the
firms owning the impacted facilities or on their industries,
for reasons discussed in this section.

The proposed rule is expected to increase the cost of the
projected new in scope facilities relative to other new
facilities and to existing facilities.  Annualized compliance
costs as a percentage of revenues at the facility-level ranged
from 0.07 to 4.2 percent for new electric generators and
from 0.01 to 8.8 percent for new manufacturing facilities.
Since firm revenues are always equal to or greater than
facility-level revenues, the cost-to-revenue ratio at the firm-
level cannot be higher than at the facility-level. In most
cases, this ratio would be lower.  EPA therefore concluded
that significant firm-level  impacts as a result of the
proposed §316(b) New Facility Rule are unlikely.

A rule that substantially increases the cost of new facilities
could present a barrier to new entry, and constrain capacity
growth in the affected industries.  Barriers to new entry
result in higher product prices in the long run and can
retard valuable technological innovation.  EPA concluded
that the proposed rule is unlikely to discourage new entry,
because the compliance costs associated with the proposed
rule are small compared with the expected revenues of the
projected facilities. However, the rule may influence the
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§316(b) EEA Chapter 7 for New Facilities
                              Economic Impact Analysis
location, design, and choice of water sources of new
facilities planning to use cooling water.

Given the small number of affected in scope facilities
relative to the size of the affected industries, EPA also
concluded that impacts at the industry-level are very
unlikely. The maximum costs incurred in any one year
represent a very small percentage of total industry revenues
at the 4-digit SIC level. The rule affects too small a portion
of any industry to have observable impacts at the industry
level. EPA therefore does not expect any impacts on
industry productivity, competition, prices, output, foreign
trade, or employment.  EPA concluded that a detailed
market analysis is not required for any of the affected
industries, given the screening analysis results.
7.5   CASE STUDY FACILITY IMPACTS

EPA also estimated economic impacts for the eight case
study facilities costed in Section 6.4 of Chapter 6: Facility
Compliance Costs. These eight facilities include four worst
case hypothetical electric generators (two large coal-fired
power plants and two large nuclear plants) and four
manufacturing facilities in industries in which EPA does
not expect construction of new in scope facilities in the near
future:  SIC 20 (Food and Kindred Products), SIC 26 (Pulp
and Paper), SIC 29 (Petroleum Refining), and SIC 32
(Stone, Clay, Glass and Concrete).

EPA used the same methodologies to estimate economic
characteristics and impacts for the eight case study facilities
as were used for the 98 projected new facilities discussed in
Sections 7.1 and 7.2 above.

The following two subsections present the economic
characteristics and impacts for the worst case electric
generators and the case study manufacturing facilities,
respectively.
a.  Worst  Case Electric Generators
The four worst case electric generators are hypothetical
facilities with no actual economic or technical information.
EPA made the following assumptions to project economic
characteristics and estimate impacts:

    >   Waterbody type: All four plants will be located on
        an estuary. This assumption will result in the
        highest potential compliance costs because
        facilities drawing water from estuaries are subject
        to the most stringent compliance requirements
        under the proposed §316(b) New Facility Rule.

    >   NERC region: All four facilities will be located in
        the Southwest Power Pool  (SPP) NERC region.
        The SPP region has the lowest electricity price of
        any coastal regions and one of the lowest electricity
        sales factors.  The analysis will therefore provide a
        conservative estimate of projected facility revenues
        and is likely to overstate economic impacts.

    *   Capacity: The capacity of two of the four electric
        generators (CoalMax and NucMax) is the capacity
        of the facility with the maximum flow for a
        recirculating system among existing coal plants
        and nuclear plants, respectively. EPA identified
        these two high-flow plants  from the 1995 EIA-767
        database.  The capacity of the two other generators
        (CoalAvg and NucAvg) is the average capacity of
        facilities with a flow among the highest third of
        once-through systems for existing coal plants and
        nuclear plants, respectively. This information is
        also based on the 1995 EIA-767 database.

Table 7-8 presents the assumed economic characteristics of
the four worst case electric generators.
Table 7-8: Economic and Financial Characteristics of Worst Case Electric Generators ($1999 thousands)
Facility
Name
CoalMax
CoalAvg
NucMax
NucAvg
NERC
Region
SPP
SPP
SPP
SPP
Planned
Capacity
(MW)
2,558
1,200
2,708
2,666
Electricity
Sales
Factor
4,119
4,119
4,119
4,119
Annual
Electricity
Sales (MWh)
10,535,816
4,942,525
11,153,632
10,980,643
Price
(S/MWh)
24.7
24.7
24.7
24.7
Estimated
Annual
Revenues
$260,145
$122,038
$275,400
$271,129
Plant Construction Cost
RDI
n/a
n/a
n/a
n/a
EIA
$1,523,789
$714,834
$1,613,143
$1,588,124
 Source: Analysis based on U.S. DOE, 1999a; U.S. DOE, 1999b.
                                                                                                            7-13

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§316(b) EEA Chapter 7 for New Facilities
                               Economic Impact Analysis
EPA applied the same measures used for the 40 projected
new electric generators to assess economic impacts on the
four worst case facilities:

    *   annualized compliance costs as a percent of
        expected annual revenues; and
    *   initial compliance costs as a percent of the
        construction cost of the plant.

Table 7-9 presents the economic impact results for the four
worst case electric generators.
Table 7-9: Economic Impacts for Worst Case Electric Generators
Facility
Name
CoalMax
CoalAvg
NucMax
NucAvg
Total
Annualized
Compl. Cost
$1,353,428
$6,234,675
$2,802,671
$17,523,882
Expected
Annualized
Revenues
$260,145,006
$122,038,314
$275,399,795
$271,128,454
Total Annualized
Compl. Cost/
Expected
Annualized
Revenues
0.5%
5.1%
1.0%
6.5%
Net Present
Value of Initial
Compl. Costt
$12,444,249
$21,958,268
$26,015,277
$53,714,343
Plant
Construction
Cost
$1,523,788,501
$714,834,324
$1,613,142,792
$1,588,123,591
NPV of Initial
Compl. Cost/
Plant
Construction Cost
0.8%
3.1%
1.6%
3.4%
 t    Initial compliance cost includes the one-time costs presented in Table 6-14, i.e., capital, and initial permit application costs.

 Source:  EPA Analysis, 2000.
Table 7-9 shows that the cost-to-revenue ratio for the four
hypothetical worst case electric generators ranges between
0.5 and 6.5 percent. The initial cost-to-plant construction
cost ratio ranges between 0.8 and 3.4 percent.

These results show that, if facilities with the characteristics
of the four hypothetical worst case generators  were being
built in the future,  such facilities could experience economic
impacts that are higher than those estimated for the
projected 40 electric generators.  However, EPA believes
that it is extremely unlikely that many facilities with worst
case characteristics will be constructed in the future. The
EIA does not project construction of any new  nuclear
facilities  over the next 20 years.

In addition, the regulatory framework provides considerable
flexibility for facilities to meet the requirements of the
proposed §316(b) New Facility Rule. Facilities that are
proposing to withdraw from estuaries and would as a result
incur high compliance costs may choose to locate on a
different type of water body and at a greater distance from
biologically sensitive areas.  By relocating their CWISs,
facilities  similar to the four worst case facilities can avoid
some of the compliance requirements and would therefore
face lower compliance costs and economic impacts.

EPA believes that, based on current technology and
resource conservation trends, significant economic impacts
on the electricity generation sector are unlikely. However,
the Agency recognizes that in a few worst case instances,
high flow electric generators could incur high costs to
comply with the requirements of the proposed §316(b) New
Facility Rule.

b.  Case Study Manufacturing  Facilities
The four case study manufacturing facilities are
hypothetical facilities for which no actual economic or
technical information exists. EPA estimated economic
characteristics for these facilities using responses to the
§316(b) Screener Questionnaire, as described in Section 7.2
for the 58 projected new manufacturing facilities.

Table 7-10 presents the economic  characteristics of the four
case study manufacturing facilities.
7-14

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§316(b) EEA Chapter 7 for New Facilities
                               Economic Impact Analysis
Table 7-10: Projected Economic Characteristics of Case Study Manufacturing Facilities
(Revenues in $1999 thousands)
Facility ID
New SIC 20 HF
New SIC 26 HF
New SIC 29 HF
New SIC 32 HF
SIC
20
26
29
32
SIC Description
Food And Kindred Products
Paper And Allied Products
Petroleum Refining
Stone, Clay, Glass, And Concrete
Products
Facility FTEs
689
331
570
260
Facility Annual Revenuef
$1,826,719
$164,273
$151,681
$64,581
 T    Facility revenues from the screener were updated from 1997 to 1999 using Producer Price Indexes (PPI) compiled at the four-
      digit SIC level; revenues from the Census of Manufacturers were updated from 1992 to 1999 using the PPIs.

 Source: §316(b) Screener Questionnaire, 1999; Bureau of the Census, 1992.
EPA used the ratio of total annualized compliance cost to
estimated revenues ("cost-to-revenue ratio") to determine
facility-level impacts for the four case study manufacturing
facilities.

Table 7-11 presents the economic impact results for these
facilities.  The table shows that the cost-to-revenue ratio for
the four facilities ranges between 0.02 and 2.1 percent. The
Agency therefore concludes that new manufacturing
facilities in other industries are not expected to incur
significant economic impacts as a result of the proposed
§316(b) New Facility Rule.
Table 7-11: Economic Impacts for Case Study Manufacturing Facilities
Facility ID
New SIC 20 HF
New SIC 26 HF
New SIC 29 HF
New SIC 32 HF
Total Annualized
Compl. Cost
$333,460
$77,780
$84,326
$1,367,874
Expected Annualized
Revenues
$1,826,718,783
$164,273,163
$151,680,887
$64,581,082
Total Annualized Compl. Cost/
Expected Annualized Revenues
0.02%
0.05%
0.06%
2.12%
 Source:  EPA Analysis, 2000.
                                                                                                               7-15

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§316(b) EEA Chapter 7 for New Facilities
                            Economic Impact Analysis
REFERENCES

Dun and Bradstreet (D&B).  1999. Data as of April 1999.

Resource Data International (RDI).  2000. NEWGen
Database. January 2000.

U.S. Department of Energy (U.S. DOE). 2000.  Energy
Information Administration.  Assumptions to the Annual
Energy Outlook 2000 (AEO2000) With Projections to 2020.
DOE/EIA-0554(2000).  January 2000.
U.S. Department of Energy (U.S. DOE). 1999a. Energy
Information Administration. Annual Energy Outlook 2000
With Projections to 2020.  DOE/EIA-0383(2000).
December 1999.

U.S. Department of Energy (U.S. DOE). 1999b. Office of
Policy. Supporting Analysis for the Comprehensive
Electricity Competition Act.  DOE/PO-0059.  May 1999.
7-16

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§316(b) EEA Chapter 8 for New Facilities
                Regulatory Flexibility Analysis/SBREFA
      Chapter   8:   Regulatory   Flexibility

                       Analysis/SBREFA
INTRODUCTION

The Regulatory Flexibility Act (RFA), as amended by the
Small Business Regulatory Enforcement Fairness Act
(SBREFA), requires EPA to consider the economic impacts
a rule will have on small entities. RFA/SBREFA requires
an agency to prepare a regulatory flexibility analysis for any
notice-and-comment rule it issues, unless the Agency
certifies that the rule "will not, if promulgated, have a
significant economic impact on a substantial number of
small entities" (Small Business Regulation Enforcement
Fairness Act of 1996, P.L. 104-121, Section 243).

EPA conducted a screening analysis to determine the
potential impact of the proposed §316(b) New Facility Rule
on small entities. The screening analysis showed that this
regulation will not have a significant economic impact on a
substantial number of small entities (SISNOSE).  This
finding is based on the limited number of small entities
expected to incur compliance costs and the insignificant
magnitude of compliance costs as a percentage of sales
revenues.

The analysis used the definitions of small businesses
established by the Small Business Administration (SB A) in
the screening analysis.1 The SB A defines small businesses
based on Standard Industrial Classification (SIC) codes and
size standards expressed by the number of employees,
annual receipts, or electric output (13 CFR §121.20). The
small business determination is made at the level of the
parent firm.

To evaluate the economic impact on small entities, EPA
analyzed each of the new facilities projected to incur costs
under this regulation. These are electric generating facilities
(SIC 49), chemical facilities (SIC 28), steel facilities (SIC
  CHAPTER CONTENTS
  8.1 Electric Generation Sector  	8-1
  8.2 Manufacturing Sector	8-4
  8.3 Summary of Results 	8-7
  References 	8-8
331), and aluminum facilities (SIC 335).2

A "sales test" is used to determine the potential severity of
economic impacts on electric generators and manufacturing
facilities owned by small firms. The test calculates
annualized compliance cost as a percentage of total sales
revenues. This screening analysis conducts the sales test at
the facility-level.
8.1    ELECTRIC GENERATION SECTOR

EPA's analysis in Chapter 5 identified 40 new electric
generators expected to incur costs under the proposed
§316(b) New Facility Rule.  Seven of the 40 facilities are
"actual" planned facilities for which real information,
including data on the parent firm, was available. The
remaining 33 facilities are projected facilities expected to
begin operation between 2004 and 2009 (six facilities) and
2011 and 2020 (27 facilities).  No actual information on
parent firms was available for these 33 facilities.

EPA used the NEWGen database to  identify the parent firms
of the seven actual facilities.  Two of these facilities are
owned by more than one firm. Therefore, the total number
of firms that own a share  in the seven facilities is nine. The
Dun & Bradstreet (D&B) database was used to
obtain each parent firm's  SIC code, employment, and
    1 The SBA definitions only apply to private businesses, not
governments or non-profit organizations. All small entities
affected by the proposed §316(b) New Facility Rule are private
businesses.
    2 New facilities in other industry sectors are assumed not to
be impacted by the rule based on their low overall intake flows.
They are therefore not included in this SBREFA analysis. See
Chapter 5: Baseline Projections of New Facilities for further
information on how new facilities expected to incur costs were
identified.

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§316(b) EEA Chapter 8 for New Facilities
                                                                      Regulatory Flexibility Analysis/SBREFA
revenues.  Table 8-1 shows that eight parent firms are
private businesses and one is a State government.  For the
purposes of the RFA/SBREFA analysis, States and tribal
governments are not considered small governments but
rather as independent sovereigns (U.S. EPA, 1999).
Therefore, this facility is excluded from the SBREFA
analysis.

Table 8-1 also shows the SIC codes of the parent firms.
                                                     SBA's definition of small business for firms with SIC code
                                                     4911 (Electric Services) is different from the definition for
                                                     other industrial categories.  The small business standard for
                                                     SIC code 4911 is electric output of less than 4 million
                                                     megawatt hours, rather than an employment or revenue
                                                     standard. EPA used the Energy Information Administration
                                                     (EIA) Form 861 database to determine electric output of
                                                     firms with SIC code 4911.
Table 8-1: Parent Firm and Facility Information for New In Scope Electric Generators
Parent Firm
Name
ParentA
ParentB
ParentC
ParentD
ParentEl
ParentE2
ParentFl
ParentF2
ParentG
Type
private business
private business
private business
private business
private business
private business
private business
private business
state government1
SIC Code
4924
8741
4911
4911
4911
unknownn
4922
unknown^
n/a
Facility
Name
GenA
GenB
GenC
GenD
GenEm
GenFm
GenG
Share in
Facility
100%
100%
100%
100%
50%
50%
50%
50%
100%
 TT
 TTT
For the purposes of the RFA/SBREFA analysis, States and tribal governments are not considered small governments but rather as
independent sovereigns (U.S. EPA, 1999). This entity is therefore not considered in the small entity analysis.
No DUNS number could be identified for this entity. The SIC code is therefore unknown.
GenE and GenF are both owned by two parent firms.
 Source:  EPA analysis based on RDI, 2000; D&B, 1999.
EPA determined the size of each of the nine parent firms by
comparing their electric output, revenues, or employment to
the SB A small entity size standard for the entity's SIC code.
Table 8-2 presents the comparison of the SBA small entity
size standard with economic data for each parent firm.
Based on data from the Dun & Bradstreet database and
Form EIA-861, EPA determined that three parent firms are
large, two are small, and the other three are of undetermined
                                                     size. Since no further information could be retrieved for the
                                                     firms of undetermined size, EPA assumed that these firms
                                                     are also small entities.  This assumption is both reasonable
                                                     and conservative because, data are generally more readily
                                                     available for larger entities, and the lack of data may be the
                                                     result of a smaller entity size. By assuming that the parent
                                                     firms of unknown size are small, EPA may overestimate the
                                                     potential impacts on small entities.
 \-2

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§316(b) EEA Chapter 8 for New Facilities
                  Regulatory Flexibility Analysis/SBREFA
Table 8 2: Parent Firm Information for New In Scope Electric Generators
Parent Firm Name
ParentA
Parents
ParentC
ParentD
ParentE 1
ParentE2
ParentFl
ParentF2
ParentG
Parent Firm SIC Code
4924
8741
4911
4911
4911
unknown
4922
unknown
n/a
SBA Small Entity
Size Standard
500 emp
$5,000,000
4,000,000 MWh
4,000,000 MWh
4,000,000 MWh
unknown
$5,000,000
unknown
n/a
Parent Firm Value
62 emp
$660,000
78,552,062 MWh
5,059,220 MWh
unknown
unknown
$5,781,999,616
unknown
n/a
Parent Firm Size
small
small
large
large
undetermined
undetermined
large
undetermined
n/a
 Source: EPA Analysis based on NEWGen Database; D&B Database.
No information was available on the entity size of the 27
electric generators projected to begin operation between
2011 and 2020. EPA made the following assumptions for
these facilities:

    >   Four of the six extrapolated facilities projected to
        begin operation between 2004 and 2009 will be
        owned by small entities.  This is based on the
        assumption that the projected facilities have the
        same characteristics as the seven NEWGen
        facilities for which actual data are available.  Four
        of the seven NEWGen facilities, or 57 percent,
        were determined to be owned by a small entity or
        an entity of unknown size. Applying this factor to
        the projected six facilities, EPA determined that an
        additional four projected facilities may be owned
        by a small entity.

    *   None of the 16 coal facilities projected to begin
        operation between 2011 and 2020 will be owned
        by a small entity. The 16 coal plants are assumed
        to have a generating capacity of 800 MW.  Using
        the average electricity sales factors presented in
        Chapter  7: Economic Impact Analysis, each facility
        would generate more than 3.6 million MWh per
        year. This amount almost qualifies the facility as a
        large entity at the facility-level.  EPA believes that
        coal plants of 800 MW would actually generate
        more than the average across all technologies. In
        addition, it is unlikely that a small firm would plan
        to construct a large coal plant. Based on these
        factors, EPA assumes that the 16 new coal facilities
        will not be owned by a small entity.
        Six of the 11 extrapolated combined-cycle
        facilities projected to begin operation between
        2011 and 2020 will be owned by small entities.
        This estimate is based on the assumption that the
        projected combined-cycle facilities have the same
        characteristics as the seven NEWGen facilities for
        which data are available. Fifty-seven percent of the
        NEWGen facilities were determined to be owned
        by a small entity or an entity of unknown size.
        Applying this factor to the projected 11 facilities,
        EPA determined that an additional six projected
        facilities would be owned by a small entity
Table 8-3 lists the 14 new electric generators expected to be
owned by a small entity.  Sales revenues required for the
sales test were not available for all parent firms. The test to
determine significant economic impacts was therefore
applied at the facility-level instead of the parent firm-level.3
As facility-level revenues are equal to or smaller than the
parent firm revenues, this approach may overstate the
economic impacts of this rule.
    3 Facility-level revenues were estimated using expected
annual electricity generation and expected future prices of
electricity. Compliance costs include all costs incurred during the
first 30 years of each facility's life. Chapter 7: Economic Impact
Analysis provides details on the estimation of expected annual
compliance costs and expected annual revenues for this screening
analysis.

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§316(b) EEA Chapter 8 for New Facilities
                  Regulatory Flexibility Analysis/SBREFA
Table 8-3: Economic Impact Condition of New In Scope Electric Generators
Facility Name
GenA
GenB
GenE
GenF
Genl-Gen6
CC1-CC11
No. of
Facilities
1
1
1
1
4
6
Parent Name
ParentA
ParentB
ParentEl
ParentE2
ParentF2
N/A
N/A
Facility Information
Estimated Annual Estimated Annual Ann. Compl. Cost/
Compliance Cost ($1999) Revenues ($1999) Ann. Revenues
$72,638 $106,638,872 0.07%
$73,147 $109,136,681 0.07%
$79,448 $54,195,202 0.15%
$77,508 $77,348,729 0.10%
$78,987 $82,226,151 0.10%
$90,850 $88,466,529 0.10%
 Source:  EPA Analysis, 2000.
Table 8-3 shows that the ratio of estimated annual
compliance costs to estimated annual revenues for the 14 in
scope facilities owned by a small firm ranges from 0.07
percent to 0.15 percent. None of these facilities are
expected to incur compliance costs in excess of one percent
of revenues.
8.2    MANUFACTURINS  SECTOR

The analysis in Chapter 5: Baseline Projections of New
Facilities determined that 58 new manufacturing facilities
are expected to incur compliance costs under the proposed
§316(b) New Facility Rule.  Since EPA's estimate of new
manufacturing facilities is based on industry growth
forecasts and not on specific planned facilities, actual parent
firm information was not available. EPA therefore
developed representative facilities based on the
characteristics of existing facilities identified in the §316(b)
Industry Screener Questionnaire.4
Table 8-4 presents the comparison of parent firm
employment with the SB A small entity size standard for the
29 new manufacturing facilities projected to begin operation
between 2001 and 2010.5  The SB A standard is based on the
firm's SIC code.  The table shows that only three of the 29
new manufacturing facilities are projected to be owned by a
small parent firm.  Two of the three facilities are in the
chemicals sector and one is in the metals sector. None of
the three small firms are expected to own more than one new
facility with costs under the proposed §316(b) New Facility
Rule.
    4 For each SIC code with a projected new facility, EPA sorted
screener respondents in that SIC code by their facility employment.
EPA selected the facility with the median employment value as the
representative facility and used that facility's reported firm
employment for this SBREFA analysis. Data from the Dun &
Bradstreet database were used where information on the firm was
not available in the screener. In cases where more than one new
facility is projected in an SIC code, EPA divided the screener
respondents in as many ranges as there are new facilities and
identified the median-employment facility in each range. Chapter
7: Economic Impact Analysis provides more detailed information
on how facility and firm characteristics for the 58 new
manufacturing facilities were determined.
    5 This section only presents information for the 29 facilities
expected to begin operation during the first ten years of the rule.
EPA's analysis assumed that facilities beginning operation between
2011 and 2020 would have characteristics identical to facilities
beginning operation during the first ten years of the forecasting
period.  Each facility presented in table 8-4 therefore represents
two new facilities.
 \-4

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§316(b) EEA Chapter 8 for New Facilities
Regulatory Flexibility Analysis/SBREFA
Table 8-4: Parent Firm Size of New In Scope Manufacturing Facilities
Facility ID
new 2812-1
new 2813-1
new 2819-1
new 28 19-2
new 2821-1
new 282 1-2
new 282 1-3
new 2824-1
new 2833-1
new 2834-1
new 2841-1
new 2865-1
new 2869-1
new 2869-2
new 2869-3
new 2869-4
new 2869-5
new 2869-6
new 2869-7
new 2869-8
new 2869-9
new 2873-1
new 2874-1
new 2899-1
new 33 12-1
new 33 12-2
new 33 12-3
new 3316-1
new 3353-1
SIC Code
2812
2813
2819
2821
2824
2833
2834
2841
2865
2869
2873
2874
2899
3312
3316
3353
SIC Code Description
Alkalies and Chlorine
Industrial Gases
Industrial Inorganic Chemicals, N.E.C.
Plastics Materials, Synthetic Resins, and
Nonvulcanizable Elastomers
Manmade Organic Fibers, Except Cellulosic
Medicinal Chemicals and Botanical Products
Pharmaceutical Preparations
Soaps and Other Detergents, Except
Speciality Cleaners
Cyclic Organic Crudes and Intermediates,
and Organic Dyes and Pigments
Industrial Organic Chemicals, N.E.C.
Nitrogenous Fertilizers
Phosphatic Fertilizers
Chemicals and Chemical Preparations, NEC
Steel Works, Blast Furnaces (Including Coke
Ovens), and Rolling Mills
Cold-Rolled Steel Sheet, Strip, and Bars
Aluminum Sheet, Plate, and Foil
SBA Small Entity
Size Standard
(Employees)
1,000
1,000
1,000
750
1,000
750
750
750
750
1,000
1,000
500
500
1,000
1,000
750
Estimated
Parent Firm
Employment
12,380
25,388
81,600
5,500
10,500
70,400
290,000
98,000
53,800
40,000
26,946
39,362
17,000
17,000
98,000
260
39,362
98,000
13,300
13,300
15,000
8,390
9,000
135
14,800
41,620
16,400
4,580
690
Parent
Firm Size
large
large
large
large
large
large
large
large
large
large
large
large
large
large
large
small
large
large
large
large
large
large
large
small
large
large
large
large
small
 Source:  EPA analysis based on §316(b) Industry Screener Questionnaire, 1999; D&B, 1999.
                                                                                                              • -5

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§316(b) EEA Chapter 8 for New Facilities
                  Regulatory Flexibility Analysis/SBREFA
Each of the three facilities owned by a small parent firm was
further analyzed to determine if it will experience a
significant economic impact as a result of this regulation.
The analysis is based on the ratio  of estimated annual
compliance cost to estimated annual revenues. As with
electric generators, this analysis was conducted at the
facility-level rather than the firm-level, and includes all
compliance costs incurred during the first 30 years of each
facility's life.. (See Chapter 7: Economic Impact Analysis
for details on the estimation of expected annual compliance
costs and expected annual revenues for this screening
analysis.)
Table 8-5: Economic Impact Condition of
Facility ID
new 2869-4
new 2899-1
new 3353-1
Facility
SIC
2869
2899
3353
New In Scope Manufacturing
Facilities
Facility Information
Estimated Annual
Compliance Cost ($1999)
$74,626
$94,879
$73,359
Estimated Annual Annual Compliance Cost/
Revenues ($1999) Annual Revenues
$67,565,540
$30,360,360
$404,433,726
0.11%
0.31%
0.02%
 Source:  EPA Analysis, 2000.
The results in Table 8-5 show that none of the facilities
owned by a small firm would have a compliance cost-to-
revenue ratio of greater than one percent. Based on this
screening analysis EPA determined that no small firm in the
analyzed manufacturing industries would experience
significant impacts from the compliance cost of this rule.6
    6 The estimated ratio of annual compliance costs to annual
revenues is likely to overestimate impacts because it is based on
facility revenues rather than firm revenues.  Firm revenues are
always greater than or equal to facility revenues. In addition, the
number of facilities owned by small entities may be overstated
because it is based on the firm's current employment.  Once the
employment of the new facility is added to the firm's employment,
the firm may no longer be considered small.
 \-6

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§316(b) EEA Chapter 8 for New Facilities
                Regulatory Flexibility Analysis/SBREFA
8.3    SUMMARY OF  RESULTS

The RFA/SBREFA analysis for this proposed regulation
shows that only 20 facilities  owned by a small entity would
be impacted by the proposed §316(b) New Facility Rule.
This number is well below the SBREFA threshold of 100
small entities suggested by EPA's SBREFA guidance. In
addition, none of the small entities are expected to
experience a significant economic impact as a result of this
regulation. Therefore, EPA certifies that the proposed
§316(b) New Facility Rule will not have a significant
economic impact on a substantial number of small entities.

Table 8-6 summarizes the results of the SBREFA screening
analysis.
Table 8-6: Projected Number of New Facilities Owned by a Small Entity
„ „ r fi Facilities Owned Compliance Cost as a Number of Facilities Owned by a
by Small Entities Percent of Revenue Small Entity With Significant Impact
Electric Generators
49, 87 \ 14 \ 0.07% to 0.15% \ 0
Manufacturing Facilities
26 - Pulp & Paper
28 - Chemicals
29 - Petroleum
33 -Metals
Total Manufacturing
Total
0
4
0
2
6
20
n/a
0.11% to 0.31%
n/a
0.02%
0.02% to 0.31%
0.02% to 0.29%
0
0
0
0
0
0
 Source:  EPA Analysis, 2000.

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§316(b) EEA Chapter 8 for New Facilities                                  Regulatory Flexibility Analysis/SBREFA


REFERENCES

Dun and Bradstreet (D&B).  1999. Data as of April 1999.      U.S. Environmental Protection Agency (EPA). 1999.
                                                       Revised Interim Guidance for EPA Rulewriters: Regulatory
Research Data International (PJ)I).  2000.  NEWGen          Flexibility Act as amended by the Small Business Regulatory
Database.                                               Enforcement Fairness Act. March 29, 1999.

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§316(b) EEA Chapter 9 for New Facilities
                   UMRA and Other Economic Analyses
       Chapter  9:   UMRA  and   Other

                          Economic   Analyses
INTRODUCTION

This chapter addresses the requirements of the Unfunded
Mandates Reform Act (UMRA) and the related
requirements of Executive Order 13132 on "Federalism"
and the Paperwork Reduction Act (PRA). To demonstrate
compliance with these mandates, EPA analyzed the costs
and impacts of the proposed rule for government and private
sector entities, including the administrative costs imposed by
the regulation.

Section 9.1 of this chapter presents an analysis which
supports EPA's compliance with the requirements of
UMRA.  Section 9.2 presents the total social costs of the
proposed rule. Section 9.3 addresses Executive Order
13132 and the Paperwork Reduction Act.
9.1   THE UNFUNDED MANDATES
       REFORM ACT (UMRA) OF 1995

Title II of the Unfunded Mandates Reform Act of 1995
(UMRA) requires that Federal agencies assess the effects of
their regulatory actions on state, local, and tribal
governments and the private sector. Agencies must prepare
a written statement, including a cost-benefit analysis, for
proposed and final rules with "Federal mandates" that may
result in expenditures by state, local, and tribal governments,
in the aggregate, or by the private sector, of $100 million or
more in any one year (Section 202 of UMRA).1

Before promulgating a rule for which a written statement is
needed, agencies  must identify and consider a reasonable
number of regulatory alternatives and adopt the  least costly,
most cost-effective or least burdensome alternative that
achieves the objectives of the rule (Section 205). The
provisions of Section 205 do not apply when they are
inconsistent with applicable law. Agencies may adopt an
    1 Federal mandates include Federal regulations that impose
enforceable duties on state, local, and tribal governments, or on the
private sector, excluding those related to conditions of Federal
assistance and participation in voluntary Federal programs.
CHAPTER CONTENTS
9. 1  The Unfunded Mandates Reform Act
       of 1995 ...........................  9-1
    9.1.1   Compliance Costs for Governments .  9-2
    9.1.2   Compliance Costs for the Private
           Sector  ........................  9-8
    9. 1.3   Summary of the UMRA Analysis ...  9-8
    Social Costs of the Proposed Rule  ........  9-8
    Other Economic Analyses ..............  9-10
    9.3.1   Executive Order 13132
           ("Federalism")  ................  9-10
           The Paperwork Reduction Act
           of 1995 ......................  9-10
                                          9-12
  9.2
  9.3
      9.3.2
  References
alternative other than the least costly, most cost-effective, or
least burdensome alternative if they publish with the final
rule an explanation why that alternative was not adopted
(Section 205).  Before establishing any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, agencies must
develop a small government agency plan (Section 203). The
plan must provide for notifying potentially affected small
governments, enabling officials of affected small
governments to have meaningful and timely input in the
development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing,
educating, and advising small governments on compliance
with the regulatory requirements.

UMRA specifies that a written statement is needed if either
(1) the cost of a regulation to state, local, and tribal
governments exceeds $100 million in any one year, or (2)
the cost of a regulation to the private sector exceeds $100
million in any one year.2 The following  two subsections,
9.1.1 and  9.1.2, present the costs of the proposed §316(b)
New Facility Rule to the government and the private sector,
    2 The $100 million test is applied separately to governments
and the private sector. The term "in any one year" refers to the
maximum cost in a single year, not the annualized cost over the
analysis period.
                                                                                                   9-1

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§316(b) EEA Chapter 9 for New Facilities
                     UMRA and Other Economic Analyses
respectively.  Subsection 9.1.3 presents a summary of the
results of the UMRA analysis.

9.1.1 Compliance Costs  for Governments
Governments may incur two types of costs as a result of the
proposed rule: (1) costs to comply with the rule for in scope
facilities owned by government entities; and (2) costs to
implement the rule, borne by the responsible regulatory
authorities. Both types of costs are discussed below.

a.  Compliance Costs for Government-Owned
    Entities
Of the 98 new in scope facilities subject to the proposed
rule, only three are expected to be owned by a government
entity. All three are electric generators projected to be
owned by a state government or municipality.3

Compliance costs for individual facilities were presented in
Chapter 6: Facility Compliance Costs. The maximum
aggregate costs for the three government-owned facilities in
any one year is estimated to be $189,000.4
b.  Implementation  Costs for Regulatory
    Authorities
The requirements of §316(b) are implemented through the
NPDES permit program.  Forty-four states and territories
currently have NPDES permitting authority under Section
402(b) of the Clean Water Act (CWA). EPA estimates that
states and territories will incur four types of costs associated
with implementing the requirements of the proposed §316(b)
New Facility Rule: (1) start-up activities; (2) issuing an
initial NPDES permit for each new facility; (3) reviewing
and reissuing a permit for each new facility every five years;
and (4) annual activities.

Each state's actual burden associated with the administrative
functions required by the proposed §316(b) New Facility
Rule will depend on the number of new in  scope facilities
that will be built in the state during the ten  year analysis
period. The incremental burden will also depend on the
extent of each state's current practices for regulating
CWISs.5
    3 Based on EPA's research of the NEWGen database, one
new in scope facility, GenG, is owned by a state government. EPA
extrapolated information from the NEWGen database to account
for the 20-year forecasting period of this analysis. Based on this
extrapolation, EPA estimated that an additional two government-
owned facilities, Genl and CC6, would be subject to this proposed
regulation. (See Chapter 5: Baseline Projections of New Facilities
and Chapter 7: Economic Impact Analysis for more information on
how EPA estimated the number and the type and characteristics of
facilities subject to this rule.)

    4 Annualized at seven percent, this cost is estimated to be
$186,000.
    5 States that currently require relatively modest analysis,
monitoring, and reporting of impacts from CWISs in NPDES
permits may require more permitting resources to implement the
proposed rule than are required under their current programs. For
states that are actively implementing §316(b) requirements now,
the proposed rule may actually reduce the burden on permit writers,
by clarifying key concepts in the rule and by providing easily-
applied criteria for some regulatory determinations. The available
information on current implementation of the §316(b) requirements
by different regulatory authorities is insufficient to allow EPA to
estimate the costs of the proposed rule to the regulatory authorities
with precision. EPA therefore made the conservative assumption
that permitting authorities currently do not incur administrative
costs of implementing §316(b) requirements and that all costs for
new facilities under the proposed §316(b) New Facility Rule are
incremental costs.
9-.

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§316(b) EEA Chapter 9 for New Facilities
                     UMRA and Other Economic Analyses
«>  Start-up activities
All 44 states and territories with NPDES permitting
authority are expected to undergo start-up activities to
prepare for administering the provisions of the proposed
§316(b) New Facility Rule.  Start-up activities include
reading and understanding the rule, mobilization and
planning of the resources required to address the rule's
requirements, and training technical staff on how to review
materials submitted by facilities and make determinations on
the§316(b) requirements for each facility's NPDES permit.
In addition, permitting authorities are expected to incur other
direct costs, e.g., for copying and the purchase of supplies.
Table 9-1  shows that total start-up costs of $3,054 are
expected to be incurred by each of the 44 states and
territories  with NPDES permitting authority.
Table 9-1: Government
Activity
Read and Understand Rule
Mobilization/Planning
Training
Other Direct Costs
Totalf
Costs of Start-Up Activities (per Regulatory Authority)
Costs
$758
$1,326
$919
$50
$3,054
         T    Individual numbers may not add up to total due to independent rounding.

         Source:  U.S. EPA, Information Collection Request for Cooling Water Intake Structures, New Facility Proposed
                 Rule, July 2000.
                                                                                                              9-3

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§316(b) EEA Chapter 9 for New Facilities
                     UMRA and Other Economic Analyses
«>  Issue initial NPDESpermit
The permitting authorities will have to include the
requirements of the proposed §316(b) New Facility Rule in
the initial NPDES permit issued to each new in scope
facility. The activities required to make determinations of
§316(b) requirements include reviewing submitted
documents and supporting materials, verifying data sources,
consulting with facilities and the interested public,
determining specific permit requirements, and writing the
actual permit.
Table 9-2 below shows the activities that EPA anticipates
will be necessary for initial permit issuance and the
estimated cost of each activity. Permits that require all of
the components listed in Table 9-2 are expected to impose a
cost of $3,482 per permit.
Table 9-2: Government Costs of Initial
Activity
Review Source Water Baseline Characterization Study
Review Littoral Zone and CWIS Location Data
Review CWIS Design Data
Review Additional Technology Implementation Plan
Determine Compliance with CWIS Standards
Determine Monitoring Frequency
Determine Record Keeping and Reporting Frequency
Consider Public Comments
Issue Permit
Keep Permit Record
Other Direct Costs
Totalft
NPDES Permit Issuance (per Permit)
Costs
$443
$443
$443
$222
$665
$222
$222
$222
$201
$100
$300
$3,482
      T    Actual per permit costs may be lower than the total cost because some facilities will not have to submit information
          on all compliance requirements.
      n   Individual numbers may not add up to total due to independent rounding.

      Source:  U.S. EPA, Information Collection Request for Cooling Water Intake Structures, New Facility Proposed Rule,
              July 2000.
9-4

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§316(b) EEA Chapter 9 for New Facilities
                     UMRA and Other Economic Analyses
«>  Review and reissue permit every five years
NPDES permits are issued for five years. The permitting
authority therefore has to reissue the permits for the new in
scope facilities every five years following issuance of the
initial permit.  Before reissuing a facility's permit, the
regulatory authority must determine if there have been any
changes in the facility's operations or in the physical or
biological attributes of the source water body. Any changes
should be evaluated to determine the need for additional, or
more stringent, conditions in the permit.

The proposed §316(b) New Facility Rule requires facilities
to submit the same type of information for their permit
renewal application as was required for the initial permit.
The permitting authorities will therefore have to carry out
the same type of administrative activities as during the initial
permitting process. The burden of these activities is
expected to be smaller for permit reissuance, however,
because the permitting authority is already familiar with the
facility's case and the type of information the facility will
provide.  The reduction in costs is expected to vary by the
specific repermitting activities.

Table 9-3 shows the activities that EPA anticipates will be
necessary for permit reissuance and the estimated cost of
each activity. Permits that require all of the components
listed in Table 9-3 are expected to impose a cost of $2,861
per permit.
Table 9-3: Government Costs of
Activity
Review Source Water Baseline Characterization Study
Review Littoral Zone and CWIS Location Data
Review CWIS Design Data
Review Additional Technology Implementation Plan
Determine Compliance with CWIS Standards
Determine Monitoring Frequency
Determine Record Keeping and Reporting Frequency
Consider Public Comments
Issue Permit
Keep Permit Record
Other Direct Costs
Total
Repermitting (per Permit)
Costs
$443
$133
$133
$222
$665
$222
$222
$222
$201
$100
$300
$2,861
      t    Actual per permit costs may be lower than the total cost because some facilities will not have to submit information
          on all compliance requirements.
      ^   Individual numbers may not add up to total due to independent rounding.

      Source:  U.S. EPA, Information Collection Request for Cooling Water Intake Structures, New Facility Proposed Rule,
              July 2000.
                                                                                                                9-5

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§316(b) EEA Chapter 9 for New Facilities
                     UMRA and Other Economic Analyses
«>  Annual activities
In addition to the start-up and permitting activities discussed
above, permitting authorities will have to carry out certain
annual activities to ensure the continued implementation of
the requirements of the proposed §316(b) New Facility
Rule. These annual activities include reviewing yearly
status reports, tracking compliance, determining monitoring
scope reduction, and record keeping.
Table 9-4 below shows the annual activities that will be
necessary for each permit following the year of initial
permitting and the estimated cost of each activity.  A total
cost of $1,469 is estimated for each permit per year.
Table 9-4: Government Costs for Annual
Activity
Review of Yearly Report
Track Compliance
Determine Monitoring Scope Reduction
Keep Records
Other Direct Costs
Totalf
Activities (per Permit)
Costs
$522
$443
$348
$106
$50
$1,469
       n   Individual numbers may not add up to total due to independent rounding.

       Source:  Information Collection Request for Cooling Water Intake Structures, New Facility Proposed Rule, July 2000.
EPA calculated total government costs for implementing the
proposed §316(b) New Facility Rule by aggregating the unit
costs presented in Tables 9-1 to 9-4 based on the specific
permitting requirements for each of the 98 new in scope
facilities. Table 9-5 presents the rule's estimated
government implementation costs for 2001 to 2030. The
table shows that the highest one-year implementation costs,
$159,319, will be incurred in 2001, the first year of the final
§316(b) New Facility Rule. This cost is mainly the result of
start-up activities for the 44 states and territories with
NPDES permitting authority. The total net present value of
government implementation costs is estimated to be
$953,700 or $76,860 per year when annualized over 30
years at a seven percent rate.6
                                                               6 Calculation of the present value assumes that costs are
                                                           incurred at the end of the year.
9-6

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§316(b) EEA Chapter 9 for New Facilities
UMRA and Other Economic Analyses
Table 9-5: Total Government Implementation Costs by Year and Activity
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Net Present Value
@7%
Annualized @7%
Start-Up Activities
$134,376
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$125,585
$10,120
Initial Permitting
$24,943
$18,832
$12,977
$11,679
$10,571
$12,280
$13,009
$12,344
$6,425
$5,255
$9,116
$6,963
$6,963
$6,963
$6,520
$8,293
$11,775
$12,597
$11,775
$8,608
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$127,553
$10,280
Repermitting
$0
$0
$0
$3,546
$14,262
$16,040
$10,805
$9,507
$12,255
$24,060
$26,567
$21,287
$15,622
$13,521
$24,060
$26,567
$21,287
$15,622
$13,521
$24,060
$26,567
$21,287
$15,622
$13,521
$24,060
$26,567
$21,287
$15,622
$13,521
$24,060
$164,583
$13,260
Annual
Activities
$0
$7,344
$17,624
$24,968
$30,843
$36,718
$44,061
$49,936
$55,811
$60,217
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$61,685
$535,980
$43,190
Total Costs
$159,319
$26,175
$30,601
$40,193
$55,676
$65,037
$67,875
$71,787
$74,491
$89,531
$97,367
$89,936
$84,271
$82,170
$92,266
$96,545
$94,747
$89,904
$86,981
$94,354
$88,252
$82,973
$77,307
$75,206
$85,745
(TOO OCO
J)00,ZJZ
$82,973
$77,307
$75,206
$85,745
$953,701
$76,860
 Source:  Summary information from the Information Collection Request for Cooling Water Intake Structures, New Facility Proposed
         Rule, July 2000.
                                                                                                              9-7

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§316(b) EEA Chapter 9 for New Facilities
                    UMRA and Other Economic Analyses
9.1.2 Compliance  Costs for the Private
        Sector
The private sector incurs costs under the proposed §316(b)
New Facility Rule to comply with the requirements for in
scope facilities.  Of the 98 new in scope facilities subject to
the proposed rule, 95 are estimated to be owned by a private
entity. The privately-owned facilities include all 58
manufacturing facilities and 37 of the 40 electric generators.

Compliance costs for individual facilities were presented in
Chapter 6: Facility Compliance Costs. Total annualized
compliance costs for the 95 privately-owned facilities are
estimated to be $11.9 million, discounted at seven percent.
The maximum aggregate costs for all 95 facilities in any one
year is estimated to be $36.2 million.  This is well below the
UMRA $100 million cost threshold for private sector costs
in any one year.

9.1.3 Summary of the  UMRA  Analysis
EPA has determined that the proposed rule, if promulgated,
would not contain a Federal mandate that will result in
expenditures of $100 million or more for state, local and
tribal governments, in the aggregate, or for the private sector
in any one year.

Table 9-6 summarizes the costs to comply with the rule for
the 98 in scope facilities and the costs to implement the rule,
borne by the responsible regulatory authorities.
Table 9-6: Summary of Total Costs
Sector
Government
Sector
Private
Sector
Total
Total Annualized Cost
Facility
Compliance
Costs
$185,950
$11,941,130
$12,127,080
Government
Implement-
ation Costs
$76,860
n/a
$76,860
Total
$262,810
$11,941,130
$12,203,940
Maximum One- Year Cost
Facility
Compliance
Costs
$189,000
$36,182,530
$36,371,530
Government
Implement-
ation Costs
$97,370
n/a
$97,370
Total
$286,370
$36,182,530
$36,468,900
 Source:  Summary information from Appendix B and the Information Collection Request for Cooling Water Intake Structures, New
         Facility Proposed Rule, July 2000.
Table 9-6 shows that total annualized costs of the §316(b)
New Facility Rule borne by governments is $0.26 million per
year.  The maximum one-year costs that will be incurred by
government entities is expected to be $0.29 million ($0.19
million in compliance costs for the three projected
government-owned facilities and $0.1 million in
implementation costs). Total annualized costs and maximum
one-year costs borne by the private sector are $11.9 million
and $36.2 million, respectively.  Both of these maximum
costs are well below the $100 million UMRA threshold.
EPA therefore concludes that the proposed §316(b) New
Facility Rule is not subject to the requirements of Sections
202 and 205 of UMRA.
9.2   SOCIAL COSTS OF THE  PROPOSED

        RULE

The social costs of regulatory actions are the opportunity
costs to society of employing scarce resources to reduce
environmental damage.  The largest component of economic
costs to society generally is the estimated costs incurred by
facilities for the labor, equipment, material, and other
economic resources needed to comply with the proposed
rule. Social costs also include the value of resources used
by governments to implement the rule, including the costs of
permitting, compliance monitoring, and enforcement
activities.  Finally, social costs include lost producers' and
consumers' surplus that result when the quantity of goods
and services produced decreases as a result of the rule.

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§316(b) EEA Chapter 9 for New Facilities
                      UMRA and Other Economic Analyses
The estimated total social cost of the proposed §316(b) New
Facility Rule is the sum of three cost components: (1) direct
compliance costs to facilities subject to the regulation; (2)
costs to permitting authorities of implementing the rule; and
(3) costs to the federal government of overseeing rule
implementation.

    >    Facility compliance costs are discussed in Chapter
         6: Facility Compliance Costs and include
         technology costs, operating and maintenance costs,
         and permitting and monitoring costs.7

    >    State permitting costs are presented in Section
         9.1.1(b) of this chapter and include start-up costs,
         costs for initial permit application review and permit
         development, repermitting costs, and costs for
         annual activities.

    *•    Federal costs include the same types of costs as are
         incurred by states but are associated with reviewing
         the states' permitting actions.
Given the small number of new facilities that would incur
costs under the proposed §316(b) New Facility Rule, EPA
does not expect a reduction in output in the affected
industries due to the proposed rule (see discussion in
Chapter 7: Economic Impact Analysis).  Therefore, social
costs are fully accounted for by the compliance costs
incurred by the regulated facilities and the costs incurred by
governments to implement the rule.

The total estimated social cost of the proposed §316(b) New
Facility Rule is approximately $12.2 million annually (using
a seven percent discount rate and a 30 year discounting
period). Direct facility compliance costs account for $12.1
million, or 99.2 percent, of the total.  Annual state and
federal implementation costs account for approximately
$76,860 and $3,250, respectively.  The net present value of
total social costs is $151.5 million, with facility compliance
costs accounting for $150.5 million, state implementation
costs for $0.95 million, and federal costs for $0.04 million.
    7 Direct compliance costs to facilities are often calculated
differently for the economic impact analysis and the social cost
estimation. Economic impact analyses often take into account the
tax deductability of compliance costs to private businesses and
differences between social and private opportunity costs of capital.
The facility compliance costs estimated in Chapter 6, however, were
not adjusted for tax effects. In addition, a single discount rate of
seven percent is used in all parts of the analysis. Therefore, the
costs presented in Chapter 6 represent both, the costs used in the
impact analysis and the value to society of the resources used by
facilities in compliance activities.
                                                                                                                 9-9

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§316(b) EEA Chapter 9 for New Facilities
                    UMRA and Other Economic Analyses
Table 9-7: Social Cost of the Proposed §316(b) New Facility

Facility Compliance Costs
State Implementation Costs
Federal Costs
Total
NPV
$150,485,380
$953,700
$40,320
$151,479,400
Rule ($1999)
Annualized
$12,127,080
$76,860
$3,250
$12,207,190
      Source:  Summary information from Appendix B and the Information Collection Request for Cooling Water Intake Structures,
              New Facility Proposed Rule, July 2000.
9.3   OTHER  ECONOMIC ANALYSES

9.3.1 Executive Order 13132
        ( Federalism  )
Executive Order 13132 on "Federalism" (64 FR 43255,
August 10, 1999) requires EPA to develop an accountable
process to ensure "meaningful and timely input by state and
local officials in the development of regulatory policies that
have federalism implications." "Policies that have
federalism implications" is defined in the Executive Order to
include regulations  that have "substantial direct effects on
the states, on the relationship between the national
government and the states, or on the distribution of power
and responsibilities among the various levels of
government."

Under Section 6 of  Executive Order 13132, EPA may not
issue a regulation that has federalism implications, that
imposes substantial direct compliance costs, and that is not
required by statute,  unless the Federal government provides
the funds necessary to pay the direct compliance costs
incurred by state and local governments, or EPA consults
with state and local officials early in the process of
developing the proposed regulation. EPA also may not issue
a regulation that has federalism implications and that
preempts state law,  unless the Agency consults with state
and local officials early in the process of developing the
proposed regulation.

EPA determined that the proposed §316(b) New Facility
Rule does not have  federalism implications.  It will not have
substantial direct effects on the states, on the relationship
between the national government and the states, or on the
distribution of power and responsibilities among the various
levels of government, as specified in Executive Order
13132. The rule will not impose substantial costs on states
and localities. In addition, the rule is required by §316(b) of
the Clean Water Act.  For these reasons, the requirements of
Section 6 of the Executive Order do not apply to this rule.

9.3.2 The Paperwork Reduction Act of

        1995
The Paperwork Reduction Act of 1995 (PRA) (superseding
the PRA of 1980) is implemented by the Office of
Management and Budget (OMB) and requires that agencies
submit a supporting statement to OMB for any information
collection that solicits the same data from more than nine
parties.  The PRA seeks to ensure that Federal agencies
balance their need to collect information with the paperwork
burden imposed on the public by the collection.

The definition of "information collection" includes activities
required by regulations, such as permit development,
monitoring, recordkeeping, and reporting.  The term
"burden" refers to the "time, effort, or financial resources"
the public expends to provide information to or for a Federal
agency, or otherwise fulfill statutory  or regulatory
requirements. PRA paperwork burden is measured in terms
of annual time and financial resources the public devotes to
meet one-time and recurring information requests (44 U.S.C.
3502(2); 5 C.F.R. 1320.3(b)).

Information collection activities may include:

    >•   reviewing  instructions;
    >•   using technology to collect, process, and disclose
        information;
    *   adjusting existing practices to comply with
        requirements;
9-10

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§316(b) EEA Chapter 9 for New Facilities
                    UMRA and Other Economic Analyses
    >•   searching data sources;
    *   completing and reviewing the response; and
    *   transmitting or disclosing information.

Agencies must provide information to OMB on the parties
affected, the annual reporting burden, the annualized cost of
responding to the information collection, and whether the
request significantly impacts a substantial number of small
entities.  An agency may not conduct or sponsor, and a
person is not required to respond to, an information
collection unless it displays a currently valid OMB control
number.

EPA's estimate of the information collection requirements
imposed by the proposed §316(b) New Facility Rule are
documented in the Information Collection Request (ICR)
which accompanies this regulation.
                                                                                                         9-11

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§316(b) EEA Chapter 9 for New Facilities
UMRA and Other Economic Analyses
REFERENCES

U.S. Environmental Protection Agency. 2000. Information
Collection Request for Cooling Water Intake Structures,
New Facility Proposed Rule, July 2000.
9-12

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§316(b) EEA Chapter 10 for New Facilities
                       Alternative Regulatory Options
 Chapter   10:    Alternative   Regulatory
                                        Opt
ions
INTRODUCTION

EPA defined and evaluated a number of alternative Best
Technology Available (BTA) options for facilities subject to
the proposed §316(b) New Facility Rule. This chapter
presents two alternative options that EPA considered for
proposal and their costs.
10.1 ALTERNATIVE OPTION 1:  UNIFORM
       STANDARDS OPTION

The first alternative option that EPA considered would
apply the BTA requirements proposed for estuaries and
tidal rivers to all facilities, regardless of location.  Under
this option, the definition and number of new facilities
subject to the rule would not change, but some facilities
would incur more stringent compliance requirements.
Application of these requirements would ensure that
stringent controls, based on the capabilities of closed-cycle
recirculating systems, are the nationally applicable
minimum for all new CWISs on all water body types. The
specific standards under this option would include:

    *   reducing total design intake flow to no more than
       one percent of annual flow or volume of the source
       water body;

    *   reducing maximum design intake velocity to no
       more than 0.5 feet per second;

    *   reducing intake flow to a level commensurate with
       that which could be attained by a closed-cycle
       recirculating cooling water system;

    *   implementing additional technologies that
       minimize I&E of fish eggs and larvae and
       maximize survival of impinged adult and juvenile
       fish;

    *   implementing other requirements as defined by the
       Director.
   CHAPTER CONTENTS
   10.1 Alternative Optionl: Uniform Standards
       Option	
   10.2 Alternative Option 2: Dry Cooling Option
10-1
10-2
EPA used the same process to develop the estimates for the
Uniform Standards Option as was used for the proposed
rule. Based on the new facility characteristics, EPA
assessed whether a facility is likely to comply with the
Uniform Standards Option requirements in the baseline.
Assumptions made in this assessment include the following:

    *   A facility with a passive screen was assumed to
       meet the 0.5 fps velocity criteria.

    *   A facility using  an intake screen only was assumed
       have a traveling screen without fish handling
       equipment.

    *   A facility with a recirculating system is assumed to
       meet the one percent intake flow criteria, since
       most existing facilities (e.g., more than 90 percent
       of utilities) with recirculating systems would meet
       the intake flow criteria. Most once-through
       facilities were also assumed to meet the intake flow
       criteria since manufacturing facilities typically
       have much lower intake flows than utilities.

    *   All facilities were assumed to have one intake,
       which seems reasonable for manufacturers  since
       most utilities have one or two intakes and typically
       use much higher flows.

The unit costs discussed in Chapter 6: Facility Compliance
Costs, Section 6.1 also were used to develop cost estimates
for the Uniform Standards Option requirements. The
estimated flow for a facility was important in calculating the
cost for a given technology because unit costs for
technologies are based on flow.  Costing assumptions
related to flow for this option are the same as used to
estimate the costs of the proposed rule.
                                                                                                 10-1

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§316(b) EEA Chapter 10 for New Facilities
                        Alternative Regulatory Options
Table 10-1 shows the estimated compliance costs under the
Uniform Standards Option.
Table

Industry Category
(Number of Facilities
Affected)

Electric Generators
(40)
Manufacturing
Facilities (58)
Total (98)

Electric Generators
(40)
Manufacturing
Facilities (58)
Total (98)
10-1: National Costs of Compliance with the Uniform Standards Option
One-Time Costs
Capital
Technology
Total Con
$25.87
$23.49
$49.36
Anni
$2.08
$1.89
$3.97
Initial Permit
Application
Recurring Costs
O&M
npliance Costs (present value.
$1.08
$1.47
$2.55
alized Compliance
$0.09
$0.12
$0.21
$50.60
$59.48
$110.08
Costs (in mi
$4.08
$4.79
$8.87

Permit Monitoring,
_ , Record Keeping
Renewal „ _ ..
& Reporting
Total
in millions $1999)
$1.57
$2.23
$3.80
lions $1999)
$0.13
$0.18
$0.31
$15.93
$21.95
$37.88

$1.28
$1.77
$3.05
$95.05
$108.62
$203.67

$7.66
$8.75
$16.41
 Source: Summary information from Appendix B and the Information Collection Request for Cooling Water Intake
         Structures, New Facility Proposed Rule, July 2000.
Under the Uniform Standards Option, the present value of
total compliance costs is estimated to be $203.7 million.
The 40 electric generators account for $108.6 million of this
total, and the 58 manufacturing facilities for $95.1 million.
Total annualized cost for the 98 facilities is estimated to be
$16.4  million.  Of this, $7.7 million will be incurred by
electric generators and $8.8 million by manufacturing
facilities.
10.2  ALTERNATIVE OPTION  2: DRY
        COOLINS OPTION

The second alternative option considered by EPA would
impose more stringent compliance requirements on the
electric generating segment of the industry.  It is based in
whole or in part on a zero intake-flow (or nearly zero,
extremely low-flow) requirement commensurate with levels
achievable through the use of dry cooling systems. New
manufacturing facilities would not be subject to these
stricter requirements but would have to comply with the
standards of the proposed rule.

EPA developed cost equations and curves for dry cooling
towers similarly to those for wet cooling towers, relating
tower capital and operating and maintenance (O&M) costs
to the system's cooling water flow requirement. EPA used
the same flow volume used for developing cost estimates for
the other options to develop the costs for the Dry Cooling
Option.

Table 10-2 shows the estimated compliance costs under the
Dry Cooling Option.
10-2

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§316(b) EEA Chapter 10 for New Facilities
Alternative Regulatory Options
Table 10-2: National Costs of Compliance with the Dry Cooling
Industry Category
(Number of Facilities
Affected)

Electric Generators
(40)
Manufacturing
Facilities (58)
Total (98)

Electric Generators
(40)
Manufacturing
Facilities (58)
Total (98)
One-Time Costs
Capital
Technology
Total Con
$657.50
$12.22
$669.72
Anni
$52.99
$0.98
$53.97
Initial Permit
Application
npliance Costs
$0.09
$1.38
$1.47
Recurring Costs
O&M
(present value.
$1,665.52
$34.26
$1,699.78
alized Compliance Costs (in mi
$0.01
$0.11
$0.12
$134.22
$2.76
$136.98
Option

Permit Monitoring,
_ , Record Keeping
Renewal „ _ ..
& Reporting

Total
in millions $1999)
$0.09
$2.14
$2.23
lions $1999)
$0.01
$0.17
$0.18
$0.00
$20.74
$20.74

$0.00
$1.67
$1.67
$2,323.20
$70.74
$2,393.94

$187.23
$5.70
$192.93
 Source: Summary information from Appendix B and the Information Collection Request for Cooling Water Intake
         Structures, New Facility Proposed Rule, July 2000.
The Dry Cooling Option would be the most expensive of the   Manufacturing facilities would incur the same compliance
three regulatory frameworks considered by EPA.  Under       costs as under the proposed rule,$5.7 million.  The 40
this option, the present value of total compliance costs is       electric generators, however, would face considerably
estimated to be almost $2.4 billion. Total annualized cost      higher costs with approximately $187 million annually.
for the 98 facilities is estimated to be  $193 million.
                                                                                                          10-3

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§316(b) EEA Chapter 10 for New Facilities                                      Alternative Regulatory Options
                                This  Page Intentionally Left Blank
10-4

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§316b EEA Chapter 11 for New Facilities
                     CWIS Impacts and Potential Benefits
        Chapter   11:   CWIS  Impacts

                      and   Potential   Benefits
INTRODUCTION

In this chapter, we discuss impacts of CWIS by waterbody
type and potential benefits of the proposed §316(b)
regulation. EPA was unable to conduct a detailed,
quantitative analysis of the proposed rule because much of
the information needed to quantify and value potential
reductions in I&E at new facilities was unavailable.  At the
time of proposal, there was only general information about
the location of proposed new facilities, and in most cases
details of facility and environmental characteristics were
unknown. To overcome these limitations, this chapter
presents examples of impacts and potential regulatory
benefits based on a subset of existing facilities for which
information was readily available. The focus is on fish
species because very large numbers of fish are impinged and
entrained compared to other aquatic organisms such as
phytoplankton and benthic invertebrates.

The chapter

*   summarizes factors related to intake location, design,
    and capacity that influence the magnitude of I&E,

>•   discusses CWIS impacts for different waterbody types
    (rivers, lakes and reservoirs, the Great Lakes, oceans,
    and estuaries), and

>•   provides examples of potential benefits from previous
    studies of existing facilities.
11.1  CWIS CHARACTERISTICS THAT
INFLUENCE THE MAGNITUDE OF I&E

11.1.1  Intake Location
Two major components of a CWIS's location that influence
the relative magnitude of I&E are (1) the type of waterbody
from which a CWIS is withdrawing water, and (2) the
placement of the CWIS relative to sensitive biological areas
within the waterbody. EPA's proposed regulatory
framework is designed to take both of these factors into
account.
  CHAPTER CONTENTS
  11.1 CWIS Characteristics that Influence the
       Magnitude of I&E	  11-1
  11.2 Methods for Estimating Potential
       I&E Losses	  11-3
  11.3 CWIS Impacts inRivers	  11-5
  11.4 CWIS Impacts in Lakes and Reservoirs ...  11-7
  11.5 CWIS Impacts in the GreatLakes 	  11-10
  11.6 CWIS Impacts inEstuaries  	  11-12
  11.7 CWIS Impacts in Oceans	  11-14
  11.8 Summary of I&E Data	  11-16
  11.9 Potential Benefits of §316(b) Regulation.  11-16
  11.10 Empirical Indications of Potential Benefits 11-22
  References 	  11-25

Considerations in siting an intake to reduce the potential for
I&E include intake depth and distance from the shoreline in
relation to the physical, chemical, and biological
characteristics of the source waterbody.  In general, intakes
located in nearshore areas (riparian or littoral zones) will
have greater ecological impacts than intakes located offshore
because nearshore areas are more biologically productive
and have higher concentrations of organisms.

Critical physical and chemical factors related to siting of an
intake include the direction and rate of waterbody flow, tidal
influences, currents, salinity, dissolved oxygen levels,
thermal stratification, and the presence of pollutants. The
withdrawal of water by an intake can change ambient flows,
velocities, and currents within the source waterbody, which
may cause organisms to concentrate in the vicinity of an
intake or reduce their ability to escape a current. Effects
vary according to the type of waterbody and species present.
In large rivers, withdrawal of water may have little effect on
flows because of the strong, unidirectional nature of ambient
currents. In contrast, lakes and reservoirs have small
ambient flows and currents, and therefore a large intake flow
can significantly alter current patterns.  Tidal currents in
estuaries or tidally influenced sections of rivers can carry
organisms past intakes multiple times, thereby increasing
their probability of entrainment. If intake withdrawal and

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§316b EEA Chapter 11 for New Facilities
                       CWIS Impacts and Potential Benefits
discharge are in close proximity, entrained organisms
released in the discharge can become re-entrained.

The magnitude of I&E in relation to intake location also
depends on biological factors such as species' distributions
and the presence of critical habitats within an intake's zone
of influence. In general, intakes located in nearshore areas
have greater impacts than intakes located offshore because
nearshore areas are typically more biologically productive
and have higher concentrations of organisms. Also, species
with planktonic (free-floating) early life stages have higher
rates of entrainment because they are unable to actively
avoid being drawn into the intake flow.

11.1.2  Intake Design
Intake design refers to the design and configuration of
various components of the intake structure, including
screening systems (trash racks, pumps, pressure washes),
passive intake  systems, and fish diversion and avoidance
technologies (U.S. EPA, 1976). After entering the CWIS,
water must pass through a screening device before entering
the power plant.  The screen is designed to prevent debris
from entering and clogging the condenser tubes.  Screen
mesh size and velocity characteristics are two important
design features of the screening system that influence the
potential for impingement and entrainment of aquatic
organisms that are withdrawn with the cooling water
(U.S. EPA, 1976).

Design intake velocity has a significant influence on the
potential for impingement (Boreman, 1977). The biological
significance of design intake velocity depends on species-
specific characteristics such as fish swimming ability and
endurance.  These characteristics are a function of the size
of the organism and the temperature and oxygen levels of
water in the area of the intake  (U.S. EPA, 1976).  The
maximum velocity protecting most small fish is 0.5 ft/s, but
lower velocities will still impinge some fish and entrain eggs
and larvae and other small organisms (Boreman, 1977).

Conventional traveling screens have been modified to
improve fish survival of screen impingement and spray wash
removal (Taft, 1999). However, a review of steam electric
utilities indicated that alternative screen technologies are
usually not much more effective at reducing impingement
than the conventional vertical traveling screens used by most
steam electric facilities (SAIC, 1994). An exception may be
traveling screens modified with fish collection systems
(e.g., Ristroph screens).  Studies of improved fish collection
baskets at Salem Generating Station showed increased
survival of impinged fish (Ronafalvy et al., 1999).

Passive intake  systems (physical exclusion devices) screen
out debris and  aquatic organisms with minimal mechanical
activity and low withdrawal velocities (Taft, 1999).  The
most effective  passive intake systems are wedge-wire
screens and radial wells (SAIC, 1994). A new technology,
the Gunderboom, which consists of polyester fiber strands
pressed into a water-permeable fabric mat, has shown
promise in reducing ichthyoplankton entrainment at the
Lovett Generating Station on the Hudson River (Taft, 1999).

Fish diversion/avoidance systems (behavioral barriers) take
advantage of natural behavioral characteristics of fish to
guide them away from an intake structure or into a bypass
system (SAIC, 1994, Taft,  1999). The most effective of
these technologies are velocity caps, which divert fish away
from intakes, and underwater strobe lights, which repel
some  species (Taft,  1999).  Velocity caps are used mostly at
offshore facilities and have proven effective in reducing
impingement (e.g., California's San Onofre Nuclear
Generating Station,  SONGS).

Another important design consideration is the orientation of
the intake in relation to the source waterbody (U.S. EPA,
1976). Conventional intake designs include shoreline,
offshore, and approach channel intakes.  In addition, intake
operation can be modified to reduce the quantity of source
water withdrawn or the timing, duration, and frequency of
water withdrawal. This is an important way to reduce
entrainment. For example, larval entrainment at the San
Onofre facility was reduced by 50% by rescheduling the
timing of high volume water withdrawals (SAIC, 1996).

11.1.3  Intake Capacity
Intake capacity is a measure of the volume or quantity of
water withdrawn or flowing through a cooling water intake
structure over a specified period of time.  Intake capacity
can be expressed as millions or billions of gallons per day
(MOD or BGD), or as cubic feet per second (cfs). Capacity
can be measured for the facility as a whole, for all of the
intakes used by a single unit, or for the intake structure
alone.  In defining an intake's capacity it is important to
distinguish between the design intake flow (the maximum
possible) and the actual operational intake flow.  For this
regulation, EPA is regulating the total design intake flow of
the facility.

The quantity of cooling water needed and the type of
cooling system are the most important factors determining
the quantity of intake flow  (U.S. EPA, 1976). Once-through
cooling systems withdraw water from a natural waterbody,
circulate the water through condensers, and then discharge it
back to the source waterbody. Closed-cycle cooling systems
withdraw water from a natural waterbody, circulate the
water through the condensers, and then send it to a cooling
tower or cooling pond before recirculating it back through
the condensers. Because cooling water is recirculated,
closed-cycle systems generally reduce the water flow from
71.9% to 96.6%, thereby using only 3.4% to 28.8% of the
11-2

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§316b EEA Chapter 11 for New Facilities
                       CWIS Impacts and Potential Benefits
water used by once-through systems (Kaplan, 2000).' It is
generally assumed that this will result in a comparable
reduction in I&E (Goodyear, 1977). Systems with helper
towers reduce water usage much less. Plants with helper
towers can operate in once-through or closed-cycle modes.

Circulating water intakes are used by once-through cooling
systems to continuously withdraw water from the cooling
water source.  The typical circulating water intake is
designed to use 0.03-0.1 nrVs (1.06-3.53 cfs, or
500-1500 gallons per minute, gpm) per megawatt (MW) of
electricity generated (U.S. EPA, 1976).  Closed cycle
systems use makeup water intakes to provide water lost by
evaporation, blowdown, and drift. Although makeup
quantities are only a fraction of the  intake flows of once-
through systems, quantities of water withdrawn can still be
significant, especially by large facilities (U.S. EPA, 1976).

If the quantity of water withdrawn is large relative to the
flow of the source waterbody, a larger number of organisms
will potentially be affected by a facility's CWIS. Thus, the
proportion of the source water flow supplied to a CWIS is
often used to derive a conservative  estimate of the potential
for adverse impact (e.g., Goodyear, 1977). For example,
withdrawal of 5% of the source water flow may be expected
to result in a loss of 5% of planktonic organisms based on
the assumption that organisms  are uniformly distributed in
the vicinity of an intake.  Although the assumption of
uniform distribution may not always be met, when data on
actual distributions are unavailable, simple mathematical
models based on this assumption provide a conservative and
easily applied method for predicting potential losses
(Goodyear, 1977).

In addition to the quantity of intake flow, the potential for
aquatic organisms to be impinged or entrained also depends
on physical, chemical, and biological characteristics of the
surrounding ecosystem and species characteristics that
influence the intensity, time, and spatial extent of contact of
aquatic organisms with a facility's CWIS. Table 11-1 lists
CWIS characteristics and ecosystem characteristics that
influence when, how, and why aquatic organisms may
become exposed to, and experience adverse effects of,
CWIS.
11.2   METHODS FOR

POTENTIAL I&E  LOSSES

11.2.1   Development of a  Database  of
I&E Rates
To estimate the relative magnitude of I&E losses for
different species and waterbody types,  EPA compiled annual
I&E data from 107 documents representing a variety of
sources, including previous §316(b) studies, critical reviews
of §316(b) studies, biomonitoring and aquatic ecology
studies, technology implementation studies, and data
compilations. In total, data were compiled from 98 steam
electric facilities (36 riverine facilities, 9 lake/reservoir
facilities, 19 facilities on the Great Lakes, 22 estuarine
facilities, and 12 ocean facilities). Design intake flows at
these facilities ranged from a low of 19.7 to a high of
3,315.6 MOD.

The data were aggregated in a series of steps to derive
average  annual impingement and entrainment rates, on a per
facility basis, for different species and waterbody types.
First, the data for each species were summed across all units
of a facility and averaged across years  (e.g., 1972 to 1976).
Losses were then averaged by species for all facilities in the
database on a given waterbody type to derive species-
specific  and waterbody-specific mean annual I&E rates.
Finally,  mean annual I&E rates were ranked, and rates for
the top 15 species were used for subsequent data
presentation.

11.2.2  Data Uncertainties  and
Potential  Biases
A number of uncertainties and potential biases are
associated with the annual I&E estimates that EPA
developed.  Most important, natural environmental
variability makes it difficult to detect ecological impacts and
identify  cause-effect relationships even in cases where study
methods are as accurate and reliable as possible.  For
example, I&E rates for any given population will vary with
changes in environmental conditions that influence annual
variation in recruitment. As a result, it can be difficult to
determine the relative role of I&E mortality in population
fluctuations.
    1  The difference in water usage in cooling towers results from
differences in source water (salinity) and the temperature rise of the
system.
                                                                                                          11-3

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§316b EEA Chapter 11 for New Facilities
                       CWIS Impacts and Potential Benefits
     Table 11-1: Partial List of CWIS, Ecosystem, and Species Characteristics Influencing Potential for I&E
                        CWIS Characteristicst
             Ecosystem and Species Characteristics
 Location
 >•    Depth of intake
 >•    Distance from shoreline
 *    Proximity of intake withdrawal and discharge
 *    Proximity to other industrial discharges or water withdrawals
 *•    Proximity to an area of biological concern

 Design
 *    Type of intake structure (size, shape, configuration, orientation)
 >•    Design intake velocity
 >•    Presence/absence of intake control and fish protection
      technologies
      *   Intake Screen Systems
      >•   Passive Intake Systems
      *•   Fish Diversion/Avoidance Systems
 *    Water temperature in cooling system
 *    Temperature change during entrainment
 >•    Duration of entrainment
 >•    Use of intake biocides and ice removal technologies
 *    Scheduling of timing, duration, frequency, and quantity of water
      withdrawal.

 Construction
 *    Mortality of aquatic organisms
 *    Displacement of aquatic organisms
 >•    Destruction of habitat (e.g., burial of eggs deposited in stream
      beds, increased turbidity of water column)

 Capacity
 >•    Type of withdrawal — once through vs. recycled (cooling water
      volume and volume per unit time)
 >•    Ratio of cooling water intake flow to source water flow	
          Ecosystem Characteristics (abiotic
          environment)
          >•   Source waterbody type
          *   Water temperatures
          >   Ambient light conditions
          >•   Salinity levels
          >•   Dissolved oxygen levels
          *   Tides/currents
          *   Direction and rate of ambient flows

          Species Characteristics (physiology,
          behavior, life history)
          >•   Density in zone of influence of CWIS
          >•   Spatial and temporal distributions (e.g.,
              daily, seasonal, annual migrations)
          *   Habitat preferences (e.g., depth, substrate)
          *   Ability to detect and avoid intake currents
          *•   Swimming speeds
          *•   Mobility
          *   Body size
          *   Age/developmental stage
          >•   Physiological tolerances (e.g., temperature,
              salinity, dissolved oxygen)
          *   Feeding habits
          *   Reproductive strategy
          >•   Mode of egg and larval dispersal
          >•   Generation time
     All of these CWIS characteristics can potentially be controlled to minimize adverse environmental impacts (I&E) of new facilities.
In addition to the influence of natural variability, data
uncertainties result from measurement errors, some of
which are unavoidable. There was also insufficient
information in many of the source documents to determine
potential variation in collection and analytical methods
among studies and across years, or to account for changes at
a facility over time, such as the number of units in  operation
or technologies in use.

Potential biases were also difficult to control. For  example,
many studies presented data for only a subset of
"representative" species, which may lead to an
underestimation of total I&E. On the other hand, the
entrainment estimates obtained from EPA's database do not
take into account the high natural mortality of egg and larval
stages and therefore are likely to be biased upwards.
However, this bias was unavoidable because most  of the
source documents from which the database was derived did
not estimate losses of early life stages as an equivalent
number of adults, or provide information for making such
calculations2.  In the absence of information for adjusting
egg losses on this basis, EPA chose to include eggs and
larvae in the entrainment estimates to avoid underestimating
age 0 losses.

With these caveats in mind, the following sections present
the results of EPA's data compilation.  The data are grouped
    2 For species for which sufficient life history information is
available, the Equivalent Adult Model (EAM) can be used to
predict the number of individuals that would have survived to
adulthood each year if entrainment at egg or larval stages had not
occurred (Horst, 1975; Goodyear, C.P., 1978). The resulting
estimate is known as the number of "equivalent adults."

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§316b EEA Chapter 11 for New Facilities
                       CWIS Impacts and Potential Benefits
by waterbody type and are presented in summary tables that
indicate the range of losses for the 15 species with the
highest I&E rates based on the limited subset of data
available to EPA. I&E losses are expressed as mean annual
numbers on a per facility basis. Because the data do not
represent a random sample of I&E losses, it was not
appropriate to summarize the data statistically. It is also
important to stress that because the data are not a statistical
sample, the data presented here may not represent actual
losses. Thus, the data should be viewed only as general
indicators of the potential range of I&E losses.
11.3  CWIS IMPACTS IN RIVERS

Freshwater rivers and streams are free-flowing bodies of
water that do not receive significant inflows of water from
oceans or bays. Current is typically highest in the center of
a river and rapidly drops toward the edges and at depth
because of increased friction with river banks and the
bottom (Hynes, 1970; Allan, 1995). Close to and at the
bottom, the current can become minimal. The range of flow
conditions in undammed rivers helps explain why fish with
very different habitat requirements can co-exist within the
same stretch of surface water (Matthews, 1998).

In general, the shoreline areas along river banks support the
highest diversity of aquatic life. These are areas where light
penetrates to the bottom and supports the growth of rooted
vegetation. Suspended solids tend  to settle along shorelines
where the current slows, creating shallow, weedy areas that
attract aquatic life.  Riparian vegetation, if present, also
provides cover and shade. Such areas represent important
feeding, resting, spawning, and nursery habitats for many
aquatic species. In temperate regions, the number of
impingeable and entrainable organisms in the littoral zone
of rivers increases during the spring and early summer when
most riverine fish species reproduce. This concentration of
aquatic organisms along river shorelines in turn attracts
wading birds and other kinds of wildlife.

EPA's regulatory framework requires stricter compliance
requirements for CWIS located in the sensitive littoral zones
of rivers.  A notable exception to the general rule of placing
CWIS away from river banks is when the structure is to be
located in a stretch of the river used by pelagic  spawners
such as alewife (Alosapseudoharengus). During a few
weeks in the spring or early summer, large numbers of eggs
and larvae of such fish species can be entrained, even
though entrainment may be minimal during the remainder of
the year.

The data analyzed by
EPA indicate that fish
species such as
common carp
(Cyprinus carpio),
yellow perch (Perca
flavescens), white bass
(Morone chrysops),
freshwater drum
(Aplodinotus
grunniens), gizzard
shad (Dorosoma
cepedianum), and
alewife are the main
fishes harmed by
CWIS located in rivers (Tables 11-2 and 11-3).  These
species occur in nearshore areas and/or have pelagic early
life stages, traits that greatly increase their susceptibility to
I&E.
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§316b EEA Chapter 11 for New Facilities
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Table 11-2: Annual Entrainment of Eggs, Larvae and Juvenile Fish in Rivers
Common Name
common carp
yellow perch
white bass
freshwater drum
gizzard shad
shiner
channel catfish
bluntnose
minnow
black bass
rainbow smelt
minnow
sunfish
emerald shiner
white sucker
mimic shiner
Scientific Name
Cyprinus carpio
Perca flavescens
Morone chrysops
Aplodinotus gmnniens
Dorosoma cepedianum
Notropis spp.
Ictalurus punctatus
Pimephales notatus
Micropterus spp.
Osmerus mordax
Pimephales spp.
Lepomis spp.
Notropis atherinoides
Catostomus commersoni
Notropis volucellus
Number
of
Facilities
7
4
4
5
4
4
5
1
1
1
1
5
3
5
2
Mean Annual Entrainment
per Facility (fish/year)
20,500,000
13,100,000
12,800,000
12,800,000
7,680,000
3,540,000
3,110,000
2,050,000
1,900,000
1,330,000
1,040,000
976,000
722,000
704,000
406,000
Range
859,000 - 79,400,000
434,000 - 50,400,000
69,400 - 49,600,000
38,200 - 40,500,000
45,800 - 24,700,000
191,000 - 13,000,000
19,100 - 14,900,000
—
—
—
—
4,230 - 4,660,000
166,000 - 1,480,000
20,700 - 2,860,000
30,100-781,000
 Sources:  Hicks, 1977; Cole, 1978; Geo-Marine Inc., 1978;
          1979; Potter et al, 1979a, 1979b, 1979c, 1997d;
Goodyear, C.D., 1978; Potter, 1978; Cincinnati Gas & Electric Company,
Cherry and Currie, 1998; Lewis and Segart, 1998.
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§316b EEA Chapter 11 for New Facilities
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Table 11-3: Annual Impingement in the Rivers for All Age Classes
Common Name
threadfm shad
gizzard shad
shiner
alewife
white perch
yellow perch
spottail shiner
freshwater drum
rainbow smelt
skipjack herring
white bass
trout perch
emerald shiner
blue catfish
channel catfish
Scientific Name
Dorosoma petenense
Dorosoma cepedianum
Notropis spp.
Alosa pseudoharengus
Morone americana
Percaflavescens
Notropis hudsonius
Aplodinotus grunniens
Osmerus mordax
Alosa chrysochons
Morone chrysops
Percopsis omiscomaycus
Notropis atherinoides
Ictalurus furcatus
Ictalurus punctatus
Number of
Facilities
3
25
4
13
3
18
10
24
11
7
19
13
17
2
23
Mean Annual Impingement
per Facility (fish/year)
1,030,000
248,000
121,000
73,200
66,400
40,600
28,500
19,900
19,700
17,900
11,500
9,100
7,600
5,370
3,130
Range
199 - 3,050,000
3,080-1,480,000
28 - 486,000
199-237,000
27,100-112,000
13-374,000
10-117,000
8 - 176,000
7-119,000
52 - 89,000
21 - 188,000
38 - 49,800
109-36,100
42 - 10,700
3 - 25,600
 Sources: Benda and Houtcooper, 1977; Freeman and Sharma, 1977; Hicks, 1977; Sharma and Freeman, 1977; Stupka and Sharma,
 1977; Energy Impacts Associates Inc., 1978; Geo-Marine Inc., 1978; Goodyear, C.D., 1978; Potter, 1978; Cincinnati Gas & Electric
 Company, 1979; Potter etal, 1979a, 1979b, 1979c, 1979d; Van Winkle etal, 1980; EA Science and Technology, 1987; Cherry and
 Currie, 1998; Michaud, 1998; Lohner, 1999.
11.4  CWIS IMPACTS IN  LAKES AND

RESERVOIRS

Lakes are inland bodies of open water located in natural
depressions (Goldman and Home, 1983). Lakes are fed by
rivers, streams, springs, and/or local precipitation.  Water
currents in lakes are small or negligible compared to rivers,
and are most noticeable near lake inlets and outlets.

Larger lakes are divided into three general zones - the
littoral zone (shoreline areas where light penetrates to the
bottom), the limnetic zone (the surface layer where most
photosynthesis takes place), and the profundal zone
(relatively deeper and colder offshore area) (Goldman and
Home, 1983). Each zone differs in its biological
productivity and species diversity and hence in the potential
magnitude of CWIS impacts. The importance of these
zones in the context of the §316(b) regulation are discussed
below.
The littoral zone is the highly productive nearshore area
where light penetration is just sufficient to allow rooted
aquatic plants to grow (Goldman and Home, 1983). The
littoral zone extends farther and deeper in clear lakes than in
turbid lakes. In small, shallow lakes, the littoral zone can be
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§316b EEA Chapter 11 for New Facilities
                       CWIS Impacts and Potential Benefits
quite extensive and even include the entire waterbody. As
along river banks, this zone supports high primary
productivity and biological diversity. It is used by a host of
fish species, benthic invertebrates, and zooplankton for
feeding, resting,  and reproduction, and as nursery habitat.
Many fish species adapted to living in the colder profundal
zone also move to shallower in-shore areas to spawn, e.g.,
lake trout (Salmo namycush) and various deep water sculpin
species (Cottus spp.).

Many fish species spend most of their early development in
and around the littoral zone of lakes.  These shallow waters
warm up rapidly in spring and summer, offer a variety of
different habitats (submerged plants, boulders, logs, etc.) in
which to hide or feed, and stay well-oxygenated throughout
the year. Typically, the littoral zone is a major contributor
to the total primary productivity of lakes (Goldman and
Home, 1983).

The limnetic zone is the surface  layer of a lake. The vast
majority of light that enters the water column is absorbed in
this layer.  In contrast to the high biological activity
observed in the nearshore littoral zone, the offshore limnetic
zone supports fewer species offish and invertebrates.
However, during certain times of year, some fish and
invertebrate species spend the daylight hours hiding on the
bottom and rise to the surface of the limnetic zone at night
to feed and reproduce. Adult fish may migrate through the
limnetic zone during seasonal spawning migrations. The
juvenile stages of numerous aquatic insects - such as
caddisflies, stoneflies, mayflies, dragonflies, and
damselflies - develop in sediments at the bottom of lakes
but move through the limnetic zone to reach the surface and
fly away.  This activity attracts foraging fish.

The profundal zone is the deeper, colder area of a lake.
Rooted plants are absent because insufficient light
penetrates at these depths. For the same reason, primary
productivity by phytoplankton is minimal. A well-
oxygenated profundal zone can support a variety of benthic
invertebrates or cold-water fish, e.g., brown trout (Salmo
trutta), lake trout, ciscoes (Coregonus spp.). With few
exceptions (such as ciscos or whitefish), these species seek
out shallower areas to spawn, either in littoral areas or in
adjacent rivers and streams, where they may become
susceptible to CWIS.

Most of the larger rivers in the United States have one or
more dams that create artificial lakes or reservoirs.
Reservoirs have some characteristics that mimic those of
natural lakes, but large reservoirs differ from most lakes in
that they obtain most of their water from a large river
instead of from groundwater recharge or from smaller
creeks and streams.

The fish species composition in reservoirs may or may not
reflect the native assemblages found in the pre-dammed
river. Dams create two significant changes to the local
aquatic ecosystem that can alter the original species
composition: (1) blockages that prevent anadromous species
from migrating upstream, and (2) altered riverine habitat
that can eliminate species that cannot readily adapt to the
modified hydrologic conditions.

Reservoirs typically support littoral zones, limnetic zones,
and profundal zones, and the same concepts outlined above
for lakes apply to these bodies of water. For example,
compared to the profundal zone, the littoral zone along the
edges of reservoirs supports greater biological diversity and
provides prime habitat for spawning, feeding, resting, and
protection for numerous fish and zooplankton species.
However, there are also several differences. Reservoirs
often lack extensive shallow areas along their edges because
their banks have been engineered or raised to contain extra
water and prevent flooding. In mountainous areas, the
banks of reservoirs may be quite steep and drop off
precipitously with little or no littoral zone.  As with lakes
and rivers, however, CWIS located in shallower water have
a higher probability of entraining or impinging organisms.
Because the profundal zone supports less biological
productivity than the littoral or limnetic zones of lakes and
reservoirs, EPA believes that placing CWIS in these deeper
areas represents the least potential for biological impact in
these systems. Therefore, EPA's proposed regulation
places no national §316(b) compliance requirements on
CWIS located in the profundal zones of lakes and
reservoirs.

Results  of EPA's data compilation indicate that fish species
most commonly affected by CWIS located on lakes and
reservoirs are the same as the riverine species that are most
susceptible, including alewife, drum (Aplondinotus spp.),
and gizzard shad (Dorsoma cepedianum) (Tables 11-4
and 11-5).
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§316b EEA Chapter 11 for New Facilities
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Table 11-4: Annual Entrainment of Eggs, Larvae and Juvenile Fish in Reservoirs and Lakes
(excluding the Great Lakes)
Common Name
drum
sunfish
gizzard shad
crappie
alewife
Scientific Name
Aplondinotus spp.
Lepomis spp.
Dorosoma cepedianum
Pomoxis spp.
Alosa pseudoharengus
Number of Facilities
1
1
1
1
1
Mean Annual Entrainment per Facility (fish/year)
15,600,000
10,600,000
9,550,000
8,500,000
1,730,000
 Sources: Michaud, 1998; Spiceretal, 1998.
Table 11-5: Annual Impingement in Reservoirs and Lakes (excluding the Great Lakes)
for All Age Classes Combined
Common Name
threadfin shad
alewife
skipjack herring
bluegill
gizzard shad
warmouth sunfish
yellow perch
freshwater drum
silver chub
black bullhead
trout perch
northern pike
blue catfish
paddlefish
inland (tidewater)
silverside
Scientific Name
Dorosoma petenense
Alosa pseudoharengus
Alosa chrysochons
Lepomis macrochirus
Dorosoma cepedianum
Lepomis gulosus
Percaflavescens
Aplodinotus grunniens
Hybopsis storeriana
Ictalurus melas
Percopsis omiscomaycus
Esox lucius
Ictalurus furcatus
Polyodon spathula
Menidia beryllina
Number of
Facilities
4
4
1
6
5
4
2
4
1
3
2
2
1
2
1
Mean Annual Impingement
per Facility (fish/year)
678,000
201,000
115,000
48,600
41,100
39,400
38,900
37,500
18,200
10,300
8,750
7,180
3,350
3,160
3,100
Range
203,000-1,370,000
33,100-514,000
—
468 - 277,000
829 - 80,700
31 - 157,000
502- 114,000
8- 150,000
—
171 - 30,300
691 - 16,800
154- 14,200
—
1,940-4380
—
 Sources: Tennessee Division of Forestry, Fisheries, and Wildlife Development, 1976; Tennessee Valley Authority, 1976; Benda and
          Houtcooper, 1977; Freeman and Sharma, 1977; Sharma and Freeman, 1977; Tennessee Valley Authority, 1977; Spiceret
          al, 1998; Michaud,  1998.
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§316b EEA Chapter 11 for New Facilities
                      CWIS Impacts and Potential Benefits
11.5  CWIS IMPACTS IN THE
GREAT LAKES

The Great Lakes were carved out by glaciers during the last
ice age (Bailey and Smith, 1981).  They contain nearly 20%
of the earth's fresh water, or about 23,000 km3
(5,500 cu. mi.) of water, covering a total area of
244,000 km2 (94,000 sq. mi.). There are five Great Lakes:
Lake Superior, Lake Michigan, Lake Huron, Lake Erie, and
Lake Ontario.  Although part of a single system, each lake
has distinct characteristics.  Lake Superior is the largest by
volume, with a retention time of 191 years, followed by
Lake Michigan, Lake Huron, Lake Erie, and Lake Ontario.
Water temperatures in the Great Lakes strongly influence
the physiological processes of aquatic organisms, affecting
growth, reproduction, survival, and species temporal and
spatial distribution. During the spring, many fish species
inhabit shallow, warmer waters where temperatures are
closer to their thermal optimum. As water temperatures
increase, these species migrate to deeper water. For species
that are near the northern limit of their range, the
availability of shallow, sheltered habitats that warm early in
the spring is probably essential for survival (Lane et al.,
1996a). For other species, using warmer littoral areas
increases the growing season and may significantly increase
production.

Some 80 percent of Great Lakes fishes use the littoral zone
for at least part of the year (Lane et al.,1996a).  Of 139
Great Lakes fish species reviewed by Lane et al. (1996b),
all but the deepwater ciscoes (Coregonus spp.) and
deepwater sculpin (Myxocephalus thompsoni) use waters
less than 10 m deep as nursery habitat.

A large number of thermal-electric plants located on the
Great Lakes draw their cooling water from the littoral zone,
resulting in high I&E of several fish species of commercial,
recreational, and ecological importance, including alewife,
gizzard shad, yellow perch, rainbow smelt, and lake trout
(Tables 11-6 to  11-9).

The I&E estimates of Kelso and Milburn (1979) presented
in Tables 11-7 and 11-9 were derived using methods that
differed in a number of ways from EPA's estimation
methods, and therefore the data are not strictly comparable.
First, the Kelso  and Milburn (1979) data represent total
annual losses per lake, whereas EPA's estimates are on a
per facility basis. In addition, the estimates of Kelso and
Milburn (1979)  are based on extrapolation of losses to
facilities for which data were unavailable using regression
equations relating losses to plant size.

Despite the differences in estimation methods, when
converted to an  annual average per facility, the impingement
estimates of Kelso and Milburn (1979) are  within the range
of EPA's estimates.  For example, average annual
impingement is  675,980 fish per facility  based on Kelso
and Milburn's (1979) data is comparable to EPA's high
estimate of 1,470,000 for alewife.

On the other hand, EPA's entrainment estimates include egg
losses and are therefore substantially larger than those of
Kelso and Milburn (1979). Because of the high natural
mortality offish eggs, EPA's inclusion of all egg losses
likely overestimates entrainment, as noted in Section 11.2.2.
However, by omitting all egg losses, the entrainment
estimates of Kelso and Milburn (1979) are  likely to
underestimate losses. Viewed together, the two types of
estimates give an indication of the possible upper and lower
bounds of annual entrainment losses per facility  (e.g., an
annual average of 8,018,657 fish based on Kelso and
Milburn's data compared to  EPA's highest estimate of
526,000,000 based on the average for alewife).
Table 11-6: Annual Entrainment of Eggs, Larvae and Juvenile Fish in the Great Lakes
Common Name
alewife
rainbow smelt
lake trout
Scientific Name
Alosa pseudoharengus
Osmerus mordax
Salmo namaycush
Number of
Facilities
5
5
1
Mean Annual Entrainment
per Facility (fish/year)
526,000,000
90,500,000
116,000
Range
3,930,000- 1,360,000,000
424,000 - 438,000,000
—
 Sources: Texas Instruments Inc., 1978; Michaud, 1998.
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§316b EEA Chapter 11 for New Facilities
CWIS Impacts and Potential Benefits
Table 11-7: Annual Entrainment of Larval Fish in
the Great Lakes by Lake
Lake
Erie
Michigan
Ontario
Huron
Superior
Number of
Facilities
16
25
11
6
14
Total Annual Entrainment
(fish/year)
255,348,164
196,307,405
176,285,758
81,462,440
4,256,707
 Source:  Kelso and Milburn, 1979.
Table 11-8: Annual Impingement in the Great Lakes for All Age Classes Combined
Common Name
alewife
gizzard shad
rainbow smelt
threespine stickleback
yellow perch
spottail shiner
freshwater drum
emerald shiner
trout perch
bloater
white bass
slimy sculpin
goldfish
mottled sculpin
common carp
pumpkinseed
Scientific Name
Alosa pseudoharengus
Dorosoma cepedianum
Osmerus mordax
Gasterosteus aculeatus
Percaflavescens
Notropis hudsonius
Aplodinotus grunniens
Notropis atherinoides
Percopsis omiscomaycus
Coregonus hoyi
Morons chrysops
Cottus cognatus
Carassius auratus
Cottus bairdi
Cyprinus carpio
Lepomis gibbosus
Number of
Facilities
15
6
15
3
9
8
4
4
5
2
1
4
3
3
4
4
Mean Annual Impingement
per Facility (fish/year)
1,470,000
185,000
118,000
60,600
29,900
22,100
18,700
7,250
5,630
4,980
4,820
3,330
2,620
1,970
1,110
1,060
Range
355 - 5,740,000
25 - 946,000
78 - 549,000
23,200 - 86,200
58 - 127,000
5 - 62,000
2 - 74,800
3 - 28,600
30 - 23,900
3,620 - 6,340
—
795 - 5,800
4 - 7,690
625 - 3,450
16-4,180
14 - 3,920
 Sources: Benda and Houtcooper, 1977; Sharma and Freeman, 1977; Texas Instruments Inc., 1978; ThurberandJude, 1985; Lawler
 Matusky& Shelly Engineers, 1993; Michaud, 1998.
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§316b EEA Chapter 11 for New Facilities
                      CWIS Impacts and Potential Benefits
Table 11-9: Annual Impingement of Fish
in the Great Lakes
Lake
Erie
Michigan
Ontario
Huron
Superior
Number of
Facilities
16
25
11
6
14
Total Annual
Impingement (fish/year)
22,961,915
15,377,339
14,483,271
7,096,053
243,683
 Source: Kelso andMilburn, 1979.
11.6  CWIS IMPACTS IN  ESTUARIES

Estuaries are semi-enclosed bodies of water that have a an
unimpaired natural connection with the open ocean and
within which sea water is diluted with fresh water derived
from land. Estuaries are created and sustained by dynamic
interactions among oceanic and freshwater environments,
resulting in a rich array of habitats used by both terrestrial
and aquatic species (Day et al., 1989).  Because of the high
biological productivity and sensitivity  of estuaries, EPA's
regulatory framework imposes more stringent compliance
requirements on CWIS located in estuaries than on those
located in other waterbody types.

Numerous commercially, recreationally, and ecologically
important species of clams, crustaceans, and fish spend part
or all of their life cycle within estuaries.  Marine species
that spawn offshore take advantage of prevailing inshore
currents to transport their eggs, larvae, or juveniles into
estuaries where they hatch or mature. Inshore areas along
the edges of estuaries support high rates of primary
productivity and are used by numerous aquatic and
terrestrial  species for nesting, feeding, and resting, or as
nursery habitats or shelter.  This high level of biological
productivity makes these shallow littoral zone habitats
highly susceptible to I&E impacts from CWIS.

Estuarine species that show the highest rates of I&E in the
studies reviewed by EPA include bay anchovy (Anchoa
mitchilli),  tautog (Tautoga onitis), Atlantic menhaden
(Brevoortia tyrannus), gulf menhaden (Brevoortia
patronus), winter flounder  (Pleuronectes americanus), and
weakfish (Cynoscion regalis) (Tables 11-10 and 11-11).

During spring, summer and fall, various life stages of these
and other estuarine fishes show considerable migratory
activity. Adults move in from the ocean to spawn in the
marine, brackish, or freshwater portions of estuaries or their
associated rivers; the eggs and larvae can be planktonic and
move about with prevailing currents or by using selective
tidal transport; juveniles actively move upstream or
downstream in search of optimal nursery habitat; and young
adult anadromous fish move out into the ocean to reach
sexual maturity.

Because of this high degree of migratory activity, a CWIS
located in  an estuary not only harms indigenous fish species
and local food webs, but also directly affects adult or
juvenile anadromous fish and indirectly affects marine food
webs that depend on these fish. As a result, EPA's
proposed regulatory framework seeks to discourage
placement of a CWIS anywhere in an estuary.
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§316b EEA Chapter 11 for New Facilities
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Common Name
jay anchovy
tautog
Atlantic menhaden
winter flounder
weakfish
logchoker
Atlantic croaker
striped bass
white perch
spot
slueback herring
alewife
Atlantic tomcod
American shad
Table 11-10: Annual Entrainment of Eggs, Larvae, and Juvenile Fish in
i Scientific Name
i Anchoa mitchilli
\ Tautoga onitis
\ Brevoortia tyrannus
\ Pleuronectes americanus
\ Cynoscion regalis
\ Trinectes maculatus
\ Micropogonias undulatus
\ Morone saxatilis
\ Morone americana
\ Leiostomus xanthurus
\ Alosa aestivalis
\ Alosa pseudoharengus
\ Microgadus tomcod
\ Alosa sapidissima
Number of
Facilities
2
1
2
1
2
1
1
4
4
1
1
1
3
1
Mean Annual Entrainment j
per Facility (fish/year) i
18,300,000,000!
Estuaries
Range
12,300,000,000 - 24,400,000,000
6,100,000,000!
3,160,000,000!
50,400,000 - 6,260,000,000
952,000,000 !
339,000,000!
99,100,000 - 579,000,000
241,000,000!
48,500,000 !
19,200,000!
16,600,000!
111,00-74,800,000
87,700 - 65,700,000
11,400,000!
10,200,000 !
2,580,000 !
2,380,000!
2,070 - 7,030,000
1,810,000!
 Sources: U.S. EPA, 1982; LawlerMatusky & Shelly Engineers, 1983;DeHart, 1994; PSE&G, 1999.
Table 11-11: Annual Impingement in Estuaries for All Age Classes
Common Name
gulf menhaden
smooth flounder
iireespine stickleback
Atlantic menhaden
rainbow smelt
say anchovy
weakfish
Atlantic croaker
spot
alueback herring
white perch
iireadfin shad
lake trout
gizzard shad
silvery minnow
! Scientific Name
i Brevoortia patronus
i Liopsetta putnami
i Gasterosteus aculeatus
i Brevoortia tyrannus
i Osmerus mordax
i Anchoa mitchilli
i Cynoscion regalis
i Micropogonias undulatus
i Leiostomus xanthurus
i Alosa aestivalis
i Morone americana
i Dorosoma petenense
i Salmo namaycush
i Dorosoma cepedianum
| Hybognathus nuchalis
Number of
Facilities
2
1
4
12
4
9
4
8
10
7
14
1
1
6
1
Mean Annual Impingement
per Facility (fish/year)
76,000,000
Combined
! Range
! 2,990,000 - 149,000,000
3,320,000 1
866,000
628,000
510,000
450,000
320,000
311,000
270,000
205,000
200,000
! 123 - 3,460,000
; 114-4,610,000
! 737 - 2,000,000
! 1,700-2,750,000
! 357-1,210,000
! 13 - 1,500,000
! 176 - 647,000
! 1,170 - 962,000
! 287-1,380,000
185,000!
162,000 !
125,000
! 2,058-715,000
73,400 i
 Sources: Consolidated Edison Company of New Yorklnc., 1975; LawlerMatusky & Shelly Engineers, 1975, 1976; Stupka and Sharma,
 1977; Lawleretal, 1980; Texas Instruments Inc., 1980; Van Winkle etal, 1980; Consolidated Edison Company of New Yorklnc. and
 New York Power Authority, 1983; Normandeau Associates Inc., 1984; EA Science and Technology, 1987; LawlerMatusky & Shelly
 Engineers, 1991; Richkus and McClean, 1998; PSE&G, 1999; New York State Department of Environmental Conservation, No Date.
                                                                                                               11-13

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§316b EEA Chapter 11 for New Facilities
                       CWIS Impacts and Potential Benefits
 11.7  CWIS IMPACTS IN OCEANS

Oceans are marine open coastal waters with salinity greater
than or equal to 30 parts per thousand. CWIS in oceans are
usually located over the continental shelf, a shallow shelf
that slopes gently out from the coastline an average of 74
km (46 miles) to where the sea floor reaches a maximum
depth of 200 m (660 ft) (Ross, 1995). The deep ocean
extends beyond this region.  The area over the continental
shelf is known as the Neritic Province and the area over the
deep ocean is the Oceanic Province (Meadows and
Campbell, 1978).

Vertically, the  upper, sunlit epipelagic zone over the
continental shelf averages about 100 m in depth (Meadows
and Campbell, 1978).  This zone has  pronounced light and
temperature gradients that vary seasonally and influence the
temporal and spatial distribution of marine organisms.

In oceans, the littoral zone encompasses the photic zone of
the area over the continental shelf.  As in other water body
types, the littoral zone is where most marine organisms
concentrate. The littoral zone of oceans is of particular
concern in the context of §316(b) because this biologically
productive zone is also where most coastal utilities
withdraw cooling water. EPA's regulatory framework
imposes more stringent standards for facilities with intakes
located less than 100 m outside the coastal littoral zone.

The morphology of the continental shelf along the
U.S. coastline is quite varied (NRC, 1993). Along the
Pacific coast of the United States the  continental shelf is
relatively narrow, ranging from 5 to 20 km (3 to 12 miles),
and is cut by several steep-sided submarine canyons. As a
result, the littoral zone along this coast tends to be narrow,
shallow, and steep. In contrast, along most of the Atlantic
coast of the United States, there is a wide, thick, and wedge-
shaped shelf that extends as much as 250 km (155 miles)
from shore, with the greatest widths generally opposite large
rivers.  Along the Gulf coast, the shelf ranges from 20 to 50
km (12 to 31 miles).

Marine environments differ in several fundamental ways
from freshwater environments. For example, they include
much larger volumes of water, and pelagic life stages of
aquatic organisms are more prevalent. Currents and tides
play an important role in distributing pelagic organisms.
One reproductive strategy used by marine fish and
invertebrates species is to cast their offspring into the ocean
currents to ensure wide geographic distribution.  Planktonic
life stages are therefore quite common. The abundance of
plankton in temperate regions is seasonal, with greater
numbers in spring and summer and fewer numbers in
winter.  The young of a number of invertebrate and fish
species reproduce over the continental shelf.  Prevailing
currents and tides tend to carry these organisms back to
nursery areas such as bays, estuaries, wetlands, or coastal
rivers.

The potential for I&E can be high if CWIS are located in
productive, shallow areas of oceans or in locations where
tides bring in or aggregate plankton or migratory fish
species. This effect is magnified because many marine
species rely on drifting,
planktonic life stages of
their
offspring to increase
their dispersal potential
over large
volumes of water. An
additional issue
pertains to the
presence of marine
mammals and reptiles,
including
threatened and
endangered species of
sea turtles.  These
species are known to
enter submerged
offshore CWIS and
can drown once inside
the intake tunnel.

In addition to many of
the species discussed in
the section
on estuaries, other fish
species found in near coastal waters
that are of commercial, recreational,  or ecological
importance and are particularly vulnerable to I&E include
silver perch (Bairdiella chrysura), cunner (Tautogolabrus
adspersus), several anchovy species, scaled sardine
(Harengulajaguana), and queenfish (Seriphus politus)
(Tables 11-12 and 11-13).
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Table 11-12: Annual Entrapment of Eggs, Larvae, and Juvenile Fish
Common Name i Scientific Name
jay anchovy i Anchoa mitchilli
silver perch i Bairdiella chrysura
striped anchovy i Anchoa hepsetus
cunner i Tautogolabrus adspersus
scaled sardine i Harengulajaguana
autog i Tautoga onitis
clown goby i Microgobius gulosus
code goby i Gobiosoma robustum
sheepshead i Archosargus probatocephalus
iingfish i Menticirrhus spp.
sigfish i Orthopristis chrysoptera
sand sea trout i Cynoscion arenarius
northern kingfish i Menticirrhus saxatilis
Atlantic mackerel i Scomber scombrus
Atlantic bumper j Chloroscombrus chrysurus
Number of
Facilities
2
2
1
2
1
2
1
1
1
1
2
1
1
1
1
Mean Annual Entrainment j
per Facility (fish/year) i
44,300,000,000 !
26,400,000,000 !
in Oceans
Range
9,230,000,000 - 79,300,000,000
8,630,000 - 52,800,000,000
6,650,000,000 !
1,620,000,000!
33,900,000 - 3,200,000,000
1,210,000,000!
911,000,000!
300,000-1,820,000,000
803,000,000 !
680,000,000 !
602,000,000 !
542,000,000 !
459,000,000!
755,000-918,000,000
325,000,000 !
322,000,000 !
312,000,000!
298,000,000 1
 Sources: Conservation Consultants Inc., 1977; Stone & Webster Engineering Corporation, 1980; Florida Power Corporation, 1985;
 Normandeau Associates, 1994; Jacobsen et al, 1998; Northeast Utilities Environmental Laboratory, 1999.
Table 11-13: Annual Impingement in Oceans for All Age Classes Combined
Common Name
queenfish
polka-dot batlish
say anchovy
northern anchovy
deepbody anchovy
spot
American sand lance
silver perch
California grunion
lopsmelt
alewife
pinfish
slough anchovy
walleye surfperch
Atlantic menhaden
i Scientific Name
I Seriphus politus
I Ogcocephalus radiatus
I Anchoa mitchilli
I Engraulis mordax
I Anchoa compressa
I Leiostomus xanthurus
I Ammodytes americanus
\Bairdiella chrysura
I Caranx hippos
I Atherinops affinis
I Alosa pseudoharengus
I Lagodon rhomboides
I Anchoa delicatissima
I Hyperprosopon argenteum
• Brevoortia tvrannus
Number of
Facilities
2
1
2
2
2
1
2
2
1
2
2
1
3
1
3
Mean Annual Impingement j
per Facility (fish/year) i
201,000!
Range
19,800 - 382,000
74,500 !
49,500!
36,900!
35,300!
11,000-87,900
26,600 - 47,200
34,200 - 36,400
28,100!
20,700 !
20,500!
886 - 40,600
12,000 - 29,000
18,300!
18,200!
16,900!
4,320 - 32,300
1,520 - 32,200
15,200!
10,900!
2,220 - 27,000
10,200 !
7.500 1
861 - 20.400
 Sources: Stone & Webster Engineering Corporation, 1977; Stupka and Sharma, 1977; Tetra Tech Inc., 1978; Stone and Webster
 Engineering Corporation, 1980; Florida Power Corporation, 1985; Southern California Edison Company, 1987; SAIC, 1993;
 EA Engineering, Science and Technology, 1997; Jacobsen etal, 1998.
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11.8  SUMMARY OF L&E DATA

The data evaluated by EPA indicate that fish species with
free-floating, early life stages are those most susceptible to
CWIS impacts.  Such planktonic organisms lack the
swimming ability to avoid being drawn into intake flows.
Species that spawn in nearshore areas, have planktonic eggs
and larvae, and are small as adults experience even greater
impacts because both new recruits and the spawning adults
are affected (e.g., bay anchovy in estuaries and oceans).

EPA's data review also indicates that fish species in
estuaries and oceans experience the highest rates of I&E.
These species tend to have planktonic eggs and larvae, and
tidal currents carry planktonic organisms past intakes
multiple times, increasing the probability of I&E.  In
addition, fish spawning and nursery areas are located
throughout estuaries and near coastal waters, making it
difficult to avoid locating intakes in areas where fish are
present.
11.9  POTENTIAL BENEFITS OF  §316(B)

RESULATTON

11.9.1  Introduction: Benefits Concepts,
Categories,  and Causal  Links
Valuing the changes in environmental quality that arise from
the §316(b) regulations for new facilities is a principal
desired outcome for the Agency's policy assessment
framework. However, time and data constraints do not
permit a quantified assessment of the economic benefits of
the proposed rule. Nonetheless, this section provides a
qualitative description of the types of benefits that are
expected.

As noted in previous sections of this chapter, changes in
CWIS design, location, or capacity can reduce I&E rates.
These changes in I&E can potentially yield significant
ecosystem improvements in terms of the number offish that
avoid premature mortality.  This in turn is expected to
increase local and regional fishery populations, and
ultimately contribute to the enhanced environmental
functioning of affected water bodies (rivers, lakes, estuaries,
and oceans). Finally, the economic welfare of human
populations is expected to increase as a consequence of the
improvements in fisheries and associated aquatic ecosystem
functioning.  Below, we identify potential ecological
outcomes and related economic benefits from anticipated
reductions in adverse effects of CWIS.  We explain the
basic economic concepts applicable to the economic
benefits,  including benefit categories and taxonomies,
service flows, and market and nonmarket goods and
services.
11.9.2  Economic  Benefit Categories
Applicable to the §316(b) Rule
To estimate the economic benefits of minimizing I&E at
new CWIS, all the beneficial outcomes need to be identified
and, where possible, quantified and assigned appropriate
monetary values.  Estimating economic benefits can be
challenging because of the many steps that need to be
analyzed to link a reduction in I&E to changes in impacted
fisheries and other aspects of relevant aquatic ecosystems,
and to then link these ecosystem changes to the resulting
changes in quantities and values for the associated
environmental goods and services that ultimately are linked
to human welfare.

Key challenges in benefits assessment include uncertainties
and data gaps, as well as the fact that many of the goods and
services beneficially affected by the proposed change in new
facility I&E are not traded in the marketplace.  Thus there
are numerous instances — including this proposed §316(b)
rule for new facilities — when it is not feasible to
confidently assign monetary values to some beneficial
outcomes. In such instances, benefits need to be described
and considered qualitatively.  This is the case for the
proposed rule for new facility CWIS. At this time, there is
only general information about the location of most
proposed new facilities, and in most cases details of facility
and environmental characteristics are unknown. As a result,
it is not possible to do a detailed analysis of potential
monetary benefits associated with the proposed regulations.

11.9.3  Benefit  Category Taxonomies
The term "economic benefits" here refers to the dollar value
associated with all the expected positive impacts of the
§316(b) regulation being proposed for new facilities.
Conceptually, the monetary value of benefits is the sum of
the predicted changes in "consumer and producer surplus."
These surplus measures are standard and widely accepted
terms of applied welfare economics, and reflect the degree
of well-being derived by economic agents (e.g., people  or
firms) given different levels of goods and services, including
those associated with environmental quality.3

The economic benefits of activities that improve
environmental conditions can be categorized in many
different ways. The various terms and categories offered by
    3 Technically, consumer surplus reflects the difference
between the "value" an individual places on a good or service (as
reflected by the individual's "willingness to pay" for that unit of
the good or service) and the "cost" incurred by that individual to
acquire it (as reflected by the "price" of a commodity or service, if
it is provided in the marketplace). Graphically, this is the area
bounded from above by the demand curve and below by the market
clearing price. Producer surplus is a similar concept, reflecting the
difference between the market price a producer can obtain for a
good or service and the actual cost of producing that unit of the
commodity.
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different authors can lead to some confusion with semantics.
However, the most critical issue is to try not to omit any
relevant benefit, and at the same time avoid potential double
counting of benefits.

One common typology for benefits of environmental
programs is to divide them into three main categories of
(1) economic welfare (e.g., changes in the well-being of
humans who derive use value from market or nonmarket
goods and services such as fisheries); (2) human health
(e.g., the value of reducing the risk of premature fatality due
to changing exposure to environmental exposure); and
(3) nonuse values (e.g., stewardship values for the desire to
                        preserve threatened and endangered species). For the
                        §316(b) regulation, however, this typology does not convey
                        all the intricacies of how the rule might generate benefits.
                        Further, human health benefits are not anticipated.
                        Therefore, another categorization may be more informative.

                        Figure 11-1 outlines the most prominent categories of
                        benefit values for the §316(b) rule. The four quadrants are
                        divided by two principles: (1) whether the benefit can be
                        tracked in a market (i.e., market goods and services) and (2)
                        how the benefit of a nonmarket good is received by human
                        beneficiaries  (either from direct use of the resource, from
                        indirect use, or from nonuse).
                               Figure 11-1:  §316(b) Benefit Values
                                Market
                                               3
                                               1
                                               6
                                              (b)N
                            onmarket
                          Nonuse
                                         Vicarious Consumption
                BENEFIT    VALUES
       Recreatio^1
       Fisheries
Nonmarket
Direct Use
Nonmarket
Indirect Use
 if
 !        A-

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Market benefits are best typified by commercial fisheries,
where a change in fishery conditions will manifest itself in
the price, quantity, and/or quality offish harvests. The
fishery changes thus result in changes in the marketplace,
and can be evaluated based on market exchanges.

Direct use benefits include the value of improved
environmental goods and services used and valued by people
(whether or not they are traded in markets). A typical
nonmarket direct use would be recreational angling, in
which participants enjoy a welfare gain when the fishery
improvement results in a more enjoyable angling experience
(e.g., higher catch rates).

Indirect use benefits refer to changes that contribute,
through an indirect pathway, to an increase in welfare for
users (or nonusers) of the resource. An example of an
indirect benefit would be when the increase in the number of
forage fish enables the population of valued predator species
to improve (e.g., when the size and numbers of prized
recreational or commercial fish increase because their food
source  has been improved). In such a context, the I&E
impacts on a forage species will indirectly result in welfare
gains for recreational or commercial anglers.

Nonuse benefits — also known as passive use values —
reflect the values individuals assign to improved ecological
conditions apart from any current, anticipated, or optional
use by them.  Some economists consider option values to be
a part of nonuse values because the option value is not
derived from  actual current use, whereas other writers place
it in a use category (because the option value  is associated
with preserving opportunity for a future use of the resource).
For convenience, we place option value in the nonuse
category.

11.9.4  Direct  Use
Direct use benefits are the  simplest to envision. The welfare
of commercial, recreational, and subsistence fishermen is
improved when fish stocks increase and their catch rates
rise.  This increase in stocks may be induced by reduced
I&E of species sought by fishermen, or through reduced
I&E of forage and bait fish, which leads to increases in
populations of commercial and recreational species. For
subsistence fishermen, the increase in fish stocks may
reduce the amount of time spent fishing for their meals or
increase the number of meals they are able to  catch. For
recreational anglers, more fish and higher catch rates may
increase the enjoyment of a fishing trip and may  also
increase the number of fishing trips taken. For commercial
fishermen, larger fish stocks may lead to increased revenues
through increases in total landings and/or increases in the
catch per unit of effort (i.e., lower costs per fish caught).
Increases in catch may also lead to growth in  related
commercial enterprises, such as commercial fish
cleaning/filleting, commercial fish markets, recreational
charter fishing, and fishing equipment sales.
Evidence that these use benefits are valued by society can be
seen in the market. For example, in 1996 about 35 million
recreational anglers spent nearly $38 billion on equipment
and fishing trip related expenditures (US DOI, 1997) and the
1996 GDP from fishing, forestry, and agricultural services
(not including farms) was about $39 billion (BEA, 1998).
Clearly, these data indicate that the fishery resource is very
important.  These baseline values do not give us a sense of
how benefits change with changes in environmental quality
such as reduced I&E and increased fish stocks.  However,
even a change of 0.1% would translate into potential
benefits of $40  million per year.

Commercial fishermen.  The benefits derived from increased
landings by commercial fishermen can be valued by looking
at the market in which the fish are sold. The ideal measure
of commercial fishing benefits  is the producer surplus
generated by the marginal increase in landings, but often the
data required to compute the producer surplus are
unavailable. In this case, revenues may be used as a proxy
for producer surplus, with some assumptions and an
adjustment.  The assumptions are that (1) there will be no
change in harvesting behavior or effort, but existing
commercial anglers will experience an increase  in landings,
and (2) there will be no change in price. Given these
assumptions, benefits can be estimated by calculating the
expected increase in the value of commercial landings, and
then translating the landed values into estimated increases in
producer surplus.  The economic literature (Huppert,  1990)
suggests that producer surplus values for commercial fishing
have been estimated to be approximately 90% of total
revenue (landings values are a close proxy for producer
surplus because the commercial fishing sector has very high
fixed costs relative to its variable costs). Therefore, the
marginal benefit from an increase in commercial landings
can be estimated to be approximately 90% of the anticipated
change in revenue.

Recreational users. The benefits of recreational use cannot
be tracked in the market. However, there is an extensive
literature on valuing fishing trips and valuing increased
catch rates on fishing trips.  While it is likely that nearwater
recreational users will gain benefits, It is unlikely that
swimmers would perceive an important effect on their use of
the ecosystem.  Boaters may receive recreational value to the
degree that enjoyment of their surroundings is an important
part of their recreational pleasure or that fishing is a
secondary reason for boating. Passive use values to these
and other individuals are discussed below.

Primary studies of sites throughout the United States  have
shown that anglers value their fishing trips and that catch
rates are one of the most important attributes contributing
the quality of their trips.

Higher catch rates may translate into two components of
recreational angling benefits: an increase in the value of
existing recreational fishing trips, and an increase in
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recreational angling participation. The most promising
approaches for quantifying and monetizing these two
benefits components are benefits transfer (as a secondary
method) and random utility modeling or RUM (as a primary
research method).

To estimate the value of an improved recreational fishing
experience, it is necessary to estimate the existing number of
angling trips or days that are expected to be improved by
reducing I&E. As with the commercial fishing benefits, it is
important to identify the appropriate geographic scope when
estimating these numbers. Once the existing angling
numbers have been estimated, the economic value of an
improvement (consumer surplus) can be estimated.  The
specific approach for estimating the value will depend on the
economic literature that is most relevant to the specific
characteristics of the study site.  For example, some
economic studies in the literature can be used to infer a
factor (percentage increase) that can be applied to the
baseline value of the fishery for specific changes in fishery
conditions. Other primary studies simply provide an
estimate of the incremental value attributable to an
improvement in catch rate.

In some cases it may be reasonable to assume that increases
in fish abundance (attributable to reducing I&E) will lead to
an increase in recreational fishing participation. This would
be particularly relevant in a location that has experienced
such a severe impact to the fishery that the site is no longer
an attractive location for recreational activity. Estimates of
potential recreational activity post-regulation can be made
based on similar sites with healthy fishery populations, on
conservative estimates of the potential increase in
participation (e.g., a 5% increase), or on recreational
planning standards (densities or level of use per acre or
stream mile). A participation model (as in a RUM
application) could also be used to predict changes in the net
addition to user levels from the improvement at an impacted
site.  The economic benefit of the increase in angling days
then can be estimated using values from the economic
literature for a similar type of fishery and angling
experience.

Subsistence anglers.  Subsistence use of fishery resources
can be an important issue in areas where socioeconomic
conditions (e.g., the number of low income households) or
the mix of ethnic backgrounds make such angling
economically or culturally important to a component of the
community. In cases of Native American use of impacted
fisheries, the value of an improvement can sometimes be
inferred from settlements in similar legal  cases (including
natural resource damage assessments, or compensation
agreements between impacted tribes and various government
or other institutions in cases of resource acquisitions or
resource use restrictions). For more general populations, the
value of improved subsistence fisheries may be estimated
from the costs saved in acquiring alternative food sources
(assuming the meals are replaced rather than foregone).
11.9.5  Indirect Use Benefits
Indirect use benefits refer to welfare improvements that arise
for those individuals whose activities are enhanced as an
indirect consequence of the fishery or habitat improvements
generated by the proposed new facility standards for CWIS.
For example, the rule's positive impacts on local fisheries
may, through the intricate linkages in ecologic systems,
generate an improvement in the population levels and/or
diversity of bird species in an area.  This might occur, for
example, if the impacted fishery is a desired source of food
for an avian species of interest. Avid bird watchers might
thus obtain greater enjoyment from their outings, as they are
more likely to see a wider mix or greater numbers of birds.
The increased welfare of the bird watchers is thus a
legitimate but indirect consequence of the  proposed rule's
initial impact on fish.

There are many forms of potential indirect benefits. For
example, a  rule-induced improvement in the population of a
forage fish  species may not be of any direct consequence to
recreational or commercial anglers. However, the increased
presence of forage fish may well have an indirect affect on
commercial and recreational fishing values because it
enhances an important part of the food chain. Thus, direct
improvements in forage species populations may well result
in a greater number (and/or greater individual size) of those
fish that are targeted by recreational or commercial anglers.
In such an instance, the relevant recreational and
commercial fishery benefits would be an indirect
consequence of the proposed rule's initial  impacts on lower
levels of the aquatic ecosystem.

The data and methods available for estimating indirect use
benefits depend on the specific activity that is enhanced.
For example, an indirect improvement to recreational
anglers would be measured in essentially the same manner
discussed under the preceding discussion on direct use
benefits (e.g., using a RUM model). However, the analysis
requires one additional critical step — that of indicating the
link between the direct impact of the proposed rule
(e.g., improvements in forage species populations) and the
indirect use that is ultimately enhanced (e.g., the
recreationally targeted fish).  Therefore, what is typically
required for estimating indirect use benefits is ecologic
modeling that captures the key linkages between the initial
impact of the rule and its ultimate (albeit indirect) effect on
use values.  In the example of forage species, the change in
forage fish  populations would need to be analyzed in a
manner that ultimately yields information on responses in
recreationally targeted species (e.g., that can be linked to a
RUM analysis).

11.9.6  Nonuse Benefits
Nonuse (passive use) benefits arise when individuals value
improved environmental quality apart from any past,
present, or  anticipated future use of the resource in question.
 Such passive use values have been categorized in several
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§316b EEA Chapter 11 for New Facilities
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ways in the economic literature, typically embracing the
concepts of existence (stewardship) and bequest
(intergenerational equity) motives. Passive use values also
may include the concept that some ecological services are
valuable apart from any human uses or motives. Examples
of these ecological services may include improved
reproductive success for aquatic and terrestrial wildlife,
increased diversity of aquatic and terrestrial wildlife, and
improved conditions for recovery of threatened and
endangered species.

Passive values can only be estimated in primary research
through the use of direct valuation techniques such as
contingent valuation method (CVM) surveys and related
techniques (e.g., conjoint analysis using surveys).  In the
case of the  §316(b) proposed new facilities rule, benefits
transfer is used, with appropriate care and caveats clearly
recognized.

One typical approach for estimating passive values is to
apply a ratio between certain use-related benefits estimates
and the passive use values anticipated for the same site and
resource change.  Freeman (1979) applied a rule of thumb in
which he inferred that national-level passive benefits of
water quality improvements were 50% of the estimated
recreational fishing benefits. This was based on his review
of the literature in those instances where nonuse and use
values had been estimated for the same resource and policy
change. Fisher and Raucher (1984) undertook a more
in-depth and expansive review of the literature, found a
comparable relationship between recreational angling
benefits and nonuse values, and concluded that since nonuse
values were likely to be positive, applying the 50% "rule of
thumb" was preferred over omitting nonuse values from a
benefits analysis entirely.
The 50% rule has since been applied frequently in EPA
water quality benefits analyses (e.g., effluent guidelines
RIAs for the iron and steel and pulp and paper sectors, and
the RIA for the Great Lakes Water Quality Guidance). At
times the rule has been extended to ratios higher than 50%
(based on specific studies in the literature). However, the
overall reliability and credibility of this type of approach is,
as for any benefits transfer approach, dependent on the
credibility of the underlying study and the comparability in
resources and changes in conditions between the research
survey and the §316(b) rule's impacts at selected sites.  The
credibility of the nonuse value estimate also is contingent on
the reliability of the recreational angling estimates to which
the 50% rule is applied.

A second approach to deriving estimates for §316(b) passive
use values is to use benefits transfer to apply an annual
willingness-to-pay estimate per nonuser household
(e.g., Mitchell and Carson, 1986; Carson and Mitchell,
1993) to all the households with passive use motives for the
impacted waterbody. The challenges in this approach
include defining the appropriate "market"  for the impacted
site (e.g., what are the boundaries for defining how many
households apply), as well as matching the primary research
scenario (e.g., "beatable to fishable") to the predicted
improvements at the §316(b)-impacted site.

For specific species, some valuation may be deduced using
restoration-based costs as a proxy for the value of the
change in stocks (or for threatened and endangered species
the value of preserving the species). Where a measure of the
approximate cost per individual can be deduced, and the
number of individuals spared via BTA can be estimated, this
may be a viable approach.
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Table 11-14: Summary of Benefit Categories, Data Needs, Potential Data Sources, and Approaches
Benefits Category
Direct Use, Marketed 6ooc
Increased commercial landings
(fishing, shellfishing, &
aquaculture)
Direct Use, Nonmarket Got
Improved value of a
recreational fishing experience
Increase in recreational fishing
participation
Increase in subsistence fishing
Nonuse and Indirect Use, 1
Increase in indirect values
Increase in passive use values
Basic Data Needs
s
>• Estimated change in landings
>• Estimated producer surplus
>ds
>• Estimated number of affected anglers
>• Value of an improvement in catch rate, and
possibly, value of an angling day
>• Estimated number of affected anglers or estimate
of potential anglers
>• Value of an angling day
>• Estimated number of affected anglers or estimate
of potential anglers
>• Value of an angling day
slonmarketed
>• Estimated changes in ecological services (e.g.,
reproductive success of aquatic species)
>• Restoration based on costs
>• Apply 50% rule to recreational fishing values
Potential Data Sources/Approaches

>• Based on ecological modeling
>• Based on available literature or 50%
rule

>• Site-specific studies, national or
statewide surveys
>• Based on available literature
>• Site-specific studies, national or
statewide surveys
>• Based on available literature
>• Site-specific studies, national or
statewide surveys
>• Based on available literature

>• Based on ecological modeling
>• Site-specific studies, national or
statewide surveys
>• Or use site-specific studies, national
or statewide surveys
11.9.7 Summary of Benefits  Categories
Table 11-4 displays the types of benefits categories expected
to be affected by the §316(b) rule and the various data
needs, data sources, and estimation approaches associated
with each category. As described in sections 11.9.4 to
11.9.6, economic benefits can be broadly defined according
to three categories: 1) direct use, 2) indirect use, and 3)
nonuse (passive use) benefits. These benefits can be further
categorized according to whether or not they are traded in
the market. As indicated in Table 11-4, "direct use" benefits
include both "marketed" and "nonmarketed" goods, whereas
"nonuse" and "indirect use" benefits include only
"nonmarketed" goods.

11.9.8  Causality: Linking the §316(b)
Rule to Beneficial  Outcomes
Understanding the anticipated economic benefits arising
from changes in I&E requires understanding a series of
physical and socioeconomic relationships linking the
installation of Best Technology Available (BTA) to changes
in human behavior and values.  As shown in Figure 11-2,
these relationships span a broad spectrum, including
institutional relationships to define BTA (from policy
making to field implementation), the technical performance
of BTA, the population dynamics of the aquatic ecosystems
affected, and the human responses and values associated
with these changes.

The first two steps in Figure 11-2 reflect the institutional
aspects of implementing the §316(b) rule. In step 3, the
anticipated applications of BTA (or a range of BTA options)
must be determined for the regulated entities. This
technology forms the basis for estimating the cost of
compliance, and provides the basis for the initial physical
impact of the rule (step 4). Hence, the analysis must predict
how implementation of BTAs (as predicted in step 3)
translates into changes in I&E at the regulated CWIS
(step 4). These changes in I&E then serve as input for the
ecosystem modeling (step 5).
                                                                                                       11-21

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§316b EEA Chapter 11 for New Facilities
                                           CWIS Impacts and Potential Benefits
                          Figure 11-2: Casual Linkages in the Benefits Analysis
                                             Causal Linkages
                                                 Benefits Analysis
              §316(b)
              Benefits
              Analysis For
              New Sources
                                         1. EPA Publication of Rule
2. Implementation Through NPDES
         Permit Process
                                 3. Changes in Cooling Water Intake Practices
                                 and/or Technologies (implementation of ETA)
                                             Determine BTA Options and
                                               Environmental Impact
                                     4. Reductions In Impingement and
                                               Entrainment
                                                                                 Present Environmental Impact
                                                                                   of the Implemented BTA
                                       5. Change in Aquatic Ecosystem
                                  (e.g., increased fish abundance and diversity
                                                                              Assessment of Environmental Impacts
                                                                                       of Reduced I&E
                                  6.  Change in Level of Demand for Aquatic
                                    Ecosystem Services (e.g., recreational,
                                  commercial, and other benefits categories)
                                                                                        Quantification
                                                                                 (e.g., participation Modeling)
                                  7. Change in Economic Values (monetized
                                            changes in Welfare)
                                                                                      Willingness to Pay
                                                                                         Estimation
In moving from step 4 to step 5, the selected ecosystem
model (or models) are used to assess the change in the
aquatic ecosystem from the preregulatory baseline
(e.g., losses of aquatic organisms before BTA) to the
postregulatory conditions (e.g., losses after BTA
implementation). The potential output from these steps
includes estimates of reductions in I&E rates, and changes
in the abundance and diversity of aquatic organisms of
commercial, recreational, ecological, or cultural value,
including threatened and endangered species.

In step 6, the analysis involves estimating how the changes
in the aquatic ecosystem (estimated in step 5) translate into
changes in level of demand for goods and services. For
example, the analysis needs to establish links between
improved fishery abundance, potential increases in catch
rates, and enhanced participation. Then, in step 7, as an
example, the value of the increased enjoyment realized by
recreational anglers is estimated. These last two steps
typically are the focal points of the economic benefits
                    portion of the analysis.  However, because of data and time
                    constraints, this benefits analysis is limited to only the first
                    four steps of the process.
                     11.10  EMPIRICAL INDICATIONS OF
                     POTENTIAL  BENEFITS

                     The following discussion provides examples from existing
                     facilities that offer some indication of the relative magnitude
                     of monetary benefits that may be expected to result from the
                     proposed new facility regulations.

                     The potential benefits of lower intake flows and 100%
                     recirculation of flow are illustrated by comparisons of once-
                     through and closed-cycle cooling (e.g., Brayton Point and
                     Hudson River facilities). The potential benefits of
                     additional requirements defined by regional permit directors
                     are demonstrated by operational changes implemented to
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§316b EEA Chapter 11 for New Facilities
                       CWIS Impacts and Potential Benefits
reduce impingement and entrainment (e.g., Pittsburg and
Contra Costa facilities).  The potential benefits of reducing
losses of forage species are demonstrated by analysis of the
biological and economic relationships among forage species
and commercial and recreational fishery species (e.g.,
Ludington facility on Lake Michigan).  Finally, the potential
benefits of implementing additional technologies to increase
survival of organisms impinged or entrained are illustrated
by the application of modified intake screens and fish return
systems (e.g., Salem Nuclear Generating Facility). These
cases are discussed below.

An example of the potential benefits of minimizing intake
flow is provided by data for the Brayton Point facility,
located on Mt. Hope Bay in Massachusetts (NEPMRI,
1981, 1995; U.S. EPA, 1982). In the mid-1980's, the
operation of Unit 4 at Brayton Point was changed from
closed-cycle to once-through cooling, increasing flow by
48% from an average of 703 MOD before conversion to an
average of 1045 MOD for the first 6 years post-conversion
(Lawler, Matusky, and Skelly Engineers, 1993). Although
conversion to once-through cooling increased coolant flow
and the associated heat load to Mt. Hope Bay, the facility
requested the change because of electrical problems
associated with Unit 4's saltwater spray cooling system
(U.S. EPA, 1982).  Comparison of I&E losses before and
after the change provides a means of estimating the
potential reduction in losses under closed cycle operation.
Data on I&E losses following conversion of Unit 4 to once-
through cooling are available in reports giving predicted
(NEPMRI, 1981) or actual (Gibson, 1996) losses. Based on
data for four species, EPA estimated that the annual
reduction in entrainment losses of adult-equivalents of
catchable fish under closed-cycle cooling would range from
7,250 for weakfish and 20,198 for tautog to 155,139 for
winter flounder and 207,254 for Atlantic menhaden.
Assuming that this would result in a proportional change in
harvest, this represents an increase under closed cycle
operation of 330,000 to 2 million pounds per year in
commercial landings and from 42,000 to 128,000 pounds
per year in recreational landings for these four species
alone.

Another example of the potential benefits of low intake
flow is provided by an analysis of I&E  losses at five
Hudson River power plants. Estimated fishery losses under
once-through compared to closed-cycle cooling indicated
that an average reduction in intake flow of about 95% at the
three facilities responsible for the greatest impacts would
result in a 30-80% reduction in fish losses, depending on
the species involved (Boreman and  Goodyear, 1988). An
economic  analysis estimated monetary damages under once-
through cooling based on the assumption that annual
percent reductions in year classes of fish result in
proportional reductions in fish stocks and harvest rates
(Rowe et al., 1995).  A low estimate of per facility damages
was based on losses at all five facilities and a high estimate
was based on losses at the three facilities that account for
most of the impacts. Damage estimates under once-through
cooling ranged from about $1.3 million to $6.1 million
annually in 1999 dollars.

Another example demonstrates how I&E losses of forage
species can lead to reductions in economically valued
species. Jones and Sung (1993) applied a RUM to estimate
fishery impacts of I&E by the Ludington Pumped-Storage
plant on Lake Michigan. This method estimates changes in
demand as a function of changes in catch rates.  The
Ludington facility is responsible for the loss of about 1-3%
of the total Lake  Michigan production of alewives, a forage
species that supports valuable trout and salmon fisheries.
Jones and Sung (1993) estimated that losses of alewife
result in a loss of nearly 6% of the angler catch of trout and
salmon each year. Based on RUM analysis, they estimated
that if Ludington operations ceased, catch rates of trout and
salmon species would increase by 3.3 to 13.7 percent
annually, amounting to an estimated recreational angling
benefit of $0.95 million per year (in 1999 dollars) for these
species alone.

Another example indicates the potential benefits of
operational BTA that may be required by regional permit
directors.  Two plants in the San Francisco Bay/Delta,
Pittsburg and Contra Costa, have made changes to their
intake operations to reduce I&E of striped bass (Morone
saxatilis). This also reduces incidental take of several
threatened and endangered fish species, including the delta
smelt (Hypomesus transpacificus) and several runs of
chinook salmon (Oncorhynchus tshawytscha) and steelhead
(Oncorhynchus mykiss).  According to  technical reports by
the facilities, operational BTA has reduced striped bass
losses by 78-94%, representing an increase in striped bass
recreational landings of about 15,000 fish each year. A
local study estimated that the consumer surplus of an
additional striped bass caught by a recreational angler is
$8.87 to $13.77 in 1999 dollars (Huppert, 1989). This
implies a benefit to the recreational fishery, from reduced
I&E of striped bass alone, in the range  of $131,000 to
$204,000 annually.

A final example indicates the benefits of technologies that
can be applied to maximize survival. At the Salem Nuclear
Generating Station in Delaware Bay, the facility's original
intake screens were replaced with modified screens and
improved fish return baskets that reduce impingement stress
and increase survival of impinged fish (Ronafalvy et al.,
1999). The changes resulted in an estimated 51% reduction
in losses of weakfish.  Assuming similar reductions in losses
of other recreational and commercial species, this represents
an increase in recreational landings of 13,000 to 65,000 fish
per year and an increase in angler consumer surplus of as
much as $269,000 annually in 1999 dollars. The estimated
increase in commercial landings of 700 to 28,000 pounds
per year represents an increase in producer surplus of up to
$25,000 annually. Assuming that nonuse benefits are at
least 50% of recreational use benefits, nonuse benefits
                                                                                                          11-23

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§316b EEA Chapter 11 for New Facilities                                               CWIS Impacts and Potential Benefits


associated with the screens may be expected to amount to
up to $134,000 per year.
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§316b EEA Chapter 11 for New Facilities
                      CWIS Impacts and Potential Benefits
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Cooling Part I, Volume 2: The Marine Environment.
Prepared by the Utility Water Act Group.  Submitted to
U.S. EPA. June.

Texas Instruments Inc. 1978. Biological Effects of Once-
Through Cooling Part I, Volume 5: Great Lakes Basin and
Connecting Water Bodies. Prepared for the Utility Water
Act Group. Submitted to U.S. EPA.

Texas Instruments Inc. 1980. Hudson River Ecological
Study in the Area of Indian Point: 1979 Annual Report.
Prepared for Consolidated Edison Company on New York,
Inc.

Thurber, N.J. and D.J. Jude. 1985. Impingement Losses at
the D. C. Cook Nuclear Power Plant During 1975-1982 with
a Discussion of Factors Responsible  and Possible Impact on
Local Populations. Special Report No. 115 of the Great
Lakes Research Division, Great Lakes and Marine Waters
Center, University of Michigan.

U.S. DOI.  1997. U.S. Department of the Interior, Fish and
Wildlife Service and U.S. Department of Commerce, Bureau
of the Census. 1996 National Survey of Fishing, Hunting,
and Wildlife-Associated Recreation. U.S.  Government
Printing Office, Washington, DC.

U.S. EPA. 1976. Development Document for Best
Technology Available for the Location, Design,
Construction, and Capacity of Cooling Water Intake
Structures for Minimizing Adverse Environmental Impact.
Office of Water and Hazardous Materials, Effluent
Guidelines Division, U.S. Environmental Protection
Agency, Washington, DC.
11-28

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§316b EEA Chapter 11 for New Facilities                                             CWIS Impacts and Potential Benefits

U.S. EPA. 1982. Determination Regarding Modification of     National Laboratory for the U.S. Nuclear Regulatory
NPDES Permit No. MA0003654 for Brayton Point Station,     Commission. Environmental Sciences Division Publication
Somerset, Massachusetts. 107 pp.                           No. 1480. NUREG/CR-1100. 133 pp.

Van Winkle, W., L.W. Barnthouse, B.L. Kirk and             Whitehead, P.J.P. 1985. FAO Species Catalogue, Volume 7.
D.S. Vaughan. 1980. Evaluation of Impingement Losses of     Clupeoid Fishes of the World. FAO Fish. Synop. 7(125),
White Perch at the Indian Point Nuclear Station and Other     Pt. 1, 303 pp.
Hudson River Power Plants. Prepared by Oak Ridge
                                                                                                       11-29

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§316(b) EEA Appendix A for New Facilities        Detailed Information on Technologies/Development of Unit Costs
                                APPENDIX A

              DETAILED INFORMATION ON TECHNOLOGIES AND
                     THE DEVELOPMENT OF UNIT COSTS
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§316(b) EEA Appendix A for New Facilities          Detailed Information on Technologies/Development of Unit Costs
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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs

                                               APPENDIX A

                    DETAILED INFORMATION ON TECHNOLOGIES AND
                              THE  DEVELOPMENT OF UNIT COSTS
This Appendix presents detailed information on the development of unit cost estimates for a set of technologies that may be
used and actions that may be taken to meet requirements under the proposed §316(b) New Facility Rule. The Appendix
provides additional description of many of the technologies and compliance actions to supplement the information presented
in the main document.

Background

Facilities using cooling water may be subject to the proposed §316(b) New Facility Rule. A facility using cooling water can
have either a once-through or a recirculating cooling system.

In a once-through system, the cooling water that is drawn in from a waterbody travels through the cooling system once to
provide cooling and is then discharged, typically back to the waterbody from which it was withdrawn. The cooling water is
withdrawn from a water source, typically a surface waterbody, through a cooling water intake structure (CWIS). Many
facilities using cooling water (e.g., steam electric power generation facilities, chemical and allied products manufacturers,
pulp and paper plants) need large volumes of cooling water, so the water is generally drawn in through one or more large
CWIS, potentially at high velocities. Because of this, debris, tree limbs, and many fish and other aquatic organisms can be
drawn toward or into the CWIS. Since a facility's cooling water system can be damaged or clogged by large debris, most
facilities have protective devices such as trash racks, fixed screens, or traveling screens, on their CWIS.  Some of these
devices provide limited protection to fish and other aquatic organisms, but other measures such as the use of passive (e.g.,
wedgewire) screens, velocity caps, traveling screens with fish baskets, or the use of a recirculating cooling system may
provide better protection and have greater capability to minimize adverse environmental impacts.1

In a recirculating system, the cooling water is used to cool equipment and steam, absorbing heat in the process, and is then
cooled and recirculated to the beginning of the system to be used again for cooling. The  heated cooling water is generally
cooled in either a cooling tower or in a cooling lake/pond. In the process of being cooled, some of the water evaporates or
escapes as steam. Flow lost through evaporation typically ranges from 0.5% to 1% of the total flow (Antaya, 1999). Also,
because of the heating and cooling of recirculating water, mineral deposition occurs which necessitates some bleeding of
water from the system. The water that is purged from the system to maintain chemical balance is called blow down. The
amount of blow down is generally around 1% of the flow. Cooling towers may also have a small amount of drift, or windage
loss, which occurs when some recirculating water is blown out of the tower by the wind or the velocity of the air flowing
through the tower. The water lost to evaporation, blow down, and  drift needs to be replaced by  what  is typically called
makeup water. Overall, makeup water is generally 3% or less of the recirculating water flow.2 Therefore, recirculating
systems still need to draw in water and may have cooling water intakes.  However, the volume of water drawn in is
significantly less than in once-through systems so the likelihood of adverse environmental impacts as a result of the CWIS is
much lower.3  Also, some recirculating systems obtain their makeup water from ground water sources or public  water
supplies, and a small but growing number use treated wastewater from municipal wastewater treatment plants for makeup
water.
    'CWIS devices used in an effort to protect fish also include other fish diversion and avoidance systems (e.g., barrier
nets, strobe lights, electric curtains), which may be effective in certain conditions and for certain species.

    2In some salt water cooling towers, however, makeup water can be as much as 15%.

    Manufacturer Brackett Green notes that closed loop systems (i.e., recirculating systems) normally require one-sixth the
number of traveling screens as a power plant of equal size that has a once-through cooling system.

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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs


A.  GENERAL COST INFORMATION

The cost estimates presented in this analysis include both capital costs and operations and maintenance (O&M) costs and are
for primary technologies such as traveling screens and cooling towers and for actions such as extending intake piping to
locate a CWIS outside the littoral zone.  Facilities may install these technologies or take these actions to meet requirements
of the proposed §316(b) New Facility Rule.  Cooling tower cost estimates are presented for various types of cooling towers
including towers fitted with features such as plume reduction and noise reduction. Estimated costs for traveling screens were
developed mainly from cost information provided by vendors. The cost of installing other CWIS technologies such as
passive screens and velocity caps are calculated by applying a cost factor based on the cost of traveling screens. All of the
base cost estimates are for new sources.

To provide a relative measurement of the differences in cost across technologies, costs need to be developed on a uniform
basis. The cost for many of the CWIS and flow reduction technologies depends on many factors, including site-specific
conditions, and the relative importance of many of these factors varies from technology to technology. The factor that is
most relevant and that seems to most affect cost is the total intake flow. Therefore, EPA selected total intake flow as the
factor on which to base unit costs and thus use for basic cost comparisons. EPA developed cost estimates, in $/gallons per
minute (gpm), for each of the technologies for use at a range of different total intake flow volumes.

EPA assumed average values or typical situations for the other factors that also impact the cost components. For example,
EPA assumed an average debris level and an intake flow velocity of 0.5 feet per second (fps); EPA also used 1.0 fps  for cost
comparison purposes. EPA separately assessed the cost effect of variations from these average conditions as add-on costs.
For instance, if the water being drawn in has a high debris level, this would tend to increase cost by about 20%.

EPA determined the specifications for each factor based on a review of information about the characteristics most likely to
be encountered at a typical facility withdrawing cooling water.  Cost factors used in this analysis and the assumed
values/scenarios are listed below in Table A-l.

EPA's unit cost estimates for the selected technologies are based on the information provided by vendors.  Most of the cost
information came from well-established firms and from industry representatives who have lengthy experience in the design,
vending, and installation of CWIS and cooling towers. Although only a limited number of vendors provided cost
information, EPA believes the information is sufficient for developing unit cost estimates.

Industry representatives often preferred to remain anonymous whether they were helpful and provided cost information or
not. Some industry representatives who provided cost information wanted to be acknowledged for providing information but
without being directly linked to specific technology costs. For these reasons and because information from several sources
was combined during analysis, some of the cost information presented in this document is not attributed to a specific industry
source.
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§316(b) EEA Appendix A for New Facilities
      Detailed Information on Technologies/Development of Unit Costs
                                Table A-l. Basis for Development of Costs
 Base Factor for Developing Unit Costs
Assumed Values of Other Factors for Base Costs
 Costs were developed for flows of: '
 < 10,000 gpm - 4 flows
 10,000 to < 100,000 gpm - 20 flows
 100,000 to 200,000 gpm - 4 flows
 > 200,000 gpm -1 flow.
Intake flow velocity = 0.5 fps, and 1.0 fps for comparison
Amount and type of debris = average/typical
Water quality = fresh water
Waterbody flow velocity = moderate flow
Accessability to intake = average/typical (no dredging needed,
use of crane possible)
 Cost Elements
 Cost estimates of screens include non-metallic fish handling panels, a spray system, a fish trough, housings and
 transitions, continuous operating features (intermittent operation feature for traveling screens without fish
 baskets), a drive unit, frame seals, engineering, and installation.  EPA separately estimated costs for spray wash
 pumps, permitting, and pilot studies.  Cost estimates do not include a differential control system.

 Cooling towers cost estimates are based on unit costs that include all costs associated with the design,
 construction, and commissioning of a standard fill cooling tower. Costs of cooling towers with various features,
 building materials, and types are calculated based on cost comparisons with standard cooling towers.

 O&M costs were estimated for each type of technology. These costs were estimated, in part, using a percent of
 capital costs as a basis and considering additional factors.
 Potential Add-Ons to Cost
 Amount and type of debris = high or need for smaller than typical openings
 Depth of waterbody = particularly shallow or deep
 Water quality = salt or brackish water (extra cost for non-corrosive material for device and shorter life
     expectancy/higher replacement cost)
 Waterbody flow velocity = stagnant or rapidly moving
 Accessability to intake = cost of difficult installation (extra cost for dredging, extra cost for unusual
     installation due to site-specific conditions)
 Existing intake structure = costs associated with retrofit and what existing structure(s) or conditions
     would cause the extra costs.  For example, if an existing structure has an intake flow of 2.0 fps and the
     intake velocity will be reduced to 0.5 fps with a new device, additional equipment or changes to other
     equipment/structures of that part of the intake system may increase capital costs (albeit minimially) when
     compared to installing a new system.
  1) Cost estimates were developed for selected flows in each range (e.g., 4 different flows less than 10,000 gpm).
  10,000 gpm = 14.4 MOD
The costs estimated for fish protection equipment are linked to both flow rates and intake width and depth. Cooling towers
costs are costed based on the flow rate, in and out temperature delta (defined later), and the type of cooling tower.  Some
industry representatives provided information on how they conduct preliminary cost estimates for cooling towers.  This is
considered to be the "rule of thumb" in costing cooling towers [i.e., $/gallons per minute (gpm)]). Regional variations in
costs do exist. For example, the costs of cooling towers in New England are generally more than for comparable cooling
towers in the Mid Atlantic and Southeast parts of the country. In addition to the costs presented below, cost curves and
equations are provided at the end of this Appendix.  The cost curves and equations can be used to estimate costs for
implementing technologies or taking actions for facilities across a range of intake flows. Additional  supporting information
can be found in Cost Research and Analysis of Cooling Water Technologies for 316(b) Regulatory Options (SAIC, 2000).
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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs


A.I. Flow

EPA determined preliminary intake flow values for the base factor based on data from the ICR (Information Collection
Request) for the §316(b) industry questionnaire, a sampling of responses to the §316(b) industry screener questionnaire, a
Utility Data Institute database (UDI, 1995), and industry brochures and technology background papers.4 Data from these
sources represent utility and nonutility steam electric facilities and industrial facilities that could be subject to prospective
§316(b) requirements and are provided in Table A-2. EPA used these data to determine the range of typical intake flows for
these types of facilities to ensure that the flows included in the cost estimates were representative. Through conversations
with industry representatives, EPA determined the flows typically handled by available CWIS equipment and cooling towers.
Facilities with greater flows would generally either use multiple screens, towers, or other technologies, or use a special
design. Considering this information together, EPA selected flows for various screen sizes, water depths, and intake
velocities for use in collecting cost data directly from industry representatives.

                                             Table A-2.  Flow Data
  ICR (average intake flows by utility/industry category)
  Steam electric utilities:            178 MOD (124,000 gpm) for 1,093 facilities
  Steam electric non-utilities:    2.8 MOD (1,944 gpm) for 1,15 8 facilities
  Chemicals & allied products:   0.339 MOD (235 gpm) for 22,579 facilities
  Primary metals:               0.327 MOD (227 gpm) for 10,999 facilities
  Petroleum & coal products:    0.461 MOD (320 gpm) for 3,509 facilities
  Paper & allied products:       0.148 MOD (103 gpm) for 9,881 facilities
  UDI Database (design intake flow for steam electric utilities) (UDI. 1995)
  Up to 11,219 gpm (16.15 MOD)               401 units
  11,220-44,877 gpm (16.16-64.62 MOD)        465 units
  44,878-134,630 gpm (64.63-193.9 MOD)      684 units
  134,631-448,766 gpm (194-646.2 MOD)       453 units
  More than 448,766 gpm (646.2 MOD)         68 units
  Sampling of Responses from Industry Screener Questionnaire (daily intake flow for non-utilities)
  Up to 0.5 MOD (347 gpm)                6 facilities      >20-30.0 MOD (13,890-20,833 gpm)  2 facilities
  >0.5-1.0 MOD (348-694 gpm)         1 facilities          >30-40.0 MOD (20,834-27,778 gpm)  2 facilities
  >1-5.0 MOD (695-3,472 gpm)         3 facilities          >40-50.0 MOD (27,779-34,722 gpm)  1 facility
  >5.0-10.0 MOD (3,473-6,944 gpm)        8 facilities      >50-100.0 MOD (34,723-69,444 gpm) 0 facilities
  >10-20.0 MOD (6,945-13,889 gpm)    2 facilities          >100 MOD (>69,444 gpm)                1 facility
  US Filter/Johnson Screens Brochure (ranges for flow definitions) (US Filter. 1998)
  Low flow:           200 to 4,000 gpm (0.288 to 5.76 MOD)
  Intermediate flow:    1,500 to 15,000 gpm (2.16 to 21.6 MOD)
  High flow:           5,000 to 30,000 gpm (7.2 to 43.2 MOD)
  Background Technology Papers (SAIC. 1994: SAIC. 1996)
  "Relatively low intake flow":           1-30 MOD (694-20,833 gpm)
  "Relatively small quantities of water":   up to 50,000 gpm (70 MOD)
    4EPA sent the Industry Screener Questionnaire: Phase I Cooling Water Intake Structures to about 2,500 steam electric
non-utility power producers and manufacturers.  This sample included most of the non-utility power producers that were
identified by EPA and a subset of the identified manufacturers in industry groups that EPA determined use relatively large
quantities of cooling water.


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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs


A.II.  Additional Cost Considerations Included in the Analysis

The cost estimates include costs, such as design/engineering, process equipment, and installation, that are clearly part of
getting a CWIS structure or cooling tower in place and operational.  However, there are additional associated capital costs
that may be less apparent but may also be incurred by a facility and have been included in the cost estimates either as stand
alone cost items or included in installation and construction costs. These costs include:

•   Mobilization and demobilization,
•   Architectural fees,
•   Contractor's overhead and profit,
•   Process engineering,
•   Sitework and yard piping,
•   Standby power,
•   Electrical allowance,
•   Instrumentation and controls, and
•   Contingencies.

Following is a brief description of these miscellaneous capital cost items to provide an indication of their general effect on
capital costs. These descriptions are intended to help economists adjust costs to account for regional variations within the
U.S.

    A. 11.a.       Mobilization and Demobilization

Mobilization and demobilization costs are costs incurred by the contractor to assemble crews and equipment on-site and to
dismantle semi-permanent and temporary construction facilities once the job is completed. The equipment that may be
needed includes backhoes, bulldozers, front-end loaders, serf-propelled scrapers, pavers, pavement rollers, sheeps-foot
rollers, rubber tire rollers, cranes, temporary generators, trucks (including water and fuel trucks), and trailers. Mobilization
costs also include bonds and insurance. To account for mobilization and demobilization costs, 2% to 5% is  generally added
to the total capital cost.

    A.II.b.  Architectural Fees

Estimates need to include the cost of the building design, architectural drawings, building construction supervision,
construction engineering, and travel.

    A.II.C.       Contractor's Overhead and Profit

This element includes field supervision, main office expenses, tools and minor equipment, workers' compensation and
employer's liability, field office expenses, performance and payment bonds, unemployment tax, profit, Social Security and
Medicare, builder's risk insurance, and public liability insurance.

    A.II.d.  Process Engineering

Costs for this category include treatment process engineering, unit operation construction supervision, travel, system start-up
engineering, study, design, operation and maintenance (O&M) manuals,  and record drawings.  These costs are generally
estimated by adding 10% to 20% to the estimated construction cost.

    A.II.e.       Sitework and Yard Piping

Cost estimates for sitework should include site preparation, excavation, backfilling, roads, walls, landscaping, parking lots,
fencing, storm water control, yard structures, and yard piping (interconnecting piping between treatment units). These costs
are generally estimated by adding 5% to 15% to the estimated construction cost for sitework and 3% to 7% for yard piping.

For installation of CWIS technologies (e.g., screens), a yard piping cost of 5% of the total capital cost is sometimes used
based on site-specific conditions.  Therefore, to cost a specific site that might require extensive yard piping,  a facility would


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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs


multiply the total capital cost by a factor of 1.05. Cooling towers are more likely to require a significant amount of piping
(for both new facilities and retrofits to existing facilities); these costs are already included in the "rule of thumb" cost
estimate for cooling towers so an additional 5% was not applied.

    A.II.f.      Standby Power

Standby generators may be needed to produce power to the treatment and distribution system during power outages and
should be included in cost estimates.  These costs are generally estimated by adding 2% to  5% to the estimated construction
cost.

    A.II.g.      Electrical  Allowance (including yard wiring)

An electrical allowance should be made for electric wiring, motors, duct banks, MCCs, relays, lighting, etc.  These costs are
generally estimated by adding 10% to 15% to the estimated construction cost.

    A.II.h.   Instrumentation and Controls

Instrumentation and control (I&C) costs may include a facility control system, software, etc. The cost depends on the degree
of automation desired for the entire facility.  These costs are generally estimated by adding 3% to 8% to the estimated
construction cost.

    A.II.L      Contingencies

Contingency cost estimates include compensation for uncertainty within the scope of labor, materials, equipment, and
construction specifications. This uncertainty factor can range from 5% to 25% of all capital costs, with an average of 10%.

Contingency costs can range from 2% to 20% for construction projects.  CWIS technology projects are not typical
construction projects since most of the construction is done at the manufacturing facility and site work mainly involves
installation.  So some of the uncertainties that could occur in typical construction projects are less likely in CWIS projects.
Design and manufacture of the technology can be around 90% of the total cost for a project that involves a straightforward
installation (e.g., no dredging). The approach used in this cost estimate  is conservative and is considered to cover
contingencies for typical CWIS technology or cooling tower projects.

In its 1992 study of cooling tower retrofit costs, Stone and Webster (1992) included, in its line item costs, an allowance for
indeterminates (e.g., contingencies) of 15% for future utility projects. The Stone and Webster study involved major retrofit
work on existing plants (i.e.,  converting a once through cooling system plant to recirculating), so the contingencies allowance
fell in the higher end of the typical range.

A.III. Replacement Costs

EPA assumed that the technologies should be in place and reasonably expected to be operational for at least a 20-year period
(the typical financing period). Therefore, O&M costs should meet that criteria. Vendors estimated the life expectancy of
their devices under the base cost scenario and identified the conditions that most alter life expectancy and to  what degree.
EPA cost estimates generally cover the financial life of a project and do not include the cost of replacing the equipment when
it reaches the end of its useful life.  For most of the technologies examined here, the useful life of major equipment is often
beyond the financing period  of 20 years. For these reasons, EPA has not included replacement costs in the cost estimates for
most of the technologies.  However, for cooling towers, industry sources indicated that replacement of some major
equipment during the financing period is necessary for the upkeep of the cooling tower. These costs tend to  increase over the
useful life of the tower and constitute a major O&M expenditure that needs to be accounted for. Therefore, EPA factored
these periodic equipment replacement costs into the O&M cost estimates presented herein.
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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs


A.IV.  Site-Specific Costs that are Not Included

The cost estimates developed for various technologies are intended to represent a National "typical average" cost estimate.
The cost estimates should not be used as a project pricing tool as they cannot account for all the site-specific conditions for a
particular project. Some highly site-specific capital costs are discussed generally in Section B. V of this Appendix but are not
included in the cost estimates.  Site-specific costs that are not accounted for in the cost estimates include the following:

•   Regulatory requirements (e.g., permitting costs) that vary from one region/area to another,
•   Testing (e.g., costs for pilot studies),
•   Geotechnical allowance,
•   Land aquisition costs, and
•   Costs associated with facility/plant personnel.

Refer to Section B.V of this Appendix for additional discussion.

B.  SPECIFIC COST INFORMATION FOR TECHNOLOGIES AND ACTIONS

The following presents information on potential compliance actions that a facility  might take, including the installation of
certain technologies, in order to meet requirements under the §316(b) New Facility Rule.  The information presented
includes the cost curves and unit costs developed for each potential compliance action.  Estimated costs are presented in
1999 dollars. The cost equations and cost curves can be used to estimate costs.  The equations and cost curves generally use
flow as the basis for determining estimated costs (i.e., unit costs are in $/gpm).  For screens, since flow is dependent on the
flow velocity through the screen, different equations  and cost curves are included  for the two velocities of 0.5 fps and 1.0
fps.

B.I. Changing the Location of the CWIS in a Water Body

    B.La.        Extending the intake pipe

As part of complying with §316(b) New Facility Rule requirements, a facility may extend its intake pipe further into a
waterbody in order to move the intake outside or further from the littoral zone.

Assumptions:
1)  Criteria involving measurement of the Secchi Depth, change in the percent slope of the waterbody bottom, and substrate
composition are being considered to determine whether a particular location is within the littoral zone.  This information was
not available for the proposed new facilities and is very site-specific. For costing  purposes, EPA assumed that the littoral
zone would end approximately 25  meters from the shoreline, so if a pipe extends at least 75 meters from the shoreline it
would be 50 meters outside the littoral zone.5 In a given location, the littoral zone may extend more or less  than 25 meters
from the shoreline into the water body, but for National costing purposes this distance is assumed to be a realistic estimate of
a typical situation.

2) To meet the 50-meter littoral zone requirement, an intake pipe will sometimes need to be extended less than 75 meters
from its original water intake design point since some intakes are planned for offshore.  The maximum would be converting a
shoreline intake to an offshore intake, which would require a 75-meter extension.5 A 75-meter extension is the equivalent of
about 246 foot extension.6
    5EPA used a very conservative estimate of a pipe extension of 125 meters as a basis for estimating costs.  Potentially the
pipe extension length may be less and thus costs for a given facility taking this action could be lower, by as much as 30-40%
depending on the pipe extension method used. This potential decrease in costs would have minimal impact on the overall
estimated cost of the proposed Rule.

    61 meter =3.281 feet

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EPA analyzed intake data from several databases to assess whether assuming a shoreline intake and therefore an intake pipe
extension of 75 meters (to be outside the littoral zone) for estimating compliance costs is justified. The 1995 Utility Data
Institute database (UDI, 1995) contains data compiled for 991 steam electric utility plants in the United States, on a unit by
unit basis.  In total, there are data records for 2,759 units (i.e., intakes) at these plants. For all units, the UDI database shows
that 50% have shoreline intakes and 10% have offshore intakes, while 19% use a canal and 14% use a well. If only the
newer units are considered (those brought online in the last 10 years before the 1995 UDI survey was completed), the percent
of shoreline intakes decreases to 39% and the portion of offshore intakes increases to 16% (14% use canals and 17% use
wells).  This may indicate a trend toward greater use of offshore intakes, however shoreline intakes are still much more
common.

EPA sent the Industry Screener Questionnaire: Phase I Cooling Water Intake Structures to about 2,500 steam electric non-
utility power producers and manufacturers. This sample included most of the non-utility power producers that were
identified by EPA and a subset of the identified manufacturers in industry groups that EPA determined use relatively large
quantities of cooling water. In total, 2,070 survey recipients filled out (at least in part) and returned a survey. Of these
responses, EPA determined that 479 facilities were in-scope (i.e., facilities that have a point source as defined under the
Clean Water Act, use cooling water, receive their cooling water supply from a surface water source, are currently in
commercial service, and have an operating cooling water intake structure). Information on the type of CWIS configuration
(e.g.,  shoreline-submerged intake, submerged offshore  intake, intake canal) was requested on a facility-wide basis, so a
respondent simply marked off all the configurations that applied, whether they were applicable at an individual CWIS or
more  than one CWIS. For the 479 in-scope facilities, the most common intake configuration is a submerged shoreline intake
(183 facilities, or 38%). A significant number of in-scope facilities (147, or 31%) have at least one CWIS that is a
submerged offshore intake. A smaller tier of facilities have intake canals or channels (102, or 21%) and/or surface shoreline
intakes  (81, or
EPA also evaluated a database generated from data reported by utilities on U.S. Department of Energy Form EIA-767 Steam
Electric Plant Operation and Design Report 1997. The database contains records for 1,537 units. Of the units likely to have
cooling water intakes (e.g., they do not receive their water supply from a well or municipal source), approximately 60% have
shoreline intakes (i.e., the intake is located 0 feet from the shore), and about 85% of the units have an intake that has a
maximum distance from the shoreline of less than 410 feet (125 meters). These units represent 73% of all the intakes in the
database. For the offshore intakes less than 410 feet from shore, the median distance for an intake is about 50 feet (15
meters) from the shoreline.

Since a majority of the units have intakes at the shoreline, and those with offshore intakes often extend only about 50 feet
(about 15 meters) or less into the source water, it is reasonable to use a 75-meter (246-foot) extension as the estimated
necessary extension length. Further, the underwater pipe laying costs will generally not change much for various lengths of
pipe extension up to 75 meters since equipment rental, equipment and crew mobilization and demobilization, and onsite
operations are the greatest costs and would be incurred regardless of the length of pipe laid for a distance less than 75 meters.
Finally, because the cost estimates are assumed to be within 30 percent of the typical National average cost which would
more than adequately account for variations due to changes in pipe distances. Therefore, the maximum distance is
considered in these cost estimates.8

3) The source water (e.g., river) is wide enough so that a pipe extending 75 meters from one shore/river bank will also be at
least 75 meters from the opposite shore/river bank and therefore meet the requirement on that side of the source water as
well.
    7These values will change slightly after they are scaled to account for the fact that the survey included only a portion of
identified manufacturers.

    8EPA used a very conservative estimate of a pipe extension of 125 meters as a basis for estimating costs. Potentially the
pipe extension length may be less and thus costs for a given facility taking this action could be lower, by as much as 30-40%
depending on the pipe extension method used. This potential decrease in costs would have minimal impact on the overall
estimated cost of the proposed Rule.

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4) Installation: Since these are new facilities, they will already be incurring some cost to construct/install an intake.
Therefore, putting in a longer intake pipe than originally planned does not entail all new construction and installation costs.
Some of the crew and equipment would already be onsite, roads would already need to be built, and some earthwork would
be done for the facility as originally planned. For estimating costs due to the §316(b) New Facility Rule, we need to consider
the additional costs for the longer intake pipe.  For example, if a shoreline intake has to become an offshore intake, costs for
dredging, an underwater dive crew, and barge rental may now be incurred.

Costs:
The installation of a pipeline underwater requires skilled labor and special equipment and material. Unlike screens installed
at water intakes, pressure is an important factor in the design and installation of the pipeline.  The difference is that screens
are much lighter than pipes and are open to water flow on both sides allowing for equalization of pressure, while pipelines
are subject to axial tension and bending tension at the bottom side of the pipe body and bending compression at the upper
side of the pipe body during laying.  Therefore, special barges designed and equipped with special tools to avoid pipe
distortion are used in such operations.  Very often these barges use robots for pipe laying, trenching, and covering. The
internal diameter of underwater pipeline ranges from 3" to 48" (very few cases are reported in the literature where pipe
diameters reach 72"; this is mainly for oil and gas underwater pipeline application). Steel pipes are often used in underwater
applications. Pipes are coated on the inside by a cement lining and on the outside by epoxy with a concrete overcoat or
fiberglass wrapping.  Prestressed concrete cylinder pipe (PCCP) and reinforced concrete pipe are also used. Steel pipe
sections are joined together by full-penetration welding or flanged connectors. PCCP pipe sections are connected
underwater by means of a device that uses a pump that creates a vacuum at the joint causing the sections to snap and tightly
connect.

Pipes can either be placed on the waterbody floor or in a trench that is dug through the water body floor. For pipelines laid
on the floor, where outcrops and uneven floors exist installation must include placing protective blankets under the pipe. For
both water body floor and subfloor placements, pipelines need to be buried to protect them from fishing trawl boards,
anchors, and from fatigue due to waterbody current stresses. Burying pipelines can be accomplished by sand bags, back fill
with soil and a rock layer on top of the soil, and in some cases natural processes of sedimentation can be used to help protect
the pipe. For underwater pipe laying, and particularly for short-distance underwater pipe laying, there are several ways to
extend an intake pipe to  125 meters off the shore line. These methods include the use of special pipe laying vessels, the
application of the bottom-pull method, and the micro-tunnel drilling method (discussed further below).

Generally, for lake applications steel piping is used and may be installed using any of the three pipe laying methods.  For
riverine applications, both PCCP and steel piping are used. All three of the installation methods are used for steel piping,
while conventional pipe  laying and micro-tunneling techniques are typically used for PCCP (although the bottom-pull
method can be used).  In ocean applications, PCCP is typically used and is installed using conventional methods.

1) Use of Conventional Pipe Laying Vessels
Special pipe laying vessels are vessels that are specially designed and constructed for underwater works. They are equipped
with features such as a pipe delivery, handling, and storage station, a welding station, and a pipeline tensioner. These vessels
are capable of handling 12-meter to 20-meter pipe sections and carrying out underwater welding.  In addition to the pipe
laying vessel, a supply vessel and a tug boat may be needed. A tug boat is sometimes used to pull the pipe laying vessel
away from the shoreline in confined, high traffic, or low wake areas.  The onshore support needed includes a crane to
transport the pipes to the pipe laying vessel. Loading the pipe laying vessel with pipes would take about 1 to 2 hours (based
on about 10  minutes per pipe section, assuming a pipe section length of 12 meters). The new generation pipe  laying vessel,
with a skilled crew and automatic welding equipment, can lay one mile of pipes on a good day.  Based on this estimate, it is
realistic to assume that one day would be sufficient for installing the pipe for a situation where the intake pipe needs to be
extended up to 125 meters offshore. Because equipment and crew rental and mobilization/demobilization account for most
of the cost, the cost per day of installing pipe is almost the same whether or not any pipe is laid (i.e., the pipe cost can be
assumed to be a minor cost driver) (Gerwick, 2000).  In a closed water body (e.g., lake), the pipe laying vessel has to be
assembled and disassembled onsite. For large pipes a 150-ton crane also needs to be transported to site.  The  cost of
transporting equipment varies greatly from site to site. Factors that contribute to cost variability include accessability to site,
labor rates (union or non-union), and environmental and seasonal conditions.  Box A-l provides further detail.
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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs
                              Box A-l. Hypothetical Scenario for Installation of Pipe

  The pipe laying vessel costs are based on the following base scenario:

  Installation of pipes underwater, zero to 1 foot underwater visibility, 60-70 degree water temperature, low current lake,
  river, or ocean.  The installation is to take place from the shoreline out to 125 meters (410 feet) offshore and requires the
  use of a barge or vessel with 4-point anchor capability and crane.

  Job description: position and connect pipes to inlet flange. Lift, lower, and position via crane anchored to barge or
  vessel. Connect pipe sections and fittings.  It is estimated that 500 feet of pipe can be installed per day using conventional
  pipe  laying techniques depending on favorable logistic and environmental conditions and that the 125 meters of pipe can
  easily be installed in one day.

  Rental cost of the  pipe laying vessel (for pipes with diameter less than 12") is estimated at $90,000 to $110,000
  depending on location of the vessel at the time of its rental. Installations in the Great Lakes area are estimated to be 10%
  to 15% higher because according to industry sources there are only four such vessels operating in that area, the labor rates
  are union rates,  and the demand is greater.  The rental price includes barge/vessel personnel (captain, crew,  etc), material
  needed, and equipment needed to lay the pipe underwater.

  Other considerations: Uncontrollable factors like barge availability, weather, water temperature, water depth, underwater
  visibility, currents, and onshore support can affect the daily production of the installation team. These variables always
  have to be considered when a job is quoted on a daily rate.
2) Bottom-Pull Method for Underwater Pipe Laying
In this method the pipeline is assembled onshore over a launching pad with rollers. The welded or flange-connected pipeline
is then pulled by a barge that is anchored offshore. The barge rental cost is estimated at $20,000 per day.  This estimated
cost includes equipment, labor (crew and divers), and material needed for barge operation and pipe pulling.  Additional costs
for the application of this method include the rental of a small crane for onshore operation at $2000/day for pipes up to 12"
in diameter and a heavy duty crane at $4,000/day for pipes of a pipe diameter greater than 12". The labor cost for welders
and pipe connectors is estimated at $500 per day. The cost of using this method varies greatly from one site to another
because it is important to have a site that is suitable for laying a pipe flat and therefore some sites require much more site
preparation earth work than other sites. For costing purposes, EPA estimated that a combination tractor-crawler equipped
with a bulldozer of 410 HP will be rented for two days for site preparation at an estimated cost of $1350/day. Some sites
may not require this equipment.

3) Micro-Tunneling Technique
For river applications, drilling is the method of choice for pipe laying. This technique is the least disturbing to a site. Using
this technique a shaft is drilled near the shoreline into which a horizontal boring machine is placed. The horizontal boring
machine drills a micro tunnel where the intake pipe is installed under the river bed, sea floor, or lake floor. According to
industry sources, the cost of this method does not differ much between a small pipe (12" diameter) and a large pipe (84"
diameter) because the main costs are in shaft construction and the mobilization and demobilization of the crew and
equipment. The lump-sum cost ranges between $1000 and $2000 per linear foot, with a typical budgetary cost for a small
project (300 to 400 feet) at $1500/ft for large pipes. To develop cost curves and unit costs based on flow for micro-
tunneling, EPA assumed a 125 meter pipe extension. Costs for this length of pipe extension were calculated and then related
to the flows that would be reasonable for pipes of various sizes. See the end of this Appendix for the cost curves and
equations for pipe extension.

    B.Lb.       Dredging the intake canal

Relocating a proposed intake pipe so that it is outside the littoral zone can be accomplished by either extending the pipe
(further) away from the shoreline or placing a shoreline intake deeper. For facilities using an intake canal or channel, the
facility may need to dredge  the canal or channel deeper so  that the intake pipe is located outside the littoral zone. The  size of


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§316(b) EEA Appendix A for New Facilities
                                    Detailed Information on Technologies/Development of Unit Costs
the littoral zone is very site-specific. The extent of the littoral zone of a given water body depends on factors such as water
depth, season, rain episodes (amounts, frequency, and intensity), the quantity and quality of runoff and other discharges,
biota and biomass, sediment disturbance, and water quality in the area of interest.  The littoral zone would be determined
using a site-specific measurement of Secchi Depth.

Assumptions:
1) Moving a cooling water intake structure to outside the littoral zone may be done by relocating the pipe to a greater depth.
This depth will depend on the quality of water in the lake. Based on the depth location required, the pipe would be extended
a certain amount from the shoreline to reach the depth.  Table A-3 shows the depths EPA estimates are needed to locate the
pipe below the littoral zone for different categories of water quality. EPA  then estimated the  distance from the shoreline that
a pipe would need to be extended to reach that water depth.  These estimated depths are based on field experience,
discussions with ecologists and biologists, and best professional judgement.  Cost estimates for extending an intake pipe
were presented in the previous section.
                 Table A-3.  Estimated Pipe Placement to Reach Outside the Littoral Zone
Water Quality
Pristine
Average
Turbid
Depth of Water to Reach Outside
Littoral Zone
(feet)
15
8
4
Distance from Shoreline to Reach
the Depth
(feet)
150
100
10
2) Shoreline intakes often have a dredged channel with a baffle or skimmer wall and withdraw water from below the surface,
possibly from the bottom.  To retain this type of intake (instead of extending it offshore), the channel would have to be deep
enough to pull in water from outside the littoral zone.  To accomplish this, dredging of the canal at the mouth of the river and
near the power plant pumping station would need to be done.

Costs:
1) Increasing the depth of the proposed intake to below the littoral zone is assumed to be achieved by further deepening the
planned intake to a level below the littoral zone. For the smallest size deepening operation, it is assumed that 10,000 CY of
sediments will be removed using a dredger for the small size canal (i.e., assuming that the dimensions are 10 by 10 by 100
yards).  It is also assumed that increasing the depth below the littoral zone for the large size canal entails the dredging of an
area of 10 by 40 by  100 yards. Widening, dredging, and dumping operations are assumed to be accomplished using a 2000
gallons per CY dredger at $12.25 per CY. These costs apply to situations where sediments are disposed of onsite. If
sediments are contaminated, the permitting authority may require transport for offsite disposal which may double or triple the
operational costs. See the end of this Appendix for costs curves.

B.II. Reducing Design Intake Flow
    B.ILa.
Switching to a recirculating system
As noted earlier, in a recirculating system cooling water is used to cool equipment and steam, and absorbs heat in the
process.  The cooling water is then cooled and recirculated to the beginning of the system to be used again for cooling.
Recirculating the cooling water in a system vastly reduces the amount of cooling water needed. The method most frequently
used to cool the water in a recirculating system is putting the cooling water through a cooling tower. Therefore, EPA chose
to cost cooling towers as the technology used to switch a once through cooling system to a recirculating system.

Based on discussions with industry representatives, the factors that generally have the greatest impact on cost appear to be
the flow desired by the facility, delta (the difference between cold water temperature and ambient wet bulb temperature),
tower type, and environmental considerations. Physical site conditions (e.g., topographic conditions, soils and underground
conditions, water quality) affect cost, but in most situations are secondary to the primary cost factors. Table A-4 presents
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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
relative capital and operation cost estimates for various cooling towers in comparison to the conventional, basic Douglas Fir
cooling tower as a standard.


                    Table A-4. Relative Cost Factors for Various Cooling Tower Types1
Tower Type
Douglas Fir
Redwood
Concrete
Steel
Fiberglass Reinforced Plastic
Splash Fill
Non-Fouling Film Fill
Mechanical draft
Natural draft (concrete)
Hybrid [Plume abatement (32DBT)]
Dry /wet
Air condenser (steel)
Noise reduction (lOdBA)
Capital Cost Factor (%)
100
1122
140
135
110
120
110
100
175
250-300
375
250-325
130
Operation Cost Factor (%)
100
100
90
98
98
150
102
100
35
125-150
175
175-225
107
1) Percent estimates are relative to the Douglas Fir cooling tower.
2) Redwood cooling tower costs may be higher because redwood trees are a protected species, particularly in the
Northwest.
Sources: Mirsky et al. (1992), Mirsky and Bauthier (1997), and Mirsky (2000)
There are two general types of cooling towers, wet and dry.  Wet cooling towers, which are the far more common type,
reduce the temperature of the water by bringing it directly into contact with large amounts of air.  Through this process, heat
is transferred from the water to the air which is then discharged into the atmosphere.  Part of the water evaporates through
this process thereby having a cooling effect on the rest of the water. This water then exits the cooling tower at a temperature
approaching the wet bulb temperature of the air.  For dry cooling towers, the water does not come in direct contact with the
air, but instead travels in closed pipes through the tower. Air going through the tower flows along the outside of the pipe
walls and absorbs heat from the pipe walls which absorb heat from the water in the pipes. Dry cooling towers tend to be
much larger and more costly than wet towers since the dry cooling process is less efficient.  Also, the effluent water
temperature is warmer since it only approaches the dry bulb temperature of the air (not the cooler wet bulb temperature).
Hybrid wet-dry towers, which combine dry heat exchange surfaces with standard wet cooling towers, are plume abatement
towers. These towers tend to be used most where plume abatement is required by local authorities. Technologies for
achieving low noise and low drift can be fitted to all types of towers.

Other characteristics of cooling towers include:

•   Airflow. Mechanical draft towers use fans to induce air flow, while natural draft (i.e., hyperbolic) towers  induce natural
    air flow by the chimney effect produced by the height and shape of the tower.  For towers of similar capacity, natural
    draft towers typically require significantly less land area and have lower power costs (i.e., fans to induce air flow are not
    needed) but have higher initial costs (particularly because they need to be  taller) than mechanical draft towers.  Both
    mechanical draft and natural draft towers can be designed for air to flow through the fill material using either a
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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs


    crossflow (air flows horizontally) or counterflow (air flows vertically upward) design, while the water flows vertically
    downward. Counterflow towers tend to be more efficient at achieving heat reduction but are generally more expensive
    to build and operate because clearance needed at the bottom of the tower means the tower needs to be taller.

•   Mode of operation: Cooling towers can be either recirculating (water is returned to the condenser for reuse) or
    nonrecirculating (tower effluent is discharged to a receiving waterbody and not reused). Facilities using
    nonrecirculating types (i.e., "helper" towers) draw large flows for cooling and therefore do not provide fish protection
    for §316(b) purposes, so the information in this report is not intended to address non-recirculating towers.

•   Construction materials: Towers can be made from concrete,  steel, wood, and/or fiberglass.

Generally, all cooling towers with plume abatement features are hybrid towers. According to an industry source, attempts to
modify towers with special designs and construction features to abate plumes was prohibitively expensive. Natural draft
towers are concrete towers, although some old natural draft wood  cooling towers do exist. Therefore, for costing purposes,
concrete is assumed to be the material used for building natural draft cooling towers.

To collect data and cost estimates on cooling towers, EPA obtained a list of cooling tower manufacturers, suppliers and users
from the Cooling Tower Institute (CTI). CTI members are local and international. Representatives of the cooling tower
industry were contacted as part of an effort to get information on firms involved in the design, manufacture, and supply of
cooling water intake structures and fish protection equipment.  The CTI members contacted indicated that in general they rely
on groundwater or treated municipal water sources for supplemental/makeup water for cooling.  Other CTI members, though
listed as manufacturers, indicated that they specialize in repairing cooling towers only and are not involved in repairing
intake facilities. Many CTI members indicated that they specialize in recirculating systems that require little or no water
(after initial startup). For example, GEA Integrated Cooling Technologies provided brochures of its latest line of cooling
equipment that does not need cooling water. Based on discussions with GEA representatives and as reflected in its
brochures, GEA specializes in dry  cooling systems and in hybrid systems that use very little water from municipal or ground
sources. The air cooled condensers provide cooling towers with plume abatement and water savings. GEA also provided
information on a system that uses a hybrid cooling system because the facility had a discharge permit for half the flow
generated at the facility.

Cooling tower industry representatives provided names and telephone numbers of persons and firms that are involved in the
design and installation of cooling towers, CWIS technologies, and associated equipment, or represent firms that do. The
representatives provided contacts at two prominent engineering firms, Bechtel and Black &Veatch, who were contacted to
request information.

A Bechtel senior engineer indicated that the cost data that Bechtel has are confidential.  However, he provided his personal
experience on factors that drive the costs of cooling towers and their associated intake structures and screening equipment.
Typically, and particularly based on the experience gained in power plants, the size of an intake structure is determined from
the financial feasibility study of the project.  The financial feasibility study determines the need for power, the expected
power loads, and the ability of the community to pay. Based on that study, and on an environmental and socioeconomic
study that follows the financial study, the project site (including the water intake site) is selected. The cost of the turnkey
project is estimated based on the concepts outlined in the site selection study.9 Typically, the cost of the project is
determined based on the following factors: type of equipment to be cooled (e.g., coal fired equipment, natural gas powered
equipment); location of the water intake (on a river, lake, or seashore); amount of power to-be-generated (e.g.,  50 mega Watt
vs. 200 mega Watt); and volume of water needed.  The volume of water needed for cooling depends on the following critical
parameters: water temperature, make of equipment to be used (e.g, G.E turbine vs. ABB turbine, turbine with heat recovery
system and turbine without heat recovery system), discharge permit limits, water quality (particularly for wet cooling towers),
and type of wet cooling tower (i.e., whether it is a natural draft or a mechanical draft).

To estimate  costs specifically for installing and operating a particular cooling tower, important factors include:
    9For a turnkey project, the engineering firm typically manages design, construction, and initial operation of the system,
and then "turns the key" over to the facility for the facility to continue operating and maintaining the system.

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§316(b) EEA Appendix A for New Facilities          Detailed Information on Technologies/Development of Unit Costs


•   Condenser heat load and wet bulb temperature (or approach to wet bulb temperature): Largely determine the size
    needed.  Size is also affected by climate conditions.

•   Plant fuel type and age/efficiency: Condenser discharge heat load per Mega watt varies greatly by plant type (nuclear
    thermal efficiency is about 33% to 35%, while newer oil-fired plants can have nearly 40% thermal efficiency, and newer
    coal-fired plants can have nearly 38% thermal efficiency).10 Older plants typically have lower thermal efficiency than
    new plants.

•   Topography: May affect tower height and/or shape, and may  increase construction costs due to subsurface conditions.
    For example, sites requiring significant blasting, use of piles, or a remote tower location will typically have greater
    installation/construction cost.

•   Material used for tower construction:  Wood towers tend to be the least expensive, followed by fiberglass reinforced
    plastic, steel, and concrete. However, some industry sources claim that Redwood capital costs might be much higher
    compared to other wood cooling towers, particularly in the Northwest U.S., because Redwood trees are a protected
    species.  Factors that affect the material used include chemical and mineral composition of the cooling water, cost,
    aesthetics, and local/regional availability of materials.

•   Pollution control requirements: Air pollution control facilities require electricity to operate.  Local requirements to
    control drift, plume, fog, and noise and to consider aesthetics  can also increase costs for a given site (e.g., different
    design specifications may be required).

Summaries of some EPRI research on dry cooling systems and wet-dry supplemental cooling systems note that dry cooling
towers may cost as much as four times more than conventional wet towers (EPRI, 1986a and 1986b).

Capital Cost of Cooling Towers

Two cooling tower industry managers with extensive experience in selling and installing cooling towers to power plants and
other industries provided information on how they estimate budget capital costs associated with a wet cooling tower. The
rule of thumb they use is $30/gpm for a delta of 10 degrees and $50/gpm for a delta of 5 degrees.11 This cost is for a "small"
tower (flow less than 10,000 gpm) and equipment associated with  the "basic" tower, and does not include installation.
Above 10,000 gpm, to account for economy of scale, the unit cost  was lowered by $5/gpm over the flow range up to 204,000
gpm.  For flows greater than 204,000 gpm, a facility may need to use multiple towers or a custom design. Combining this
with the variability in cost among various cooling tower types, costs for various tower types and features were calculated for
the flows used in calculating screen capacities at 1 ft/sec and 0.5 ft/sec. Based on discussions with industry representatives,
EPA estimated installation costs as 80% of cooling tower equipment cost. These estimates are presented in Table A-5. See
the end of this Appendix for cost curves and equations.
    10With a 33% efficiency, one-third of the heat is converted to electric energy and two-thirds goes to waste heat in the
cooling water.

    "The delta is the difference between the cold water (tower effluent) temperature and the tower wet bulb temperature.
This is also referred to as the design approach.  For example, at design conditions with a delta or design approach of 5
degrees, the tower effluent and blowdown would be 5 degrees warmer than the wet bulb temperature.  A smaller delta (or
lower tower effluent temperature) requires a larger cooling tower and thus is more expensive.

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
                             Table A-5. Estimated Capital Costs of Cooling Towers
                    without Special Environmental Impact Mitigation Features (1999 Dollars)
Flow
(gpm)
2000
4000
7000
9000
11,000
13,000
15,000
17,000
18,000
22,000
25,000
28,000
29,000
31,000
34,000
36,000
45,000
47,000
56,000
63,000
67,000
73,000
79,000
94,000
102,000
112,000
146,000
157,000
204,000
Basic Douglas Fir
Cooling Tower Cost1
$108,000
$216,000
$378,000
$486,000
$594,000
$702,000
$810,000
$918,000
$972,000
$1,148,400
$1,305,000
$1,461,600
$1,513,800
$1,618,200
$1,774,800
$1,879,200
$2,268,000
$2,368,800
$2,822,400
$3,175,200
$3,376,800
$3,679,200
$3,839,400
$4,568,400
$4,957,200
$5,443,200
$7,095,600
$7,347,600
$9,180,000
Redwood Tower
$121,000
$242,000
$423,000
$544,000
$665,000
$786,000
$907,000
$1,028,000
$1,089,000
$1,286,000
$1,462,000
$1,637,000
$1,695,000
$1,812,000
$1,988,000
$2,105,000
$2,540,000
$2,653,000
$3,161,000
$3,556,000
$3,782,000
$4,121,000
$4,300,000
$5,117,000
$5,552,000
$6,096,000
$7,947,000
$8,229,000
$10,282,000
Concrete Tower
$151,000
$302,000
$529,000
$680,000
$832,000
$983,000
$1,134,000
$1,285,000
$1,361,000
$1,608,000
$1,827,000
$2,046,000
$2,119,000
$2,265,000
$2,485,000
$2,631,000
$3,175,000
$3,316,000
$3,951,000
$4,445,000
$4,728,000
$5,151,000
$5,375,000
$6,396,000
$6,940,000
$7,620,000
$9,934,000
$10,287,000
$12,852,000
Steel Tower
$146,000
$ 292,000
$510,000
$ 656,000
$ 802,000
$ 948,000
$1,094,000
$1,239,000
$1,312,000
$1,550,000
$1,762,000
$1,973,000
$2,044,000
$2,185,000
$2,396,000
$2,537,000
$3,062,000
$3,198,000
$3,810,000
$4,287,000
$4,559,000
$4,967,000
$5,183,000
$6,167,000
$6,692,000
$7,348,000
$9,579,000
$9,919,000
$12,393,000
Fiberglass Reinforced
Plastic Tower
$119,000
$238,000
$416,000
$535,000
$653,000
$772,000
$891,000
$1,010,000
$1,069,000
$1,263,000
$1,436,000
$1,608,000
$1,665,000
$1,780,000
$1,952,000
$2,067,000
$2,495,000
$2,606,000
$3,105,000
$3,493,000
$3,714,000
$4,047,000
$4,223,000
$5,025,000
$5,453,000
$5,988,000
$7,805,000
$8,082,000
$10,098,000
1) Includes installation at 80% of equipment cost for a delta of 10 degrees.
Using the estimated costs, EPA developed a cost equation using a polynomial curve fitting function. Table A-6 presents cost
equations for basic tower types built with different building materials and assuming a delta of 10 degrees.  The cost
equations presented in Table A-6 include installation costs. The "x" in the presented cost equations is for flow in gpm and
the "y" is in dollars.
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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
  Table A-6. Capital Cost Equations of Cooling Towers without Special Environmental Impact Mitigation Features
                                                (Delta 10 degrees)
Tower Type
Douglas Fir
Redwood
Steel
Concrete
Fiberglass Reinforced Plastic
Capital Cost Equation1
y = -9E-llx3 - 8E-06x2 + 50.395x + 44058
y = -lE-lOx3 - 9E-06x2 + 56.453x + 49125
y = -lE-10x3 - lE-05x2 + 68.039x + 59511
y = -lE-10x3 - lE-05x2 + 70.552x + 61609
y = -lE-lOx3 - 9E-06x2 + 55.432x + 48575
Correlation
Coefficient
R2 = 0.9997
R2 = 0.9997
R2 = 0.9997
R2 = 0.9997
R2 = 0.9997
1) x is for flow in gpm and y is cost in dollars.
Using the cost comparison information published by Mirsky et al. (1992), EPA calculated the costs of cooling towers with
various additional features.  These costs are presented in Table A-7. Table A-7 presents capital costs of the Douglas Fir
Tower with various features. The cost for other types of cooling towers are also calculated.

Table A-8 presents cost equations for cooling towers with special environmental mitigation features, built with different
building materials and assuming a delta of 10 degrees.  The cost equations presented in Table A-8 include installation costs.
The "x" in the presented cost equations is for flow in gpm and the "y" is in dollars.

At the end of this Appendix, cost curves with equations are also presented for other types of cooling towers.

Operation and Maintenance (O&M) Cost of Cooling Towers

Estimating annual O&M costs for cooling towers is an involved process since the estimator has to account for many
interrelated dependent and independent cost drivers. These cost drivers include:

•   Size of the cooling tower,
•   Material from which the cooling tower is built,
•   Various features that the cooling tower may include,
•   Source of make-up water,
•   How blow down water is disposed, and
•   Increase in maintenance costs as the tower useful life diminishes.

For example, if make-up water is obtained from a lesser quality source, additional treatment may be required to prevent
biofouling in the tower.
AppA -18

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
                        Table A-7.  Capital Costs of Douglas Fir Cooling Towers with Special Environmental Impact Mitigation Features
                                                            (Delta 10 degrees) (1999 Dollars)
Flows
(gpm)
2000
4000
7000
9000
11,000
13,000
15,000
17,000
18,000
22,000
25,000
28,000
29,000
31,000
34,000
36,000
45,000
47,000
56,000
63,000
67,000
73,000
79,000
94,000
102,000
112,000
146,000
157,000
204,000
Douglas Fir Cooling
Tower
$108,000
$216,000
$378,000
$486,000
$594,000
$702,000
$810,000
$918,000
$972,000
$1,148,400
$1,305,000
$1,461,600
$1,513,800
$1,618,200
$1,774,800
$1,879,200
$2,268,000
$2,368,800
$2,822,400
$3,175,200
$3,376,800
$3,679,200
$3,839,400
$4,568,400
$4,957,200
$5,443,200
$7,095,600
$7,347,600
$9.180.000
Splash Fill
$130,000
$259,000
$454,000
$583,000
$713,000
$842,000
$972,000
$1,102,000
$1,166,000
$1,378,000
$1,566,000
$1,754,000
$1,817,000
$1,942,000
$2,130,000
$2,255,000
$2,722,000
$2,843,000
$3,387,000
$3,810,000
$4,052,000
$4,415,000
$4,607,000
$5,482,000
$5,949,000
$6,532,000
$8,515,000
$8,817,000
$11.016.000
Non-fouling Film Fill
$119,000
$238,000
$416,000
$535,000
$653,000
$772,000
$891,000
$1,010,000
$1,069,000
$1,263,000
$1,436,000
$1,608,000
$1,665,000
$1,780,000
$1,952,000
$2,067,000
$2,495,000
$2,606,000
$3,105,000
$3,493,000
$3,714,000
$4,047,000
$4,223,000
$5,025,000
$5,453,000
$5,988,000
$7,805,000
$8,082,000
$10.098.000
Noise Reduction 10
dBA
$140,000
$281,000
$491,000
$632,000
$772,000
$913,000
$1,053,000
$1,193,000
$1,264,000
$1,493,000
$1,697,000
$1,900,000
$1,968,000
$2,104,000
$2,307,000
$2,443,000
$2,948,000
$3,079,000
$3,669,000
$4,128,000
$4,390,000
$4,783,000
$4,991,000
$5,939,000
$6,444,000
$7,076,000
$9,224,000
$9,552,000
$11.934.000
Dry/wet
$405,000
$810,000
$1,418,000
$1,823,000
$2,228,000
$2,633,000
$3,038,000
$3,443,000
$3,645,000
$4,307,000
$4,894,000
$5,481,000
$5,677,000
$6,068,000
$6,656,000
$7,047,000
$8,505,000
$8,883,000
$10,584,000
$11,907,000
$12,663,000
$13,797,000
$14,398,000
$17,132,000
$18,590,000
$20,412,000
$26,609,000
$27,554,000
$34.425.000
Hybrid Tower
(32DBT Plume
Abatement)
$324,000
$648,000
$1,134,000
$1,458,000
$1,782,000
$2,106,000
$2,430,000
$2,754,000
$2,916,000
$3,445,000
$3,915,000
$4,385,000
$4,541,000
$4,855,000
$5,324,000
$5,638,000
$6,804,000
$7,106,000
$8,467,000
$9,526,000
$10,130,000
$11,038,000
$11,518,000
$13,705,000
$14,872,000
$16,330,000
$21,287,000
$22,043,000
$27.540.000
                                                                                                AppA -19

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
  Table A-8. Capital Cost Equations of Douglas Fir Cooling Towers with Special Environmental Impact Mitigation
                                           Features (Delta 10 degrees)
Tower Type
Douglas Fir
Splash Fill
Non-fouling Film Fill
Noise Reduction 10 dBA
Dry/Wet
Hybrid Tower (Plume Abatement
32DBT)
Capital Cost Equation1
y = -9E-llx3 - 8E-06x2 + 50.395x + 44058
y = -4E-05x2 + 62.744x + 22836
y = -lE-lOx3 - 9E-06x2 + 55.432x + 48575
y = -lE-lOx3 - lE-05x2 + 65.517x + 57246
y = -O.OOOlx2 + 196.07x + 71424
y = -3E-10x3 - 2E-05x2 + 151. 18x + 132225
Correlation
Coefficient
R2 = 0.9997
R2 = 0.9996
R2 = 0.9997
R2 = 0.9997
R2 = 0.9996
R2 = 0.9997
1) x is flow in gpm and y is cost in dollars.
The estimated annual O&M costs presented below are for cooling towers designed at a delta of 10 degrees. Annual O&M
costs for cooling towers designed at a delta of 5 degrees can be calculated using the procedure detailed below. To calculate
annual O&M costs for various types of cooling towers, EPA made the following assumptions:

•   For small cooling towers, 5% of capital costs is attributed to chemical costs and routine maintenance.  To account for
    economy of scale, that percentage is gradually decreased to 2% for the largest size cooling tower. This assumption is
    based on discussions with industry representatives and information provided by them.

•   Based on discussions with industry representatives, 2% of the tower flow is lost to evaporation and/or blow down.

•   To account for the costs of makeup water and disposal of blow down water, EPA used three scenarios. The first
    scenario is based on the facility using surface water sources for makeup water and disposing of blow down water either
    to a pond or back to the surface water source at a combined cost of $0.5/1000 gallons. The second scenario is based on
    the facility using gray water (treated municipal wastewater) for makeup water and disposing of the blow down water into
    a POTW sewer line at a combined cost of $3/1000 gallons. The third scenario is based on the facility using municipal
    sources for clean makeup water and disposing of the blow down water into a POTW sewer line at a combined cost of
    $4/1000 gallons.

•   Based on discussions with industry representatives, maintenance costs are 10% of capital costs for towers over 5 years
    old, 20% for towers over 10 years old, and 30% for towers more than 15 years old.  Averaging these percentages over a
    period of 20 years yields a maintenance cost at  15% of capital cost
    [((5*0/100)+(5*10/100)+(5*20/100)+(5*30/100))/20)].

To account for the variation in maintenance costs among cooling tower types, a scaling factor is used. Douglas Fir is the
type with the  greatest maintenance cost, followed by Redwood, steel, concrete, and fiberglass. For additional cooling tower
features, a scaling factor was used to account for the variations in maintenance (e.g., splash fill and non-fouling film fill are
the features with the lowest maintenance costs).

Using the operation cost comparison information published by Mirsky et al. (1992) and maintenance cost assumptions set out
above, EPA calculated estimated costs of O&M for various types of cooling towers with and without additional features.
EPA then developed cost equations from the generated cost data points.  The equations and costs are shown in Tables A-9
through A-14 for the first and second scenarios for different types of towers (i.e., various materials and features). Cost
curves and equations for O&M costs for additional types of cooling towers are presented at the end of the Appendix.
AppA - 20

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
Note that these cost estimates and equations are for total O&M costs.  Stone and Webster (1992) presents a value for
additional annual O&M costs equal to approximately 0.7% of the capital costs for a retrofit project. Stone and Webster's
estimate is for the amount O&M costs are expected to increase when plants with once through cooling systems are retrofit
with cooling towers to become recirculating systems, and therefore do not represent total O&M costs.
               Table A-9.  Total Annual O&M Cost Equations by Tower Type - 1st Scenario
Cooling Tower Material Type
Concrete
Douglas Fir
Redwood
Steel
Fiberglass Reinforced Plastic
Total Annual O&M Cost Equations1
y = -8E-06x2 + 13.291x + 13850
y = -8E-06x2 + 14.524x + 1 1 183
y = -8E-06x2 + 13.938x + 11895
y = -8E-06x2 + 14. 183x + 13605
y = - 6E-06x2 + 1 1.425x + 10854
Correlation Coefficient
R2 = 0.9999
R2 = 0.9999
R2 = 0.9999
R2 = 0.9999
R2 = 0.9999
1) x is flow in gpm and y is annual O&M cost in dollars.
                                                                                                     AppA - 21

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
           Table A-10. Total Estimated Annual O&M Costs by Tower Type-lst Scenario (1999 Dollars)
Flow
(gpm)
2000
4000
7000
9000
11,000
13,000
15,000
17,000
18,000
22,000
25,000
28,000
29,000
31,000
34,000
36,000
45,000
47,000
56,000
63,000
67,000
73,000
79,000
94,000
102,000
112,000
146,000
157,000
204,000
Douglas Fir
Tower
$32,000
$63,000
$109,000
$140,000
$170,000
$200,000
$230,000
$260,000
$275,000
$327,000
$371,000
$414,000
$429,000
$458,000
$501,000
$530,000
$644,000
$672,000
$798,000
$895,000
$951,000
$1,034,000
$1,092,000
$1,294,000
$1,401,000
$1,535,000
$1,989,000
$2,087,000
$2,633,000
Redwood Tower
$31,000
$61,000
$106,000
$135,000
$164,000
$193,000
$222,000
$251,000
$265,000
$316,000
$357,000
$399,000
$413,000
$441,000
$482,000
$510,000
$620,000
$646,000
$767,000
$860,000
$913,000
$992,000
$1,048,000
$1,241,000
$1,344,000
$1,472,000
$1,905,000
$1,999,000
$2,522,000
Concrete Tower
$31,000
$60,000
$103,000
$131,000
$159,000
$187,000
$214,000
$242,000
$256,000
$304,000
$344,000
$383,000
$396,000
$423,000
$462,000
$488,000
$593,000
$618,000
$732,000
$821,000
$871,000
$946,000
$999,000
$1,182,000
$1,279,000
$1,399,000
$1,807,000
$1,897,000
$2,389,000
Steel Tower
$32,000
$63,000
$109,000
$139,000
$168,000
$198,000
$228,000
$257,000
$271,000
$323,000
$365,000
$408,000
$422,000
$450,000
$492,000
$520,000
$631,000
$659,000
$780,000
$875,000
$929,000
$1,009,000
$1,065,000
$1,260,000
$1,364,000
$1,494,000
$1,931,000
$2,026,000
$2,551,000
Fiberglass Reinforced
Plastic Tower
$26,000
$51,000
$87,000
$112,000
$135,000
$159,000
$183,000
$207,000
$218,000
$260,000
$295,000
$329,000
$340,000
$363,000
$397,000
$419,000
$510,000
$532,000
$631,000
$707,000
$750,000
$815,000
$863,000
$1,022,000
$1,106,000
$1,211,000
$1,565,000
$1,647,000
$2,082,000
                        Table A-ll. Total Annual O&M Cost Equations - 1st scenario
                                   for Douglas Fir with Various Features
Type of Tower
Non-Fouling Film Fill tower
Noise reduction (lOdBA)
Hybrid tower (Plume Aabatement 32DBT)
Splash Fill tower
Dry /wet tower
O&M Cost Equations1
y = -8E-06x2 + 14.619x + 12191
y = -lE-05x2 + 17.434x + 15301
y = -3E-05x2 + 35. 199x + 46043
y = -lE-05x2 + 15.351x + 17751
y = -4E-05x2 + 44.02 Ix + 65444
Correlation
Coefficient
R2 = 0.9999
R2 = 0.9998
R2 = 0.9997
R2 = 0.9998
R2 = 0.9997
1) x is flow in gpm and y is annual O&M cost in dollars.
AppA - 22

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
                                       Table A-12. Total Estimated Annual O&M Costs - 1st scenario
                                            for Douglas Fir with Various Features (1999 Dollars)
Flows
(gpm)
2000
4000
7000
9000
11,000
13,000
15,000
17,000
18,000
22,000
25,000
28,000
29,000
31,000
34,000
36,000
45,000
47,000
56,000
63,000
67,000
73,000
79,000
94,000
102,000
112,000
146,000
157,000
204,000
Splash Fill Tower
$36,000
$70,000
$120,000
$152,000
$185,000
$217,000
$249,000
$281,000
$297,000
$352,000
$398,000
$444,000
$459,000
$490,000
$535,000
$566,000
$685,000
$714,000
$845,000
$946,000
$1,004,000
$1,090,000
$1,149,000
$1,358,000
$1,469,000
$1,607,000
$2,072,000
$2,170,000
$2,725,000
Non-Fouling Film
Fill Tower
$33,000
$64,000
$111,000
$141,000
$172,000
$202,000
$233,000
$263,000
$278,000
$331,000
$374,000
$418,000
$433,000
$462,000
$505,000
$534,000
$649,000
$677,000
$803,000
$901,000
$957,000
$1,040,000
$1,098,000
$1,301,000
$1,408,000
$1,543,000
$1,997,000
$2,095,000
$2,641,000
Hybrid Tower (Plume abatement
(32DBT
$83,000
$162,000
$278,000
$354,000
$429,000
$504,000
$578,000
$652,000
$688,000
$810,000
$916,000
$1,021,000
$1,056,000
$1,126,000
$1,230,000
$1,299,000
$1,561,000
$1,628,000
$1,925,000
$2,155,000
$2,285,000
$2,481,000
$2,595,000
$3,064,000
$3,313,000
$3,623,000
$4,668,000
$4,849,000
$6,029,000
Dry/Wet Tower
$107,000
$207,000
$353,000
$449,000
$542,000
$638,000
$731,000
$823,000
$869,000
$1,021,000
$1,153,000
$1,285,000
$1,328,000
$1,415,000
$1,545,000
$1,632,000
$1,956,000
$2,038,000
$2,408,000
$2,693,000
$2,855,000
$3,097,000
$3,234,000
$3,814,000
$4,121,000
$4,504,000
$5,791,000
$6,004,000
$7,440,000
Noise Reduction (lOdBA)
$39,000
$77,000
$132,000
$169,000
$206,000
$242,000
$278,000
$314,000
$332,000
$395,000
$447,000
$499,000
$516,000
$551,000
$603,000
$637,000
$773,000
$806,000
$956,000
$1,072,000
$1,138,000
$1,238,000
$1,304,000
$1,544,000
$1,672,000
$1,831,000
$2,370,000
$2,480,000
$3,118,000
                                                                                                 AppA - 23

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
                         Table A-13. Total Annual O&M Cost - 2nd Scenario
                                      for Douglas Fir Tower1
Type of Tower
Douglas Fir
Non-Fouling Film Fill tower
Noise reduction (lOdBA)
Hybrid tower (Plume abatement
32DBT)
Splash Fill tower
Dry /wet tower
O&M Cost Equations
y = -8E-06x2 + 40.899x + 12191
y = -8E-06x2 + 40.899x + 12191
y = -lE-05x2 + 43.714x + 15301
y = -3E-05x2 + 61.479x + 46043
y = -8E-06x2 + 40.899x + 12191
y = -4E-05x2 + 70.301x + 65444
Correlation
Coefficient
R2=l
R2=l
R2=l
R2 = 0.9999
R2=l
R2 = 0.9999
1) x is flow in gpm and y is annual O&M cost in dollars.
AppA - 24

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
                                              Table A-14.  Total Estimated Annual O&M Costs - 2nd Scenario
                                                   for Douglas Fir with Various Features (1999 Dollars)
Flow
(gpm)
2000
4000
7000
9000
11,000
13,000
15,000
17,000
18,000
22,000
25,000
28,000
29,000
31,000
34,000
36,000
45,000
47,000
56,000
63,000
67,000
73,000
79,000
94,000
102,000
112,000
146,000
157,000
204.000
Douglas Fir Tower
$84,672
$168,372
$293,279
$376,280
$459,125
$541,841
$624,449
$706,964
$748,190
$905,604
$1,028,013
$1,150,300
$1,191,038
$1,272,478
$1,394,558
$1,475,894
$1,826,903
$1,907,431
$2,269,476
$2,550,734
$2,711,337
$2,952,096
$3,167,646
$3,763,946
$4,081,655
$4,478,515
$5,825,861
$6,212,680
$7.993.887
Splash Fill Tower
$88,421
$174,901
$303,745
$388,973
$474,099
$558,817
$643,517
$728,047
$770,082
$930,341
$1,055,274
$1,179,986
$1,221,568
$1,304,502
$1,428,840
$1,511,586
$1,867,428
$1,949,225
$2,316,640
$2,601,793
$2,764,574
$3,008,485
$3,224,878
$3,827,964
$4,149,090
$4,549,882
$5,909,142
$6,296,086
$8.085.641
Non-Fouling Film
Fill Tower
$85,206
$169,319
$294,678
$378,007
$460,986
$543,995
$626,883
$709,666
$750,936
$908,666
$1,031,492
$1,154,011
$1,194,766
$1,276,408
$1,398,694
$1,480,218
$1,831,779
$1,912,460
$2,275,073
$2,556,715
$2,717,406
$2,958,525
$3,174,080
$3,770,999
$4,089,043
$4,486,287
$5,834,379
$6,221,047
$8.002.509
Hybrid Tower
(Plume Abatement 32DBT)
$135,970
$267,570
$462,072
$590,527
$718,275
$845,447
$972,133
$1,098,396
$1,161,386
$1,388,515
$1,573,034
$1,757,002
$1,818,081
$1,940,480
$2,123,316
$2,245,244
$2,743,844
$2,862,708
$3,396,505
$3,810,271
$4,045,967
$4,399,241
$4,670,799
$5,534,483
$5,993,799
$6,566,558
$8,505,005
$8,974,854
$11.390.286
Dry/wet Tower
$159,257
$312,140
$537,351
$685,646
$832,912
$979,338
$1,125,053
$1,270,154
$1,342,391
$1,599,431
$1,810,366
$2,020,500
$2,090,451
$2,229,919
$2,438,898
$2,577,681
$3,138,384
$3,273,483
$3,879,269
$4,348,257
$4,615,488
$5,015,381
$5,309,877
$6,284,310
$6,801,899
$7,446,974
$9,627,677
$10,130,255
$12.801.592
Noise Reduction
(lOdBA)
$91,561
$181,974
$316,399
$405,835
$494,860
$583,898
$672,594
$761,161
$805,589
$972,762
$1,103,982
$1,234,846
$1,278,494
$1,365,743
$1,496,320
$1,583,424
$1,955,315
$2,041,285
$2,427,781
$2,727,946
$2,899,256
$3,156,020
$3,379,633
$4,014,230
$4,352,134
$4,774,262
$6,206,605
$6,605,663
$8.478.752
                                                                                                AppA - 25

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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs


    B.ILb.  Using non-surface water sources

A facility may be able to  obtain some of its cooling water from a source other than the surface water it is using (WWTP gray
water, ground water, or municipal water supply) and thereby reduce the volume of its withdrawals from the surface water and
meet the percent of flow requirements.  Some facilities may only need to use this alternate source during low flow periods in
the surface water source.  To use this option, a facility would need to build a pond or basin for the supplemental cooling
water.

A facility using gray water may need to install some water treatment equipment (e.g., sedimentation, filtration) to ensure that
its discharge of the combined source water and gray water meets any applicable effluent limits.  For costing purposes, EPA
has assumed that a facility would only need to install treatment for gray water in situations where treatment would have been
required for river intake water.  Therefore, no additional (i.e., "new") costs are incurred for treatment of gray water after
intake or before discharge.

See the  end of this Appendix for cost curves and equations for estimating gray water and municipal water costs.

B.III. Reducing Design Intake Velocity

    B.IILa. Passive screens

Passive screens, typically made of wedge  wire, are screens that use little or no mechanical activity to prevent debris and
aquatic  organisms from entering a cooling water intake. The screens reduce impingement and entrainment by using a small
mesh size for the wedge wire and a low through-slot velocity that is quickly dissipated. The main components of a passive
screening system are typically the screen(s), framing, an air backwash system if needed, and possibly guide rails depending
on the installation location.

Passive screens vary in shape and form and include flat panels, curved panels, tee screens, vee screens, and cylinder screens.
Screen dimensions (width and depth) vary; they are generally made to order with sizing as required by site conditions.
Panels can be of any size, while cylinders are generally in the 12" to 96" diameter range.  According to industry sources,  the
main advantages of passive intake systems are:

•   They are fish-friendly due to low slot velocities (peak <0.5 fps), and
•   They have no moving parts and thus minimal O&M costs.

New passive intake screens have higher capacity (due to higher screen efficiency) than older versions of passive screens.
Wedge  wire screens are effective in reducing impingement and entrainment as long as a sufficiently small screen slot size is
used and ambient currents have enough velocity to move aquatic organisms around the screen and flush debris away.

The key parameters and additional features that are considered in estimating the cost of passive/wedge wire screening
systems on CWIS are:

•   Size of screen and flow rate (i.e., volume of water used),
•   Size of screen slots/openings,
•   Screen material,
•   Water depth,
•   Water quality (debris, biological growth, salinity),  and
•   Air backwash systems.

The size and material of a screen most affect cost.  For larger volumes of cooling water withdrawals, a facility will need to
use larger and/or more intake screens.  Branched intakes, with a screen on each branch, can be used for large flows.  Screen
slot size also impacts the  size of a screen.  A smaller slot opening will result in a larger screen being required to keep the
peak slot velocity under 0.5 fps.

Site-specific conditions significantly affect costs of the screen(s). The water depth affects equipment and installation costs
because structural reinforcement is required as depth increases, air backwash system capacities need to be increased due to
the reduced air volume at greater depths, and installation is generally more difficult.  The potential for clogging from debris

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and fouling from biogrowth are water quality concerns that affect costs.  The amount and type of debris influence the size of
openings in the screen, which affects water flow through the screen and thus screen size. Finer debris may require a smaller
slot opening to prevent debris from entering and clogging the openings.

Generally, speed and flow of water do not affect the installation cost or the operation of passive intakes, however there must
be adequate current in the source water to carry away debris that is backwashed from the screen so that it does not become
(re)clogged. It is recommended as good engineering practice that the axis of the screen cylinder be oriented parallel with the
water flow to minimize fish entrainment and to aid in removal of debris during air backwash. The effects of the presence of
sensitive species or certain types of species affect the design of the screen and may increase screen cost.  For example, the
lesser strength of a local species could result in the need for a peak velocity less than 0.5 fps which would result in a larger
screen. Biofouling from the attachment of zebra mussels and barnacles and the growth of algae may necessitate the use of a
special screen material, periodic flushing with biocides, and in limited cases, manual cleaning by divers.  For example, the
presence of zebra mussels often requires the use of a special alloy material to prevent attachment to the screen assembly.

The level of debris in the water also affects whether an air backwash system is needed and how  often it is used.  Heavy
debris loadings may dictate the need for more frequent air backwashing.  If the air backwash frequency is high enough, a
larger compressor may be required to recharge the accumulator tank more quickly.

Another water quality factor that affects screen cost is water corrosiveness (e.g., whether the intake water is seawater,
freshwater, or brackish). Most passive screens are manufactured in either 304 or 316 stainless steel for freshwater
installations.  The 316L stainless steel  can be used for some saltwater installations, but has limited life.  Screens made of
copper-nickel alloys (70/30 or 90/10) have shown excellent corrosion resistance in saltwater, however they are significantly
more expensive than stainless steel (50% to  100% greater in cost, i.e., can be double the cost).

Installation

The screen installation cost is largely a function of site conditions.  Costs are typically greater for deeper installations and
larger screens  (e.g., screens for larger volumes of flow). Site-specific conditions  such as space constraints, environmental
and license/permit requirements, and the location/accessibility of the intake may greatly affect installation cost.  For instance,
for a project requiring dredging the installation cost can be two to four more times the installation cost of a project that does
not require dredging. However, for National cost estimates, atypical conditions will not be considered in the cost estimates.

Capital Costs

EPA assumed that the capital cost of passive screens will be 60% of the capital cost of a basic traveling screen of similar size
(Table A-24a). This assumption is based on discussions with industry representatives.  The lower capital cost is because
passive screen systems have lower onshore site preparation and installation costs  (no extensive mechanical equipment as in
the traveling screens) and are easier to install in offshore situations. The estimated capital costs for passive screens are
shown in Table A-15, corresponding to the flows shown in Table A-19b for a through screen velocity of 0.5 fps. Passive
screens for sizes larger than those shown in Table A-15 will generate flows higher than 50,000 gpm.  For flows greater than
50,000 gpm, particularly when water is drawn in from a river, the size of the CWIS  site becomes very big and the necessary
network fanning for intake points and screens generally makes passive screen systems unfeasible.
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                  Table A-15.  Estimated Capital Costs for a Through Flow Passive Water Screen
                               Stainless Steel 304 - Standard Design1 (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Screen Panel Width (ft)
2
$34,200
$49,800
$74,400
$99,000
$135,600
5
$56,100
$84,900
$122,700
(2)
(2)
10
$91,800
$140,400
(2)
(2)
(2)
14
$128,700
(2)
(2)
(2)
(2)
1) Cost estimate includes stainless steel 304 structure.
2) Not estimated because passive screen systems of this size are not feasible.
As noted above, the capital costs for special screen materials (e.g., copper-nickel alloys) are typically 50% to 100% higher.

Table A-16 presents cost equations for estimating capital costs for passive screens.  The "x" in the equation represents the
flow volume in gpm and the "y" value is the passive screen total capital cost. Cost equations associated with a flow of 1 fps
are provided for comparative purposes.

                         Table A-16. Capital Cost Equations for Passive Screens
Screen
Width
(ft)
2
5
10
Passive Screens Velocity 0.5 ft/sec
Equation1
y = 3E-08x3 - O.OOOSx2 + 12.535x +
11263
y = 0.0002x2 + 1.5923x + 47041
y = 3.7385x + 58154
Correlation
Coefficient
R2 = 0.9991
R2=l
R2=l
Passive Screens Velocity Ift/sec
Equation1
y = 2E-12x4 - lE-07x3 + 0.0029x2 -
18.885x + 71766
y = 4E-05x2 + 1.0565x + 43564
y=1.8x + 59400
Correlation
Coefficient
R2=l
R2=l
R2=l
1) x is the flow in gpm y is the capital cost in dollars.
The typical useful life of a passive screen is greater than 20 years.  See the end of this Appendix for cost curves and
equations.

Operation and Maintenance (O&M) Costs for Passive Screens

Generally, there are no appreciable O&M costs for passive screens unless there are biofouling problems or zebra mussels in
the environment. Biofouling problems can be remedied through the proper choice of materials and periodic mechanical
cleaning. Screens equipped with air backwash systems require periodic compressor/motor/valve maintenance.

        B.IILb. Velocity Caps

The cost driver of velocity caps is the installation cost. Installation is carried out underwater where the water intake mouth is
modified to fit the velocity cap over the intake. EPA estimated capital costs for velocity caps based on the following
assumptions:

•       Four velocity caps can be installed in a day,
•       Cost of the installation crew is similar to the cost of the water screen installation crew (see Box A-2),
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•       To account for the difficulty in installing in deep water, an additional work day is assumed for every increase in
        depth size category, and
•       Equipment cost for a velocity cap is assumed to be 25% of the velocity cap installation cost. In our BPJ, this is a
        conservatively high estimate of the cost of velocity cap material and delivery to the installation site.

Based on these assumptions, EPA calculated estimated costs for velocity caps, which are shown in Tables A-17a and A-17b.
EPA calculated the number of velocity caps needed for various flow sizes based on a flow velocity of 0. 5ft/sec and assuming
that the intake area to be covered by the velocity cap is 20 ft2 which is the area comparable to a pipe diameter of about 5 feet.
For flows requiring pipes larger than this, EPA assumed, for velocity cap costing purposes, that multiple intake pipes with a
standard, easy-to-handle pipe diameter will be used rather than larger-diameter, custom made pipes (based on BPJ).  Table
A-17a presents the calculated velocity cap installation costs while Table A-17b presents the calculated total capital costs of
velocity caps including installation and equipment.  Cost equations for estimating the total capital costs of velocity caps are
presented in Table A-18. Cost curves and equations are at the end of the Appendix.
                       Table A-17a. Estimated Velocity Cap Installation Costs (1999 Dollars)
Flow (gpm)
(No. of velocity caps)
Up to 18,000 (4 VC)
18,000 < flow <35,000 (9 VC)
35,000
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§316(b) EEA Appendix A for New Facilities
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                            Table A-18. Cost Equations for Velocity Cap Capital Costs
Flow (gpm)
(No. of velocity caps)
Up to 18,000
(4VC)
18,000 < flow <35,000
(SVC)
35,000
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§316(b) EEA Appendix A for New Facilities
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Well depth includes the height of the structure above the water line. The well depth can be more than the water depth by a
few to tens of feet. The flow velocities used are representative of a flow speed that is generally considered to be fish friendly
particularly for sensitive species (0.5 fps), and a flow speed that may be more practical for some facilities to achieve but
typically provides less fish protection.  The water depths and well depths are approximate and may vary based on actual site
conditions.
                       Table A-19a.  Average Flow Through A Traveling Water Screen (gpm)
                                           for a Flow Velocity of 1.0 fps
Well Depth
(ft)
10
25
50
75
100
Water Depth
(ft)
8
20
30
50
65
Basket Panel Screening Width (ft)
2
4000
9000
13,000
22,000
29,000
5
9000
22,000
34,000
56,000
73,000
10
18,000
45,000
67,000
112,000
146,000
14
25,000
63,000
94,000
157,000
204,000
          Table A-19b. Average Flow Through A Traveling Water Screen (gpm) for a Flow Velocity of 0.5
                                                        fps
Well Depth
(ft)
10
25
50
75
100
Water Depth
(ft)
8
20
30
50
65
Basket Screening Panel Width
2
2000
4000
7000
11,000
15,000
5
4000
11,000
17,000
28,000
36,000
10
9000
22,000
34,000
56,000
73,000
14
13,000
31,000
47,000
79,000
102,000
Capital Costs

        Equipment Cost

Basic costs for screens with flows comparable to those shown in the above tables are presented in Tables A-20a and A-20b.
Table A-20a contains estimated costs for basic traveling screens without fish handling features, that have a carbon steel
structure coated with epoxy paint. The cost of similar size screens using 316 stainless  steel is generally twice as expensive.
The advantages of using 316 stainless steel are its longer useful life and its resistance to harsh water quality conditions. The
costs presented in Table A-20b are for traveling screens with fish handling features including a spray system, a fish trough,
housings and transitions, continuous operating features, a drive unit, frame seals, and engineering. Installation costs and
spray pump costs are presented separately below.
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             Table A-20a. Estimated Equipment Cost for Traveling Water Screens Without Fish Handling
                                              Features' (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Basket Screening Panel Width (ft)
2
$30,000
$35,000
$55,000
$75,000
$115,000
5
$35,000
$45,000
$70,000
$100,000
$130,000
10
$45,000
$60,000
$105,000
$130,000
$155,000
14
$65,000
$105,000
$145,000
$175,000
$200,000
1) Cost includes carbon steel structure coated with epoxy paint and non-metallic trash baskets with
Type 304 stainless mesh and intermittent operation components.
             Source: Vendor estimates.
              Table A-20b. Estimated Equipment Cost for Traveling Water Screens With Fish Handling
                                               Features1 (1999 Dollars)
Well depth
(ft)
10
25
50
75
100
Basket Screening Panel Width (ft)
2
$63,500
$81,250
$122,500
$163,750
$225,000
5
$73,500
$97,500
$152,000
$210,000
$267,500
10
$94,000
$133,000
$218,000
$283,000
$348,000
14
$135,500
$214,000
$319,500
$414,500
$504,500
1) Cost includes carbon steel screen structure coated with epoxy paint and non-metallic fish
handling panels, spray systems, fish trough, housings and transitions, continuous operating
features, drive unit, frame seals, and engineering (averaged over 5 units). Costs do not include
differential control system, installation, and spray wash pumps.
              Source: Vendor estimates.
Installation Cost

Installation costs of traveling screens are based on the following assumptions of a typical average installation requirement for
a hypothetical scenario.  Site preparation and earth work are calculated based on the following assumptions:

•       Clearing and grubbing: Clearing light to medium brush up to 4" diameter with a bulldozer.
•       Earthwork: Excavation of heavy soils. Quantity is based on the assumption that earthwork increases with screen
        width.
•       Paving and surfacing: Using concrete 8" thick and assuming that the cost of pavement attributed to screen
        installation is 6x3 yards for the smallest screen and 25x6 yards for the largest screen.
•       Structural concrete:  The structural concrete work attributed to screen installation is four 12"xl2" reinforced
        concrete columns with depths varying between 1.5 yards and 3 yards.  There is more structural concrete work for a
        water intake structure, however, for new source screens and retrofit screens, only a portion of the intake structural
        cost can be justifiably attributed to the screen costs.  For new screens, most of the concrete structure work is for
        developing the site to make it accessible for equipment and protect it from hydraulic elements, which are necessary
        for constructing the intake itself.  For retrofits, some of the structural concrete will already exist and some of it will
        not be needed since the intake is already in place and only the screen needs to be installed.  All unit costs used in
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        calculating on-shore site preparation were obtained from Heavy Construction Cost Data 1998 (R. S. Means,
        1997b).

Table A-21a presents site preparation installation costs that apply to traveling screens both with and without fish handling
features. The total onshore construction costs presented in Table A-21a are for a screen to be installed in a 10-foot well
depth.  Screens to be installed in deeper water are assumed to require additional site preparation work. Hence for costing
purposes it is assumed that site preparation costs increase at a rate of an additional 25% per depth factor (calculated as the
ratio of the well depth to the base well depth of 10 feet) for well depths greater than 10 feet. Table A-2 Ib presents the
estimated costs of site preparation for four sizes of screen widths and various well depths.

                 Table A-21a.  Estimated Installation (Site Preparation) Costs for Traveling Water
                              Screens Installed at a 10-foot Well Depth (1999 Dollars)
Screen
Width
(ft)
2
5
10
14
Clearing
and
Grabbing
(acre)
0.1
0.35
0.7
1
Clearing
Cost1
$250
$875
$1,750
$2,500
Earth
Work
(cy)
200
500
1000
1400
Earth
Work
Cost1
$17,400
$43,500
$87,000
$121,800
Paving and
Surfacing
Using
Concrete (sy)
18
40
75
150
Paving
Cost1
$250
$560
$1,050
$2,100
Structural
Concrete
(cy)
0.54
0.63
0.72
1.08
Structural
Cost
$680
$790
$900
$1,350
Total
Onshore
Construction
Costs
$19,000
$46,000
$91,000
$128,000
ft = feet, cy=cubic yard, sy=square yard
1) Clearing cost @ $2,500/acre, earth work cost @ $87/cubic yard, paving cost @ $14/square yard, structural cost @
$l,250/cubicyard.
  Source of unit costs: Heavy Construction Cost Data 1998 (R.S. Means, 1997b).

        Table A-21b. Estimated Installation (Site Preparation, Construction, and Onshore Installation) Costs for
                             Traveling Water Screens of Various Well Depths (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Screen Panel Width (ft)
2
$19,000
$31,000
$43,000
$55,000
$67,000
5
$46,000
$75,000
$104,000
$132,000
$161,000
10
$91,000
$148,000
$205,000
$262,000
$319,000
14
$128,000
$208,000
$288,000
$368,000
$448,000
      Source: R.S. Means (1997b) and vendor estimates.

EPA developed a hypothetical scenario of a typical underwater installation to estimate an average cost for underwater
installation costs. EPA estimated costs of personnel and equipment per day, as well as mobilization and demobilization.
Personnel and equipment costs would increase proportionately based on the number of days of a project, however
mobilization and demobilization costs would be relatively constant regardless of the number of days of a project since the
cost of transporting personnel and equipment is largely independent of the length of a project.  The hypothetical project
scenario and estimated costs are presented in Box A-2.  This scenario uses passive intake screens, but the estimated costs can
be used to develop installation costs for traveling screens and velocity caps.

As shown in the hypothetical scenario in Box A-2, the estimated cost for a one-day installation project would be $8,000
($4,500 for personnel and equipment, plus $3,500 for mobilization and demobilization). Using this one-day cost estimate as
a basis, EPA generated estimated installation costs for various sizes of screens under different scenarios. These costs are
presented in Table A-22. The baseline costs for underwater installation include the costs of a crew of divers and equipment
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including mobilization and demobilization, divers, a barge, and a crane. The number of days needed is based on a minimum
of one day for a screen of less than 5 feet in width and up to 10 feet in well depth. Using best professional judgement (BPJ),
EPA estimated the costs for larger jobs assuming an increase of two days for every increase in well depth size and of one day
for every increase in screen width size.
              Box A-2. Hypothetical Scenario for Underwater Installation of an Intake Screen System

   This project involves the installation of 12, t-24 passive intake screens onto a manifold inlet system.  Site conditions
   include a 20-foot water depth, zero to one-foot underwater visibility, 60-70 NF water temperature, and fresh water at
   an inland. The installation is assumed to be 75 yards offshore and requires the use of a barge or vessel with 4-point
   anchor capability and crane.

   Job Description:
   Position and connect water intake screens to inlet flange via 16 bolt/nut connectors.  Lift, lower, and position intake
   screens via crane anchored to barge or vessel. Between 4 and 6 screens of the smallest size can be installed per day per
   dive team, depending on favorable environmental conditions.

   Estimated Personnel Costs:
   Each dive team consists of 5 people (1 supervisor, 2 surface tenders, and 2 divers), the assumed minimum number of
   personnel needed to operate safely and efficiently.  The labor rates are based on a 12-hour work day. The day rate for
   the supervisor is $600. The day rate for each diver is $400. The day rate for each surface tender is $200. Total base
   day rate per dive team is $1,800.

   Estimated Equipment Costs:
   Use of hydraulic lifts, underwater impact tools,  and other support equipment is $450 per day.  Shallow water air
   packs and hoses cost $100 per day. The use of a crane sufficient to lift the 375 Ib t-24 intakes is $300 per day. A
   barge or vessel with 4-point anchor capability can be provided by either a local contractor or the dive company for
   $1,800 per day (cost generally ranges from $1,500-$2,000 per day).  This price includes barge/vessel personnel
   (captain, crew, etc) but the barge/vessel price does not include any land/waterway transportation needed to move
   barge/vessel to inland locations. Using land-based crane and dive operations can eliminate the barge/vessel costs.
   Thus total equipment cost is $2,650 per day.

   Estimated Mobilization and Demobilization Expenses:
   This includes transportation of all personnel and equipment to the job site via means necessary (air,  land, sea), all
   hotels, meals, and ground transportation. An accurate estimate on travel can vary wildly depending on job location
   and travel mode. For this hypothetical scenario, costs are estimated for transportation with airfare, and boarding and
   freight and would be $3,500 for the team (costs generally range between $3,000 and $4,000 for a team).

   Other Considerations:
   Uncontrollable factors like weather, water temperature, water depth, underwater visibility, currents,  and distance to
   shore can affect the daily production of the dive team. These variables always have to be considered when a job is
   quoted on a daily rate. Normally, the dive-company takes on the risks for these variables because the job is quoted on
   a "to completion" status. These types of jobs usually take a week or more  for medium to large-size installations.

   Total of Estimated Costs:
   The final estimated total for this hypothetical job is nearly $4500 per day for personnel and equipment. For a three-
   day job, this would total about $13,500. Adding to this amount about $3,500 for mobilization and demobilization, the
   complete job is estimated at $17,000.

   Note: Costs for a given project vary greatly depending on screen size, depth of water, and other site-specific
   conditions such as climate and site accessibility.

       Source: Developed based on information from Paroby (1999).
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                                  Table A-22. Estimated Underwater Installation Costs
                                for Various Screen Widths and Well Depths' (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Basket Screening Panel Width
2
$8,000
$17,000
$26,000
$35,000
$44,000
5
$12,500
$21,500
$30,500
$39,500
$48,500
10
$17,000
$26,000
$35,000
$44,000
$53,000
14
$21,500
$30,500
$39,500
$48,500
$57,500
1) Based on hypothetical scenario of crew and equipment costs of $4,500 per day and
mobilization and demobilization costs of $3,500 (see Box A-2).
Table A-23 presents total estimated installation costs for traveling screens.  These costs equal the total of the costs in Table
A-21b and Table A-22. Installation costs for traveling screens with fish handling features and those without fish handling
features are assumed to be similar.

                     Table A-23. Estimated Total Installation Costs for Traveling Water Screens1 (1999
                                                        Dollars)
Well Depth
(ft)
10
25
50
75
100
Basket Screening Panel Width (ft)
2
$27,000
$48,000
$69,000
$90,000
$111,000
5
$58,500
$96,500
$134,500
$171,500
$209,500
10
$108,000
$174,000
$240,000
$306,000
$372,000
14
$149,500
$238,500
$327,500
$416,500
$505,500
1) Includes site preparation, and onshore and underwater construction and installation costs.
Total Estimated Capital Costs

The installation costs in Table A-23 can be added to the equipment costs in Tables A-20a and A-20b to derive total
equipment and installation costs for traveling screens with and without fish handling features.  These estimated costs are
presented in Tables A-24a and A-24b. The flow volume corresponding to each screen width and well depth combination
varies based on the through screen flow velocity. These flow volumes were presented in Tables A-19a and A-19b for flow
velocities of 1.0 fps and 0.5 fps, respectively.
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            Table A-24a. Estimated Total Capital Costs for Traveling Screens Without Fish Handling Features
                                     (Equipment and Installation)1 (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Screening Basket Panel Width (ft)
2
$57,000
$83,000
$124,000
$165,000
$226,000
5
$93,500
$141,500
$204,500
$271,500
$339,500
10
$153,000
$234,000
$345,000
$436,000
$527,000
14
$214,500
$343,500
$472,500
$591,500
$705,500
1) Costs include carbon steel structure coated with an epoxy paint, non-metallic trash baskets with Type
304 stainless mesh, and intermittent operation components and installation.
              Table A-24b.  Estimated Total Capital Costs for Traveling Screens With Fish Handling Features
                                     (Equipment and Installation)1 (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Screening Basket Panel Width (ft)
2
$90,500
$129,250
$191,500
$253,750
$336,000
5
$132,000
$194,000
$287,000
$381,500
$477,000
10
$202,000
$307,000
$458,000
$589,000
$720,000
14
$285,000
$453,000
$647,000
$831,000
$1,010,000
1) Costs include non-metallic fish handling panels, spray systems, fish trough, housings and transitions,
continuous operating features, drive unit, frame seals, engineering (averaged over 5 units), and
installation. Costs do not include differential control system and spray wash pumps.
Tables A-25a and A-25b present equations that can be used to estimate costs for traveling screens at 0.5 fps and 1.0 fps,
respectively. See the end of this Appendix for cost curves and equations.
             Table A-25a.  Capital Cost Equations for Traveling Screens for Velocity of 0.5 fps
Screen
Width
(ft)
2
5
10
14
Traveling Screens with Fish Handling
Equipment
Equation1
y=2E-llx4-6E-07x3 +
0.0053x2+1.0283x + 71506
y = 2E-12x4 - 2E-07x3 + 0.004x2
-27.772x+ 187917
y = 2E-13x4 - 3E-08x3 +
0.0017x2-22.739x + 293474
y = 6E-14x4 - lE-08x3 + O.OOlx2
-15.915x + 353385
Correlation
Coefficient
R2=l
R2=l
R2=l
R2=l
Traveling Screens without Fish Handling
Equipment
Equation1
y=lE-llx4-4E-07x3 +
0.0036x2 + 0.81 19x + 44000
y = lE-12x4 - 9E-08x3 +
0.0024x2 - 14.878x + 120042
y = lE-13x4 - 2E-08x3 +
0.0012x2-15.939x + 214636
y = 4E-14x4 - 8E-09x3 +
0.0006x2 - 6.4565x + 222007
Correlation
Coefficient
R2=l
R2=l
R2=l
R2=l
1) x is the flow in gpm y is the capital cost in dollars.
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§316(b) EEA Appendix A for New Facilities
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              Table A-25b. Capital Cost Equations for Traveling Screens for Velocity of 1 fps
Screen
Width
(ft)
2
5
10
14
Traveling Screens with Fish Handling
Equipment
Equation1
y = 5E-12x4 - 3E-07x3 +
0.0072x2 - 47.584x + 185604
y = lE-13x4 - 2E-08x3 + O.OOlx2
-13.641x+ 187644
y = 2E-14x4 - 5E-09x3 +
O.OOOSx2 - 15.877x + 344095
y = 4E-15x4 - 2E-09x3 +
O.OOOSx2 -9.9356x + 387337
Correlation
Coefficient
R2=l
R2=l
R2=l
R2=l
Traveling Screens without Fish Handling
Equipment
Equation1
y = 4E-12x4 - 2E-07x3 +
0.0048x2 - 3 1.475x+ 119611
y = 7E-14x4 - lE-08x3 +
0.0006x2-6.9771x+ 117069
y = lE-14x4 - 4E-09x3 +
0.0004x2-11.291x + 251956
y = 3E-15x4 - lE-09x3 +
0.0002x2 - 4.6948x + 248170
Correlation
Coefficient
R2=l
R2=l
R2=l
R2=l
1) x is the flow in gpm y is the capital cost in dollars.
Potential Additional Capital Costs

Fish spray pumps are used to increase the survival rate of fish by directing the fish out of fish baskets and facilitating their
return to the waterbody. In some instances, water used for spraying fish can be obtained by passing a portion of the water
pumped for cooling to use in spraying fish. These pumps are an additional cost that is minimal compared to the other
equipment and installation costs of a CWIS. They are presented separately to account for systems that must have a separate
pumping facility for fish spraying. Assuming that a minimum of one percent of the flows used in cooling is used in spraying
fish will yield a flow range from 20 gpm to 2250 gpm. Even if the one percent flow assumption varies for some systems, the
flow range generated based on the one percent assumption is large enough to construct a cost curve for water pumps. Table
A-26 presents the estimated costs offish spray pumps, calculated based on the R.S. Means cost data for centrifugal water
pumps (R.S. Means, 1997c). The costs in Table A-26 include labor, material, and equipment.  See the end of this Appendix
for cost curves and equations.

                     Table A-26. Estimated Total Capital Costs for Fish Spray Pumps (1999 Dollars)
Centrifugal
Pump Flow
(gpm)
10
50
75
100
500
1000
2000
Total Capital Costs
for Centrifugal
Pumps
$ 800
$2250
$2500
$2800
$3700
$4400
$9000
Cost Equation1
y = -0.2394x2 + 47.9x + 364.04
y = 2E-06x3 - 0.0035x2 + 3.8696x + 2446.8
Correlation
Coefficient
R2 = 0.9907
R2=l
1) x is flow in gpm and y is cost in dollars.
Operation and Maintenance (O&M) Costs for Traveling Screens

O&M costs for traveling screens vary by type, size, and mode of operation of the screen.  Based on discussions with industry
representatives, EPA estimated annual O&M cost as a percentage of total capital cost. The O&M cost factor ranges between
8% of total capital cost for the smallest size traveling screens with and without fish handling equipment and 5% for the
largest traveling screen since O&M costs do not increase proportionately with screen size. Estimated annual O&M costs for
traveling screens with and without fish handling features are presented in Tables A-27a and A-27b, respectively.  As noted
                                                                                                      AppA-37

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
earlier, the flow volume corresponding to each screen width and well depth combination varies based on the through screen
flow velocity. These flow volumes were presented in Tables A-19a and A-19b for flow velocities of 1.0 fps and 0.5 fps,
respectively.
                     Table A-27a. Estimated Annual O&M Costs for Traveling Water Screens
                                        Without Fish Handling Features
                                 (Carbon Steel - Standard Design)1 (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Screen Panel Width (ft)
2
$4560
$5810
$8680
$11,550
$13,560
5
$6545
$9905
$12,270
$16,290
$16,975
10
$7650
$14,040
$17,250
$21,800
$26,350
14
$12,870
$17,175
$23,625
$29,575
$35,275
1) Annual O&M costs range between 8% of total capital cost for the smallest size traveling screens with
and without fish handling equipment and 5% for the largest traveling screen.
                     Table A-27b. Estimated Annual O&M Costs for Traveling Water Screens
            With Fish Handling Features (Carbon Steel Structure, Non-Metallic Fish Handling Screening
                                             Panel)1 (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Screen Panel Width (ft)
2
$7240
$9048
$13,405
$17,763
$20,160
5
$9240
$13,580
$17,220
$22,890
$23,850
10
$10,100
$18,420
$22,900
$29,450
$36,000
14
$17,100
$22,650
$32,350
$41,550
$50,500
1) Annual O&M costs range between 8% of total capital cost for the smallest size traveling screens with
and without fish handling equipment and 5% for the largest traveling screen.
Tables A-28a and A-28b present O&M cost equations generated from the above tables for various screen sizes and water
depths at velocities of 0.5 fps and 1 fps, respectively. The "x" value of the equation is the flow and the "y" value is the
O&M cost in dollars.
AppA - 38

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
            Table A-28a. Annual O&M Cost Equations for Traveling Screens Velocity 0.5 fps
Screen
Width
(ft)
2
5
10
14
Traveling Screens with Fish Handling
Equipment
Equation1
y = -3E-05x2+1.6179x +
3739.1
y = -lE-05x2 + 0.8563x +
5686.3
y = -2E-06x2 + 0.5703x +
5864.4
y = 4E-15x4 - 9E-10x3 +
7E-05x2 -1. 503 lx + 26977
Correlation
Coefficient
R2 = 0.9943
R2 = 0.9943
R2 = 0.9907
R2=l
Traveling Screens without Fish Handling
Equipment
Equation1
y = -2E-05x2+1.0121x +
2392.4
y = -7E-06x2 + 0.6204x +
4045.7
y = 9E-llx3-lE-05x2 +
0.8216x+ 1319.5
y = 2E-15x4 - 6E-10x3 +
4E-05x2-0.8552x+ 18106
Correlation
Coefficient
R2 = 0.9965
R2 = 0.9956
R2 = 0.9997
R2=l
1) x is the flow in gpm and y is the annual O&M cost in dollars.
             Table A-28b. Annual O&M Cost Equations for Traveling Screens Velocity 1 fps
Screen
Width
(ft)
2
5
10
14
Traveling Screens with Fish Handling
Equipment
Equation1
y = -8E-06x2 + 0.806x + 3646.7
y = -3E-06x2 + 0.4585x +
5080.7
y = -6E-07x2 + 0.2895x +
5705.3
y = 3E-16x4 - lE-lOx3 +
2E-05x2 - 0.8264x + 28092
Correlation
Coefficient
R2 = 0.982
R2 = 0.9954
R2 = 0.9915
R2=l
Traveling Screens without Fish Handling
Equipment
Equation1
y = -4E-06x2 + 0.5035x + 2334
y = -2E-06x2 + 0.3312x +
3621.1
y= !E-llx3-3E-06x2 +
0.4047x+ 1359.4
y = 2E-16x4-8E-llx3 +
lE-05x2 - 0.4829x + 18975
Correlation
Coefficient
R2 = 0.9853
R2 = 0.9963
R2=l
R2=l
1) x is the flow in gpm and y is the annual O&M cost in dollars.
        B.IV.b. Adding fish baskets to existing traveling screens

Capital Costs

Table A-29 presents estimated costs of fish handling equipment without installation costs. These estimated costs represent
the difference between costs for equipment with fish handling features (Table A-20b) and costs for equipment without fish
handling features (Table A-20a), plus a 20% add-on for upgrading existing equipment (mainly to convert traveling screens
from intermittent operation to continuous operation).12 These costs would be used to estimate equipment capital costs for
upgrading an existing traveling water screen to add fish protection and fish return equipment.
    12This 20% additional cost for upgrades to existing equipment was included based on recommendations from one of the
equipment vendors supplying cost data for this research effort.
                                                                                                     AppA - 39

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
                  Table A-29. Estimated Capital Costs of Fish Handling Equipment (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Basket Screening Panel Width
(ft)
2
$40,200
$55,500
$81,000
$106,500
$132,000
5
$46,200
$63,000
$99,000
$132,000
$165,000
10
$58,800
$87,600
$135,600
$183,600
$231,600
14
$84,600
$131,400
$209,400
$287,400
$365,400
    Source: Vendor estimates.
Installation of Fish Handling Features to Existing Traveling Screens

As stated earlier, the basic equipment cost offish handling features (presented in Table A-29) is calculated based on the
difference in cost between screens with and without fish handling equipment, plus a cost factor of 20% for upgrading the
existing system from intermittent to continuous operation. Although retrofitting existing screens with fish handling
equipment will require upgrading some mechanical equipment, installing fish handling equipment generally will not require
the use of a costly barge that is equipped with a crane and requires a minimum number of crew to operate it. EPA assumed
that costs are 75% of the underwater installation cost (Table A-22) for a traveling screen (based on BPJ). Table A-30 shows
total estimated costs (equipment and installation) for adding fish handling equipment to an existing traveling screen.

          Table A-30.  Estimated Capital Costs of Fish Handling Equipment and Installation1 (1999 Dollars)
Well Depth
(ft)
10
25
50
75
100
Basket Screening Panel Width (ft)
2
$46,200
$68,250
$100,500
$132,750
$165,000
5
$55,575
$79,125
$121,875
$161,625
$201,375
10
$71,550
$107,100
$161,850
$216,600
$271,350
14
$100,725
$154,275
$239,025
$323,775
$408,525
1) Installation portion of the costs estimated as 75% of the underwater installation cost for installing a traveling water
screen.
The additional O&M costs due to the installation of fish baskets on existing traveling screens can be calculated by
subtracting the O&M costs for basic traveling screens from the O&M costs for traveling screens with fish baskets. See the
end of this Appendix for cost curves and equations.

B.V.  Additional Cost Considerations

To account for other minor cost elements, EPA estimates that 5% may need to be added to the total cost for each alteration.
Minor cost elements include:

•       Permanent buoys for shallow waters to warn fishing boats and other boats against dropping anchor over the pipes.
        Temporary buoys and warning signs during construction.

•       Additional permit costs.  Permit costs may increase because of the trenching and dredging for pipe installation.
AppA - 40

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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs

•       Facility replanning/redesign costs may be incurred if the facility is far enough along in the facility planning and
        development process. This cost would likely be minimal to negligible for most of the alterations discussed above,
        but could be much higher for switching a facility to a recirculating cooling system.

•       Monitoring costs (e.g., to test for contaminated sediments).

As noted earlier, if the intake structure installation involves disturbance of contaminated sediments, the permitting authority
may require special construction procedures, including hauling the sediments to an appropriate disposal facility offsite. This
may increase the cost of the project by more than two to three times the original cost estimate.

        B.V.a           Potential Additional Site-Specific Costs

There are some especially site-specific costs associated with the construction of cooling towers and water intake structures
that represent potential additional expenditures a facility may incur to get a technology in place and operational. These costs
can be considerable in some individual cases and in such cases would need to be added to cost estimates.  The items
described below were not included in the National cost estimates presented in this document. General ranges for these costs
are provided in the descriptions below.13

These potential site-specific costs that need to be added where applicable are:

•       Pilot studies,
•       Geotechnical allowance,
•       Land acquisition,
•       Interest,
•       Legal, fiscal, and administrative expenses, and
•       Sales tax.

The following subsections describe each of these indirect cost elements in more detail.

Pilot Studies

Site-specific pilot tests are often required by regulatory  agencies to better define design conditions and to ensure protection
of public health by the proposed technology. Pilot tests can be run to determine appropriate  loading rates, chemical feed
rates or other process parameters, waste handling requirements, and whether a facility is likely to meet requirements for noise
and air drift control (for cooling towers) and other emissions limits.

Requirements of predesign testing can be satisfied through several alternatives. Among these are full- or small-scale pilot
studies, bench tests, and desktop feasibility studies. In addition, participating in cooperative studies between suppliers,
associations, and users can sometimes reduce costs for such pre-design requirements.

The general costs for each type of study range from an inexpensive, small-scale pilot study to full-scale pilot studies that are
warranted by site-specific conditions.  Performing a full-scale pilot study with the actual process equipment, as installed on-
site, can sometimes reduce equipment costs. Three variables affecting these costs are  technology requirements, existing
standard protocol requirements, and state requirements.   Some states may determine test requirements on a case-by-case basis
particularly where stringent fish protection, NPDES, and noise and plume abatement regulations exist.

The diversity of state requirements, along with the many options for pre-design testing, results in poorly defined
requirements for pilot or bench scale  studies. To determine costs,  a strong definition of pilot scale testing requirements is
necessary.
    "Because these costs are so site-specific, an individual cost estimate would not be appropriate on a National basis. In
addition, costs may vary substantially by region.  For example, weighted unit cost averages for 689 cities range from 0.653 to
1.352, with a 30-city average index of 1.0 (R.S. Means, 1997a). City indices are available on the Internet on various sites
and provide a tool for adjusting estimated costs to be more reflective of potential costs in specific geographic locations.

                                                                                                          AppA - 41

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
Table A-31 shows estimated hours and cost for a pilot test and is the result of a combination of available information,
contacts with vendors for verification, and review of references.
                    Table A-31.  Potential Pilot Test Costs for Screens and Cooling Towers
                                                (1999 Dollars)
Element
P.E./P.M.
Junior Engineer
Word Processor
Pilot System
Rental
Other costs
Hours
12
40
16


Cost



$10,000
$4,000
Assumptions
1 . A 2-week pilot study test is sufficient.
2. P.M./P.E. will arrange and coordinate test.
3 . Selection of technology performed in the process design phase of the
project.
4. A brief report will be prepared describing test, results and
recommendations.
5 . Other costs include power costs, chemical costs, sludge disposal, and
one effluent sample per day for TSS, turbidity, and three volatile organic
constituents.
Geotechnical Allowance

Cost estimates should include a geotechnical allowance for any unique subsurface conditions that require special
construction techniques, such as piles or high ground water table dewatering. These costs are very site-specific.

Land Acquisition

Cost estimates for purchasing land for buildings, facility units, and conveyance should be included, if necessary.  The
amount of land required should include a 40-foot buffer on each side for emergency vehicle access. Typical costs per acre
range from $4,000 to $350,000 for industrial sites and from $150 to $2,200 for rural sites.  Average costs are $10,000 per
industrial acre and $1,000 per rural acre. (EPA, 1996)

Interest

Cost estimates may need to include interest for the financing of the project. The interest rate depends on the funding source,
subsidies, and the general  economy, but generally ranges from 3% to 10%. The interest on capital expenses during
construction generally ranges between 5% and 10% of capital costs.

Legal, Fiscal and Administrative Expenses

This category includes project management, accounting, and administrative activities related to the project, excluding
permitting. The cost can range from 2% to 5% of the equipment, installation, construction, electrical, and standby power
cost, with an average of 3%.

Sales Tax
Projects may be exempt from the sales tax, particularly those constructed with public funds. If not, the tax can be as high as
7.25% of the equipment and construction cost, with a National average of 4.75% (R.S. Means,  1997a).


C.  REFERENCES

In addition to the references listed below, EPA would like to thank the following individuals for providing valuable
information, comments  and support: Russel Bellman and Brian Julius, Acting Chief, Gulf Coast Branch NOAA Damage
Assessment Center,  Silver Spring, MD, of the National Oceanic and Atmospheric Administration; Adnan Alsaffar, Arman
Sanver, and John Gantnier, Bechtel Power Corporation, Fredrick, MD; Gary R. Mirsky Vice President, Hamon Cooling
Towers, Somerville, NJ; Jim Prillaman, Prillaman Cooling Towers, Richmond, VA; Ken Campbell GEA Power Systems,
Denver, CO and David  Sanderlin, GEA Power Systems, San Diego, CA; Michael D. Quick, Manager - Marketing /
Communications, U.S. Filter - Envirex Products, Waukesha, WI; Trent T. Gathright, Fish Handling Band Screen Specialist,
Marketing Manager, Bracket! Geiger USA, Inc., Houston, TX;  Richard J.  Sommers, U.S. Filter Intake Systems, Chalfont,
AppA - 42

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§316(b) EEA Appendix A for New Facilities          Detailed Information on Technologies/Development of Unit Costs

PA; Ken McKay, VP Sales/Marketing, USF Intake Products; and Larry Sloan, District Representative, Sloan Equipment
Sales Co.,Inc., Owings Mills, MD.

Anderson, R. 2000.  Personal communication (February, and March) between Roland Anderson, Price Brothers, Dayton,
OH and Faysal Bekdash, SAIC.

Antaya, Bill. 1999. Personal communication between Bill Antaya, The Coon-De Visser Company and Faysal Bekdash,
SAIC.

Boles, D.E., et al. 1973. Technical and Economic Evaluations of Cooling Systems Slowdown Control Techniques.

Coss, Tim. 2000. Personal communication (February, and March) between Tim Coss, the Boulder Trenchless Group and
Faysal Bekdash, SAIC.

U.S. Department of Energy (DOE).  1994. Environmental Mitigation at Hydroelectric Projects: Volume II. Benefits and
Costs of Fish Passage and Protection. Francfort, J.E., Cada, G.F., Dauble, D.D., Hunt, R.T., Jones, D.W., Rinehart, B.N.,
Sommers, G.L. Costello, R.J. Idaho National Engineering Laboratory.

U.S. EPA (EPA). (1996). Technology Transfer Handbook - Management of Water Treatment Plant Residuals, EPA/625/R-
95/008, April 1996.

Electric Power Research Institute (EPRI). 1995. Proceedings: Cooling Tower and Advanced Cooling Systems Conference.
Summary of Report TR-104867, obtained from EPRFs Web site at http://www.epri.com on 12/1/99.

EPRI. 1986a. Performance of a Capacitive Cooling System for Dry Cooling.  Summary of Report CS-4322, obtained from
EPRFs Web site at http://www.epri.com on 12/1/99.

EPRI. 1986b.  Wet-Dry Cooling Demonstration: TestResults. Summary of Report CS-4321, obtained from EPRFs Web site
at http://www.epri.com on 12/1/99.

Federal Energy Regulatory Commission (FERC).  1995. Preliminary Assessment of Fish Entrainment at Hydropower
Projects, A Report on Studies and Protective Measures,  Volume 1. Office of Hydropower Licensing, Washington, DC.
Paper No. DPR-10.

Ganas, Michael. Assembling underwater concrete pipelines. Published article provided by Price Brothers (no date or journal
name).

GEA Power Cooling Systems, Inc. (GEA). Undated. Direct Air Cooled Condenser Installations. Brochure. R-227.

Gerwick, B.C. Jr. 2000.  Construction of Marine And offshore structures. 2nd edition.  CRC Press.

Huber,  Gary. 2000. Personal communication (February, and March) between Gary Huber, Permalok and Faysal Bekdash,
SAIC.

Mirsky, G.R., et al. 1992. The Latest Worldwide Technology in Environmentally Designed Cooling Towers. Cooling Tower
Institute 1992 Annual Meeting Technical Paper Number TP92-02.

Mirsky, G. and Bautier, J. 1997. Designs for Cooling Towers and Air Cooled Steam Conensers that Meet Today's Stringent
Environmental Requirements. Presented at the EPRI 1997 Cooling Tower Conference (St. Petersburg, Florida) and ASME
1997 Joint Power Conference (Denver, Colorado).

Mirsky, G. 2000. Personal communication between Gary Mirsky, Hamon Cooling Towers and Faysal Bekdash, SAIC. Email
dated 3/27/00.

Montdardon, S.  2000. Personal communication (February, and March) between Stephan Montdardon, Torch Inc. and
Faysal Bekdash, SAIC.


                                                                                                   AppA - 43

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§316(b) EEA Appendix A for New Facilities           Detailed Information on Technologies/Development of Unit Costs

Nicholson, J.M. (Stone & Webster Engineering Corp.) 1993. Preliminary Engineering Evaluation. Public Service Electric
and Gas Company Salem Generating Station, NJPDES Permit No. NJ0005622, Public Hearing.

Congress of the United States, Office of Technology Assessment (OTA). 1995. Fish Passage Technologies: Protection at
Hydropower Facilities. OTA-ENV-641.

Paroby, Rich. 1999.  Personal communication between Rich Paroby, District Sales Manager, Water Process Group and
Deborah Nagle, U.S. EPA.  E-mail dated May 12, 1999.

Power Plant Research Program (PPRP) for Maryland.  1999. Cumulative Environmental Impact Report (CEIR), 1 Oth Annual.
Obtained from Maryland's PPRP Web site at http://www.dnr.md.us/bay/pprp/ on 11/18/99.

R.S. Means Company, Inc.  (R.S. Means). 1997a. Plumbing Cost Data 1998. 21st Annual Edition.

R.S. Means. 1997b. Heavy Construction Cost Data 1998. 12th Annual Edition.

R.S. Means. 1997c. Environmental Remediation Cost Data 1998.

Science Applications International Corporation (SAIC). 1994. Background Paper Number 3: Cooling Water Intake
Technologies.  Prepared by SAIC for U.S. EPA. Washington, DC.

SAIC. 1996. Supplement to Background Paper 3: Cooling Water Intake Technologies. Prepared by SAIC for U.S. EPA.
Washington, DC.

SAIC. 2000. Cost Research and Analysis of Cooling  Water Technologies for 316(b) Regulatory Options, Prepared by SAIC
for Tetra Tech, for U.S. EPA. Washington, DC.

Stone & Webster Engineering Corporation. 1992.  Evaluation of the Potential Costs and Environmental Impacts of
Retrofitting Cooling Towers on Existing Steam Electric Power Plants that Have Obtained Variances  Under Section 316(a)
of the Clean Water Act.  Prepared by Stone & Webster for the Edison Electric Institute (EEI).

US Filter/Johnson Screens (US Filter). 1998. Surface Water Intake Screen Technical Data. Brochure.

Utility Data Institute (UDI). 1995. EEI Power Statistics Database. Prepared by UDI for EEI.  Washington, DC.

The Utility Water Action Group (UWAG).  1978.  Thermal Control Cost Factors. Chapter 2 - Report on the Capital Costs
of Closed-Cycle Cooling Systems.  Prepared by Stone & Webster Engineering Corporation for UWAG.

Additional References Used for General Information But Not Specifically Cited

Envirex Inc. 1973. Traveling screens to protect fish in water intake systems. Bulletin No. 316-300.

Gathright, Trent. 1999. Personal communication between Trent Gathright, Marketing Manager, Brackett Green and
Faysal Bekdash, SAIC. Letter dated November 16, 1999.
GEA. Undated. PAC System™: The Parallel Condensing System. Brochure.

Geiger. Undated. Geiger Fipro - Fimat. Efficient, modern fish protection systems. Fish repelling plants of the new
generation. Brochure.

Norell, Bob. 1999. Personal communication between Bob Norell, US Filter/Johnson Screens and Tracy Scriba,
SAIC.

Puder, M.G. and J.A. Veil.  1999.  Summary Data on Cooling Water Use at Utilities and Nonutilities. Prepared by
Puder and Veil, Argonne National Laboratory for U.S. DOE.

Swanekamp, Robert, PE. 1998. Parallel condensing combines best of all-wet, all-dry methods. Power. July/August
1998 issue.

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§316(b) EEA Appendix A for New Facilities
                                           Detailed Information on Technologies/Development of Unit Costs
U.S. Filter. 1999. Raw Water Screening Intake Systems. Brochure.
D. LIST OF COST CURVES AND EQUATIONS
Chart 1.
Chart 2.
Charts.
Chart 4.
Charts.
Chart 6.
Chart?.
Charts.
Chart 9.
Chart 10.
Chart 11.
Chart 12.
Chart 13.
Chart 14.
Chart 15.
Chart 16.
Chart 17.
Chart 18.
Chart 19.
Chart 20.
Chart 21.
Chart 22.
Chart 23.
Chart 24.
Chart 25.
Chart 26.
Chart 27
Chart 28.
Chart 29
Chart 30
Chart 31.
Chart 32.
Chart 33.
Chart 34.
Chart 35.
Chart 36.
Chart 37.
Chart 38.
Chart 39.
Chart 40.
Chart 41.
Chart 42.
Chart 43.
Chart 44.
Chart 45.
Total Cost of Conventional Concrete Pipe Laying
Total Cost of Steel Pipe Extension Laying Using Conventional Method
Cost of Bottom-pull Concrete Pipe Laying
Total Cost of Steel Pipe Extension Using Bottom-pull Laying Method
Capital Cost for Extending Intake Pipe 125 Meters Using Micro Tunneling Techniques - Steel Pipe
Microtunnelling Technique Capital Costs for 125 Meter Pipe Extension - Concrete Pipe
Canal Dredging and Widening Cost
Capital Costs of Basic Cooling Towers with Various Building Material (Delta 10 Degrees)
Douglas Fir Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
 Red Wood Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
 Concrete Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
 Steel Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
 Fiberglass Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
 O&M of Basic Standard Fill Cooling Tower for Different Material Type - 1st Scenario
 O&M of Basic Standard Fill Cooling Tower for Different Material Type - 2nd Scenario
 Total O&M Douglas Fir Tower Annual Cost - 1st Scenario
 Total O&M Douglas Fir Tower Annual Cost - 2nd Scenario
 Total O&M Douglas Fir Tower Annual Cost - 3rd Scenario
 Total O&M Red Wood Tower Annual Cost - 1st Scenario
 Total O&M Red Wood Tower Annual Cost - 2nd Scenario
 Total O&M Concrete Tower Annual Cost - 1st Scenario
 Total O&M Concrete Tower Annual Cost - 2nd Scenario
 Total O&M Steel Tower Annual Cost - 1st Scenario
 Total O&M Steel Tower Annual Cost - 2nd Scenario
 Total O&M Fiberglass Tower Annual Cost - 1st Scenario
 Total O&M Fiberglass Tower Annual Cost - 2nd Scenario
 Municipal Water Use Costs
 Gray Water Use Costs
 Capital Costs of Passive Screens Based on Well Depth
 Capital Costs of Passive Screens for a Flow Velocity 0.5 ft/sec
 Capital Costs of Passive Screens for a Flow Velocity 1 ft/sec
 Velocity Cap Total Capital Costs
 Concrete Fittings for Intake Flow Velocity Reduction
 Steel Fittings for Intake Flow Velocity Reduction
 Traveling Screens Capital Cost Without Fish Handling Features Flow Velocity 0.5 ft/sec
 Traveling Screens Capital Cost With Fish Handling Features Flow Velocity 0.5 ft/sec
 Traveling Screens Capital Cost Without Fish Handling Features Flow Velocity 1 ft/sec
 Traveling Screens Capital Cost With Fish Handling Features Flow Velocity 1 ft/sec
 Fish Spray Pumps Capital Costs
 O&M Costs for Traveling Screens Without Fish Handling Features Flow Velocity 0.5 ft/sec
 O&M Costs for Traveling Screens With Fish Handling Features Flow Velocity 0.5 ft/sec
 O&M Costs for Traveling Screens Without Fish Handling Features Flow Velocity 1 ft/sec
 O&M Costs for Traveling Screens With Fish Handling Features Flow Velocity 1 ft/sec
 Capital Cost of Fish Handling Equipment Screen Flow Velocity 0.5 ft/sec
 O&M for Fish Handling Features Flow Velocity 0.5 ft/sec
                                                                                                      AppA - 45

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§316(b) EEA Appendix A for New Facilities          Detailed Information on Technologies/Development of Unit Costs
                                      [This page intentionally left blank.]
AppA - 46

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§316(b) EEA Appendix A for New Facilities
                            Detailed Information on Technologies/Development of Unit Costs
                                  Chart 1. Total Cost of Conventional Concrete Pipe Laying
       $1,400,000
       $1,200,000
       $1,000,000
    i/)
    o>
    ~    $800,000
    i/)
    LU

    •Si
    o
    a
     .
    ra
    O
         $600,000
         $400,000
         $200,000
             $-
                                 20000
                                                       y = -4E-14x4 + 7E-09x3 - 0.0004x2 + 16.394x + 112967


                                                                         R2 = 0.9986
40000            60000


            Design Flow(gpm)
80000
100000
120000
                                                                                                                            AppA - 47

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§316(b) EEA Appendix A for New Facilities
                               Detailed Information on Technologies/Development of Unit Costs
                       Chart 2. Total Cost of Steel Pipe extension Laying  Using Conventional Method
        $4,000,000
        $3,500,000
        $3,000,000
    |j   $2,500,000
    E
    ?
    LU
    *;   $2,000,000
    o
    O
    Is
    «   $1,500,000
    O
        $1,000,000
         $500,000
             $-
                               50000
                                                                   y = -7E-11x3 + 3E-05x2 + 9.0384x + 119998j
                                                                                R2 = 0.9999
100000
150000         200000
  Design Flow(gpm)
250000
300000
350000
AppA - 48

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§316(b) EEA Appendix A for New Facilities
                           Detailed Information on Technologies/Development of Unit Costs
                                      Chart 3. Cost of Bottom-pull Concrete Pipe Laying
       $1,400,000
       $1,200,000
       $1,000,000
    i/)
    o>
    ~    $800,000
    i/)
    LU

    •Si
    o
    a
     .
    ra
    O
         $600,000
         $400,000
         $200,000
             $-
                                  20000
                                                                  y = -3E-10x3 + 8E-05x2 + 6.678x + 70275


                                                                               R2 = 0.9948
40000            60000


            Design Flow (gpm)
80000
100000
120000
                                                                                                                            AppA - 49

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§316(b) EEA Appendix A for New Facilities
                      Detailed Information on Technologies/Development of Unit Costs
                         Chart 4. Total Cost of Steel Pipe Extension Using Bottom-pull Laying Method
         $600,000
         $500,000
         $400,000
      I/)
     LU

     to  $300,000
      o
     O
      a.
      a
     O
         $200,000
         $100,000
             $-
                                                                             y = 7E-09x3 - 0.0004X2 + 19.807x + 55754

                                                                                         R2 = 0.9994
                             5000         10000
15000        20000        25000


       Design Flow (gpm)
30000        35000        40000
AppA - 50

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§316(b) EEA Appendix A for New Facilities
                      Detailed Information on Technologies/Development of Unit Costs
                     Chart 5. Capital Cost for Extending Intake Pipe 125 Meters Using Micro Tunneling
                                                   Techniques - Steel Pipe
        $700,000
        $600,000
        $500,000
     «  $400,000
    o
     Q.

    O  $300,000
        $200,000
        $100,000
            $-
                                                    y = -1 E-08x3 + 0.0006X2 + 1.5251x + 335098
                            5000         10000
15000        20000        25000

       Design Flow(gpm)
30000
35000        40000
                                                                                                                       AppA - 51

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§316(b) EEA Appendix A for New Facilities
                                    Detailed Information on Technologies/Development of Unit Costs
                                               Chart 6. Microtunelling Technique
                                   Capital Cost for 125 meter pipe extension - concrete pipe
        $700,000
        $600,000
        $500,000
     «  $400,000
     u
     "5
     +j
     'a.
     O  $300,000
        $200,000
        $100,000
             $0
                                                     y = -2E-13x4 - 1E-09x3 + 0.0006x2 - 2.1685x + 353928
                                                                      FT = 0.9828
                            5000
10000
15000        20000        25000

       Design Flow(gpm)
30000
35000
40000
                                                         *  Seriesl 	Poly. (Seriesl)
AppA - 52

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§316(b) EEA Appendix A for New Facilities
                                     Detailed Information on Technologies/Development of Unit Costs
                                         Chart 7. Canal Dredging and Widening Cost
       $600,000
       $500,000
       $400,000
    o
    u
    31  $300,000
    Q.
    ra
    u
       $200,000
       $100,000
           $-
               100
                                                     y = 3E-1 Ox  - 8E-05x  + 8.0629x + 183348


                                                                  R2 = 0.9975
1000
      10000



Design Flow(gpm)
100000
1000000
                                                                                                                          AppA - 53

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§316(b) EEA Appendix A for New Facilities
                        Detailed Information on Technologies/Development of Unit Costs
        $14,000,000
        $12,000,000
        $10,000,000
     «   $8,000,000
    o
    "5
    +j
    'a.
    O   $6,000,000
         $4,000,000
         $2,000,000
               $-
                        Chart 8. Capital Costs of Basic Cooling Towers with Various Building Material
                                                        (Delta 10 Degrees)
                                                       y = -1E-10x3- 1E-05x2 + 70.552x + 61609
                                                                   R2 = 0.9997
                         y = -1E-1 Ox3 -1 E-05x2 + 68.039x + 59511
                                      R2 = 0.9997
                          y = -1 E-1 Ox3 - 9E-06x2 + 56.453x + 49125
                                         = 0.9997
                                                                                y = -1 E-10xJ - 9E-06x" + 55.432x + 48575
                                                                                            R2 = 0.9997
                                                                           y = -9E-11x3 - 8E-06x2 + 50.395x + 44058
                                                                                       R2 = 0.9997
                                     50000
100000
150000
200000
250000
                         * Douglass Fir       * Red wood      A Concrete      • Steel      * Fiberglass reinforced plastic
AppA - 54

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§316(b) EEA Appendix A for New Facilities
   Detailed Information on Technologies/Development of Unit Costs
                Chart 9. Douglas Fir Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
       $40,000,000
       $35,000,000
       $30,000,000
       $25,000,000
    o
    O
    «  $20,000,000
    Q.
    ra
    O
       $15,000,000




       $10,000,000




        $5,000,000




              $-
                                                                          = -O.OOOIx" + 196.07X + 71424
                 3E-10x3-2E-05x2 + 151.18x + 132225
                                                                   1E-1 Ox3 -1 E-05x2 + 65.517x + 57246
                            y = -4E-05x  + 62.744X +
                       Ox3 - 9E-06x2 + 55.432X + 48575
11x3 - 8E-06x2 + 50.395X + 44058
                                      50000               100000               150000


                                                                   FlowGPM
                          200000
250000
     *BasicTower    -"Splash fill    A Non-fouling film fill    * Hybrid tower (Plume abatement 32DBT)   * Noise reduction 10 dBA    • Dry/ wet
                                                                                                                         AppA - 55

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§316(b) EEA Appendix A for New Facilities
                                                                        Detailed Information on Technologies/Development of Unit Costs
                Chart 10.  Red Wood Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
I/)
o
i
Q.
ra
O
       45000000
       40000000
       35000000
       30000000
       25000000
       20000000
       15000000
       10000000
        5000000
                                                               y = -4b-1 UX" - 3h-UbX~ + 211. fx + 184338
                                                                                      y = -3E-10x3 - 3E-05x2 + 169.36x + 147375
                                                                                                   R2 = 0.9997
                                                                      y = -5E-05x2 + 76.127x + 27653
                                                                                                      = -5E-05x' +70.271 x
                                                                                                            FT = 0.9996
                                                                                                y = -4E-05x + 64.419x + 2332^
                                                                                                         R2 - 0.9996
                                                                        y =-4E-05xz + 58.561 x +21173
                                                                                 R2 = 0.9996
                                                                                                                      5393
                0                  50000                100000                150000
                                                                 FlowGPM
                                                                                             200000
250000
     *BasicTower    * Splash fill    A Non-fouling film fill    "Hybrid tower (Plume abatement 32DBT)   * Noise reduction 10 dBA   • Dry/ wet
AppA - 56

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§316(b) EEA Appendix A for New Facilities
                      Detailed Information on Technologies/Development of Unit Costs
                Chart 11.  Concrete Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
      60000000
      50000000
      40000000
   o
   O
   «  30000000
   Q.
   ra
   O
      20000000
      10000000
                                                  y = -5E-10x3 - 5E-05x2 + 296.32x + 258694
                      y = -5E-10x3 - 4E-05x2 + 264.56x + 231239
                                                                      y = -6E-05x' + 95.16x + 34551
                                             9E-05x' + 128.1X +46441
                                                                                               y = -5E-05xz + 80.529X + 29073
                                                                       y = -5E-05x^ + 73.202X + 26463
                                  50000
100000               150000
         FlowGPM
200000
250000
         1 BasicTower                           '"Splash fill
         " Hybrid tower (Plume abatement 32DBT)    * Noise reduction 10 dBA
         •*" Natural draft wet tower
                              A Non-fouling film fill
                              • Dry/ wet
                                                                                                                         AppA - 57

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§316(b) EEA Appendix A for New Facilities
                    Detailed Information on Technologies/Development of Unit Costs
                  Chart 12.  Steel Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
       60000000
       50000000
       40000000
    o
    O
    «  30000000
    Q.
    ra
    O
       20000000
       10000000
                                                                     y = -6E-05x' + 91756x + 33667
                                                                                              y = -5E-05x' + 77.645X + 28303
                                                                       y = -5E-05x + 70.584X + 25763
50000
100000
                                                                           150000
200000
250000
                                                               FlowGPM
A
X
BasicTower
^Ion-fouling
sloise reduc
BasicTower
slon-fouling
film
tion
film
IdBA
fill
sa
Splash fill
Hybrid tower
Dry/ wet,
Splash fill
Hybrid tower
(Plume
(Plume
abatement
abatement
32DBT)
32DBT)
AppA - 58

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§316(b) EEA Appendix A for New Facilities
                    Detailed Information on Technologies/Development of Unit Costs
               Chart 13. Fiberglass Cooling Tower Capital Costs with Various Features (Delta 10 Degrees)
      40000000
      35000000
      30000000
      25000000
    o
   O
    « 20000000
    Q.
    ra
   O
      15000000
      10000000
       5000000
       y = -3E-10xJ -
                                                                                  166.3x +*5724
                           y = -4E-10x3 - 3E-05x2 + 207.87x + 182205
               y = -5E-05x^ + 74.769X + 27353
                                                                                                y = -4E-05x^ + 63.263X + 23203
                                                                        y = -4E-05x + 57.513x + 20980
                                  50000
100000
150000
200000
250000
                                                                FlowGPM
                            * BasicTower
                            A Non-fouling film fill
                            * Noise reduction 10 dBA
                     	^Splash fill
                     "Hybrid tower (Plume abatement 32DBT)
                     * Dry/ wet	
                                                                                                                       AppA - 59

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§316(b) EEA Appendix A for New Facilities
       Detailed Information on Technologies/Development of Unit Costs
                      Chart 14. O&M of Basic Standard Fill Cooling Tower For Different Material Type -
                                                           1st Scenario
       $3,000,000
       $2,500,000
       $2,000,000
    42
    i/)
    o
    o
    75 $1,500,000
    .*;
    Q.
    TO
    O
       $1,000,000
         $500,000
               $0
                                             y = -8E-06x2 + 14.183X + 13605
                                                     R2 = 0.9999
    y = -8E-06x^ + 13.938x + 11895
             R2 = 0.9999
                                                y = -8E-06x^ + 14.524x + 11183
                                                        R2 = 0.9999
                           y = -8E-06x2 + 13.291 x + 13850
                                    R2 = 0.9999
                    y = -6E-06x^ + 11.425x + 10854
                            R2 = 0.9999
                                     50000                100000               150000
                                                                   Flow gpm
                              200000
                        250000
             1 Douglass Fir Standard Fill       A Red wood Standard Fill
Concrete       * Steel
1 Fiberglass reinforced plastic
AppA - 60

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§316(b) EEA Appendix A for New Facilities
                                             Detailed Information on Technologies/Development of Unit Costs
                    Chart 15.  O&M of Basic Standard Fill Cooling Tower For Different Material Type - 2nd
                                                             Scenario
       $9,000,000


       $8,000,000


       $7,000,000


       $6,000,000
    J3
    8  $5,000,000
    o
    S $4,000,000
    O
       $3,000,000
       $2,000,000
       $1,000,000
                                          y = -8E-06x^ + 40.804X + 11183
                                                     R2 =
                       y = -8E-06x + 39.571X + 13850
Graphically there is no
difference between Doug lass Fir,
Redwood and Steel Towers
Costs
                                                                                            y = -8E-06x  + 40.218x + 11895
                                                                                                       R2 = 1
                                                                y = -8E-06x^ + 40.463X + 13605
                                      y = -6E-06x2 + 37.705X + 10854
                                                                                   R2 =
                                     50000                100000               150000

                                                                   Flowgpm
                                                                  200000
                        250000
           1 Douglass Fir Standard Fill       A Red wood Standard Fill
                                    Concrete       * Steel
' Fiberglass reinforced plastic
                                                                                                                             AppA - 61

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§316(b) EEA Appendix A for New Facilities
                                                                          Detailed Information on Technologies/Development of Unit Costs
                              Chart 16.  Total O&M Douglas Fir Tower Annual Cost - 1st Scenario
•8
o
O

s
08
o
        $8,000,000





        $7,000,000





        $6,000,000





        $5,000,000





        $4,000,000





        $3,000,000





        $2,000,000





        $1,000,000
                                                          y = -4E-05X  + 44.021 x + 65444
                                                                                               = -8E-06x^ + 14.619X + 12191
                                                                          The difference between Standard

                                                                          Fill Splash Fill and Non-fouling

                                                                          Film Fill is graphically negligible
                                     50000                100000                150000


                                                                    Flowgpm
                                                                                                200000
250000
'Standard "Splash fill * Non-fouling film fill
* Hybrid tower (Plume abatement 32DBT)
* Noise reduction 1 0 dBA • Dry/ wet
AppA - 62

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§316(b) EEA Appendix A for New Facilities
                                                                           Detailed Information on Technologies/Development of Unit Costs
                                 Chart 17. Total O&M Cost Douglas Fir Tower - 2nd Scenario
   $14,000,000


   $12,000,000


   $10,000,000


S  $8,000,000


    $6,000,000


    $4,000,000


    $2,000,000
    o
   O
                                     50000
                                                                         y = -4E-05x' + 70.301 x + 65444
                                                                                                       y = -1E-05x  +43.714x
                                                                                                 y = -8E-06x^ + 40.899X + 12191
                                                                                         The difference in Total
                                                                                         O&M costs between
                                                                                         Standard , Splash and
                                                                                         Non-Fouling film is
                                                                                         graphically negligible
                                                       100000               150000
                                                                Flow gpm
200000
250000
               Douglass Fir Standard Fill               • Splash fill

               Hybrid tower (Plume abatement 32DBT)   * Noise reduction 10 dBA
                                                                                         Non-fouling film fill

                                                                                        ' Dry/ wet
                                                                                                                            AppA - 63

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§316(b) EEA Appendix A for New Facilities
                    Detailed Information on Technologies/Development of Unit Costs
    CO
    J3
       $16,000,000


       $14,000,000


       $12,000,000


       $10,000,000
    O   $8,000,000
    s
    o«S
    O
                                  Chart 18.  Total O&M Cost Douglas Fir Tower - 3rd Scenario
y = -4E-05x + 80.813x + 65444
         R2 = 0.9999
                                                    R  = 0.9999
                                            y = -1 E-05x^ + 54.226X +
                                                      R2 =
                      y = -1 E-05x^ + 52.143x + 17751
                                                                                                   = -8E-06x2 + 51.411x +12191
                                                                                 The difference in Total
                                                                                 O&M costs between
                                                                                 Standard , Splash and
                                                                                 Non-Fouling film is
                                                                                 graphically negligible
                                                                                                 y = -8E-06x^ + 51.316x + 11183
                                                                                                            R2 =
   6043
    5301
                                      50000               100000                150000

                                                                    Flowgpm
                                          200000
250000
* Douglass Fir Standard Fill • Splash fill
• Hybrid tower (Plume abatement 32DBT) * Noise reduction 1 0 dBA
c* Non-fouling film fill
• Dry/ wet
AppA - 64

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§316(b) EEA Appendix A for New Facilities
                    Detailed Information on Technologies/Development of Unit Costs
                                Chart 19.  O&M Red Wood Tower Annual Costs - 1st Scenario
       $9,000,000




       $8,000,000




       $7,000,000




       $6,000,000
    •5)  $5,000,000
    o
    O
       $4,000,000




       $3,000,000




       $2,000,000




       $1,000,000
                             y = -4E-05x + 48.672X + 73207
                                            y = -9E-06x + 15.744X
                                    50000
100000               150000


         Flow gpm
200000
250000
         * Standard   m Splash fill     Non-fouling film fill   * Hybrid tower (Plume abatement 32DBT)   * Noise reduction 10 dBA   • Dry/wet
                                                                                                                         AppA - 65

-------
§316(b) EEA Appendix A for New Facilities
                                                                      Detailed Information on Technologies/Development of Unit Costs
                                Chart 20.  O&M Red Wood Tower Annual Costs - 2nd Scenario
    J3
    
-------
§316(b) EEA Appendix A for New Facilities
                                                                      Detailed Information on Technologies/Development of Unit Costs
                                 Chart 21.  O&M Concrete Tower Annual Costs - 1st Scenario
    o
    o
    o
    s
    08
    O
       $12,000,000
       $10,000,000
        $8,000,000
$6,000,000
        $4,000,000
        $2,000,000
                                                           y = -6E-05x^ + 63.946X + 90156
                                       y = -5E-05x + 59.527X + 91478
                                                       y = -2E-05x" + 22.306X + 21417
                                                            y = -1 E-05x' + 18.968x + 11676
                                                                                                 8E-06x' + 13.291 x + 13850
                                     50000
                                                  100000               150000
                                                           Flowgpm
200000
250000
          * Standard     " Splash fill      Non-fouling film fill     * Hybrid tower (Plume abatement 32DBT)     • Dry/ wet     + Natural Draft
                                                                                                                           AppA - 67

-------
§316(b) EEA Appendix A for New Facilities
      Detailed Information on Technologies/Development of Unit Costs
                                 Chart 22. O&M Concrete Tower Annual Costs - 2nd Scenario
        $18,000,000
        $16,000,000
        $14,000,000
        $12,000,000
     "K  $10,000,000
     o
     o
                                                            y = -6E-05x" + 90.226X + 90156
                                        y = -5E-05x" + 85.807X + 91478
                                 9E-06x" +40.419x
y = -1 E-05x" + 41.716x + 23371
                             y = -2E-05x" + 48.586X + 21417
                                                                                              y = -8E-06x" + 39.571 x + 13850
                                                                y = -1 E-05x" + 45.248X + 11676
                                                                                                     200000
                                                 250000
            * Standard     ''Splash fill      Non-fouling film fill    * Hybrid tower (Plume abatement 32DBT)     • Dry/ wet    + Natural Draft
AppA - 68

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§316(b) EEA Appendix A for New Facilities
                                                                          Detailed Information on Technologies/Development of Unit Costs
                                    Chart 23. O&M Steel Tower Annual Costs - 1st Scenario
42
i/)
o
        $12,000,000
        $10,000,000
         $8,000,000
         $6,000,000
         $4,000,000
         $2,000,000
                                                                                                    y = -5E-05x" + 53.454X +
                                                               y = -5E-05x' + 61.846x + 87152
                                         y = -5E-05x" + 57.585X + 88466
                                                                                             y = -1 E-05x" + 16.978X + 23269
                                                          = -1 E-Q5y" + 21 696x + 20720
                                                                                                  8E-06x'+ 14.183X+ 13605
                                      50000                100000                150000

                                                                    Flowgpm
                                                                                               200000
250000
            'Standard    "Splash fill      Non-fouling film fill     * Hybrid tower (Plume abatement 32DBT)     *Dry/wet    +Air condenser
                                                                                                                            AppA - 69

-------
§316(b) EEA Appendix A for New Facilities
                                                Detailed Information on Technologies/Development of Unit Costs
                                   Chart 24. O&M Steel Tower Annual Costs - 2nd Scenario
       $18,000,000

       $16,000,000

       $14,000,000

       $12,000,000
    "K  $10,000,000
    o
    o
        $8,000,000

        $6,000,000

        $4,000,000

        $2,000,000
                y = -5E-05x^ + 88.126X + 87152
                         R2 = 0.9998
y = -5E-05x^ + 79.734X + 93301
        R2 = 0.9999
               y = -5E-05x2 + 83.865X + 88466
                       R2 = 0.9999
y = -1 E-05x2 + 47.976X + 20720
                                                                  y = -1 E-05x^ + 43.258X + 23269
                                                                             R2=1
                                          y = -8E-06x^ + 40.463X + 13605
                                                     R2=1	
                                                                                                                             819
                  0                  50000                100000               150000
                                                                   Flow gpm
                                                                      200000
                                       250000
          * Standard      Splash fill      Non-fouling film fill     * Hybrid tower (Plume abatement 32DBT)     • Dry/ wet    + Air condenser
AppA - 70

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§316(b) EEA Appendix A for New Facilities
                                              Detailed Information on Technologies/Development of Unit Costs
                                Chart 25.  O&M FiberglassTower Annual Costs - 1st Scenario
      $9,000,000
   •5) $5,000,000
   o
   O
                                                             y = -3E-05x' + 38.192X + 50729
                                      y = -4E-05x' + 47.895X + 72023
                                                                                           y = -9E-06x' + 12.736X + 18221
                                                                                                   = -7F-DRY' + 11 TRY + 19D4
                                                                 1E-05x' + 18.652x +16870

                                                                       2
                                                                                                        11.425x +10854
                                   50000
                          100000
                                                                 Flow gpm
                             150000
                            200000
      250000
            * Standard
I Splash fill
Non-fouling film fill
* Hybrid tower (Plume abatement 32DBT)
1 Dry/ wet
                                                                                                                        AppA - 71

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§316(b) EEA Appendix A for New Facilities
                                                                          Detailed Information on Technologies/Development of Unit Costs
                                Chart 26. O&M FiberglassTower Annual Costs - 2nd Scenario
•8
o
    08
    O
       $16,000,000
       $14,000,000
       $12,000,000
       $10,000,000
        $8,000,000
        $6,000,000
        $4,000,000
        $2,000,000
                                                         y = -3E-05x^ + 64.472X + 50729
                                     y = -4E-05x^ + 74.175x + 72023
                                                                                                   y =-9E-06x^ + 39.016x +182
                                          y = -1E-05x^ + 44.932X + 16870
                                                                                                 y =-7E-06x'+ 38.04x + 12041
                                                          y = -6E-06x^ + 37.705X + 10854
                                     50000                100000               150000
                                                                   Flowgpm
                                                                                                200000
                                                                        250000
              Standard
                           I Splash fill
Non-fouling film fill        * Hybrid tower (Plume abatement 32DBT)
1 Dry/ wet
AppA - 72

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§316(b) EEA Appendix A for New Facilities
Detailed Information on Technologies/Development of Unit Costs
                                              Chart 27.  Municipal Water Use Costs
        $10,000,000





         $9,000,000





         $8,000,000





         $7,000,000





         $6,000,000

     U)
     O
     o

     I    $5,000,000

     c
     c
     <

         $4,000,000





         $3,000,000





         $2,000,000





         $1,000,000





              $-
                              500       1000       1500       2000      2500


                                                                Flow in gpm
     3000
3500
4000
4500
                                                                                                                             AppA - 73

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§316(b) EEA Appendix A for New Facilities
                            Detailed Information on Technologies/Development of Unit Costs
                                                Chart 28. Gray Water Use  Costs
        $7,000,000
        $6,000,000
        $5,000,000
    to  $4,000,000
    o
    o

    "55

    c

    <  $3,000,000
        $2,000,000
        $1,000,000
             $-
                             500       1000
1500       2000       2500       3000


             Flow in gpm
3500       4000       4500
AppA - 74

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§316(b) EEA Appendix A for New Facilities
                          Detailed Information on Technologies/Development of Unit Costs
        $160,000
        $140,000
                               Chart 29.  Capital Costs of Passive Screens Based on Well Depth
                   y = 0.088xJ -11.406x' + 1406.4x + 20961
                                  20
40
      60
Well Depth Feet
80
100
                        * Screen width 2 feet     • Screen width 5 feet       Screen width 10 feet      Screen width 14 feet
120
                                                                                                                           AppA - 75

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§316(b) EEA Appendix A for New Facilities
                    Detailed Information on Technologies/Development of Unit Costs
                          Chart 30.  Capital Costs of Passive Screens for a Flow Velocity 0.5 ft/sec
        $160,000
        $140,000
                                                                      0002X2 + 1.5923x + 47041
                              3E-08x3 - O.OOOSx2 + 12.535x+ 11263
                                     5000
10000
15000
20000
                                                                  Flow in gpm
                              Screen width 2 ft Water depth 8-65 ft
                              Screen width 10 ft water depth 8-20 ft
                • Screen width 5 ft water depth 8-30 ft
                x Screen width 14 ft water depth 8 ft
25000
AppA - 76

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§316(b) EEA Appendix A for New Facilities
                    Detailed Information on Technologies/Development of Unit Costs
                           Chart 31. Capital Costs of Passive Screens for a Flow Velocity 1 ft/sec
       $160,000
     o
     o
    O
     re  $80,000
     Q.
     ra
    O
        $60,000
        $40,000
        $20,000
             $0
                  V = 2E-12x4 -1E-07X3 + 0.0029x2 - 18.885x + 71766
                                     R2 =
                          5000       10000      15000
20000      25000      30000


        Flow in gpm
                           Screen width 2 ft Water depth 8-65 ft
                           Screen width 10 ft water depth 8-20 ft
             11  Screen wjdth 5 ft water depth 8-30 ft
             •  Screen width 14 ft water depth 8 ft
35000      40000      45000     50000
                                                                                                                           AppA - 77

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§316(b) EEA Appendix A for New Facilities
                                                        Detailed Information on Technologies/Development of Unit Costs
                                          Chart 32. Velocity Caps Total Capital Costs
        $100,000

         $90,000

         $80,000

         $70,000

    .£    $60,000
    flow>70000 (23 VC)
                                     • 35000>flow>18000 (9 VC)
                                     *157000gpm(35VC)
                                 70000>flow>35000 (15 VC)
                                 204000 gpm (46 VC)
70
AppA - 78

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§316(b) EEA Appendix A for New Facilities
                                                                      Detailed Information on Technologies/Development of Unit Costs
                                Chart 33. Concrete Fittings for Intake Flow Velocity Reduction
        $80,000
        $70,000
        $60,000
    -S   $50,000
    ra



    In
    LU
    +j
    I/)
    o
    O

    "5
    +j
    'o.
    ra
    O
$40,000
$30,000
        $20,000
        $10,000
           $-
                                                                         y = -2E-05x2 + 4.0765X -148706
                                    y = -4E-06x' + 0.5395X + 2719.6
                                20000
                                          40000             60000


                                                      Design Flow(gpm)
80000
100000
120000
                                                                                                                           AppA - 79

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§316(b) EEA Appendix A for New Facilities
                                 Detailed Information on Technologies/Development of Unit Costs
                                   Chart 34. Steel Fittings for Intake Flow Velocity Reduction
        $180,000
        $160,000
        $140,000
        $120,000
     
     0)

     15



     ^  $100,000
     LU
     +j
     I/)
     o


     -   $80,000
     Co
     +j

     '5.
     to
     O

         $60,000
         $40,000
         $20,000
            $-
                                                              y = 5E-08x2 + 0.5222X + 1250.3


                                                                      R2 = 0.9998
                               50000
100000
150000         200000


  Design Flow(gpm)
250000
300000
350000
AppA - 80

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§316(b) EEA Appendix A for New Facilities
                             Detailed Information on Technologies/Development of Unit Costs
               Chart 35.  Travel Screens Capital Cost Without Fish Handling Features Flow Velocity 0.5ft/sec
       800000
       700000
       600000
       500000
    o
    -   400000
    a.
    ra
    O
       300000
       200000
       100000
                                                       v = 4E-14x4 - 8E-09x3 + 0.0006x2 - 6.4565x + 222007
                                   y = 1E-13x4 - 2E-08x3 + 0.0012x2 -15.939x + 2
                                                                                                       R2 =
                                              y = 1E-12x4 - 9E-08x3 + 0.0024x2 - 14.878x + 120042
                                                                 R2 = 1
                             y = 1 E-11x4 - 4E-07x3 + 0.0036x2 + 0.8119x + 44000
                                                R2 = 1
                                                           4636
                              20000
40000
  60000
Flowgpm
80000
100000
120000
                        * width 2 feet
 1 width 5 feet
        width 10 feet
            * width 14 feet
                                                                                                                         AppA - 81

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§316(b) EEA Appendix A for New Facilities
                             Detailed Information on Technologies/Development of Unit Costs
                 Chart 36. Travel Screens Capital Cost With Fish Handling Features Flow Velocity 0.5ft/sec
        1200000
        1000000
        200000
                                                                y = 6E-14x4 - 1E-08x3 + 0.001 x2 -15.915x + 353385
                                   y = 2E-13x4 - 3E-08x3 + 0.0017x2 - 22.739x
                                                      R2 = 1
                                                y = 2E-12x4 - 2E-07x3 + 0.004x2 - 27.772x + 187917
                                                                   R2 = 1
                              y = 2E-11 x4 - 6E-07x3 + 0.0053x2 + 1.0283x + 71506
                                                 R2 = 1
                                                                                                                          2S3474
                               20000
40000
  60000
Flowgpm
                                    80000
100000
                          * width 2 feet
"width 5 feet
                         width 10 feet
                                * width 14 feet
120000
AppA - 82

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§316(b) EEA Appendix A for New Facilities
                             Detailed Information on Technologies/Development of Unit Costs
                Chart 37. Travel Screens Capital Cost Without Fish Handling Features Flow Velocity 1 ft/sec
       800000
       700000
       600000
                                                          y = 3E-15x4 - 1 E-09x3 + 0.0002x2 - 4.6948x + 248170
                                  y = 1E-14x"-4E-09x
                                                                                                            "- 11.291x + 251
                                             y = 7E-14x4 - 1 E-08x3 + 0.0006x2 - 6.9771x + 117069
                           y = 4E-12x4 - 2E-07x3 + 0.0048x2 - 31.475x + 119611
                                 50000                 100000                150000
                                                                Flow gpm
                                                  200000
                                               250000
                        * width 2 feet
l	'width 5 feet
width 10 feet
* width 14 feet
                                                                                                                          AppA - 83

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§316(b) EEA Appendix A for New Facilities
                              Detailed Information on Technologies/Development of Unit Costs
                  Chart 38.  Travel Screens Capital Cost With Fish Handling Features Flow Velocity 1 ft/sec
       1200000
       1000000
        800000
        400000
        200000
                                                          y = 4E-15x4 - 2E-09x3 + O.OOOSx2 - 9.9356x + 387337
                                                                                   y = 2E-14x4 - 5E-09x3 + O.OOOSx2 - 15.877x + 34^095
                                                                                                      R2 = 1
                                           \
y = 1E-13x4-2E-08x3 + 0.001x2-13.641x + 187644
                   R2 = 1
                            y = 5E-12x4 - 3E-07x3 + 0.0072x2 - 47.584x + 185604
                                               R2 = 1
                                   50000                100000               150000
                                                                 Flowgpm
                                                    200000
                           width 2 feet
  "width 5 feet
                                              250000
width 10 feet
* width 14 feet
AppA - 84

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§316(b) EEA Appendix A for New Facilities
                    Detailed Information on Technologies/Development of Unit Costs
                                            Chart 39.  Fish Spray Pumps Capital Costs
         $10,000.00


          $9,000.00

          $8,000.00


          $7,000.00
     to    $6,000.00
     _c
     in
     E    $5,000.00
     Q.
     w    $4,000.00
     i/)
     o
     o
          $3,000.00
          $2,000.00
          $1,000.00
              $-
= 2E-06x3 - 0.0035X2 + 3.8696x + 2446.8
                           y = -0.2394x^ + 47.9x + 364.04
                                   p2 = n gem?    	
                                        500
  1000                 1500
          FlowGPM
2000
2500
                                                              * Spray pumps flow in GPM
                                                                                                                            AppA - 85

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§316(b) EEA Appendix A for New Facilities
                                                           Detailed Information on Technologies/Development of Unit Costs
    o
    o
    O
    s
    08
    O
$40,000




$35,000




$30,000




$25,000




$20,000




$15,000




$10,000




 $5,000




     $0
                  Chart 40.  O&M Cost for Traveling Screens Without Fish Handling Features Flow Velocity

                                                             0.5ft/sec
y = -7E-06x^ + 0.6204X + 4045.7

         R2 = 0.9956
                                                                                                        R2 =
                                                                                       = 2E-15x4 - 6E-1 Ox3 + 4E-Q5x2 - 0 8552x + 18106
                                         y = 9E-11x3 - 1E-05x2 + 0.8216x + 1319.5
                          = -2E-05x^ + 1. 01 21 x + 2392.4
                                 R = 0.9965
                              20000
                              40000
                                                            60000

                                                         Flow in gpm
80000
100000
120000
                 1 Screen width 2 feet
                           Screen width 5 feet
                                                                  1 Screen width 10 feet
                * Screen width 14 feet
AppA - 86

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§316(b) EEA Appendix A for New Facilities
                               Detailed Information on Technologies/Development of Unit Costs
   o
      $60,000
      $50,000
      $40,000
      $30,000
      $20,000
      $10,000
           $0
                   Chart 41.  O&M Cost for Traveling Screens With Fish Handling Features Flow Velocity
                                                            0.5ft/sec
                                            y = 4E-15x4 - 9E-1 Ox3 + 7E-05x2 -1.5031x + 26977
                                                                y = -2E-06x2 + 0.5703X + 5864.4
                                                                         FT = 0.9907
                                        y = -1 E-05x2 + 0.8563X + 5686.3
                                                R2 = 0.9943
                               y =-3E-05x2 + 1.6179x +3739.1
                                       R2 = 0.9943
                              20000
  40000
   60000
Flow in gpm
80000
                     1 Screen Width 2 ft
A Screen Width 5 ft
         * Screen Width 10 ft
100000
120000
               X Screen Width 14 ft
                                                                                                                          AppA - 87

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§316(b) EEA Appendix A for New Facilities
                                                            Detailed Information on Technologies/Development of Unit Costs
                 Chart 42. O&M Cost for Traveling Screens Without Fish Handling Features Flow Velocity 1
                                                              ft/sec
•8
o
O
s
08
o
       $40,000


       $35,000


       $30,000


       $25,000


       $20,000


       $15,000


       $10,000


        $5,000


           $0
y = -2E-06x2 + 0.3312x + 3621.1
         R2 = 0.9963
                                                               y = 2E-16x4 - 8E-11x3 + 1E-05x2 - 0.4829x + 18975
                                                                                  R2 = 1
                                       y = 1E-11x3 - 3E-06x2 + 0.4047x + 1359.4
                                                      R2 = 1
       y = -4E-06x  + 0.5035X + 2334
               R2 = 0.9853
              0                   50000                100000                150000
                                                                Flow in gpm
                                                                                 200000
                                                                                                                     250000
                  1 Screen width 2 feet
                            Screen width 5 feet
                                                                    * Screen width 10 feet
* Screen width 14 feet
AppA - 88

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§316(b) EEA Appendix A for New Facilities
                      Detailed Information on Technologies/Development of Unit Costs
              Chart 43. O&M Cost for Traveling Screens With Fish Handling Features Flow Velocity 1 ft/sec
      $60,000
      $50,000
      $40,000
   o  $30,000
   08
   O
      $20,000
      $10,000
          $0
                                                         y = 3E-16x4 - 1E-10x3 + 2E-05x2 - 0.8264x + 28092
                                                             y = -6E-07x + 0.2895X + 5705.3
                                                                      R =0.9915
                                       y = -3E-06x^ + 0.4585X + 5080.7
                                                R2 = 0.9954
                             y = -8E-06x2 + 0.806x + 3646.7
                                      R2 = 0.982
                                 50000
100000                150000
        Flow in gpm
200000
250000
                     I Screen Width 2 ft          * Screen Width 5 ft           * Screen Width 10 ft          * Screen Width 14 ft
                                                                                                                        AppA - 89

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§316(b) EEA Appendix A for New Facilities
                            Detailed Information on Technologies/Development of Unit Costs
                     Chart 44. Capital Cost of Fish Handling Equipment Screen Flow Velocity 0.5 ft/sec
       $400,000
       $350,000
       $300,000
       $250,000
     o
    o


    •=  $200,000
    .£
    '5.
    ra
    O

       $150,000
       $100,000
        $50,000
             $0
                                                                y = 3E-14x4 - 7E-09x3 + O.OOOSx2 -11.35x + 157654
                     y = 9E-13x4 - 7E-08x3 + 0.0019x2 - 15.473x + 81450

                                        R2 = 1
                                  y = 6E-14x4 - 1E-08x3 + 0.0006x2 - 8.1597x + 94606
                             y = 6E-12x4 - 2E-07x3 + 0.002x2 + 0.2597x + 33008

                                                R2 = 1
                               20000
40000
  60000


Flowgpm
80000
100000
120000
                           width 2 feet
11 width 5 feet
         width 10 feet
            * width 14 feet
AppA - 90

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§316(b) EEA Appendix A for New Facilities
                              Detailed Information on Technologies/Development of Unit Costs
                           Chart 45. O&M Cost for Fish Handling Features Flow Velocity 0.5ft/sec
       $16,000
       $14,000
    o
    s
    08
    o
           $0
                                            y = 1E-15x4 - 3E-1 Ox3 + 3E-05x2 - 0.6479x + 8871.4
                                         y = -2E-06x  + 0.2359X + 1640.6
                                                  R2 = 0 9869
                                  y = -2E-05x^ + 0.6059X + 1346.7
                                          R2 = 0.9866
                              20000
 40000
   60000
Flow in gpm
80000
                      	I Screen Width 2 ft
A Screen Width 5 ft
          * Screen Width 10 ft
100000
120000
                * Screen Width 14 ft
                                                                                                                          AppA - 91

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§316(b) EEA Appendix B for New Facilities                                      Unit Cost Analyses
                                  APPENDIX B




                             UNIT COST ANALYSES
                                                                          AppB -1

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§316(b) EEA Appendix B for New Facilities                                                     Unit Cost Analyses
                                        [This page intentionally left blank.]
AppB -.

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§316(b) EEA Appendix B for New Facilities                                                      Unit Cost Analyses


                                                APPENDIX  B


                                         UNIT COST ANALYSES

EPA developed unit cost estimates for the new steam electric generators and new manufacturers expected to begin operation
during the next 20 years.  For a detailed discussion on how the new generators and the new manufacturing SIC codes were
selected please refer to Chapter 5 of this document The characteristics of the new facilities were determined for the new
steam electric database from the information provided in the NewGen database or for the new manufacturers by analyzing
similar SIC code facility data from EPA Screener Survey database. The following provides a detailed discussion on how the
characteristics of the projected manufacturers were determined and how unit costs were assigned.

To determine if these facilities must take compliance actions to meet the proposed requirements, EPA needed to estimate
the likely characteristics of these new facilities. Important characteristics in assessing facility compliance with New Facility
Rule requirements and determining estimated compliance costs include: source water body type, intake flow volume, use of
once-through or recirculating cooling systems, intake location (e.g., shoreline, offshore submerged), and in-place intake
control technologies.

In order to determine the characteristics of the new manufacturing facilities that are projected to come online over the next
20 years, EPA performed an analysis of the Industry Screener Questionnaire: Phase I Cooling Water Intake Structures. In
1999, EPA administered a screener questionnaire to manufacturers and non-utilities. The screener questionnaire was
intended to identify facilities that are subject to standards under Sections 301 or 306 and are point source dischargers under
a number of industrial categories to identify the facilities that operate cooling water intake structures in surface waters and
are therefore subject to Section 316(b). The survey requests information on whether the facility is a point source discharger;
directly withdraws cooling water from surface water sources; the water body types upon which cooling water is being
withdrawn; design intake flow for a typical operational year; type of cooling water systems in use; configuration of cooling
water intake structures; technology types being used at cooling water intake structures; gross annual electricity generated;
annual sales of electricity ownership type; number of full-time equivalent employees; and annual sales revenue.

Using the Screener data for a given SIC code, EPA determined the projected facility's characteristics such as originating
surface water sources, flow rates, profile of cooling water systems, configuration of intake structures, and control
technologies by analyzing the trends of an industry to have particular characteristics.  Since facilities with the  same SIC
code generally have similar operations and generate similar products, EPA assumed that the characteristics of new facilities
in a given SIC code will be the same as the characteristics of existing facilities in that same SIC code. EPA also considered
current trends in facilities that have come online in more recent years. For example, a review of available data for facilities
starting up in the last 10 years indicates that newer facilities are much more likely to have at least partially recirculating
cooling systems than older facilities.  In situations where a particular trend was not as definable, EPA assumed the national
trends  such as recirculating systems, use of screens, etc., would be the projected characteristic.

EPA evaluated the characteristics listed above for all the existing facilities in each SIC code, and used those characteristics
to project the characteristics for the one or more projected new facilities.  If only one new facility was projected for a given
SIC code, EPA generally used the following conventions:

    Source water type: most common water body among the existing facilities;
    Flow1:  weighted median2 flow either by source water type, cooling system type or all flow for the SIC code;
    Intake location: most common intake location among existing facilities;
    'Several flow values are presented in the tables. They include: Flow in gallons per day (GPD) (from screener survey
data), Flow in gallons per minute (gpm), Total Flow Requirement (the total water for a facility required to circulate through
the cooling systems), Flow Needed for Recirculating Cooling Towers (this is the volume of water required to recirculate
through the cooling towers used to cost the towers), and Flow Used for Costing Activities Other Than Cooling Tower (this
is the volume of water through the intake structure used to cost intake technologies).

    2The Screener Survey was sent to a sample of the manufacturing facilities that may be impacted by the rule. A
statistical weight was applied to the responses to represent the impacted universe.

                                                                                                         AppB - 3

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§316(b) EEA Appendix B for New Facilities                                                       Unit Cost Analyses


    Control technology type: most common technologies in use at existing facilities; and
    Cooling system type: most common type, with a bias toward recirculating or combined recirculating and once-through
    when the type of system among existing facilities was very mixed.

When more than one new facility was projected for a given SIC code, EPA generally split the existing facilities by
waterbody type or by recirculating versus once-through and determined one new projected facility's characteristics based on
one set of existing facilities and another new projected facility's characteristics based on the other set of existing facilities.
Based on trends, EPA used a bias toward certain characteristics such as recirculating cooling systems, offshore intakes, and
passive  screens.  Since the trend for new facilities is toward the use of cooling towers, flows used may be lower than those
for the existing facilities in some cases.

EPA analyzed the characteristic data to assess with which of the New Source Rule's regulatory framework criteria a new
facility would already be complying (current compliance assumptions) and what changes would need to be made to comply
with all the criteria for their water body (projected compliance actions).  Once the compliance actions were determined,
EPA developed capital and operation and maintenance (O&M) unit cost estimates for each projected facility. For costing
purposes,  compliance actions were  assumed to be the addition of a technology or a construction modification. The
following provides the list of costed technologies or construction actions:

        Intake fanning or widening for velocity reduction
        Canal dredging
    •   Pipe extensions
        Traveling screen with fish handling devices
        Fish handling equipment
        Passive screens
        Velocity caps
        Cooling Towers

EPA developed cost estimates for three regulatory scenarios: the preferred regulatory framework option, the one standard
option, and the dry cooling option.  Refer to Chapter 10  of this document for the estimated costs for dry cooling for the
other generating facilities.  EPA assumed that since manufacturers reused much of their cooling water in their process they
would not be able to  switch to dry cooling and, therefore, did not develop cost estimates for that scenario. Cost estimates for
each scenario are in separate tables provided at the end of this appendix. The costing scenarios are as follows:

        Table 1 - Unit costs for new steam electric generators expected to be built during 2001  to 2010. The cost was
        estimated based on the regulatory framework.

        Table 2 - Unit costs for new steam electric generators expected to be built during 2001  to 2010. The cost was
        estimated based on the one standard option (standards for estuaries).

        Table 3 - Unit costs for projected new manufacturers by SIC code projected to build new facilities during 2001 to
        2010. The cost was estimated based on the regulatory framework.  (To determine the costs for the second ten
        years, EPA doubled these costs.)

        Table 4 - Unit costs for projected new manufacturers by SIC code projected to build new facilities during 2001 to
        2010. The cost was estimated based on the one standard  option (standards for estuaries).

        Table 5 - Unit costs for manufacturing facilities in industries that are not projected to build new facilities during
        2001 to 2010 but if such a facility were to be built the compliance costs were estimated. The cost was estimated
        based on the regulatory framework.

        Table 6 - Unit costs for large coal-fired or nuclear plants.  EPA does not expect such facilities to be built. The cost
        was estimated based on the regulatory framework.

        Table 7 - Unit costs for new coal steam plants expected to be built during 2011 to 2020. The cost was estimated
        based on the regulatory framework.
AppB - 4

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§316(b) EEA Appendix B for New Facilities                                                     Unit Cost Analyses


        Table 8 - Unit costs for new coal steam plants expected to be built during 2011 to 2020. The cost was estimated
        based on the one standard option (standards for estuaries).

        Table 9 - Unit costs for new combined cycle plants expected to be built during 2011 to 2020. The cost was
        estimated based on the regulatory framework.

        Table 10 - Unit costs for new combined cycle plants expected to be built during 2011 to 2020.  The cost was
        estimated based on the one standard option (standards for estuaries).

        Table 11 - Unit costs for both the coal-fired and combined cycle generating plants expected to be built during 2011
        to 2020. The cost estimate was performed to determine the cost if all the facilities used dry cooling.

The following tables provide the unit costs for the new projected facilities for the compliance scenarios discussed above.
                                                                                                       AppB - 5

-------
§316(b) EEA Appendix B for New Facilities                                                     Unit Cost Analyses
                                        [This page intentionally left blank.]
AppB - 6

-------
316(b) EE/A Appendix B for New Facilities



                           Table 1. Projected New Generator Characteristics and Needed Compliance Action and Costs
Unit Cost Analyses
New Gen
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Water Body
Nontidal River
Nontidal River
Lake, Pond or
Res.
Tidal River
Nontidal River
Nontidal River
Lake, Pond or
Res.
Flow
GPD
3,600,000
19,400,000
10,000,000
6,500,000
10,400,000
3,500,000
8,800,000
Total Water
Requirement
GPD
129,000,000
24,000,000
23,000,000
59,000,000
43,000,000
67,000,000
69,000,000
Configuration of Facility's CWIS
Submergec Surface Submerged
Canal Shoreline Shoreline Bay-cove Offshore Other
X
X
X X
X

X
X
Technology Types Being Used
Fish Passive Fish Intake Other
Diversion Intakes Returns Screens Tech.
X
X
X
X X
X
X
X
                    0= Not applicable for this facility under these compliance scenarios
                                                                                                                                          AppB-1-1

-------
316(b) EE/A Appendix B for New Facilities



                         Table 1. Projected New Generator Characteristics and Needed Compliance Action and Costs
Unit Cost Analyses
New Gen
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Profile of Facility's Cooling Water System
Recirc
Once Once thru Once thru w/ Recirc w/
Through w/ ponds w/ towers Recirc. ponds towers Other
X
X
X
X
X
X
X
Current Compliance Assumptions
Infiltration gallery under river bed: Meets
the flow, velocity, and recirc criteria
Meets the flow, velocity, and recirc
criteria
Meets the flow, velocity, and recirc
criteria
Meets the flow, velocity, and recirc
criteria
Meets the flow, velocity, and recirc
criteria; assume in the littoral zone;
assume Johnson screens maximize the
survival of impinged and entrained
Raney wells under river bed: Meets the
flow, velocity, and recirc criteria
Meets the flow, velocity, and recirc
criteria
Projected Compliance
action(s)
None
None
Dredge canal
None
None
None
Extend the pipe
Flow Flow
needed Needed for
for activities
Recirc Other Than
Cooling Cooling
Flow in Tower Tower
gpm gpm gpm
3,000 0 0
13,000 0 0
7,000 0 0
5,000 0 0
7,000 0 0
2,000 0 0
6,000 0 0
                                                                                                                                AppB-1-2

-------
316(b) EE/A Appendix B for New Facilities



                         Table 1. Projected New Generator Characteristics and Needed Compliance Action and Costs
Unit Cost Analyses







New Gen
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Capital Costs
Velocity
Reduction
by Intake Fish Total
Fanning or Handling Passive Pipe Canal Cooling Techn.
Widening Equipme Screen Restoration Extension Velocity Dredging Tower Capital
Cost nt Cost 0.5 ft/Sec Cost Cost Cap Cost Cost Cost Cost
$ $ $ $ $ $ $ $$
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$162,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$236,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$236,000
$0
$0
$0
$162,000
Annual O&M Costs

Annual
O&M 0&M
Cost for O&M Cost Costs for
cooling for Fish
towers Restoration Handling
$ $ $
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Cost



Total
Estimated
Annual Cost
$
$0
$0
$0
$0
$0
$0
$0



Total
Estimated
Capital Costs
$
$0
$0
$236,000
$0
$0
$0
$162,000
                                                                                                                                AppB-1-3

-------
316(b) EEA Appendix B for New Facilities                                                                                Unit Cost Analyses



             Table 2. Projected New Generator Characteristics and Needed Compliance Action and Cost for Uniform Standards



New Gen
GenA
GenB

GenC
GenD
GenE
GenF

GenG



Water Body
Nontidal River
Nontidal River
Lake, Pond or
Res.
Tidal River
Nontidal River
Nontidal River
Lake, Pond or
Res.


Flow
GPD
3,600,000
19,400,000

10,000,000
6,500,000
10,400,000
3,500,000

8,800,000

Total Water
Requirement
GPD
129,000,000
24,000,000

23,000,000
59,000,000
43,000,000
67,000,000

69,000,000
Configuration of Facility's CWIS

Submerge! Surface Submerged
Canal Shoreline Shoreline Bay-cove Offshore Other
X
X

X X
X

X

X
Technology Types Being Used

Fish Passive Fish Intake Other
Diversion Intakes Returns Screens Tech.
X
X

X
X X
X
X

X
                0= Not applicable for this facility under these compliance scenarios
                                                                                                                                 AppB-2-1

-------
316(b) EEA Appendix B for New Facilities                                                                           Unit Cost Analyses



            Table 2. Projected New Generator Characteristics and Needed Compliance Action and Cost for Uniform Standards
New Gen
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Profile of Facility's Cooling Water System
Once Once thru Once thru Recirc w/ Recirc w/
Through w/ ponds w/ towers Recirc. ponds towers Other
X
X
X
X
X
X
X
Current Compliance
Assumptions
Infiltration gallery under river bed:
Meets the flow, velocity, and recirc
criteria
Meets the flow, velocity, and recirc
criteria
Meets the flow, velocity, and recirc
criteria
Meets the flow, velocity, and
recirc.criteria
criteria; assume in the littoral zone;
assume Johnson screens maximize
the survival of impinged and
entrained organisms
Raney wells under river bed: Meets
the flow, velocity, and recirc criteria
Meets the flow, velocity, and recirc
criteria
Projected Complianc
action(s)
None
None
Dredge canal
None
None
None
Extend the pipe
Flow
Flow Needed for
needed for activities
Recirc Other Than
Cooling Cooling
Flow in Tower Tower
gpm gpm gpm
3,000 0 0
13,000 0 0
7,000 0 0
5,000 0 0
7,000 0 0
2,000 0 0
6,000 0 0
                                                                                                                        AppB-2-2

-------
316(b) EEA Appendix B for New Facilities                                                                           Unit Cost Analyses



            Table 2. Projected New Generator Characteristics and Needed Compliance Action and Cost for Uniform Standards







New Gen
GenA
GenB
GenC
GenD
GenE
GenF
GenG
Capital Costs
Velocity
Reduction
by Intake Fish Total
Fanning or Handling Passive Pipe Canal Cooling Techn.
Widening Equipme Screen Restoration Extension Velocity Dredging Tower Capital
Cost nt Cost 0.5 ft/Sec Cost Cost Cap Cost Cost Cost Cost

$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0 $0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$162,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$236,000
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$236,000
$0
$0
$0
$162,000
Annual O&M Costs


0&M Annual
Cost for O&M Cost O&M Costs
cooling for for Fish
towers Restoration Handling
$ M>
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
Total Cost



Total
Estimated
Annual Cost
$
$0
$0
$0
$0
$0
$0
$0




Total Estimated
Capital Costs
$
$0
$0
$236,000
$0
$0
$0
$162,000
                                                                                                                        AppB-2-3

-------
316(b) EEA Appendix B for New Facilities                                                                                                  Unit Cost Analyses

                       Table 3.  Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                         Primary SIC
                                      Water Body
                                                      Flew
                                                      GPD
                             Total Water
                             Requirement
                             GPD
                                                                                                Configuration of Facility's CWIS
                              Submerged    Surface             Submerged
                      Canal    Shoreline	Shoreline   Bay-cove  Offshore	Other
                         new 2812-1     Nontidal River
                                      Nontidal River
                                      Lake, Pond or Res.
                         new 2841-1     Lake, Pond or Res.      7,180,000     7,180,000
                         new 2869-2


                         new 2869-3


                         new 2869-4
Nontidal River




Nontidal River

Nontidal River


Nontidal River
I2,qqq,qqq

 2,400,000


 2,400,000
I2,qqq,qqq

16,000,000
                                                                                                                                                           AppB-3-1

-------
316(b) EEA Appendix B for New Facilities                                                                                              Unit Cost Analyses

                      Table 3.  Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                           Primary SIC
                                              Technology Types Being Used
                                       Fish      Passive  Fish     Intake    Other
                                       Diversion  Intakes   Returns   Screens  Tech.
                                                                                         Profile of Facility's Cooling Water System
                                                                             Once    Once thru Once thru
                                                                                                             Recirc w/ Recirc w/
                                                                             Through  w/ ponds w/ towers  Recirc. ponds   towers   Other
                           new 2869-2


                           new 2869-3


                           new 2869-4
                                                                                                                                                      AppB-3-2

-------
316(b) EEA Appendix B for New Facilities
                                                                                                                            Unit Cost Analyses
                          Table 3.  Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                            Primary SIC
                            code
                                           Current Compliance Assumptions
                                                                                     Projected Compliance Actions
                                                                                      Flow in
                                                                                      gpm
      Flow needed Flow Needed
      for          for Activities
      Recirculating Other Than
      Cooling      Cooling
      Tower       Tower
      gpm	gpm	
                                           Trend for recirculating & submerged offshore;
                                           Assume meets intake flow criteria & 100%
                                           recirc criteria
                                           Assume meets intake flow criteria & velocity
                                           criteria; assume cannot extend 50 meters
                                           beyond littoral zone
                                           Assume meets intake flow criteria & velocity
                                           criteria, & maximizes survival of impinged &
                                           minimizes entrainment because of passive
                                           screens; After switching to 100% recirc, facility
                                           flow is less than 2 MGD so no other action is
                                           •eguired
                                           Trend for submerged & recirculating; Assume
                                           meets intake flow volume criteria after switching
                                           :o 100% recirculating system
                                           Enlarge intake pipe opening to achieve 0.5 fps
                                           velocity

                                           Install cooling towers to make 100% recirc; Add
                                           fish baskets to maximize survival (for remaining
                                           flow)
                                           Install cooling towers to make 100% recirc
                                           Install cooling towers to make 100% recirc;
                                           Install passive screens to achieve 0.5 fps
                                           velocity and maximize survival of impinged &
                                           minimize entrainment
                                                                                                                                                            5,400
                                           Trend is for recirculating 8- submerged; Assume
                                           meets intake flow criteria 8- velocity criteria
                                                                                     Extend pipe to be 50 meters outside littoral zone
                                                                                                                                                           _L§00

                                                                                                                                                            2,800
Assume does not alter natural stratification after
Dipe extension
                                           Extend pipe to be 50 meters outside littoral zone
                            new 2869-2


                            new 2869-3


                            new 2869-4
                                           Trend is for recirculating; Assume meets intake
                                           flow criteria
                                           Install passive screens to achieve 0.5 fps
                                            elocity and maximize survival of impinged &
                                           minimize entrainment
                                           Trend for recirculating; Assume meets intake
                                           flow criteria, velocity criteria, 8-100% recirc
                                           criteria; Assume maximizes survival &
                                           minimizes impingement because of passive
                                           screens and fish returns
                                                                                     None
                                           Trend for recirculating; Assume meets intake
                                           flow criteria. Assume 50 meters outside littoral
                                           zone.
                                                                                     None
Intake flow criteria not met, so switch to
recirculating and then since flow is less than 2
MGD, no other action is required
Assume none of the criteria met.After switching
to 100% recirc, facility flow is less than 2 MGD
so no other action is required

Trend for recirculating; Assume meets intake
 low criteria, velocity criteria (passive screens)
81 50 meters outside littoral zone
Once through only (based on 10 facilities);
Assume meets intake flow criteria, velocity
criteria (passive screen); After switching to
100% recirc, flow is less than 2 MGD so no
other action is requried
Once through only (based on 10 facilities);
Assume meets intake flow criteria, velocity
criteria (passive screen); After switching to
100% recirc, flow is less than 2 MGD so no
other action is requried
Recirc only (based on data for 7 facilities);
Assume meets intake flow 8: recirc criteria
Recirc only (based on data for 7 facilities);
Assume meets intake flow 8: recirc criteria
Install cooling tower to make 100% recirc


Install cooling tower for 100% recirc.



None


Install cooling tower to make 100% recirc




Install cooling tower to make 100% recirc




Install velocity caps to meet velocity criteria

Install velocity caps to meet velocity criteria
                                                                                                                                   8,300        8,300       1,200
8,300


1,700


1,700
1,200


1,700


1,700
                                           Recirc only (based on data for 7 facilities);
                                           Assume meets intake flow 8. recirc criteria
                                                                                     Install velocity caps to meet velocity criteria
                                                                                                                                                           _LZ22

                                                                                                                                                            7,400
Recirc 8- once thru (based on 3 facilities);
assume meets velocity criteria
                                           Extend pipe to be 50 meters outside littoral zone
                                                                                                                                  31,300       28,200
                                           Recirc 8- once thru (based on 3 facilities);
                                           assume meets velocity criteria
                                                                                     Extend pipe to be 50 meters outside littoral zone
                                                                                                                                  31,300       28,200
                                                                                                                                                            7,400
                                                                                                                                                                                    AppB-3-3

-------
316(b) EEA Appendix B for New Facilities                                                                                                Unit Cost Analyses

                      Table 3. Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                          Primary SIC
                          code
                                                                                 Capital Costs
                                      Velocity
                                      Reduction by  Fish
                                      Intake Fanning Handling    Passive                                    Canal
                                      or Widening   Equipment  Screen 0.5 Restoration  Pipe Extension  Velocity    Dredging                 Total Techn.
                                      Cost         Cost       ft/Sec    Cost       Cost          Cap Cost   Cost     Cooling Tower Cost Capital Cost
                                                                                                                     $320,0001   $320,000
                                                                                                                    $1,452,000  $1,512,000
                                                                                                                          $0   $300,000
                                                                                                                          $0    $47,000
                                                                                                                          $o    $21,000
                                                                                                                          $o    $21,000
                                                                                                                          $0   $400,000
                                                                                                                                                         AppB-3-4

-------
316(b) EEA Appendix B for New Facilities                                                                                          Unit Cost Analyses

                     Table 3. Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                                        Primary SIC
                                        code
                                                              Annual O&M Costs
                                                                          Annual O&M
                                                   O&M Cost for  O&M Cost for Costs for Fish
                                                   cooling towers  Restoration   Handling
Total
Estimated
Annual Cost
Total Estimated
Capital Costs
$	
                                                       _$157,000|

                                                       	$o|


                                                             $o
                                                                                     $0    $102,000
                                                                                                                                               AppB-3-5

-------
316(b) EEA Appendix B for New Facilities
                                                                                                    Unit Cost Analyses
                         Table 3.  Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                            Primary SIC
                            code
Flew
GPD
Total Water
Requirement
GPD
         Submerged     Surface
Canal    Shoreline      Shoreline
                                                                                                            Configuration of Facility's CWIS
                                                                                                                                    Submerged
                                          Nontidal River
                                                               12,000,000    80,000,000
new 3312-1
new 3312-2
new 3312-3
Tidal River
Nontidal River
Lake, Pond or Res.
31,500,000
16,700,000
76,000,000
49,360,500
111,333,333
119,092,000
                                          0= Not applicable for this facility under these compliance scenarios
                                          ^^^^^^^^^^^|  Contains Confidential Business Information
                                          Notes/Assumptions for Facility Characteristics and Compliance Determination:
                                          1) Facility with a passive screen is assumed to meet the 0.5 fps velocity criteria
                                          2)  Location:  Facility with a shoreline, canal, or bay/cove intake is assumed to be
                                          in the littoral zone; Facility with an offshore intake is assumed to be less than 50
                                          meters outside the littoral zone. As noted in the new source document, about
                                          85% of the units in the EIA-767 database likely to have intakes have them less
                                          than 125 meters from shore, with a median distance of about 17 meters
                                          3) Flow:  Comments on flow are imbedded in the cells of the spreadsheet and can
                                          be viewed electronically; Since the trend for new facilities is toward the use of
                                          cooling towers, flows used may be lower than those for the existing facilities in
                                          some cases.  All facilities that intake less than 2MGD were assumed to intake
                                          <1 % of the source waterbody flow and thus are exempt.
                                          4) All facilities assumed to have one intake, which seems reasonable for chemical
                                          and metals manufacturers since even most utilities have 1 or 2 intakes (verify) and
                                          typically use much higher flows.
                                          Costing Assumptions:
                                          5) If a facility is once through only and is projected to switch to a 100%
                                          recirculating system, the flow used for costing the cooling tower is 15% of the
                                          original flow since the flow will be reduced in the new system.
                                          6) If a facility starts out as a combined once through and recirculating system, the
                                          facility is assumed to have 10% of the initial flow attributed to recirculating and
                                          90% to the once through part of the system. The relative  portions of the total flow
                                          are  used for costing compliance actions.
                                                                                                                                                                             AppB-3-6

-------
316(b) EEA Appendix B for New Facilities                                                                                            Unit Cost Analyses

                     Table 3.  Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                          Primary SIC
                          code
                                             Technology Types Being Used
Fish     Passive   Fish     Intake    Other
Diversion  Intakes   Returns   Screens   Tech.
                                                                                      Profile of Facility's Cooling Water System
                                                                           Once     Once thru  Once thru        Redrew/ Redrew/
                                                                                                                                                 AppB-3-7

-------
316(b) EEA Appendix B for  New Facilities
                                                                                                                          Unit Cost Analyses
                          Table 3.  Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                            Primary SIC
                            code
                                                          ^
                                          Recirc & once thru (based on 3 facilities);
                                          assume meets velocity criteria
                                             J?!::!;?^ .9.9.n]P.!i..a..0..9.e.. Action5
                                          Extend pipe to be 50 meters outside littoral zone
                                                                                                                                       Flow needed Flow Needed
                                                                                                                                       for          for Activities
                                                                                                                                       Recirculating Other Than
                                                                                                                                       Cooling      Cooling
                                                                                                                              Flow in   Tower       Tower
                            new 2869-9


                            new 2873-1
                            new 3312-1

                            new 3312-2
Due to trend for recirc (based on all data);
Assume meets intake flow criteria, velocity
criteria (passive screen), recirc criteria,
maximizes survival of impinged & minimizes
entrained because of passive screens & fish
returns
Assume meets intake flow criteria, meets recirc
criteria
                                          Install fish handling equipment to maximize
                                          survival of impinged fish & minimize entrainment
                                          Assume does not alter natural stratification of
                                          ake, meets recirc criteria; Assume cannot
                                          extend intake pipe to 50 meters outside littoral
                                          zone due to local geography
                                          Once through only and recirc systems; Assume
                                          meets intake flow criteria, velocity criteria
                                          (passive screen); After switching to 100%
                                          recirc, flow is less than 2 MGD so no other
                                          i*£y°!lJ^LI!?9yl^
                                          Assume meets intake flow criteria after switch
                                          :o 100% recirculating system
Trend for recirculating; Assume meets intake
flow cj1teji£_____^^
Trend for recirculating; Assume does not alter
natural stratification of source water after switch

Trend for recirculating; Assume meets intake
low criteria, velocity criteria, recirc criteria,
maximize survival of impinged & minimize
entrained because of passive screens & recirc
^J^^IJl^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^.
Assume meets intake flow criteria & recirc
criteria;  Assume cannot extend intake pipe to
50 meters outside littoral zone due to local
geography	
                                                                                    Install passive screens to meet 0.5 fps
                                          Install cooling tower to make 100% recirc
                                          Install cooling towers to switch rest of system to
                                          recirc; Install passive screens to meet 0.5 fps
                                          and maximize survival & minimize entrained

                                          Install velocity caps to meet 0.5 fps

                                          Extend the pipe to 50 meters ouside the littoral
                                          zone
                                                                                    Enlarge intake pipe opening to meet 0.5 fps
                                                                                                                                                                                  AppB-3-8

-------
316(b) EEA Appendix B for New Facilities
                                                                                                    Unit Cost Analyses
                      Table 3. Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                         Primary SIC
                         code
Velocity
Reduction by   Fish
Intake Fanning  Handling   Passive
or Widening   Equipment  Screen 0.5 Restoration  Pipe Extension  Velocity
Cost         Cost      ft/Sec    Cost      Cost          Cap Cost
                                                                               Capital Costs
                                                                                                  Canal
                                                                                                  Dredging                 Total Techn.
                                                                                                  Cost     Cooling Tower Cost Capital Cost
                                                                                                                                                     AppB-3-9

-------
316(b) EEA Appendix B for New Facilities                                                                                        Unit Cost Analyses

                    Table 3. Projected New Manufacturing Facility Characteristics and Needed Compliance Action and Costs
                                      Primary SIC
                                      code
                                                            Annual O&M Costs
                                                                        Annual O&M
                                                 O&M Cost for  O&M Cost for Costs for Fish
                                                 cooling towers  Restoration   Handling
                                      new2869-9             $0|


                                      new 2873-1
                                                                                                                                          AppB-3-10

-------
316(b) EEA Appendix B for New Facilities
                                                                                 Unit Cost Analyses
                           Table 4. Projected New Manufacturer Characteristics, Needed Compliance Action and
                                                             Costs for Uniform Standard
            Primary SIC
            code	
                        Water Body
                                       FLOW
             Flow needed Flow Used for
             for         Costing
             Recirculating Activities Other
Total Water   Cooling     Than Cooling
Requirement   Tower      Tower
GPD         gpm        gpm
                                                                                                       Configuration of Facility's CWIS
       Submerged Surface            Submerged
Canal   Shoreline   Shoreline  Bay-cove  Offshore   Other
           j]ew28J2-J_  Nontidal River

           new 2813-1
                        Nontidal River
                                        72,400,000    482,666,667
                                                       6,000,000       4,200
                                                                                   50,300
                                                                                     600
                        Tidal River
                                                      51,711,000       20,600
                                                                                    5,400
                        Nontidal River
                        Lake, Pond or
                        Res.
                                                      26,640,000       18,500
                                                                                    2,800
            new 2821-3   Tidal River
                                          5,000,000     33,333,333
            new2824-1

            new 2833-1   INontidal River   I   16,347,0001   25,615,749       10,300
                        Nontidal River
                                                      12,000,000       8,300
                                                                                    1,200
            new 2869-2
                        Nontidal River
                                         12,000,000
                                                      12,000,000
                                                                     8,300
                                                                                    1,200
                        Nontidal River
                        Nontidal River
            new 2869-5
                        Nontidal River
                                          2,400,000
                                                      16,000,000
                        Nontidal River     45,000,000     70,515,000       28,200
                                                                                                                                                 AppB-4-1

-------
316(b) EEA Appendix B for New Facilities
                                                                                             Unit Cost Analyses
                        Table 4.  Projected New Manufacturer Characteristics, Needed Compliance Action and
                                                       Costs for Uniform Standard
                Primary SIC
                code	
                            Technology Types Being Used
Fish     Passive  Fish     Intake    Other
Diversion Intakes   Returns  Screens   Tech.
                                                                                 Profile of Facility's Cooling Water System
        Once    Once
Once    through w/through w/         Redrew/  Redrew/
Through  ponds   towers    Recirc.    ponds    towers   Other
                new 2869-2
                new 2869-5
                                                                                                                                    AppB-4-2

-------
316(b) EEA Appendix B for New Facilities
Unit Cost Analyses
                     Table 4. Projected New Manufacturer Characteristics, Needed Compliance Action and
                                               Costs for Uniform Standard
Primary SIC
code
new 281 2-1
new 281 3-1
new 28 19-1
new 28 19- 2
new 2821-1
new 2821 -2
new 2821 -3
new 2824-1
new 2833-1
new 2834-1
new 2841-1
new 2865-1
new 2869-1
new 2869-2
new 2869-3
new 2869-4
new 2869-5
new 2869-6
Current Compliance Assumptions
Trend for recirculating & submerged offshore; Assume
meets intake flow criteria & 100% recirc criteria
Passive and travel screens. Assume meets intake flow
cittej^aj^^
Assume meets intake flow criteria & velocity criteria, &
maximizes survival of impinged & minimizes entrainment
because of passive screens; After switching to 100%
recirc, facility flow is less than 2 MGD so no other action
isj^qjJJrj^^
Trend for submerged & recirculating; Assume meets
intake flowvolume and velocity criteria after switching to
100% recirculating system
Trend is for recirculating & submerged; Assume meets
intake velocity criteria
Trend for submerged; Passive screens and intake
screens. Assume meets intake flowvolume criteria after
switching to 100% recirculating system
Trend is for recirculating; Assume meets 100% recirc.
flow criteria; estend the pipe to get outside of sensitive
bjpjogj£ajjar^^
Trend for recirculating; Assume meets intake flow
criteria, velocity criteria, & 100% recirc criteria; Assume
maximizes survival & minimizes impingement because
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Trend for recirculating; Assume meets intake flow and
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Intake flow criteria not met, so switch to recirculating
and then since flow is less than 2 MGD, no other action
isj^qjJJrj^^
Assume none of the criteria met. After switching to 100%
recirc, facility flow is less than 2 MGD so no other action
isj^ujre^[____^^
Trend for recirculating; Assume meets intake flow
criteria, velocity criteria (passive screens) & 100% recirc
criteria and passive screens minimize impingement and
entrainment
Once through only (based on 10 facilities); Assume
meets intake flow criteria, velocity criteria (passive
screen); After switching to 1 00% recirc, flow is less than
2 MGD so no other action is required
Once through only (based on 10 facilities); Assume
meets intake flow criteria, velocity criteria (passive
screen); After switching to 1 00% recirc, flow is less than
2 MGD so no other action is required
Recirc only (based on data for 7 facilities); Assume
meets intake flow & recirc criteria
Recirc only (based on data for 7 facilities); Assume
meets intake flow & recirc criteria
Recirc only (based on data for 7 facilities); Assume
meets intake flow & recirc criteria
Recirc & once through (based on 3 facilities); Intake
flow criteria not met before cooling towers
Projected Compliance
Action (s)
Enlarge intake pipe opening to achieve 0.5 fps velocity
and install velocity cap; install fish handling and return
equipment
Install cooling towers to make 100% recirc. Add fish
bjasketsjio^^
Install cooling towers to make 100% recirc
Install cooling towers to make 100% recirc; Install fish
handling equipment to maximize survival of impinged fish
& minimize entrainment.
Install cooling towers to make 100% recirc. Install fish
handling equipment to maximize survival of impinged fish
& minimize entrainment
Install cooling towers to make 100% recirc. Install fish
handling equipment to maximize survival of impinged fish
& minimize entrainment
Install fish handling equipment to maximize survival of
impinged fish & minimize entrainment; extend intake pipe
None
Add cooling tower for 100% recirc; install fish handling
equipment for imjsin^e^™^
Install cooling tower to make 100% recirc
Install cooling tower for 100% recirc.
None
Install cooling tower to make 100% recirc
Install cooling tower to make 100% recirc
Install velocity caps and reduce velocity through fanning to
rneej^l^o^
Install velocity caps and reduce velocity through fanning to
meet velocity criteria; install fish handling equipment
Install velocity caps and reduce velocity through fanning to
meet velocity criteria; install fish handling equipment
Install cooling tower for once through portion of flow to
meet intake flow criteria, velocity criteria (same size intake
but reduced flow now) & recirc criteria, & minimize
entrainment (reduced velocity & flow); Add fish baskets to
maxjmizjBjs^^
                                                                                                                AppB-4-3

-------
316(b) EEA Appendix B for New Facilities
                                                                                                      Unit Cost Analyses
                          Table 4. Projected New Manufacturer Characteristics, Needed Compliance Action and
                                                           Costs for Uniform Standard
              Primary SIC
              code	
                                                                           Capital Costs
                           Velocity
                           Reduction by
                           ntake       Fish
                                 Travel
                                Screens
Fanning or    Handling    Passive    with Fish                     Pipe              Canal
Widening     Equipment  Screen     Handling  Area     Restoration  Extension   Velocity Dredging  Cooling     Total Tech..
 :ost        Cost       0.5 fps    Equipment  Restored  Cost       Cost       Cap Cost Cost     Tower Cost  Capital Cost
$           $$$ha$$$$$          $
                                              $0
                                                                 $0
                                                                                              $0
                                                                                                              $0
                                                                                                                    $320,000
                                                                                                                               $320,000
                                         $66,000
                                                       $0
                                                                 $0
                                                                                              $0
                                                                                                              $0
                                                                                                                  $1,452,000
                                                                                                                              $1,518,000
                                         $38,000
                                                       $0
                                                                                              $0
                                                                                                              $0
                                                                                                                    $438,000
                                                                                                                               $476,000
                                         $45,000
                                                       $0
                                                                 $0
                                                                                              $0
                                                                                                              $0
                                                                                                                  $1,308,000
                                                                                                                              $1,353,000
                                              $0
                                                                 $0
                                                                                              $0
                                                                                                                         $0    $181,000