EPA Cooling Water Intake Rules Add New Hurdle to Clean Water Act Permitting

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July 26, 2005

Recent final and proposed EPA rules regulating cooling water intakes promise to add a significant new hurdle for utilities and manufacturers using cooling water when they seek to renew their National Pollutant Discharge Elimination System (“NPDES”) permits.

Section 316(b) of the Clean Water Act requires that NPDES permits include “best technology available for minimizing adverse environmental impact” from cooling water intake structures (“CWIS”). This requirement is designed to protect fish from becoming trapped in CWIS or entrained through a plant’s cooling system. However, EPA did not issue specific rules for implementing this mandate until 2001, when EPA finalized the first in what will be a three-phase program creating a standard approach to Section 316(b). The Phase I rule, finalized in 2001, covers new facilities, while Phase II and proposed Phase III rules cover existing facilities. EPA finalized the Phase II rule, which covers existing electric power producing plants, last summer. More recently, EPA has proposed regulations for Phase III, which will cover existing non-power sources. When EPA’s Phase III rulemaking is complete, specific performance standards and permitting requirements will apply to many new and existing large users of cooling water. Because of the impact of the new Phase II rule and proposed Phase III rule on existing facilities, this Advisory will focus on them.

Which Existing Facilities Are Affected?

EPA’s new Phase II rule applies to point sources that: (1) use CWIS with a total design intake flow of 50 million gallons per day or more to withdraw cooling water from waters of the United States; (2) both generate and transmit electric power, or generate electric power to sell to another entity for transmission; and (3) use at least 25 percent of the water they withdraw exclusively for cooling water purposes. EPA estimates that the Phase II rule affects over 500 electric power plants.

The final scope of the Phase III rule is still uncertain. EPA’s proposed rule has several applicability options. The most stringent option would apply to all sources that: (1) use CWIS with a total design intake flow of 50 million gallons per day or more to withdraw cooling water from waters of the United States; and (2) use at least 25 percent of the water they withdraw exclusively for cooling water purposes. EPA estimates that this version of the Phase III rule would affect 158 facilities around the country. Most – but not all – of these facilities are manufacturing facilities, particularly in the paper, chemicals, petroleum refining, steel and aluminum industries.

What Are the Substantive Compliance Requirements for Existing Facilities?

EPA has set nationwide performance standards to limit the frequency with which fish are impinged (i.e., trapped against an intake screen) or entrained (i.e., drawn into the cooling water intake) at CWIS. EPA’s performance standards call for an 80-95 percent reduction in impingement and a 60-90 percent reduction in entrainment. These performance standards apply both to the Phase II rule and the proposed Phase III rule.

Under the Phase II and proposed Phase III rules, existing facilities can select from five compliance options, each of which (except for the last) is designed to achieve the performance standards. These options are: (1) demonstrate that the facility does or will meet the performance standards; (2) use an “approved design and construction technology”; (3) reduce its intake flow commensurate with a closed-cycle recirculating cooling system; (4) reduce its intake velocity to 0.5 feet per second or less (and choose another option to meet the entrainment standard); or (5) argue for a “site-specific” performance standard based on cost.

To demonstrate compliance with the performance standards, facilities may use combinations of construction technologies, operational measures, and “restoration measures,” such as fish stocking. However, the D.C. Circuit Court of Appeals struck down EPA’s attempt to use restoration measures in the Phase I rule for new facilities, and the use of restoration measures is being challenged in court again for existing facilities.

Although use of an “approved design and construction technology” is an option, to date EPA has approved only one such technology, and that technology is applicable only to facilities that already have reduced their maximum throughscreen to 0.5 feet per second. Both EPA and authorized states are allowed to approve additional technologies, and once approved, other sources may rely on those approved technologies.

What Will Facilities Need to Do to Renew Their Permits?

In addition to the significant substantive requirements, the Phase II rule creates (and the Phase III rule will create) significant procedural steps for existing facilities that need to renew their NPDES permits. Most importantly, facilities will need to develop and submit with their permit renewal applications a Comprehensive Demonstration Study. This Study will require collection of a substantial amount of data regarding the waterbody, the impingement and entrainment effects of the facility’s CWIS, technological options to reduce these effects, a restoration plan, and a verification monitoring program. Preparing this study promises to be a significant undertaking, which will require careful planning and coordination among a variety of scientific, engineering and legal disciplines.

When Will This Take Effect and What Should I Be Doing Now?

The Phase II rule is already in effect, and the Phase III rule will take effect shortly after it is finalized. In most cases, this means that existing facilities generally will need to comply with the new rules when they next renew their NPDES permits. In general, the Comprehensive Demonstration Study will be due at the same time as the rest of a facility’s permit renewal application (i.e., 180 days before the facility’s existing permit expires). However, in the Phase II rule, EPA has allowed facilities whose existing permits expire before September 7, 2008 to request a schedule to submit the Study “as soon as practicable,” but no later than March 5, 2007. The Phase III rule likely will contain the same type of limited relief for facilities with permits expiring soon after the rule takes effect.

Phase II facilities should already be investigating their options for complying with the new rule. This will include the necessary studies to determine baseline impingement and entrainment at their facilities and the reduction the facilities already achieve through existing measures. Phase II facilities will then need to prepare to present and defend their selected compliance option to the NPDES permitting authority.

Non-electric utility facilities should evaluate whether the Phase III rule may apply to them and, if so, whether all or only some versions of the proposed rule may apply. While the comment period on the proposed rule has closed, facilities that may be subject to Phase III can continue to track the rule’s development through trade associations and others active in the development and implementation of the Section 316(b) rules.

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