1. Clean Water Act Section 316(b) Proposal Regulations for Cooling Water Intake Structures at Existing Facilities April 6, 2011

2. Background Section 316(b) of the Clean Water Act (CWA) requires that National Pollutant Discharge Elimination System (NPDES) permits for facilities with cooling water intake structures ensure that the location, design, construction, and capacity of the structures reflect the best technology available (BTA) to minimize harmful impacts on the environment. Withdrawal of cooling water removes aquatic organisms, including fish, fish larvae and eggs, crustaceans, shellfish, sea turtles, and marine mammals, from waters of the U.S. each year. Most impacts are to early life stages of fish and shellfish through impingement and entrainment. Impingement happens when fish and other organisms are trapped against screens when water is drawn into the facility’s cooling system. Entrainment happens when organisms are drawn into the facility, resulting in their exposure to pressure and high temperatures. EPA estimates that 2.1 billion fish, crabs, and shrimp on an age-1 equivalent basis are killed annually by impingement and entrainment. 2

3. Rulemaking History Under a consent decree with environmental organizations, the section 316(b) rulemaking was divided into three phases: Phase I addressed all new facilities except offshore oil and gas exploration facilities (December 2001) Phase II addressed existing large electric-generating facilities (February 2004) Phase III addressed existing small electric-generating, all manufacturing facilities, and new offshore oil and gas exploration facilities (June 2006) EPA conducted a Small Business Advocacy Review Panel for this rulemaking in 2004, and incorporated a number of recommendations of SERs in the existing facilities proposal Phase II and the existing facility portion of Phase III were remanded to EPA for reconsideration This proposal, called the Existing Facilities proposal, combines Phases II and III into one rule and provides a holistic approach to protecting aquatic life impacted by cooling water intakes 3

4. Scope of Rule Potentially affected facilities are existing power plants and manufacturing facilities that generate electricity or manufacture other goods and that withdraw at least 2 million gallons per day (MGD)of cooling water, at least 25 percent of which is for cooling purposes The proposed rule covers roughly 1,260 existing facilities that dissipate waste heat through water withdrawals Approximately 590 are manufacturers Other 670 are power plants Approximately 740 facilities already use technologies that are likely to comply with the impingement requirements of the proposal 4

5. Identification of Best Technology Available In selecting the BTA, a number of factors were considered: Availability and feasibility of various technologies Costs including potential costs to facilities as well as households, and economic impacts of different technologies Efficacy of technologies in reducing impingement and entrainment mortality, including cost-effectiveness relationships Age, size, and type of facility Non-water quality effects of different technologies on energy production and availability Electricity reliability Potential adverse environmental effects from the use of the different controls US Supreme Court’s decision in Entergy Corp. v. Riverkeeper, Inc., et al., that EPA has the authority to balance costs and benefits in promulgating 316(b) regulations 5

6. Identification of BTA for Impingement Mortality The use of fish-friendly modified traveling screens with a fish handling and return system or reduced intake velocity is proposed as BTA for impingement mortality EPA’s record shows modified traveling screens are available for all facilities, whereas reduced intake velocity may not be available at all locations – Facility would determine technology best suited to meeting the limit – Subject to an upper limit on how many fish can be killed by the facility through impingement – impingement mortality not to exceed: 12% on an annual average 31% on a monthly average Requires facility to sample and hold up to 48 hours to determine mortality – Alternately, facility could reduce their intake velocity to 0.5 feet per second Data indicate that at this velocity, there is a significant reduction in the potential for impingement and impingement mortality to a level equal to/better than the numeric impingement mortality restrictions Most fish can swim away from the cooling water intake of the facility at this velocity Facility can comply either through an engineering design demonstration, or through monthly monitoring and reporting of velocity 6

7. Identification of BTA for Entrainment Mortality For entrainment, no single technology that represented BTA for all facilities could be identified Four key factors support determining entrainment mortality controls on a site- specific basis (except with respect to new units) in lieu of a national basis: energy reliability, increased air emissions, land availability, and remaining useful life Instead, EPA is proposing to adopt regulations that establish a process for the permitting authority to determine entrainment BTA controls on a site-specific basis Permitting authority could consider social costs and benefits on a site specific basis in establishing additional entrainment mortality controls, if any Facilities above 125 MGD actual intake flow are required to submit additional studies to permit authority, and have studies peer reviewed Facilities may have to meet impingement requirements before learning what are their entrainment requirements Permitting process includes opportunity for public input 7

8. Identification of BTA for New Units at Existing Facilities Closed cycle cooling (or wet cooling towers) are proposed as BTA for both impingement mortality and entrainment mortality for new units at existing facilities – Applies only to new unit portion of facility, not to entire facility – Capital costs for closed-cycle cooling are lower than capital costs for once-through cooling when constructing a new unit – Requirements for entrainment mortality require the facility to reduce their intake flow to a level similar to a closed cycle cooling system – Alternately, facility could demonstrate to permitting authority that it has installed, and will operate/maintain technologies capable of achieving entrainment mortality reductions equal to at least 90% of the reduction achievable through compliance with the intake flow reduction requirement Proposal establishes January 17, 2002 as the date for distinguishing existing facilities from new facilities because that is the effective date of the Phase I new facility rule 8

9. Compliance Requirements would be applied to individual cooling water intake structures through NPDES permits issued by authorized States or EPA Regulations would become effective 60 days after FR publication of the promulgation notice (~July 2012 + 60 days) Technologies to meet the impingement requirements of the rule would have to be implemented as soon as possible but facilities may request additional time (not to exceed 8 years) Most facilities should be able to comply within in 5 years Existing facilities subject to entrainment requirements would have to comply as soon as possible under a schedule of compliance established by the permitting authority New units have to comply by the time they begin operating 9

10. Benefits & Costs of Proposed Rule Proposal would reduce impingement and entrainment mortality by 615 million fish, on an age-1 equivalent basis, of total of 2.2 billion lost to I&E mortality Annual monetized benefits are estimated at $17.6 million (2009$; 3% discount rate) Annualized social costs are estimated at $384 million (2009$; 3% discount rate) Electric Generators segment of the proposed rule accounts for the majority of total cost (direct compliance costs of $319 million at 3% discount rate, including cost of studies) Annual costs of closed cycle cooling at new generating units are estimated separately as $15 million, but benefits, even in age-1 equivalent terms, cannot be calculated Estimates do not include costs associated with complying with permit authority determinations on site-specific BTA Majority of facilities (86%) and parent entities (89%) that would be subject to the proposed rule are estimated to incur annualized costs of less than 1% of revenue (assuming zero cost pass-through) National compliance cost of proposed rule, on average, is estimated to be 0.013¢ per KWh (assuming full cost pass-through) For a typical U.S. household, proposed rule is estimated to result in costs of $1.41 per household per year (assuming full cost pass-through) 10