Effluent Limitations Guidelines and New Source Performance Standards for the Meat and Poultry Products Point Source Category

Note: EPA no longer updates this information, but it may be useful as a reference or resource.

[Federal Register: September 8, 2004 (Volume 69, Number 173)]
[Rules and Regulations]
[Page 54475-54555]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08se04-18]
[[Page 54476]]

-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 432
[FRL-7631-2]
RIN 2040-AD56

Effluent Limitations Guidelines and New Source Performance
Standards for the Meat and Poultry Products Point Source Category

AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: Today's final rule revises Clean Water Act effluent
limitations guidelines and new source performance standards for meat
producing facilities. These revisions apply to existing as well as new
slaughtering facilities ( ``first processors''), to facilities that
further process meat to produce products like sausages (``further
processors'') and to independent rendering facilities that convert
inedible by-products to items like pet food (``renderers''). The rule
establishes, for the first time, effluent limitations guidelines and
new source performance standards for existing and new poultry first and
further processors. Today's guidelines and standards establish
limitations on wastewater discharges of specified pollutants for meat
and poultry products facilities that discharge directly to U.S. waters.
There are no current regulations for facilities that discharge
indirectly, and EPA has not adopted regulations for those facilities.
Today's rule applies to wastewater discharges from existing meat and
poultry facilities above specified production thresholds. Today's new
source standards apply to new meat facilities above the production
thresholds and to all new poultry facilities irrespective of their
production level. EPA is not revising the current effluent limitations
guidelines or new source performance standards for meat first or
further processors below the production threshold.
This final rule will benefit the Nation's receiving waters by
reducing discharges of conventional pollutants, ammonia, and nitrogen.
EPA estimates that compliance with this regulation will reduce
discharges of nitrogen up to 27 million pounds per year, ammonia by 3
million pounds per year, and conventional pollutants by 4 million
pounds per year.

DATES: This regulation shall become effective October 8, 2004. The
Director of the Federal Register approves the incorporation by
reference on October 8, 2004, of certain publications listed in this
rule in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. For judicial
review purposes, this final rule is promulgated as of 1:00 p.m.
(Eastern time) on September 22, 2004, as provided in 40 CFR 23.2.

ADDRESSES: The docket for today's final rule is available for public
inspection at the Water Docket in the EPA Docket Center, (EPA/DC) EPA
West, Room B102, 1301 Constitution Ave., NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: For additional technical information
contact Samantha Lewis at (202) 566-1058. For additional economic
information contact James Covington at (202) 566-1034.

SUPPLEMENTARY INFORMATION:

General Information

A. What Entities Are Potentially Regulated by This Final Rule?

Entities potentially regulated by this action include:

------------------------------------------------------------------------
Examples of
Category regulated Primary SIC and NAICS
entities codes
------------------------------------------------------------------------
Industry...................... Facilities
engaged in
first
processing,
further
processing, or
rendering of
meat and
poultry
products, which
may include the
following
sectors:.
Meat Packing 2011 (SIC)
Plants. 31161 (NAICS)
Animal (except 311611 (NAICS)
Poultry)
Slaughtering.
Meat Processed 311612 (NAICS)
from Carcasses.
Sausages and 2013 (SIC)
Other Prepared 311612 (NAICS)
Meat Products.
Poultry 2015 (SIC)
Slaughtering 311615 (NAICS)
and Processing.
Meat & Meat 422470 (NAICS)
Product
Wholesalers.
Poultry 311615 (NAICS)
Processing.
Rendering and 311613 (NAICS)
Meat By-Product
Processing.
Support 11521 (NAICS)
Activities for
Animal
Production.
Prepared Feed 2048 (SIC)
and Feed 311119 (NAICS)
Ingredients for
Animals and
Fowls, Except
Dogs and Cats.
Dog and Cat Food 311111 (NAICS)
Manufacturing.
Other Animal 311119 (NAICS)
Food
Manufacturing.
All Other 311999 (NAICS)
Miscellaneous
Food
Manufacturing.
Animal and 2077 (SIC)
Marine Fats and 311613 (NAICS)
Oils.
Livestock 0751 (SIC)
Services, 311611 (NAICS)
Except
Veterinary..
------------------------------------------------------------------------

This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could potentially be regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your facility is regulated by this action, you should carefully examine
the applicability criteria listed at 40 CFR parts 432.1, 432.10,
432.20, 432.30, 432.40, 432.50, 432.60, 432.70, 432.80, 432.90,
432.100, 432.110, and 432.120 of today's rule. If you have questions
regarding the applicability of this action to a particular entity,
consult the person listed for technical information in the preceding
FOR FURTHER INFORMATION CONTACT section.

B. How Can I Get Copies of This Document and Other Related Information?

1. Docket
EPA has established an official public docket for this action under
Docket ID

[[Page 54477]]

No. OW-2002-0014. The official public docket consists of the documents
specifically referenced in this action, any public comments received,
and other information related to this action. Although a part of the
official docket, the public docket does not include information claimed
as Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. The official public docket is the
collection of materials that is available for public viewing at the
Water Docket in the EPA Docket Center, (EPA/DC) EPA West, Room B102,
1301 Constitution Ave., NW., Washington, DC. The EPA Docket Center
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is (202) 566-1744, and the telephone number for the Water
Docket is (202) 566-2426. Every user is entitled to copy 266 pages per
day before incurring a charge. The Docket may charge 15 cents a page
for each page over the page limit plus an administrative fee of $25.00.
2. Electronic Access
You may access this Federal Register document electronically
through the EPA Internet under the ``Federal Register'' listings at
http://www.epa.gov/fedrgstr/.
An electronic version of the public docket is available through
EPA's electronic public docket and comment system, EPA Dockets. You may
use EPA Dockets at http://www.epa.gov/edocket/ to view public comments,
access the index listing of the contents of the official public docket,
and to access those documents in the public docket that are available
electronically. Once in the system, select ``search,'' then key in the
appropriate docket identification number: OW-2002-0014.
Certain types of information will not be placed in the EPA Dockets.
Information claimed as CBI and other information whose disclosure is
restricted by statute, which is not included in the official public
docket, will not be available for public viewing in EPA's electronic
public docket. EPA's policy is that copyrighted material will not be
placed in EPA's electronic public docket but will be available only in
printed, paper form in the official public docket. To the extent
feasible, publicly available docket materials will be made available in
EPA's electronic public docket. When a document is selected from the
index list in EPA Dockets, the system will identify whether the
document is available for viewing in EPA's electronic public docket.
Although not all docket materials may be available electronically, you
may still access any of the publicly available docket materials through
the docket facility identified in section B.1.

C. What Other Information Is Available To Support This Final Rule?

The two major documents supporting the final regulations are the
following:
? ``Technical Development Document for the Final Effluent
Limitations Guidelines and Standards for the Meat and Poultry Products
Point Source Category'' [EPA-821-R-04-011]
referred to in the preamble
as the Technical Development Document (TDD): This document presents the
technical information that formed the basis for EPA's decisions in
today's final rule. The TDD describes, among other things, the data
collection activities, the wastewater treatment technology options
considered by the Agency as the basis for effluent limitations
guidelines and standards, the pollutants found in Meat and Poultry
Products (MPP) wastewaters, and the estimation of pollutant removals
associated with certain pollutant control options.
? ``Economic and Environmental Benefits Analysis of the
Final Meat and Poultry Products Rule'' [EPA-821-R-04-010]
referred to
as the Economic and Environmental Benefits Analysis (EEBA). This
document presents the methodology employed to assess economic impacts,
environmental impacts, and environmental benefits of the final rule and
the results of the analyses.
Major supporting documents are available in hard copy from the
National Service Center for Environmental Publications (NSCEP), U.S.
EPA/NSCEP, P.O. Box 42419, Cincinnati, Ohio, USA 45242-2419, (800) 490-
9198, www.epa.gov/ncepihom. You can obtain electronic copies of this
preamble and rule as well as major supporting documents at EPA Dockets
at www.epa.gov/edocket and at www.epa.gov/guide/mpp.

D. What Process Governs Judicial Review for Today's Final Rule?

In accordance with 40 CFR part 23.2, today's rule is considered
promulgated for the purposes of judicial review as of 1:00 p.m. Eastern
Daylight Time, September 22, 2004. Under Section 509(b)(1) of the Clean
Water Act (CWA), judicial review of today's effluent limitations
guidelines and new source performance standards may be obtained by
filing a petition in the United States Circuit Court of Appeals for
review within 120 days from the date of promulgation of these
guidelines and standards. Under Section 509(b)(2) of the CWA, the
requirements of this regulation may not be challenged later in civil or
criminal proceedings brought to enforce these requirements.

E. What Are the Compliance Dates for Today's Final Rule?

Each National Pollutant Discharge Elimination System (NPDES) permit
must include all technology-based effluent limitations promulgated by
EPA. Consequently, all reissued permits for existing direct dischargers
must require compliance with today's limitations. Direct dischargers
that are new sources must comply with applicable new source performance
standards (NSPS) on the date the new sources begin discharging. For
purposes of the revised NSPS being promulgated today, a source is a new
source if it commences construction after October 8, 2004.
Today's rule does not revise the new source performance standards
for wastewater discharges from small meat products facilities (i.e.,
those new meat facilities whose production is below the subcategory-
specific production threshold) in Subparts A-I. Therefore, the
respective new source dates for small facilities in Subparts A-I are
not affected by today's final rule.

F. How Does EPA Protect Confidential Business Information (CBI)?

Certain information and data in the record supporting the final
rule have been claimed as CBI and, therefore, EPA has not included
these materials in the record that is available to the public in the
Water Docket. Further, the Agency has withheld from disclosure some
data not claimed as CBI because release of this information could
indirectly reveal information claimed to be confidential. To support
the rulemaking while preserving confidentiality claims, EPA is
presenting in the public record certain information in aggregated form,
masking facility identities, or using other strategies.

Table of Contents

I. Definitions, Acronyms, and Abbreviations Used in This Document
II. Under What Legal Authority Is This Final Rule Issued?
III. What Is the Legislative Background of This Rule?
A. Clean Water Act
B. Existing Clean Water Act requirements applicable to meat and
poultry processors
IV. How Was This Final Rule Developed?
A. February 2002 Proposed Rule
B. August 2003 Notice of Data Availability
C. Public Comments
D. Public Outreach

[[Page 54478]]

V. How Is the Final Rule Different From the Proposed Rule and the
Approaches Discussed in the NODA?
A. Definitions
B. Pollutants
C. Costs and Economic Impacts
D. Loadings
E. Environmental Assessment
F. Treatment Options
G. Limitations
VI. Applicability
A. To Whom does This Rule Apply?
B. What Is a First Processor?
C. What Is a Further Processor?
D. What Is an Independent Renderer?
E. What Is Included as Meat? What Is Included as Poultry?
F. What if a Facility Processes Both Meat and Poultry? How Is It
Categorized?
G. Are Indirect Dischargers Covered by This Final Rule?
H. What Changes Have Been Made to the Regulations for Meat Products?
I. What Wastewaters Are Covered?
J. Which Pollutants Have Limitations and Standards Established
by This Rule?
K. Does This Regulation Impose Monitoring Requirements?
VII. What Is the Basis of the Final Regulation?
A. What Options Did EPA Consider for the Final Rule?
B. What Is the Basis for EPA's Selected Technology Options for
Subcategories A-D (Meat First Processors)?
C. What Is the Basis for EPA's Selected Technology Options for
Subcategory E (Meat Small Further Processors)?
D. What Is the Basis for EPA's Selected Technology Options for
Subcategories F-I (Meat Further Processing)?
E. What Is the Basis for EPA's Selected Technology Options for
Subcategory J (Independent Rendering)?
F. What Is the Basis for EPA's Selected Technology Options for
Subcategory K (Poultry First Processing)?
G. What Is the Basis for EPA's Selected Technology Options for
Subcategory L (Poultry Further Processing)?
VIII. How Did EPA Estimate the Pollutant Loadings and Compliance
Costs for the Final Rule?
A. Pollutant Reductions
B. Compliance Costs
IX. What Are the Economic Impacts Associated With This Rule?
A. What Methods Were Used To Determine the Costs and Economic Impacts?
B. How Many Closures Are Projected as a Result of the Final Rule?
C. What Company-Level Impacts, Other Than Closure, Are Projected
Due to the Final Rule?
D. What Market Level Impacts Are Projected?
E. What Are the Potential Impacts on Foreign Trade?
F. What Are the Potential Impacts on Communities?
G. What Are the Projected Barriers to Entry for New Sources?
H. What Do the Cost-Reasonableness and Cost-Effectiveness
Analyses Show?
X. Water Quality Analysis and Environmental Benefits
A. Summary of the Environmental Benefits
B. What Pollutants Are in MPP Wastewater, and How Do They Affect
Human Health and the Environment?
C. How Will Water Quality and Human Health Be Improved by This Rule?
XI. What Are the Other (Non-Water Quality) Environmental Impacts and
Benefits?
A. Air Emissions
B. Energy Consumption
C. Solid Waste Generation
XII. How Will This Rule Be Implemented?
A. Implementation of the Limitations and Standards for Direct
Dischargers
B. Upset and Bypass Provisions
C. Variances and Modifications
XIII. Statutory and Executive Order Reviews
A. Executive Order 12866: Regulatory Planning and Review
B. Paperwork Reduction Act
C. Regulatory Flexibility Act
D. Unfunded Mandates Reform Act
E. Executive Order 13132: Federalism
F. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
G. Executive Order 13045: Protection of Children From
Environmental Health and Safety Risks
H. Executive Order 13211: Actions that Significantly Affect
Energy Supply, Distribution, or Use
I. National Technology Transfer and Advancement Act
J. Executive Order 12898: Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income Populations
K. Congressional Review Act

I. Definitions, Acronyms, and Abbreviations Used in This Document

Act--The Clean Water Act
Agency--U.S. Environmental Protection Agency
AP--Alkylphenol polyethoxylate
APE--Alkylphenol ethoxylate
ASM--Annual Survey of Manufacturers, Census Bureau
AWQC--Ambient Water Quality Criteria
BAT--Best available technology economically achievable, as defined by
section 304(b)(2)(B) of the Act
BCT--Best conventional pollutant control technology, as defined by
section 304(b)(4) of the Act
BOD, BOD₅--Biochemical oxygen demand
BMP--Best management practices, as defined by section 304(e) of the Act
BPJ--Best professional judgment
BPT--Best practicable control technology currently available, as
defined by section 304(b)(1) of the Act
CAA--Clean Air Act (42 U.S.C. 7401 et seq., as amended)
CAFO--Concentrated animal feeding operation
CAPDET--Computer Assisted Procedure for Design and Evaluation of
Wastewater Treatment Systems
CBI--Confidential business information
CBOD--Carbonaceous biochemical oxygen demand
CE--Cost-effectiveness (ratio of compliance costs to the pounds of
pollutants removed)
CFR--Code of Federal Regulations
CFU--Colony-forming unit
COD--Chemical oxygen demand
Conventional Pollutants--Constituents of wastewater as determined by
section 304(a)(4) of the Act and the regulations there under 40 CFR
401.16, including pollutants classified as biochemical oxygen demand,
suspended solids, oil and grease, fecal coliform, and pH
CWA--Clean Water Act (33 U.S.C. 1251 et seq., as amended)
DAF--Dissolved air flotation
DCN--Document control number
Direct Discharger--An industrial discharger that introduces wastewater
to a water of the United States with or without treatment by the
discharger
DMR--Discharge Monitoring Report
DO--Dissolved oxygen
EBT--Earnings before tax
EEBA--Economic and Environmental Benefits Analysis of the Final Meat
and Poultry Products Rule (EPA-821-R-04-010)
Effluent Limitation--A maximum amount, per unit of time, production,
volume or other unit, of each specific constituent of the effluent from
an existing point source that is subject to limitation. Effluent
limitations may be expressed as a mass loading or as a concentration
(e.g., milligrams of pollutant per liter discharged).
ELG--Effluent limitations and guidelines
ELWK--Equivalent live weight killed
End-of-Pipe Treatment--Refers to those processes that treat a plant
waste stream for pollutant removal prior to discharge
ER--Estrogen receptor
FDF--Fundamentally different factor
FR--Federal Register
FSIS--Food Safety Inspection Service
FTE--Full-time equivalents (related to the number of employees)
HACCP--Hazard Analysis and Critical Control Point
HAP--Hazardous air pollutant
HEM--Hexane extractable material
Indirect Discharger--An industrial discharger that introduces
wastewater into a publicly owned treatment works
kg--Kilogram
kkg--1,000 kilograms
lbs/yr--Pounds per year
LTA--Long-term average concentration
LWK--Live weight killed
mg/L--Milligrams per liter
mL--Milliliter
MPN--Most probable number
MPP--Meat and Poultry Products point source category

[[Page 54479]]

NAICS--North American Industry Classification System
NAWQA--National Water Quality Assessment, a U. S. Geological Survey
program
NCEPI--EPA's National Center for Environmental Publications
NODA--Notice of Data Availability (August 13, 2003; 68 FR 48472)
Nonconventional Pollutants--Pollutants that have not been designated as
either conventional pollutants or priority pollutants
NPDES--National Pollutant Discharge Elimination System, a Federal
program by which industry dischargers, including municipalities, obtain
permits to discharge pollutants to the nation's water, under section
402 of the Act
NPV--Net present value
NSPS--New Source Performance Standards
NTTAA--National Technology Transfer and Advancement Act
NWPCAM--The National Water Pollution Control Assessment Model
O&G--Oil and grease
O&M--Operation and maintenance
OMB--Office of Management and Budget
P--Phosphorus
PCS--Permit Compliance System
PE--Pound-equivalents (the units used to weight toxic pollutants)
POTW--Publicly owned treatment works
ppm--parts per million
Priority Pollutants--The 126 pollutants listed at 40 CFR part 423,
appendix A
PSES--Pretreatment standards for existing sources of indirect
discharges, under section 307(b) of the Act
PSNS--Pretreatment standards for new sources of indirect discharges,
under sections 307(b) and (c) of the Act
PV--Present value
RCRA--Resource Conservation and Recovery Act
RFA--Regulatory Flexibility Act
SBA--U.S. Small Business Administration
SBREFA--Small Business Regulatory Enforcement Fairness Act
SER--Small entity representative
SIC--Standard Industrial Classification, a numerical categorization
scheme used by the U.S. Department of Commerce to denote segments of
industry
SIU--Significant Industrial User as defined in the General Pretreatment
Regulations (40 CFR part 403)
SOP--Standard operating procedure
TDD--Technical Development Document for the Final Effluent Limitations
Guidelines and Standards for the Meat and Poultry Products Point Source
Category (EPA-821-R-04-011)
TKN--Total Kjeldahl nitrogen
TMDL--Total maximum daily load
TRI--Toxic Release Inventory
TSE--Transmissible spongiform encephalopathy
TSS--Total suspended solids
UMRA--Unfunded Mandates Reform Act
U.S.C.--United States Code
USDA--United States Department of Agriculture
WQI--Water Quality Index
WQS--Water quality standards

II. Under What Legal Authority Is This Final Rule Issued?

The U.S. Environmental Protection Agency is promulgating these
regulations under the authority of Sections 301, 304, 306, 307, 308,
402, and 501 of the Clean Water Act, 33 U.S.C. 1311, 1314, 1316, 1318,
1342, and 1361.

III. What Is the Legislative Background of This Rule?

A. Clean Water Act

Congress adopted the Clean Water Act (CWA) to ``restore and
maintain the chemical, physical, and biological integrity of the
Nation's waters'' (Section 101(a), 33 U.S.C. 1251(a)). To achieve this
goal, the CWA prohibits the discharge of pollutants into navigable
waters except in compliance with the statute. The Clean Water Act
confronts the problem of water pollution on a number of different
fronts. Its primary reliance, however, is on restricting the types and
amounts of pollutants discharged from various industrial, commercial,
and public sources of wastewater.
Congress recognized that regulating only those sources that
discharge effluents directly into the Nation's waters would not be
sufficient to achieve the CWA's goals. Congress was also concerned
about pollutants from facilities that discharge wastewater through
sewers flowing to publicly-owned treatment works (POTWs). Consequently,
the CWA requires EPA to promulgate nationally applicable pretreatment
standards for those pollutants in wastewater from indirect dischargers
which pass through, interfere with, or are otherwise incompatible with
POTW operations (Section 307(b) and (c), 33 U.S.C. 1317(b) and (c)).
Generally, pretreatment standards are designed to ensure that
wastewater from direct and indirect industrial dischargers are subject
to similar levels of treatment. In addition, POTWs are required to
develop and enforce local pretreatment limits applicable to their
industrial indirect dischargers to satisfy local requirements (see 40
CFR part 403.5).
1. Effluent Limitations Guidelines and Standards
Direct dischargers must comply with effluent limitations in
National Pollutant Discharge Elimination System (NPDES) permits;
indirect dischargers must comply with pretreatment standards. Effluent
limitations guidelines and standards are established by regulation for
categories of industrial dischargers and are based on the degree of
control that can be achieved using various levels of pollution control
technology.
Best Practicable Control Technology Currently Available (BPT)--Section
304(b)(1) of the CWA
In the regulations, EPA defines BPT effluent limitations for
conventional, toxic, and non-conventional pollutants. Section 304(a)(4)
designates the following as conventional pollutants: biochemical oxygen
demand (BOD₅), total suspended solids (TSS), fecal coliform,
pH, and any additional pollutants defined by the Administrator as
conventional. The Administrator designated oil and grease (O&G) as an
additional conventional pollutant on July 30, 1979 (see 44 FR 44501).
EPA has identified 65 pollutants and classes of pollutants as toxic
pollutants, of which 126 specific substances have been designated
priority toxic pollutants (see Appendix A to 40 CFR part 403, reprinted
after 40 CFR part 423.17). EPA considers all other pollutants to be
non-conventional.
In specifying BPT, EPA looks at a number of factors. EPA first
considers the total cost of applying the control technology in relation
to the effluent reduction benefits. The Agency also considers the age
of the equipment and facilities, the processes used and any required
process changes, engineering aspects of the control technologies, non-
water quality environmental impacts (including energy requirements),
and such other factors as the EPA Administrator deems appropriate (CWA
304(b)(1)(B)). Traditionally, EPA establishes BPT effluent limitations
based on the average of the best performances of facilities of various
ages, sizes, processes or other common characteristics within the
industry. Where current performance is uniformly inadequate to meet
effluent controls, BPT may reflect higher levels of control than
currently in place in an industrial category if the Agency determines
the technology can be practically applied.

[[Page 54480]]

Best Conventional Pollutant Control Technology (BCT)--Section 304(b)(4)
of the CWA
The 1977 amendments to the CWA required EPA to identify effluent
reduction levels for conventional pollutants associated with BCT for
discharges from existing industrial point sources. In addition to the
other factors specified in Section 304(b)(4)(B), the CWA requires that
EPA establish BCT limitations after considering a two-part ``cost-
reasonableness'' test. EPA explained its methodology for developing BCT
limitations in July 1986 (see 51 FR 24974).
Best Available Technology Economically Achievable (BAT)--Section
304(b)(2) of the CWA
In general, BAT effluent limitations guidelines represent the best
available economically achievable reduction in discharges of toxic and
non-conventional pollutants by plants in the industrial subcategory or
category. The factors considered in assessing BAT include the cost of
achieving BAT effluent reductions, the age of equipment and facilities
involved, the process employed, potential process changes, and non-
water quality environmental impacts, including energy requirements. The
Agency retains considerable discretion in assigning the weight to be
accorded these factors. BAT limitations may be based on effluent
reductions attainable through changes in a facility's processes and
operations. Where existing performance is uniformly inadequate, BAT may
reflect a higher level of performance than is currently being achieved
within a particular subcategory based on technology transferred from a
different subcategory or category. BAT may be based upon process
changes or internal controls, even when these technologies are not
common industry practice.
New Source Performance Standards (NSPS)--Section 306 of the CWA
NSPS reflect effluent reductions that are achievable based on the
best available demonstrated control technology. New sources can install
the best and most efficient production processes and wastewater
treatment technologies. As a result, NSPS should represent the most
stringent controls attainable through the application of the best
available demonstrated control technology for all pollutants--
conventional, non-conventional, and priority pollutants. In
establishing NSPS, EPA must consider the cost of achieving the effluent
reduction, any non-water quality environmental impacts, and energy
requirements.
Pretreatment Standards for Existing Sources (PSES)--Section 307(b) of
the CWA
PSES are designed to prevent the discharge of pollutants that pass
through, interfere with, or are otherwise incompatible with the
operation of publicly-owned treatment works (POTWs), including POTW
sludge disposal methods. Pretreatment standards for existing sources
are technology-based and are like BAT effluent limitations guidelines.
You can find the General Pretreatment Regulations, which set forth
the framework for the implementation of national pretreatment
standards, at 40 CFR part 403.
Pretreatment Standards for New Sources (PSNS)--Section 307(c) of the CWA
Like PSES, PSNS are designed to prevent the discharges of
pollutants that pass through, interfere with, or are otherwise
incompatible with the operation of POTWs. PSNS are to be issued at the
same time as New Source Performance Standards. New indirect dischargers
have the opportunity to incorporate into their plants the best
available demonstrated control technologies. The Agency considers the
same factors in promulgating PSNS as it considers in promulgating New
Source Performance Standards.
2. Effluent Guidelines Planning Process--Section 304(m) Requirements
Section 304(m) of the CWA requires EPA every two years to publish a
plan for reviewing and revising existing effluent limitations
guidelines and standards and for promulgating new effluent guidelines.
On January 2, 1990, EPA published an Effluent Guidelines Plan (see 55
FR 80) in which the Agency established schedules for developing new and
revised effluent guidelines for several industry categories. Natural
Resources Defense Council, Inc., and Public Citizen, Inc., challenged
the Effluent Guidelines Plan in a suit filed in the U.S. District Court
for the District of Columbia, (NRDC et al v. Reilly, Civ. No. 89-2980).
On January 31, 1992, the Court entered a consent decree which, among
other things, establishes schedules for EPA to propose and take final
action on effluent limitations guidelines and standards for several
point source categories. The amended consent decree requires EPA to
take final action on the Meat and Poultry Products effluent guidelines
by February 26, 2004.
At the time EPA selected the Meat and Poultry Products (MPP) point
source category for review, pathogens, nutrients, and oxygen-depleting
substances were contributing 25 to 35 percent to reported water quality
problems in impaired rivers and streams. EPA selected the meat and
poultry products category, along with concentrated animal feeding
operations and aquatic animal production, as sources of nutrients
needing additional control. EPA also selected the MPP industry for
review to analyze changes that have occurred in this industry in the
United States since the development of the current regulations.

B. Existing Clean Water Act Requirements Applicable to Meat and Poultry
Processors

EPA issued effluent limitations guidelines and new source
performance standards for meat slaughterhouses and packinghouses (40
CFR part 432 subcategories A through D) in February 1974 and for meat
further processing facilities (subcategories E through I) in January
1975. EPA later revised or withdrew some of the BPT and BAT limitations
due to litigation. The Agency also issued effluent limitations
guidelines and new source performance standards for independent
renderers (subcategory J) in January 1975, then promulgated revised BAT
and NSPS limitations in October 1977. EPA proposed regulations for the
poultry industry in April 1975, but never finalized them.

IV. How Was This Final Rule Developed?

A. February 2002 Proposed Rule

On February 25, 2002, EPA published a proposed rule entitled,
``Effluent Limitations Guidelines and New Source Performance Standards
for the Meat and Poultry Products Point Source Category'' (see 67 FR
8582). At that time, EPA proposed to revise the effluent limitations
guidelines and standards for wastewater discharges from meat processing
and independent rendering facilities and proposed new guidelines for
poultry slaughtering and processing facilities.
EPA identified six groups (12 subcategories) of facilities
categorized by animal and processing type (i.e., meat or poultry; first
processor (slaughterer), further processor, or renderer). EPA grouped
several existing subcategories together (A-D, F-I) because of
similarities in processes and products. This proposed subcategorization
scheme allowed EPA to assess more accurately various

[[Page 54481]]

technology options in terms of compliance costs, pollutant reductions,
benefits, and economic impacts.
EPA proposed limitations and standards for two new subcategories (K
and L) for poultry slaughterers and further processors. EPA proposed to
add limitations for chemical oxygen demand (COD), ammonia (as
nitrogen), total nitrogen, and total phosphorus. EPA proposed revised
limitations and standards in nine of the ten existing subcategories,
choosing not to propose to revise limitations for ``small'' facilities
in subcategories A-D or for the smallest meat further processors
(subcategory E). EPA also proposed lowering the production threshold
for independent renderers so that facilities rendering 10 million
pounds per year or more would be subject to the guidelines. EPA did not
propose national pretreatment standards for indirect dischargers (see
67 FR 8633; February 25, 2002) in any subcategory.

B. August 2003 Notice of Data Availability

On August 13, 2003, EPA published a Notice of Data Availability
(NODA) at 68 FR 48472. In the NODA, EPA discussed major issues raised
in comments on the proposed rule; identified revisions EPA considered
making to the technical and economic methodologies used to estimate
compliance costs, pollutant loadings, and economic and environmental
impacts; presented the results of these suggested methodology changes
and incorporation of new (or revised) data; and summarized EPA's
thinking on how these results could affect the final decisions. EPA
asked for comments on the revised methodologies and data.

C. Public Comments

This preamble includes a general summary of public comments in the
discussions of the various issues addressed here. EPA has prepared a
``Comment Response Document'' that includes responses to comments
submitted for the proposed rule and the notice of data availability.
All of the comments, including supporting documents submitted on
today's action, are available for public review in the administrative
record for this final rule, filed under docket number OW-2002-0014.
The proposed regulations were published in the Federal Register on
February 25, 2002 (67 FR 8582), and the comment period closed on June
25, 2002. EPA received approximately 50 comments on the proposed rule.
EPA received comments from a multitude of sources, including facility
owners and operators, environmental groups, State agencies, publicly
owned water treatment plants, representatives of various trade
associations, and private citizens.
The comment period for the Notice of Data Availability was from
August 13 through October 14, 2003 (68 FR 48472). EPA received
approximately 40 comments on the Notice.

D. Public Outreach

In support of both the proposed rule and today's final rule, EPA
has conducted outreach activities. During the development of the
proposed regulations for meat and poultry products, EPA met with
members of the stakeholder community through meetings, sampling trips,
and site visits to collect information on waste management practices at
meat and poultry product operations.
After the proposed rule was published, EPA conducted two public
outreach meetings on the proposed regulations and continued to meet
with representatives of stakeholder groups, including representatives
of various industry trade associations. EPA used several additional
means to provide outreach to stakeholders, such as managing websites
that post information related to these regulations. EPA provided
supporting documents for the proposed rule on these sites. These
documents included the ``Technical Development Document,'' ``Economic
Analysis,'' and ``Environmental Assessment'' of the proposed
regulations. These are available at www.epa.gov/guide/mpp/.

V. How Is the Final Rule Different From the Proposed Rule and the
Approaches Discussed in the NODA?

Since the proposed rule was published, EPA has incorporated a
significant amount of additional technical and economic data into the
database used for developing the effluent limitations guidelines and
new source performance standards. In addition, EPA has modified certain
assumptions used in its cost and pollutant loadings models. The NODA
discussed in detail these new data (see 68 FR 48479; August 13, 2003).
This section summarizes the major changes EPA has made for the final rule.

A. Definitions

1. How Has the Definition of a ``Small'' Poultry First Processor
Changed?
A small poultry first processor (Subcategory K) is a facility that
slaughters 100 million pounds or less of poultry per year, measured as
live weight killed. For the proposed rule, EPA had defined a small
facility as slaughtering 10 million pounds or less per year, live
weight killed.
EPA examined the effect of increasing the threshold for small
poultry slaughter facilities (Subcategory K) from the proposed 10
million pounds per year. In its analysis, EPA considered two types of
competition: Competition between poultry facilities for poultry market
share, and competition with meat facilities as a substitute for poultry.
Based on the most reliable studies performed to date, significant
economies of scale exist in poultry slaughter. Extrapolating from
Ollinger et al. (2000, DCN 25088), a 50 million pounds per year (lbs/
yr) poultry plant has about a 3 percent cost advantage over a 10
million lbs/yr plant. This cost advantage increases with production: A
150 million lbs/yr plant has perhaps a 15 percent cost advantage over
the 10 million lbs/yr plant. Economies of scale in meat slaughter
plants are not as significant: a 150 million lbs/yr meat slaughter
plant might have a 5 percent cost advantage over a 10 million lbs/yr
plant (extrapolated from MacDonald et al., 2000, DCN 328-001).
In both sectors, compliance costs per pound of production are
larger for the smaller plants. In the poultry sector, costs per pound
for slaughtering plants with less than 50 million lbs/yr of production
are projected to be 20 times larger than those for plants above that
threshold. This exacerbates the competitive disadvantage under which
the smaller poultry plants already operate. In the meat sector, the
compliance cost per pound differential, while still substantial, is
much smaller.
In addition, EPA estimates that compliance costs per pound of
poultry are about 40 percent larger than compliance costs per pound of
meat. Consumers consider meat and poultry to be substitutes; if the
price of poultry increases relative to that of meat, consumers will
increase purchases of meat and decrease purchases of poultry. These
changes are not large, but are statistically significant.
In summary, EPA determined that (1) poultry facilities will be
somewhat disadvantaged by the rule relative to meat facilities if the
poultry slaughter facility production threshold stays at 10 million
pounds/year (as proposed) or even at 50 million pounds/year, and (2)
within the poultry sector, smaller slaughter facilities (at 10 million
or 50 million pounds/year) will be disadvantaged by the rule relative
to large slaughter facilities. Therefore, EPA chose to increase the
small production threshold for small poultry slaughter

[[Page 54482]]

plants from 10 million lbs/yr to 100 million lbs/yr for the final rule.
This reduces the estimated number of non-small facilities in
subcategory K from 118 to 99. See Section 2.2.2 of the EEBA for
discussion on the selection of the production threshold for Subcategory
K for the final rule.
2. How Has the Definition of Subcategory E Facilities Been Clarified?
The current Sec. 432.51 (Subpart E) regulations define ``small
processor'' as ``an operation that produces up to 2,730 kg (6,000 lb)
per day of any type or combination of finished product.'' Because using
the words ``up to 6,000 lb per day'' may lead to questions on whether
facilities that produce 6,000 pounds per day are covered by Subcategory
E or Subcategories F-I, EPA is changing the language to be consistent
with the production threshold language in other subcategories of the
final rule. Therefore, in today's final rule, it states that
Subcategory (Subpart) E facilities are those that produce no more than
6,000 pounds per day of finished product.

B. Pollutants

1. How Have the Regulated Pollutants Changed?
In the proposed rule, EPA proposed limitations for ammonia (as
nitrogen), biochemical oxygen demand (BOD₅), chemical oxygen
demand (COD), fecal coliforms, oil and grease (as hexane-extractable
material), pH, total nitrogen, total phosphorus, and total suspended
solids (TSS). In the final rule, EPA decided not to include limits for
COD or total phosphorus.
In 2002, EPA proposed to add COD to the BPT limitations for non-
small meat facilities in Subcategories A-D, F-I, and J to better
reflect the current BPT treatment technology (67 FR 8630; February 25,
2002). EPA did not propose to establish COD limitations for the poultry
subcategories. As discussed in the NODA (68 FR 48484; August 13, 2003),
commenters stated that COD is not as accurate an indicator of a
biological treatment system performance as BOD and carbonaceous BOD
(CBOD), because biological treatment systems are not necessarily
designed to remove nonbiodegradable chemical oxygen-demanding
components. In addition, one commenter stated that COD removal would be
financially burdensome. In today's final rule, EPA has taken these
comments into account and has not established a COD limitation. This is
because the current regulations for Subcategories A-D, F-I, and J
already include limitations for BOD. EPA has determined that with the
addition of limitations for ammonia (as nitrogen) where they did not
exist previously and new limitations for total nitrogen, regulation of
these parameters for these subcategories effectively controls these
pollutant discharges of concern.
EPA has decided not to regulate total phosphorus in today's final
rule for any subcategory. In a change from the proposed rule, EPA did
not set limitations or standards for total phosphorus because it did
not select a technology option for the final rule that controls
phosphorus (i.e., Option 2.5 + P or Option 4). In general, Option 2.5 +
P and Option 4 were either not economically achievable, not cost-
effective for phosphorus removal, or not available or demonstrated
technology for a subcategory. The decision to not select a technology
option that controls phosphorus is subcategory-specific and the reasons
are explained in detail in Section VII.
2. How Has Reporting of Fecal Coliforms Changed?
EPA proposed a maximum of 400 MPN (most probable number) per 100 ml
at any time of fecal coliforms for the BPT limitations and NSPS for
Subparts K and L (poultry subcategories). These proposed limitations/
standards were the same as the current BPT in place for Subparts A-J,
which EPA did not propose to change. Based on analyses conducted for
the proposed rule, EPA tentatively determined that poultry facilities
could achieve this level.
Commenters requested that EPA allow monitoring of fecal coliforms
to be reported in units of colony forming units (CFU) per 100
milliliters (mL) in addition to MPN per 100 mL specified in the
existing regulations. Results from either technique can be considered
comparable, as long as the analyzed volume is equivalent. Therefore,
EPA revised the limitations and standards to allow results to be
reported in either MPN units or CFU units per 100 mL. See Section V.C.1
of the NODA for additional information (68 FR 48484, August 13, 2003).
Finally, today's final rule will correct 40 CFR 432 for Subparts A
through J to delete the monthly average limitations/standards for fecal
coliforms and pH leaving only daily maximum limitations and standards.
Because the values are currently the same for the daily maximum
limitations/standards and the monthly average limitations/standards,
EPA does not expect that any facility will need to change its
operations with the elimination of the monthly average limitations/
standards currently codified in the CFR for fecal coliforms and pH. As
discussed in the NODA (68 FR 48499; August 13, 2003), 40 CFR 432
currently specifies both monthly average limitations/standards and
daily maximum limitations (at the same limitations) for fecal coliforms
and pH, while the text of the final rules published in the Federal
Register (39 FR 7900; February 28, 1974 and 40 FR 906; January 3, 1975)
included only daily maximum limitations and standards for those
parameters. For today's final rule the subparts regulating the
discharge of fecal coliforms include the following daily maximum
limitation/standard: a maximum at any time of 400 MPN (or CFU)/100 mL.
For the subparts regulating pH, the daily maximum limitation/standard
is: within the range of 6.0 to 9.0.

C. Costs and Economic Impacts

1. How Has the Methodology Changed for Calculating the Costs To Upgrade
Facilities as a Result of This Rule?
EPA proposed to establish effluent limitations based on the
performance of biological wastewater treatment designed and operated to
achieve a specified degree of denitrification (i.e., reduced total
nitrogen). To estimate the costs of the proposed rule, EPA used a model
facility approach, applied frequency factors to obtain national
estimates, and applied an existing computer model (Computer Assisted
Procedure For Design And Evaluation Of Wastewater Treatment Systems
(CAPDET)) used for determining capital and operating and maintenance
costs for various wastewater treatment unit operations. Based on public
comments on the proposed costing approach and the incorporation of new
data following proposal, EPA revised its approach for developing
national estimates of compliance costs for the MPP industry, as
presented in the NODA. For the costs presented in the NODA, EPA
developed its own computer model specific to the MPP industry using a
more facility-specific approach for the surveyed facilities and
applying survey weights to obtain national estimates. See Section III
of the NODA for more detailed information (68 FR 48479; August 13, 2003).
Since the NODA was published, EPA has made some additional changes
to the cost model. Based on comment, EPA has further modified the cost
models and reviewed the assessment of current treatment-in-place (see
DCN 300-004, Section 10 of the TDD, and Record Section 28 of the
rulemaking docket). The changes in the cost models include revising the
values of the constants used

[[Page 54483]]

in the model, accounting for the use of lime as an alkalinity source,
including costs for a holding/polishing pond with seven day retention,
and limiting the nitrate recycle rate to a maximum of five times the
influent flow when costing facilities for Option 2.5 technology and
higher. See Section VIII of today's preamble for a discussion of the
cost estimates for the final rule.
2. How Has the Methodology for Closure Analysis Changed?
For the proposed rule, EPA projected facility-level economic
impacts using a probability model derived from Census data because
detailed survey financial information was not available at that time.
As discussed in the NODA, fewer than 40 percent of direct discharging
facilities provided facility-level financial data in the detailed
survey. Industry stated that many companies in the MPP industry do not
maintain financial records at the facility level, which is how EPA
typically evaluates economic impacts. Instead they maintain their
financial records at, for example, the company level, division level or
product line level. As a result, EPA could not directly scale up its
facility-level closure analysis to produce a national projection of
closures. Therefore, EPA used two approaches to deal with the lack of
facility-level financial data. First, EPA adjusted the weights of
facilities that did provide financial data to account for facilities
that did not provide that data. Second, EPA performed a subsidiary
company-level analysis to supplement the primary facility-level analysis.
For the final rule, EPA used a combination of the probability model
approach developed for the proposed rule, and the closure model based
on detailed survey data. EPA used this combination of modeling
approaches because in Subcategories F-I, Subcategory J, and Subcategory
L, too few direct discharging facilities submitted detailed surveys to
estimate costs and project national economic impacts adequately. In
these subcategories EPA used data from direct discharge screener survey
facilities to estimate compliance costs and used the probability
distribution model to project economic impacts. In Subcategories A-D
and Subcategory K, EPA used the closure model approach based on
detailed survey data to project impacts. Finally, based on comments to
the NODA, EPA projects a facility will close if the present value (PV)
of future compliance costs exceeds the forecast PV of net income under
two of the three forecasting methods described in Section IX. For the
NODA, EPA projected closure when the costs exceeded the forecast PV of
net income under three of the five forecasting methods. EPA has also
analyzed closures using a more conservative assumption that a facility
closes if the PV or future compliance cost exceeds the forecast PV of
net income under one of three forecasting methods. See Section VI.A of
the NODA (68 FR 48487; August 13, 2003) and Section IX of today's
preamble for more detailed information.

D. Loadings

1. How Has the Methodology Changed for Calculating the Pollutant
Loadings Generated by Regulated Facilities?
As discussed in the NODA (68 FR 48482; August 13, 2003), EPA
revised the proposed model facility group approach in order to develop
pollutant loadings and load reductions that are consistent with the
revised costing methodology, which is based on a facility-level
analysis. EPA developed the baseline loadings presented in this final
rule using facility-specific effluent data submitted with the detailed
surveys or obtained from Discharge Monitoring Reports (DMRs) from the
Permit Compliance System (PCS), a computerized data base of DMR
reported effluent values. For facilities without monitoring information
for some pollutants, EPA used a default data set. Default baseline
concentrations were developed using data from surveyed or sampled
facilities that use the same type of pretreatment technology/treatment
technology and that had similar operations. See Section VIII of today's
preamble and Section 11 of the Technical Development Document for more
detailed information on estimating pollutant loads and reductions.
Because the final long-term averages on which the limits are based
were developed fairly late in the rulemaking process due to the receipt
of late submissions of data from industry, some of which was requested
by EPA, to clarify issues raised by commenters after the NODA, EPA
estimated facility-by-facility pollutant load reductions for each of
the technology options by using the target effluent concentrations
developed prior to the development of the final long-term averages
(LTAs) used for calculating limitations and standards. The final LTAs
used for developing limitations are either less stringent or the same
as the target effluent concentrations used for developing pollutant
load reductions and compliance cost estimates. Although the target
effluent concentrations and the final rule LTAs are not identical, EPA
considers its estimates of pollutant load reductions and costs for
today's final rule to be generally representative of the load
reductions and costs that will be realized based on the limitations and
standards that the Agency is promulgating today. EPA calculated
pollutant load reductions as the difference between the baseline
pollutant load and option-specific pollutant load.
2. How Have the Target Effluent Concentrations Used for Calculating
Loadings Changed?
The target effluent concentrations used to estimate pollutant load
reductions and compliance costs for the final rule have not changed
from those EPA used in the NODA (see 68 FR 48482; August 13, 2003 for
non-small facilities in Subcategories A-D and K and see Section 10 of
the TDD for Subcategories F-J and L non-small and small facilities). As
noted in the previous section, the final LTAs are not identical to the
target effluent concentrations, but EPA considers the target effluent
concentrations still generally representative.

E. Environmental Assessment

1. How Has the Methodology Changed for Modeling Water Quality?
In the proposed rule, EPA used the National Water Pollution Control
Assessment Model (NWPCAM) version 1.1 to estimate environmental impacts
to surface water quality resulting from implementation of the proposed
rule. Ecological effects such as habitat degradation were noted but not
quantified to avoid double-counting benefits derived using NWPCAM
version 1.1. Habitat degradation can result from increased suspended
particulate matter and total suspended solids were already accounted
for in NWPCAM. In response to comments that NWPCAM did not incorporate
nutrients, EPA used an updated version of NWPCAM which simulates
concentrations of nitrogen and phosphorus to more fully estimate the
water quality change and the associated monetized benefits associated
with the provisions in today's rule. Commenters also had concerns about
the missing sources of loadings in the model, especially nonpoint and
point sources that were not captured in NWPCAM version 1.1. For the
final rule, EPA used NWPCAM version 2.1, which models water quality
using a stream reach network with greater resolution and

[[Page 54484]]

incorporates additional point and nonpoint source loadings.
2. How Has the Methodology Changed for Determining Recreational Benefits?
The benefits analysis for the proposed rule used two methods to
estimate a household's willingness to pay for improvements in water
quality: (1) A water quality ladder and (2) a continuous water quality
index (WQI). In the final rule, a continuous water quality index was
used to estimate a household's willingness to pay for improvements in
water quality. The ``continuous'' method was suggested by Mitchell and
Carson (1993) as a means to attribute benefits to marginal water
quality improvement whether or not it happened to be of sufficient
magnitude to result in reclassification to a higher use class. The
benefits analysis of the proposed MPP regulation presented both methods
in order to contrast their results. The ``continuous'' method of
monetizing water quality benefits from WQI changes used in the analysis
of the proposed rule was further revised in the benefit assessment for
the final effluent limitation guidelines for concentrated animal
feeding operations (CAFOs), as explained in the NODA (68 FR 48492;
August 13, 2003). This revision included the application of a benefit
transfer function developed from the results of the Mitchell and Carson
survey. EPA believes the water quality index and the Mitchell-Carson
valuation function may help address some concerns associated with the
NWPCAM monetization of benefits at proposal. The benefits methodology
for the final rule is discussed in more detail in Section X.
3. How Has the Methodology Changed for Determining Toxicity Assessment?
In the proposed rule, EPA did not undertake a toxicity assessment.
As noted in the NODA (68 FR 48493; August 13, 2003), EPA performed an
exploratory analysis employing stream dilution modeling techniques,
which do not take into account fate processes other than complete
immediate mixing, to assess the potential impacts of releases of ten
pollutants (ammonia, barium, chromium, copper, manganese, molybdenum,
nickel, titanium, vanadium, and zinc) from the 53 detailed survey MPP
facilities for which sufficient data were available to model. Based on
the results of this assessment, EPA's assessment did not identify
meaningful health or aquatic life benefits associated with the selected
BPT or BAT options. EPA thus did not conduct further analyses of these
types of impacts.

F. Treatment Options

1. What Changes Were Made to the Costed Treatment Option for Each
Subcategory?
Table V.F-1 summarizes the treatment options for each of the meat
and poultry product subcategories that formed the basis for the
proposed limitations and standards as well as those that are the basis
of this final rule. See Section VII of today's preamble for the
identification of the technology basis for each option and a discussion
of how the options were selected for the final rule. In a change from
proposal, as discussed in the NODA (68 FR 48499; August 13, 2003), EPA
is not pursuing Option 3 as a technology basis for the final rule. This
is because the only MPP facility (a poultry slaughtering facility) to
identify Option 3 technology on their survey was not able to provide
EPA with supporting data (i.e., nitrate/nitrite, total Kjeldahl
nitrogen (TKN), or total nitrogen effluent concentrations). Therefore,
EPA did not have a facility to use as the basis for establishing long-
term average concentrations for Option 3. The only facilities
determined to have complete denitrification also used chemicals to
remove phosphorus. EPA classified these facilities as Option 4.

Table V.F-1.--Summary of Technology Options by Subcategory and Size
----------------------------------------------------------------------------------------------------------------
Size threshold
Subcategory for final rule Facility type Proposed rule Final rule
----------------------------------------------------------------------------------------------------------------
A-D: Meat First Processors.... Non-small (>50 Existing........ BPT: Option 2... BPT: Nitrification (Option
million lbs/yr). BAT: Option 3... 2/2.5) for ammonia (as
nitrogen), no revision
for conventionals.
BAT: Option 2.5 for total
nitrogen.
New............. Option 3........ NSPS = BPT for ammonia (as
nitrogen).
NSPS = BAT for total
nitrogen.
No revision for
conventionals.
Small (<=50 Existing/New.... No revision..... No revision.
million lbs/yr).
E: Smallest Meat Further Small Existing/New.... No revision..... No revision.
Processors. (<=1,560,000
lbs/yr).
F-I: Meat Further Processors.. Non-small (>50 Existing........ BPT: Option 2... BPT: no revision.
million lbs/yr). BAT: Option 3... BAT: Option 2.5 for total
nitrogen, no revision for
ammonia (as nitrogen).
New............. Option 3........ NSPS = BAT (Option 2.5)
for total nitrogen.
NSPS = Nitrification
(Option 2/2.5) for
ammonia (as nitrogen).
No revision for
conventionals.
Small Existing/New.... No revision..... No revision.
(>1,560,000 but
<=50 million
lbs/yr).
J: Independent Renderers...... (>10 million lbs/ Existing........ Option 2........ BPT: no revision.
yr). BAT: Option 2.5 for total
nitrogen, no revision for
ammonia (as nitrogen).
New............. Option 2........ NSPS = BAT for total
nitrogen.
No revision for ammonia
(as nitrogen) and
conventionals.
K: Poultry First Processors... Non-small (>100 Existing........ Option 3........ BPT: Nitrification (Option
million lbs/yr). 2/2.5) for ammonia (as
nitrogen) and
conventionals.
BAT: Option 2.5 for total
nitrogen,
BAT= BPT for ammonia (as
nitrogen).

[[Page 54485]]

New............. Option 3........ NSPS = BPT for ammonia (as
nitrogen) and
conventionals,
NSPS = BAT for total
nitrogen.
Small (<=100 Existing........ Option 1........ No regulation.
million lbs/yr).
New............. Option 1........ Nitrification (Option 2/
2.5) for ammonia (as
nitrogen), Option 2 for
conventionals.
L: Poultry Further Processors. Non-small (>7 Existing........ Option 3........ BPT: Nitrification (Option
million pounds/ 2/2.5) for ammonia (as
yr). nitrogen) and Option 2
for conventionals.
BAT: Option 2.5 for total
nitrogen,
BAT= BPT for ammonia (as
nitrogen).
New............. Option 3........ NSPS = BPT for ammonia (as
nitrogen) and
conventionals,
NSPS = BAT for total
nitrogen.
Small (<=7 Existing........ Option 1........ No regulation.
million pounds/
yr).
New............. Option 1........ Nitrification (Option 2/
2.5) for ammonia (as
nitrogen), Option 2 for
conventionals.
----------------------------------------------------------------------------------------------------------------

G. Limitations

1. Are the Limitations Production-Based or Concentration-Based?
The current limitations that are not being changed by this rule
will continue to be production-based. New limits and ammonia limits for
certain MPP subcategories that have changed due to today's rule are
concentration-based (e.g., in milligrams per liter). See Section XII
for a discussion on how the rule will be implemented.
EPA received several comments from industry about the need to use
more water to properly implement USDA's Hazard Analysis and Critical
Control Point (HACCP) program. USDA initiated the HACCP program to
increase food safety and decrease the risk of food-borne illness while
allowing facilities more flexibility in processing procedures. One
aspect of this HACCP rule requires meat and poultry products facilities
to develop and implement standard operating procedures (SOPs) for
sanitation. Based on comments, EPA concluded that many facilities
implementing the sanitation SOPs had increased their use of water to
clean processing equipment and surfaces. EPA does not want to
discourage good sanitation SOPs and compliance with HACCP by setting
production-based limitations which might result in restricted water use
during periods of increased production. Therefore, for all new or
revised limitations/standards in today's final rule, EPA is using a
concentration basis. Concerns over dilution are outweighed by the need
for food safety. In addition, the NPDES regulations prohibit dilution,
and permit writers who are concerned about dilution may convert the
concentration-based limitations to mass-based limitations using a
reasonable measure of facility-specific flow based on the time period
after HACCP was implemented at the facility.
2. What Changes Did EPA Make to the Methodology for Calculating Long-
Term Averages (LTAs) and the Limitations and Standards Promulgated Today?
Based on comments about its data selection and the amount of data
used, EPA has reviewed data from additional sampling episodes and
facility self-monitoring data in developing the final limitations and
standards in today's rule. (In this section, a reference to limitations
also includes new source performance standards.) EPA also reevaluated
the appropriateness of the data it relied on in evaluating the
different treatment options at the time of the proposal and for the
NODA. As a consequence, EPA has retained some data sets used for the
proposal and/or NODA and excluded others from the calculations. EPA
also has re-evaluated the technology determinations associated with the
data sets based on comments and discussions with facilities. As a
consequence, EPA has moved some data sets from one option to another.
The discussion below provides further explanation of these changes and
how these changed the analyses used for EPA's final technology
determinations and the calculation of the final limitations.
For the final rule, EPA used the average effluent concentrations
presented in the NODA to evaluate the costs and pollutant removals
associated with Options 1 through 4 of the final rule. The results of
this assessment are explained in detail at Section VII of the preamble.
After the close of the NODA comment period, based on comments and
data concerning the Option 2.0 and 2.5 technologies--the technology
bases that were ultimately selected for the final rule for the
limitations and standards for both the meat and poultry subcategories--
EPA revised the target effluent concentrations to develop the final
LTAs. This resulted from EPA's reassessment of its earlier selection of
model facilities and a recalculation of the long-term average
concentration based on a reconsideration of the performance of these
facilities. The revised LTAs were higher than the NODA average effluent
concentrations.
Because EPA relied for its reassessment on some of the data that
were submitted after the close of the NODA comment period, EPA was not
able to fully reflect the revised LTAs in its analyses of costs,
removals, economic impact, cost-reasonableness and cost-effectiveness
of the technology options selected for the final limitations and
standards for Option 2 and Option 2.5. However, EPA did perform a
supplemental analysis using a revised LTA for nitrogen that was close
to the LTAs upon which the final limitations are based. In addition to
using this revised LTA for total nitrogen in the supplemental analysis
of costs for both the poultry and meat subcategories, EPA also used
other information that was received in late comments including
treatment-in-place classifications, additional costs for methanol, and
longer storage duration for emergency holding ponds. EPA is presenting
the results of this supplemental analysis in the TDD (costs and
removals) and the

[[Page 54486]]

EEBA (economic impacts, cost-reasonableness, and cost-effectiveness).
Based on this analysis, EPA estimates that the total annualized pre-tax
compliance costs of the rule could be $52 million (a decrease from the
$58.2 million estimate in EPA's primary analysis) and the removals of
total nitrogen could be 20.6 million pounds per year (a decrease from
the 27 million pounds per year estimate in the primary analysis). EPA
has concluded that the results of the supplemental analysis would not
change EPA's selection of the technology bases for BPT, BAT, and NSPS,
or its determination that the final rule is economically achievable,
cost-reasonable, and nutrient cost-effective.
As noted above, EPA did not use the NODA average effluent
concentrations for calculating the final effluent limitations and
standards. Rather, EPA based the final LTA concentrations on further
consideration of the performance of facilities using the model BPT and
BAT technologies and additional data and information provided in
comments on the NODA.
In particular, regarding the total nitrogen LTA, commenters were
concerned about EPA's intention to transfer the poultry total nitrogen
LTA for use in the development of the limitations and standards for
meat facilities. Commenters demonstrated that the average influent
nitrogen concentrations (i.e., TKN) at meat facilities are almost two
times higher than the average influent nitrogen concentration at
poultry facilities which may affect their ability to consistently
achieve the same effluent concentrations using the BAT technology. For
the final rule, EPA thus selected the model poultry facility with an
influent nitrogen concentration that was closest to the average
influent nitrogen concentration at meat facilities. This led to a total
nitrogen LTA for meat facilities that was about 20% less stringent than
the total nitrogen LTA for poultry facilities. Further, based on
comments concerning the excess detention times in the anoxic basins of
the two partial denitrification facilities that were used to set the
limitations (EPA used one of the facilities to calculate the LTAs for
meat facilities and both were used for poultry facilities), EPA
reassessed its estimates of the variability among denitrification rates
at BAT facilities and determined that an additional factor to reflect
lower denitrification rates at some facilities was appropriate for
calculating the final nitrogen limitations. This factor was related to
the consideration of several variables, including anoxic basin size,
BOD/TKN ratio, and influent total nitrogen variability (see DCN 300-017).
In regard to the ammonia (as nitrogen) and conventional pollutant
LTAs, based on comments regarding the use of all data EPA collected,
EPA reevaluated its full effluent database (i.e., including data from
facilities that only provided data reported as summarized monthly
averages). As a result of this reevaluation, EPA further revised its
selection of model facilities for use in developing the ammonia (as
nitrogen) and conventional pollutant LTAs for the rule. (See DCNs 300-
011, 300-012, and 300-013.) In addition, comments were received that
seasonal changes in performance or wastes to be treated with respect to
the biological nitrification portion of the process would affect the
ability to meet ammonia limits. Following evaluation of the ammonia
data, including the effects of seasonal variability, EPA calculated the
final limitations using the most representative facility's data and
applied a seasonality adjustment factor to the final limitations. All
of these revisions were designed to ensure that facilities operating
the selected technology would be able to achieve all of the limitations
and standards of the final rule in all seasons of the year. See Section
14 of the TDD for the final rule for discussion of the data sets used
to develop the final limitations and standards for these subcategories
and pollutants.
Although EPA recalculated effluent limitations using the new LTAs
identified above, EPA determined that it was not necessary to make
further revisions to its cost and removal assessments beyond the
supplemental analyses discussed above. EPA recalculated the LTAs in
order to ensure that the effluent limitations guidelines being
promulgated today reflect the best and most current information
available to EPA regarding the performance of the BPT and BAT
facilities. Because these effluent limitations guidelines become the
basis for enforceable permit limitations, EPA concluded that this
refinement is justified. EPA's estimates of costs and removals,
however, have a different function. Unlike the limitations, they are
not binding. Rather, EPA uses this information as a basis for
evaluating which BPT and BAT candidate technologies under consideration
best meet the statutory requirements. EPA has determined that the
analyses based on the NODA average effluent concentration, along with
the supplemental analysis, remain generally applicable to the
technology options considered and use of the final LTAs in calculating
the costs and removals would not have changed EPA's conclusions about
the technology on which it should base the final limitations. The new
LTAs are not significantly different from the LTAs used as the basis
for EPA's supplemental analysis, and EPA has concluded that the final
revisions to the LTAs would not change the cost and removal estimates
in a material way. In other words, when considering the refined
versions of the LTAs developed for purposes of calculating the
limitations in light of the analyses it conducted, EPA continues to
conclude that the chosen technology bases meet the CWA requirements for
BPT, BAT, and NSPS. For these reasons, EPA believes it is appropriate
not to recalculate the costs and removal estimates to reflect the new
LTAs being used to calculate the final limitations and standards. To do
so would not have materially changed the results.
In conjunction with its review of its statistical models, EPA
performed an engineering review to verify that the limitations are
reasonable based upon the design and expected operation of the control
technologies and the facility process conditions. As part of the
engineering review, EPA examined the range of performance from
facilities with Option 2.5 technology as indicated by the facility
effluent for those facilities whose data were used to calculate the
limitations and those that were not used as a basis for the
limitations. Some facility data sets demonstrated the best available
technology and achieved the expected performance level. Other facility
data sets reflected inadequate performance, either in the manner the
facility operates the technology or because of design differences in
the technology. For these facilities, EPA has evaluated the impact of
the costs to the industry for facility upgrades to its design,
operating, and maintenance conditions to meet the limitations (see
Section VIII.B for discussion of compliance cost methodology).
As discussed in the NODA and in more detail in Section VII.B of
today's final rule, EPA did not identify any non-small meat first
processing facilities (Subcategories A-D) that meet EPA's criteria for
selection as operating as a BAT Option 2.5 facility. Therefore, in
developing limitations associated with Option 2.5 for meat first
processing facilities, EPA transferred the long-term average
concentration for total nitrogen from a well-operated Option 2.5
poultry first processing facility and, as discussed above, included an
additional factor to adjust the final total nitrogen limitations to
account for variable denitrification rates and ensure

[[Page 54487]]

achievability. EPA included costs (such as costs for lagoon bypass,
additional carbon source, or two-stage denitrification) for the meat
first processing facilities to achieve the Option 2.5 LTA for total
nitrogen.
Because commenters stated that two-stage denitrification should not
be part of EPA's definition of Option 2.5 technology, EPA reviewed the
costs for the five non-small meat first processors (Subcategories A-D)
in EPA's database that EPA had costed for two-stage denitrification in
the preliminary cost analysis due to their high influent TKN (i.e.,
greater than 200 mg/L) levels. EPA then developed alternate costs for
these facilities in the supplemental analysis, including costs for
additional pretreatment using DAF and alum addition (to reduce the TKN
load to the biological nutrient removal system) followed by single-
stage denitrification. On a site-specific basis, these costs were both
lower and higher than the costs EPA estimated for its original
analysis, but were still within the range that EPA considers
economically achievable. These alternate cost estimates do not result
in any additional economic impacts (i.e., closures). Details of the
supplemental analyses are provided in Section 10 of the TDD and in the EEBA.
3. How Has the Monitoring Frequency Changed?
In developing the proposed maximum monthly limitations and
standards, EPA had assumed a monitoring frequency of thirty samples per
month (i.e., daily monitoring) which had been the assumption for the
previously promulgated limitations. In the proposal (67 FR 8632), EPA
solicited comment on whether small poultry facilities should have
monthly limitations/standards based upon 20 days, rather than 30 days,
because they would be unlikely to operate on weekends. In response, EPA
received comments that stated that monitoring every day during the
month was too frequent for all facilities; one commenter requested
sampling once per week. An analysis of existing permits for MPP
facilities showed that the monitoring frequency ranged from daily to
weekly to monthly. EPA agrees with the commenters and has reduced the
assumed monitoring frequency to weekly (approximately four times a
month) for any new limitations and standards promulgated in this
rulemaking. EPA incorporated this assumed monitoring frequency into the
monitoring costs and determination of the limitations for the final
rule. This rule does not establish minimum monitoring frequencies. The
decision regarding the actual frequency at which facilities must
monitor for compliance with today's limitations and standards is left
to the permit writer. See 40 CFR 122.44(1) and 122.48.

VI. Applicability

A. To Whom Does This Rule Apply?

This regulation applies to meat facilities and poultry and small
game facilities (referred to as ``poultry facilities'' for convenience)
that discharge their wastewater directly into waters of the U.S. (e.g.,
stream, lake, ocean) and are required to obtain an NPDES permit.
Facilities that send their wastewater to a publicly owned treatment
works (POTW) are not subject to this final rule; they remain subject to
40 CFR 403 and their local limits (see sections VI.G and XII.A.2).
Facilities above certain production thresholds (see Table VI.H-1
for subcategory-specific production thresholds) who are involved in any
of the following activities are subject to this rule:
? Slaughtering (first processing) meat or poultry or both
? Further processing meat or poultry or both
? Rendering meat or poultry or both.
Operations or processes for which EPA has not promulgated effluent
limitations guidelines and standards are subject to technology-based
limitations determined on a case-by-case basis under 40 CFR 125.3.

B. What Is a First Processor?

A first processor is a facility that slaughters live animals and
produces whole or cut-up carcasses. First processing operations can
include the assembly and holding of animals for slaughter, killing,
bleeding, removal of hide or hair or feathers, evisceration and variety
meat (organ) harvest, carcass washing, trimming, carcass chilling and
refrigeration, and cleanup. For the purposes of this rule, a facility
is still a first processor if it performs other operations in addition
to slaughtering such as further processing or rendering and is only
subject to the limitations for first processors.
First processors include facilities classified as simple
slaughterhouses (40 CFR 432 Subpart A), complex slaughterhouses
(Subpart B), low-processing packinghouses (Subpart C), and high-
processing packinghouses (Subpart D), in addition to the newly created
Subpart K for poultry first processors.

C. What Is a Further Processor?

A further processor is a facility that performs operations which
utilize whole carcasses or cut-up meat or poultry products for the
production of fresh or frozen products. Further processing operations
may include the following types of processing: Cutting and deboning,
cooking, seasoning, smoking, canning, grinding, chopping, dicing,
forming, breading, breaking, trimming, skinning, tenderizing,
marinating, curing, pickling, extruding and/or linking. A facility is
still a further processor if it performs other operations in addition
to further processing such as rendering (but not slaughtering) and is
only subject to the limitations for further processors.
Meat further processors include facilities classified as small
processors (40 CFR part 432 Subpart E), meat cutters (Subpart F),
sausage and luncheon meats processors (Subpart G), ham processors
(Subpart H), and canned meats processors (Subpart I), in addition to
the newly created Subpart L for poultry further processors.

D. What Is An Independent Renderer?

A renderer processes slaughtering by-products (e.g., animal fat,
bone, blood, hair, feathers, dead animals) from either poultry or meat
into usable products. An independent renderer is subject to 40 CFR part
432 Subpart J and is a facility that performs rendering operations at a
production rate greater than 10 million pounds per year and does not do
any first or further processing.

E. What Is Included as Meat? What Is Included as Poultry?

For today's rule, ``meat'' includes cattle, calves, hogs, sheep,
lambs, horses, and all other animal species except poultry, other
birds, rabbits, and other small game.
``Poultry'' includes chickens, turkeys, ducks, other birds,
rabbits, and other small game.

F. What if a Facility Processes Both Meat and Poultry? How Is it
Categorized?

Facilities that discharge wastewater from both meat and poultry
processing operations will have to comply with limitations and
standards for two subcategories. Permit writers would use the
``building block approach'' based on production or wastewater discharge
flow to apply the two sets of limitations into one final effluent
limitation in the facility's permit. See Section XII of today's
preamble for a discussion on how the rule will be implemented.

[[Page 54488]]

G. Are Indirect Dischargers Covered by This Final Rule?

EPA is not establishing pretreatment standards for existing or new
sources in today's final rule. Indirect dischargers (i.e., facilities
that discharge their MPP process wastewater to a publicly owned
treatment works) remain subject to the General Pretreatment Standards
(40 CFR 403) and local limitations.
The current part 432 regulations do not include pretreatment
standards (beyond a cross-reference to the General Pretreatment
Standards) and EPA did not propose to add them. However, as discussed
in the NODA (68 FR 48477; August 13, 2003), following the publication
of the proposal, EPA continued to gather additional data to determine
whether or not national categorical pretreatment standards were
necessary for the MPP industry. In addition, EPA received comments on
the proposal and NODA regarding the necessity of pretreatment standards
for the MPP industry. Most commenters supported EPA's proposed decision
to not promulgate pretreatment standards for new and existing indirect
dischargers.
Based on the data gathered through the EPA Regional offices and the
comments EPA received on this subject, EPA determined that there was
not sufficient evidence of pass through or interference from MPP
facilities to warrant establishing national pretreatment standards for
these facilities. For further discussion and to review the data
gathered, see DCN 115-077 in the docket for today's notice.
In today's final rule, EPA has removed the current cross-reference
to the General Pretreatment Standards (40 CFR part 403) under PSES and
PSNS for all subcategories. EPA found that this cross-reference was
potentially confusing and duplicative. All process wastewater
discharges to publicly owned treatment works (regardless of point
source category) are subject to part 403 regardless of whether it is
specified in the codified regulatory text or not.

H. What Changes Have Been Made to the Regulations for Meat Products?

Today's action revises Part 432 in a number of respects discussed
elsewhere in today's Federal Register Notice. These revisions include
promulgation of effluent limitations guidelines and standards for
poultry processors, which are presented in two new subparts (subparts K
and L), and the promulgation of limitations and standards for ammonia
and nitrogen for certain pre-existing subcategories. EPA has also
adopted a new applicability statement for Part 432 to account for the
new poultry subcategories and has consolidated into a General
Definitions section definitions that in the past had been repeated for
each subcategory. The new General Definitions section, codified at
Sec. 432.2, contains some new definitions, some revised definitions,
and some previously codified definitions that remain unchanged. EPA has
also removed as unnecessary provisions in Part 432 that require
indirect dischargers to comply with 40 CFR Part 403, because those
requirements speak for themselves.
For the convenience of the reader, today's rule presents Part 432
in its entirety. This presentation includes reprinting portions of Part
432 for which EPA is making no substantive changes today. Those
portions of the existing MPP effluent limitations guidelines and
standards that are not substantively amended by this action are not
subject to judicial review; nor is their effective date affected by
today's action.
Table VI.H-1 explains the changes and additions made to the earlier
regulation for meat slaughterhouses, packinghouses, and further
processors. The earlier regulation did not have production thresholds
distinguishing between small and non-small categories, and it did not
have Subcategories K and L for poultry slaughterers and further
processors.

Table VI.H-1.--Summary of Changes by Subcategory and Size
----------------------------------------------------------------------------------------------------------------
Subcategory Size Description Changes made by this rule
----------------------------------------------------------------------------------------------------------------
A-D: Meat First Processors... Small............ Slaughters <= 50 million lb/yr No revision.
live weight killed (LWK) of
meat.
Non-small........ Slaughters > 50 million lb/yr Set BPT limit for ammonia.
LWK of meat. No revision for BPT/BCT for
conventional pollutants.
Set BAT limits for nitrogen.
Set BAT limits for ammonia =
BPT.
Revise NSPS for ammonia = BPT.
Set NSPS for total nitrogen =
BAT.
No revision for NSPS for
conventional pollutants.
E: Meat Small Further ................. Produces <= 6,000 lb/day of No revision.
Processors. meat finished product.
F-I: Meat Further Processors. Small............ Produces > 6,000 lb/d but <= No revision.
50 million lb/yr of meat
finished product.
Non-small........ Produces > 50 million lb/yr of No revision for BPT/BCT.
meat finished product. Set BAT limits for nitrogen.
No revision to BAT limits for
ammonia except for
Subcategory G.
Set NSPS for total nitrogen =
BAT.
Set NSPS for ammonia.
No revision to NSPS for
conventional pollutants.
J: Independent Renderers..... ................. Renders > 10 million lb/yr of Lower production rate in
raw material (meat and/or definition from 75,000 pounds
poultry). per day to 10 million pounds
per year.
No revision for BPT/BCT.
Set BAT limits for nitrogen.
No revision to BAT limits for
ammonia.
Set NSPS for total nitrogen =
BAT.
No revision to NSPS for
conventional pollutants or
ammonia.
K: Poultry First Processors.. Small............ Slaughters <= 100 million lb/ No national limitations,
yr LWK of poultry. except for new sources.
Set NSPS for BOD5, TSS, O&G
(as HEM), pH, ammonia & fecal
coliforms.

[[Page 54489]]

Non-small........ Slaughters > 100 million lb/yr Set BPT/BCT/NSPS limits for
LWK of poultry. BOD5, TSS, O&G (as HEM), pH,
ammonia & fecal coliforms.
Set BAT and NSPS limits for
total nitrogen.
Set BAT limits for ammonia =
BPT.
L: Poultry Further Processors Small............ Produces <= 7 million lb/yr of No national limitations,
poultry finished product. except for new sources.
Set NSPS for BOD5, TSS, O&G
(as HEM), pH, ammonia & fecal
coliforms.
Non-small........ Produces > 7 million lb/yr of Set BPT/BCT/NSPS limits for
poultry finished product. BOD5, TSS, O&G (as HEM), pH,
ammonia & fecal coliforms.
Set BAT and NSPS limits for
total nitrogen.
Set BAT limits for ammonia =
BPT.
----------------------------------------------------------------------------------------------------------------

I. What Wastewaters Are Covered?

This rule covers wastewater generated by the following meat and
poultry product operations: first processing, further processing, and
rendering. Examples of this type of wastewater include water from
carcass washing, bird washing before and after evisceration, water used
in scalding in the process of feather removal, chilling, cleaning and
sanitizing of equipment and facilities, and other process area cleanup,
including washing out trucks and animal holding areas. Stormwater that
is associated with these activities is also included.
This rule does not include non-process wastewater such as non-
contact cooling water, sanitary wastewater, and stormwater that is not
associated with industrial activity.

J. Which Pollutants Have Limitations and Standards Established by This
Rule?

EPA is establishing limitations and standards for 5-day biochemical
oxygen demand (BOD₅), total suspended solids (TSS), pH, oil
and grease (as hexane extractable material), fecal coliforms, ammonia
(as nitrogen), and total nitrogen. However, for some subcategories EPA
will not be revising current limitations for all or some pollutants
(e.g., conventional pollutants) and will therefore only be establishing
limitations and standards for some of these pollutants (e.g., total
nitrogen).
EPA has decided not to regulate total residual chlorine in today's
final rule, even though EPA evaluated it for regulation for the MPP
industry. When there is residual chlorine (i.e., chlorine is not used
up to inactivate bacteria), this chlorine can react with organic
compounds such as humic materials (i.e., forms of organic carbon
created by decaying organic matter) and form other chlorinated organic
compounds such as trihalomethanes (e.g., bromoform, chloroform,
bromodichloromethane, dibromochloromethane). Trihalomethanes are a
potential human health concern in drinking water. However, treatment
processes that meat and poultry products facilities use to remove
biochemical oxygen demand and other parameters also reduce the
concentrations of organic compounds in the discharged wastewater and,
therefore, lessen, to some extent, the potential for the formation of
trihalomethanes.
Disinfection via chlorination is part of the BAT technology basis
for the final limitations and standards for today's final rule.
Therefore, EPA used chlorination to estimate compliance costs for
disinfection in the cost model; however, this regulation does not
require the use of a specific technology-based process for
disinfection. Thus, facilities may use disinfection technologies other
than chlorination to comply with this final rule. Other effective
methods exist besides chlorinating with free chlorine (e.g., use of
chloramines, ozone, ultraviolet radiation) that may not form the same
level or type of by-products. In addition, the environmental effects of
disinfection by-products depend on the characteristics and uses of the
receiving water. These considerations persuade EPA that disinfection
by-products from MPP facilities are best controlled through individual
NPDES permit limits on a facility-by-facility basis.
In fact, for non-small facilities that responded to EPA's detailed
survey, 63 percent of facilities in Subcategories A-D (meat first
processors) and 48 percent of facilities in Subcategory K (poultry
first processors) already have limits in their NPDES permits for total
residual chlorine. An additional 5 percent of meat first processors and
12 percent of poultry first processors have monitoring requirements for
total residual chlorine without corresponding limits. Therefore, EPA
concluded that the current system is working well in addressing any
residual chlorine issues. When a chlorinated discharge enters U.S.
waters that are high in organic carbon content, then it is a local
water quality issue best addressed through a tailored, individual NPDES
permit.
See Section V.B for discussion of pollutants that EPA proposed for
regulation but did not regulate in the final rule (i.e., COD and total
phosphorus).

K. Does This Regulation Impose Monitoring Requirements ?

EPA is not promulgating any monitoring requirements in this
regulation. While EPA based its limitations, statistical analysis, and
corresponding cost estimates for today's rule on monitoring once per
week, no such frequency is being required today. Rather, actual
monitoring requirements for individual facilities are specified in the
NPDES permits issued by the States (or other authorized permitting
authority).

VII. What Is the Basis of the Final Regulation?

This section describes, by subcategory, the options considered and
selected for today's final rule. EPA provides a discussion, as
applicable, for the regulatory levels that EPA considered for
regulation (i.e., BPT, BCT, BAT, and NSPS) for each of the
subcategories of the MPP industry. See summary in Table VII.A-1. For a
detailed discussion of all technology options considered in the
development of today's final rule, see the proposal (see 67 FR 8582;
February 25, 2002, the NODA (see 68 FR 48500; August 13, 2003) or
Section 9 of the TDD for today's final rule.
EPA has also determined that each technology it selected as the
basis for the final limitations has effluent reductions commensurate
with compliance costs and is economically achievable for the applicable
subcategory. EPA considered the age, size, processes, and other
engineering factors pertinent to facilities in the scope of the final
regulation for the

[[Page 54490]]

purpose of evaluating the technology options. None of these factors,
except size, provides a basis for selecting different technologies from
those EPA selected for today's rule. As discussed in the proposal (67
FR 8582; February 25, 2002) and below, EPA is not promulgating or
revising national effluent limitations for small facilities in specific
subcategories. (See Section 5 of the TDD for the final rule for further
discussion of EPA's analyses of these factors.)
The new source performance standards (NSPS) EPA is establishing
today represent the greatest degree of effluent reduction achievable
through best available demonstrated control technology. The new source
technology basis is equivalent to the technology basis upon which EPA
is setting BAT. In selecting its technology basis for today's NSPS, EPA
considered all of the factors specified in CWA section 306, including
the cost of achieving effluent reductions. EPA has thoroughly reviewed
the costs of such technologies and has concluded that such costs do not
present a barrier to entry (see the Economic and Environmental Benefits
Analysis in the rulemaking record). The Agency also considered energy
requirements and other non-water quality environmental impacts for the
new source technology basis and found no basis for any different
standards from those selected for NSPS. Therefore, EPA concluded that
the NSPS technology basis chosen constitutes the best available
demonstrated control technology. For a discussion on the compliance
date for new sources, see Section XII of today's final rule.
EPA decided not to establish BPT, BCT, or BAT limitations for small
facilities in Subcategories K and L (poultry first and further
processing, respectively) or to revise current limitations and
standards for small facilities in Subcategories A-I (see Table VI.H-1).
EPA is establishing new source performance standards for new small
facilities in Subcategories K and L. EPA's bases for not promulgating
revised limitations or standards for small facilities are explained in
the following sections. Finally, EPA decided not to establish
pretreatment standards for all existing and new indirect dischargers
(PSES and PSNS) for the reasons discussed in the NODA (68 FR 48477;
August 13, 2003) and in Section VI.G of today's rule.

A. What Options Did EPA Consider for the Final Rule?

As discussed in the NODA (68 FR 48500; August 13, 2003), comments
on the proposal requested that EPA consider modifications to the
preferred options selected as the basis for the proposed limitations
and standards for certain subcategories. As a result of additional data
and comments, EPA reconsidered the technology options for BPT, BCT,
BAT, and NSPS that EPA evaluated for the proposed rule. In the NODA,
EPA presented two additional options for further consideration and
comment. These additional options include primary and secondary
biological treatment and disinfection, nitrification, partial
denitrification, and, for one option, chemical phosphorus removal. EPA
refers to these options as ``Option 2.5'' and ``Option 2.5+P.'' EPA
also stated in the NODA that it was considering not revising
limitations and standards for certain facilities.
For the final rule, EPA considered the full range of options
(Option 1 through Option 4) for all non-small facilities (i.e.,
facilities above the proposed subcategory-specific threshold) as well
as options under which EPA would not promulgate national effluent
limitations guidelines and standards for those facilities or would not
revise those limitations and standards currently in place. Table VII.A-
1 describes these options. For small facilities, EPA considered Option
1, Option 2, or no regulation/no revision. All technology-based options
EPA considered for the final rule included some pretreatment of the
wastewaters prior to biological treatment (including combinations of
screening, dissolved air flotation, equalization, and chemical
addition) followed by primary and secondary biological treatment and
disinfection. In Table VII.A-1, EPA uses the terms ``partial'' and
``more complete'' to describe the varying degrees of nitrification and
denitrification and to convey the increasing stringency of the options.
Because 100 percent nitrification or denitrification is not possible,
EPA chose the term ``more complete'' instead of ``complete'' to
describe the more stringent technology options.
For the NODA, EPA evaluated the effectiveness of in-place
denitrification technology at meat and poultry facilities. For
facilities for which EPA had data, EPA identified the facilities'
denitrification treatment systems and the partial denitrification
levels they achieved (e.g., long-term average nitrate + nitrite or
total nitrogen effluent concentrations). One commenter stated that it
believed that the target LTAs used to calculate costs for Option 2.5
were based upon facilities that had high nitrogen removals, regardless
of the control technologies used at those facilities (e.g., facilities
were using two-stage denitrification equipment) and that EPA failed to
clearly define partial denitrification. Following its consideration of
comments received on the NODA, EPA has better defined its criteria for
selecting facilities that are achieving the level of denitrification
that represents Option 2.5 control (i.e., partial denitrification). EPA
has used long-term data with individual measurements (i.e., not
summarized monthly average data) for total nitrogen (or both TKN and
nitrate+nitrite) from facilities employing BAT partial denitrification
to determine the Option 2.5 limitation for total nitrogen. For the
development of the LTA for total nitrogen, EPA considered facilities to
be operating as BAT partial denitrification (Option 2.5) technology if
they met all four of the following criteria:
? EPA has long-term effluent data for total nitrogen (or
both TKN and nitrate+nitrite) for the facility for the period which
they were operating their treatment system as Option 2.5.
? Facility had the biological treatment components of Option
2.5 technology in place and had a minimum BOD:TKN ratio of 3 at the
influent to biological nutrient removal;
? Facility was achieving effluent total nitrogen
concentrations below 60 mg/L; and
? Facility's current total nitrogen effluent concentration
can be achieved by EPA's Option 2.5 cost model (i.e., when running the
cost model starting at the facility's actual influent TKN
concentration, facility's actual total nitrogen effluent concentration
can be achieved using single-stage denitrification and a maximum
nitrate recycle rate of 5).
EPA chose 60 mg/L based on the documented total nitrogen removal of
the denitrification processes that is used in EPA's cost model
(Modified Ludzack-Ettinger process) which can achieve an average
nitrogen removal of 70 percent. When applying 70 percent removal of
total nitrogen to the average total nitrogen influent concentration
(193 mg/L) at meat survey facilities, the resulting concentration is
approximately 60 mg/L.
EPA developed the fourth criteria to ensure that it did not select
facilities as BAT that use components of Option 2.5 technology but
operate them in a way that is inadequate to achieve a degree of
nitrification or approaches the performance and costs of EPA's Option
2.5 cost model. For example, based on comments from industry, EPA's
Option 2.5 cost model (based on single stage denitrification) allows
for a maximum nitrate recycle rate of 5 to achieve the Option 2.5 LTAs.
Some facilities may

[[Page 54491]]

actually use a higher recycle rate when operating their system. When
estimating compliance costs for such facilities, EPA's costing
methodology requires the use of the Option 2.5 LTAs with a two-stage
denitrification system (similar to the equipment used in the Option 4
cost model). For additional details regarding EPA's cost models or BAT
facility selection for development of limitations, see Sections 10 and
14, respectively, of the TDD for the final rule.

Table VII.A-1.--Options Considered
------------------------------------------------------------------------
Option Description \1\
------------------------------------------------------------------------
1............................. Biological Treatment + Partial
Nitrification + Disinfection
2............................. Biological Treatment + More Complete
Nitrification + Disinfection
2.5........................... Biological Treatment + Nitrification +
Partial Denitrification + Disinfection
2.5 + P....................... Biological Treatment + Nitrification +
Partial Denitrification + Chemical
Phosphorus Removal + Disinfection
4............................. Biological Treatment + Nitrification +
More Complete Denitrification +
Chemical Phosphorus Removal +
Disinfection
------------------------------------------------------------------------
\1\ Note: All Options are preceded by pretreatment steps.

B. What Is the Basis for EPA's Selected Technology Options for
Subcategories A-D (Meat First Processors)?

In 2002, EPA proposed revised national regulations for facilities
in Subcategories A-D that exceed a production threshold of 50 million
pounds (live weight killed) per year. EPA proposed this threshold to
reduce potential economic impacts to small facilities by allowing for
different limitations for small and non-small facilities (i.e., less
stringent limitations for small facilities). EPA did not receive
adverse comment on the production threshold and is retaining the
proposed production threshold for the final rule. Therefore, this
section discusses small facilities and non-small facilities separately.
Costs presented in this section are presented in 1999 year dollars
which is the base year of the survey; however, EPA provides updated
estimates in 2003 year dollars in Section VIII.B.
1. Meat First Processors That Slaughter Less Than or Equal to 50
Million Pounds Per Year (Small)
EPA is not revising limitations or standards for small facilities
in Subcategories A-D. Such facilities will continue to be subject to
the current limitations in Meat and Poultry Products effluent
limitations guidelines (part 432), as applicable. The current
regulations include production-based limitations for these facilities
for BOD, TSS, oil & grease, pH, and fecal coliforms for existing
sources and standards for these same pollutants plus the addition of
standards for ammonia (as nitrogen) for new sources. The following
sections discuss EPA's decision to retain the current BPT, BCT, and BAT
limitations and NSPS for small direct discharge facilities in
Subcategories A-D.
a. BPT/BCT/BAT
EPA proposed not to revise the current BPT, BCT, or BAT limitations
for existing small direct dischargers in Subcategories A-D (meat first
processors). For the final rule, for these facilities, EPA evaluated
the cost of achieving pollutant reductions and the economic
achievability of compliance with best practicable control technology
(BPT) limitations based on the Option 1 technology and the level of the
pollutant reductions resulting from compliance with such limitations.
Option 1 includes biological treatment, partial nitrification, and
disinfection.
EPA estimated that the cost of achieving the effluent reductions
for these facilities at Option 1 would be $198 per pound of pollutant
removed (1999$).\1\ EPA has promulgated effluent limitations guidelines
in the past with costs per pound of pollutant removed as high as $37
per pound (1999$) although generally ELGs have had much lower costs per
pound. Therefore, EPA evaluated the cost of the treatment technology
options to small facilities using $37 per pound removed as guidance for
assessing BPT cost-reasonableness.
---------------------------------------------------------------------------

\1\ In estimating the pounds of pollutants removed by
implementing Option 1 technology for these facilities, EPA used the
sum of BOD₅ and ammonia (as nitrogen) removed. EPA did
not include removals of other pollutants, including COD, in this
analysis because, for example, BOD and COD address many of the same
pollutants and including both could result in double counting.
---------------------------------------------------------------------------

Consequently, following this approach, EPA has determined the total
costs of effluent reductions using the Option 1 technology are not
reasonable in relation to the effluent reduction benefits for the
following reasons. First, although EPA estimates that implementation of
the Option 1 technology would result in zero closures, EPA estimates
the cost of effluent reductions using Option 1 technology is $198 per
pound removed. Moreover, Option 1 does not remove any additional
nutrients and consequently is not ``nutrient cost-effective'' (see
Section VII.B.2.c for detailed discussion on nutrient cost-
effectiveness). For the reasons discussed in this section, EPA has
concluded that for existing small direct dischargers in the
Subcategories A-D, Option 1 is not the best practicable control
technology, best conventional pollutant control technology, or best
available technology economically achievable. Because the other options
being considered would require more equipment and therefore more costs
than Option 1, EPA assumed they would not be considered cost-
reasonable. Therefore, EPA has determined that it should not promulgate
revisions to the current BPT, BCT, or BAT limitations for existing
small direct dischargers. These facilities will continue to be subject
to the applicable portions of sections 432.10--432.40.
b. New Source Performance Standards (NSPS)
When establishing NSPS based on best available demonstrated
technology, the Agency considers how the cost of complying with any
more stringent effluent limitations will affect new facilities trying
to enter the industry. EPA employs a barrier to entry analysis that
evaluates the barrier posed to new entrants by the cost of complying
with the regulation. (For further discussion, see Section IX.G.) While,
as explained previously, the cost of effluent reductions for existing
small A-D facilities may not be cost reasonable, it is not necessarily
the case that the costs for new facilities are as great. Generally, it
is less costly for a new facility to incorporate waste treatment
technologies during construction than to retrofit existing facilities.
EPA's barrier to entry analysis compares estimated average
incremental capital costs a facility or company incurs to meet the
effluent guidelines to average total assets of existing facilities or
companies. EPA considered establishing new source performance standards
for small facilities in Subcategories A-D based on Option 1 technology.
EPA evaluated the barrier to entry based on a ratio of costs for Option
1 to assets of existing facilities. The Agency estimates a cost to
assets ratio of 16.7%, which the Agency concludes will present a
barrier to entry to new facilities. Because the costs for other options
would be greater than for Option 1, these would pose an even greater
barrier to entry. For these reasons, EPA is not revising the NSPS
limitations for new small direct dischargers in these subcategories.
New facilities would continue to be subject to

[[Page 54492]]

the current NSPS limitations in sections 432.15, 432.25, 432.35, and
432.45.
2. Meat First Processors That Slaughter More Than 50 Million Pounds Per
Year (Non-Small)
a. Pollutants
For non-small facilities in Subcategories A-D, EPA is revising
limitations and standards for some pollutants and is establishing total
nitrogen limitations and standards for the first time. EPA is not
revising the current limitations (BPT/BCT) or new source performance
standards (NSPS) for conventional pollutants for these facilities. The
current regulations include production-based limitations and standards
for these facilities for BOD, TSS, oil & grease, pH, and fecal
coliforms. EPA is revising BPT to include limitations for ammonia (as
nitrogen), establishing a BAT limitation for ammonia (as nitrogen)
equivalent to the BPT limitation, revising the NSPS for ammonia to be
equivalent to the BPT limitation, and establishing BAT and NSPS
limitations for total nitrogen. As discussed in Section V.G, the
revised and new limitations and standards are concentration-based. The
following sections discuss the technology bases EPA selected for the
final rule for the non-small direct discharge facilities in
Subcategories A-D.
b. Best Practicable Control Technology Currently Available (BPT)
In 1974, EPA established BPT for the meat subcategories A-D based
on biological treatment (e.g., aerobic and anaerobic treatment) to
control five conventional pollutants or pollutant parameters
(BOD₅, TSS, oil & grease, fecal coliforms, and pH). The BPT
limitations did not include limits for ammonia (as nitrogen) because
nitrification was not a widely used technology, and therefore, not the
BPT technology at the time. However, EPA notes that the BPT technology
that was the basis for the 1974 limitations provided some incidental
ammonia removal through nitrification during extended aeration, which
resulted in some reduction in ammonia (as nitrogen). EPA did attempt to
establish ammonia limitations under BAT based on a technology other
than nitrification (which was more advanced than the 1974 BPT
technology). Those limitations were the subject of judicial challenge
and were remanded to EPA for further consideration (American Meat
Institute v. Environmental Protection Agency, 526 F.2d 442 (7th Cir.
1975)). In 2002, EPA proposed new BPT limitations for ammonia (as
nitrogen) based on Option 2 for non-small facilities in Subcategories
A-D (facilities with production rates greater than 50 million pounds
live weight killed (LWK) per year). As shown in Table VII.A-1, Option 2
consists of biological treatment followed by more complete
nitrification than Option 1 to further reduce ammonia levels and
disinfection.
EPA is establishing BPT limitations for ammonia (as nitrogen) for
non-small direct dischargers in Subcategories A-D based on the proposed
technology option (Option 2) with the inclusion of Option 2.5
facilities as part of evaluating seasonal effects on nitrification. A
large degree of nitrification must occur in order to achieve sufficient
partial denitrification to meet the nitrogen limitations, thus, the
limitations for ammonia are based on data from facilities of both
option types. EPA has concluded that ``more complete'' nitrification is
now a widely available pollution control technology that should be the
basis for the BPT ammonia limitation. For this guideline, EPA did not
propose revising BPT limitations for the conventional pollutants. (See
Section VII.B.2.c on BCT for additional information on why EPA is not
revising current limits for conventional pollutants for facilities in
these subcategories.)
EPA has concluded that biological nitrification treatment
technology represents the best practicable control technology currently
available for control of ammonia (as nitrogen) while providing
incidental removals of additional conventional pollutants, particularly
BOD₅ and TSS, and is the basis for the BPT limitations for
these facilities for the following reasons.
First, this technology is available and readily applicable to all
non-small facilities in Subcategories A-D. Approximately 97 percent of
the non-small direct discharging facilities in these subcategories
currently use the Option 2 technology or better. Although most
facilities have the components of Option 2 technology in place (e.g.,
nitrification basin/aerobic reactor), some facilities are not achieving
the Option 2 long-term average (LTA) concentration for ammonia or the
additional removals of the conventional pollutants identified in the
following paragraph. EPA attributes this to their failure to operate or
maintain the Option 2 technology adequately. Consequently, when
estimating the costs of compliance with Option 2 for purposes of
evaluating its reasonableness and for estimating economic impacts, EPA
included costs for treatment optimization that a number of facilities
would need in order to achieve the Option 2 LTAs. For example, EPA
included costs for increased aeration, detention time (capacity),
chemical addition, sludge handling, process controls, and additional
in-process sampling and analytical testing. (See Sections 10 and 11 of
the final Technical Development Document for additional discussion of
the cost and loading methodologies.)
Second, the cost of compliance with these limitations relative to
the effluent reduction benefits is not disproportionate. Based on our
economic analysis (see Section IX), EPA concludes that compliance with
BPT limitations based on Option 2 technology should not result in
closures of any existing non-small direct dischargers in these
subcategories. Moreover, adopting this level of control will reduce the
quantity of ammonia (as nitrogen) and other pollutants currently being
discharged into the environment.
For meat first processor facilities that produce more than 50
million pounds LWK per year, EPA estimates an annual compliance cost
for Option 2 of $7.29 million (pre-tax, 1999$). It also estimates 3.8
million pounds of BOD₅ and ammonia (as nitrogen) removed
from current discharges into the Nation's waters (for $2.55/pound-
pollutant removed (1999$)). In estimating the pounds of pollutant
removed by implementing Option 2 technology for these facilities, EPA
used the sum of BOD₅ and ammonia (as nitrogen) removed. EPA
tried to avoid ``double-counting'' pollutant reductions that would
occur if, for example, EPA summed removals of COD and BOD. As
previously explained, EPA has evaluated BPT costs and removals using,
as guidance, $37/lb-removed in 1999 dollars as a point of comparison.
EPA has, therefore, determined the total cost of effluent reductions
due to the Option 2 technology ($2.55 per pound removed) are reasonable
in view of the effluent reduction benefits.
EPA found that 32% of the non-small facilities in these
subcategories use Option 2.5 (which includes partial denitrification).
Although Option 2.5 technology is demonstrated, it is not as widely
available as Option 2. Moreover, the pollutant loadings reductions for
ammonia (as nitrogen) for Option 2.5 are the same as the reduction
estimated for Option 2 but cost $9 million more every year. Therefore,
EPA did not select it as the basis of BPT limitations.
EPA did not select Option 2.5+P or Option 4 as the basis for BPT
limitations, as they do not achieve additional pollutant reductions at
a cost EPA considers reasonable. For example, Option 2.5+P does not achieve

[[Page 54493]]

additional removals of ammonia (as nitrogen) but would cost an
additional $36 million annually. Option 4 would remove an additional
59,000 pounds of ammonia (as nitrogen) at an additional cost of $45
million annually. Moreover, EPA notes that Option 2.5+P represents
control technology not closely related to the technology basis for the
earlier BPT regulations. Chemical phosphorus removal is not closely
connected to the nitrification and disinfection technology that was the
basis of the 1974 BPT limitations for Subcategories A-D. The Agency did
not select other options considered for BPT because they were not
readily available and/or produced an unfavorable total BPT cost and
removal comparison. Detailed discussions explaining why EPA rejected
setting BPT limitations based on these other technology options are
contained in the proposal and the NODA (see 67 FR 8637; February 25,
2002 and 68 FR 48499; August 13, 2003). EPA has no information that
justifies changing these conclusions.
Although EPA is not changing the technology basis from that
proposed, the Agency is promulgating BPT limitations for non-small
facilities in Subcategories A-D that are slightly different than
proposed. First, where EPA is promulgating BPT limitations for
pollutants like ammonia (as nitrogen) for which EPA had not previously
set BPT limits for these subcategories, the final limitations are based
on revised and additional data reflecting the types of changes
described in the NODA (see 68 FR 48495). In addition, for the reasons
discussed in Section V.G, where EPA is adopting new or revised BPT
limitations, EPA has expressed them in concentration-based form while
the unchanged limitations will continue to be expressed as production-
based limits. (See Section 15 of the TDD for guidance on how both types
of limits can be implemented together into permits.)
c. Best Conventional Pollutant Control Technology (BCT)
For both the proposed and final rules, in deciding whether to adopt
more stringent limitations for BCT than BPT, EPA considered
technologies that might achieve greater removals of conventional
pollutants than those adopted for BPT. It also looked at whether those
technologies are cost-reasonable under the standards established by the
CWA. EPA generally refers to the decision criteria as the ``BCT cost test.''
As discussed in Section VII.B.2.a, EPA is not revising the current
BPT effluent limitations for conventional parameters (i.e., pH,
BOD₅, TSS, O&G, and fecal coliforms) for non-small meat
first processors (Subcategories A-D). Therefore, when considering a
technology that would achieve greater removals of conventional
pollutants than adopted for BPT, EPA compared the removals achievable
through implementation of the Option 2 technology (which EPA considered
as the possible technology basis for BCT) to current BPT limitations.
EPA estimates that Option 2 removes about an additional 610,000 pounds
per year of BOD₅ and 970,000 pounds per year of TSS compared
to pollutant reductions by facilities meeting or exceeding current BPT
limitations. There are no additional removals of O&G or fecal
coliforms.
EPA evaluated Option 2 under the BCT cost test and it failed (see
EPA's Economic and Environmental Benefits Analysis for details on the
Agency's analysis). EPA did not evaluate technology options, such as
Option 2+F (Option 2 plus the addition of a filter), because they are
more costly and would not remove significantly more conventional
pollutants than Option 2. Therefore, if Option 2 did not pass, these
options would not pass the BCT cost test. The Agency did not identify
any technologies that pass the BCT cost test and achieve greater
removals of conventional pollutants than the current BPT technology.
Thus, EPA is not revising the BCT limitations for these facilities.
Non-small facilities in Subcategories A-D will continue to be regulated
by the current BCT limitations (which are equivalent to the current BPT
limitations) in sections 432.17, 432.27, 432.37, and 432.47.
d. Best Available Technology Economically Achievable (BAT)
EPA proposed to establish the BAT level of regulatory control for
non-small facilities in Subcategories A-D based on Option 3 (i.e.,
biological treatment, more complete nitrification, more complete
denitrification and disinfection). As discussed in the NODA, after
review and evaluation of the revised and new data, EPA has reconsidered
its assessment of Option 3 as BAT technology. EPA determined that
Option 3 did not meet all the statutory criteria for BAT. Therefore,
the Agency refocused its evaluation for the technology basis for BAT on
Option 2.5, Option 2.5+P and Option 4 for nutrient removal. (See
Section VII.A of today's preamble for a description of the technology
options.) For the final rule, EPA is basing the BAT limitations for
non-small facilities in Subcategories A-D on Option 2.5 technology and
is promulgating a limitation for total nitrogen on this basis. EPA is,
however, setting a limitation for ammonia (as nitrogen) that is equal
to BPT.
The following section describes EPA's rationale for selecting
Option 2.5 technology and rejecting Option 2.5+P and Option 4 for the
basis of the total nitrogen limitation and for selecting to set BAT
equal to BPT (based on Option 2) for ammonia (as nitrogen). Both the
proposal and the NODA contain detailed discussions explaining why EPA
rejected setting BAT limitations based on other more stringent
technology options (see 67 FR 8629; February 25, 2002 and 68 FR 48499;
August 13, 2003). The record for today's final rule provides no basis
for EPA to change these conclusions.
EPA selected Option 2.5 technology as the basis of BAT for non-
small facilities in Subcategories A-D for the following reasons. First,
Option 2.5 technology has been demonstrated as available, as 32 percent
of the non-small facilities in Subcategories A-D use the components of
Option 2.5 technology (e.g., facility has in place a denitrification
basin, nitrification basin, and disinfection) or more advanced
technology. EPA has, however, determined that facilities in
Subcategories A-D with the components of Option 2.5 technology in place
are not operating their systems optimally based on review of the
BOD:TKN ratios (68 FR 48500; August 13, 2003). EPA concluded that for
effective denitrification to occur, facilities must be achieving a
minimum BOD:TKN ratio of 3. In addition, these facilities are not
currently achieving at least a 60 mg/L total nitrogen concentration in
the effluent. (EPA is using 60 mg/L as a minimum standard for
facilities it considered in developing the BAT long-term average
limitation for total nitrogen. See Section VII.A for discussion of BAT
facility selection criteria.) EPA did have data from poultry first
processing facilities with Option 2.5 technology that met all BAT
selection criteria, indicating that the poultry facility's treatment
systems were well operated. For this reason, when estimating costs and
pollutant reductions and in developing limitations associated with
Option 2.5, EPA used the long-term average (LTA) concentration for
total nitrogen from well-operated Option 2.5 poultry first processing
facilities (see Section 14 of the TDD for the final rule). EPA included
costs (such as costs for lagoon bypass, additional carbon source, or
two-stage denitrification) for the meat first processing facilities to
achieve the poultry Option 2.5 LTA for total nitrogen.

[[Page 54494]]

Second, Option 2.5 is economically achievable. EPA estimates the
pre-tax annualized compliance costs (in 1999 dollars) for Option 2.5 to
be $16.7 million. Using the facility and company closure methodologies
described in Section IX.A, EPA estimates that no facilities or
companies will close. EPA performed an alternate analysis by estimating
closures using more conservative assumptions (i.e., EPA predicted a
closure would occur if the facility failed under 1 of 3 forecast
methodologies, rather than under at least 2 out of 3). Under EPA's more
conservative alternate analysis, the Agency estimates that there could
be two closures among subcategory A-D facilities. Because not all
facilities are covered by the closure analysis, it may understate the
number of facility closures nationally.
As discussed in the NODA (68 FR 48489; August 13, 2003), EPA tried
to determine whether there are additional companies that own direct
discharging MPP facilities. The Agency identified, based on the
screener survey results, three additional companies across all
subcategories that may own direct discharging MPP facilities.
Therefore, the company-level analysis may underestimate the number of
company closures nationally, but to a lesser degree than the facility-
level analysis.
EPA also considered the cost-effectiveness of nutrient removal as
one aspect of its evaluation of BAT options for this industry as whole.
As discussed in the proposed rule and the NODA, EPA has established a
benchmark for nitrogen removal of $4 per pound, based on studies of
nitrogen removal by POTWs with biological nutrient removal, and a
benchmark for phosphorus removal of $10 per pound, based on studies of
agricultural best management practices that reduce phosphorus
discharges. EPA used these benchmarks for nutrients in connection with
the effluent guidelines for concentrated animal feeding operations (CAFOs).
For Option 2.5 for subcategories A-D, EPA estimates 15.4 million
pounds removed per year of total nitrogen and nutrient cost-
effectiveness of $1.08 per pound of total nitrogen removed. Because
Option 2.5 does not include phosphorus removal, EPA did not calculate
nutrient cost-effectiveness for phosphorus for Option 2.5. EPA
concludes that Option 2.5 is nutrient cost-effective for total nitrogen.
EPA considered Option 2.5+P as the basis of BAT, but rejected it
for the following reasons. First, no facilities in EPA's database for
Subcategories A-D use Option 2.5+P technology. However, facilities may
use individual components of the technology. Some facilities in the
subcategories use Option 2.5 technology (for nitrogen removal) and
Option 2+P or Option 4 (for phosphorus removal). Second, EPA estimated
the pre-tax annualized cost of Option 2.5+P to be $42.9 million. EPA
now believes these costs may be underestimated. Based on information
provided in comments on the NODA and further analysis, EPA concludes
that the average annual cost of increased alum addition and the
resulting increased sludge generation and disposal may range from
$108,000 to $378,000 more per facility than previously estimated for
this subcategory (see DCN 300-015). Option 2.5+P removes an estimated
4.5 million pounds per year of total phosphorus and achieves the same
level of nitrogen and conventional pollutant reduction as Option 2.5.
Although the cost per pound of phosphorus removed using the estimated
cost of $42.9 million is $9.49 per pound, EPA believes that the actual
cost per pound would be greater than $10 because of the additional
costs noted above. Although EPA has selected options where the nutrient
cost-effectiveness is greater then the reference values (i.e., $4/lb
nitrogen removed and $10/lb phosphorus removed) for an individual
subcategory or segment, EPA has not done so in cases where selecting
such an option would raise the nutrient cost-effectiveness of the rule,
as a whole, over these values. With a phosphorus cost-effectiveness
over $10/lb for non-small facilities in Subcategory A-D, the phosphorus
cost-effectiveness for the rule, as a whole, would be greater than $10/
lb total phosphorus removed. Therefore, considering the lack of
availability of the technology and the unfavorable nutrient cost-
effectiveness for phosphorus, EPA rejected Option 2.5+P as the basis of
BAT limitations.
EPA considered Option 4 (which includes more complete
denitrification and chemical phosphorus removal) as the basis of BAT
but did not select it due to the high increase in cost compared to
Option 2.5 and the poor incremental nutrient cost-effectiveness (i.e.,
the high cost to remove additional nutrients compared to Option 2.5+P).
EPA estimates that there are no direct discharge facilities in
these subcategories currently operating Option 4 technology. EPA
estimates the pre-tax annualized compliance costs for Option 4 to be
$52.0 million (1999$), which is $9.1 million more than Option 2.5+P and
$35.3 million more than Option 2.5. EPA estimates that Option 4 removes
18.5 million pounds per year of nitrogen (3.1 million more pounds per
year than Option 2.5 or Option 2.5+P) and 5.0 million pounds per year
of phosphorus (approximately 500,000 more pounds per year than Option
2.5+P). EPA estimates no facility or company closures for Option 4.
Finally, EPA estimates the incremental nitrogen cost-effectiveness (as
compared to Option 2.5) to be $11.56 per pound of total nitrogen
removed and the incremental phosphorus cost-effectiveness (as compared
to Option 2.5+P) to be $20.09 per pound of total phosphorus removed.
The incremental nutrient cost-effectiveness of Option 4 is above the
benchmark values; therefore, EPA does not consider Option 4 to be cost-
effective.
EPA is establishing BAT limitations for ammonia (as nitrogen) that
are equivalent to the limitations it is promulgating today under BPT
for subcategories A-D. EPA considered setting more stringent
limitations for ammonia (as nitrogen) under BAT; however, the selected
BAT technology option (Option 2.5) does not remove any additional
quantity of ammonia (as nitrogen), particularly when considering the
seasonal effects using data from Option 2 and Option 2.5 facilities.
Although Option 4 does remove some additional pounds of ammonia (as
nitrogen) as compared to Option 2, EPA did not select Option 4 for BAT
for the reasons discussed earlier in this section.
e. New Source Performance Standards (NSPS)
As previously discussed, when establishing NSPS, EPA considers
whether increased compliance costs related to the effluent guidelines
regulation might create a barrier for a new facility to enter the
industry and whether there are any new source standards currently in
place for the subcategory. The barrier to entry analysis compares the
estimated average increase in facility or company capital costs to meet
the effluent guidelines to the average total assets of existing
facilities or companies. EPA does not have data on the assets of new
entrants because, in general, we cannot identify them before they are
established. Therefore, EPA uses data on the assets of existing
facilities. The extent to which potential new entrants have total
assets that are similar to those of existing industry participants
provides a proxy for potential barriers to entry that new facility
compliance costs may represent.
EPA performed an analysis to evaluate the effect of the rule on the
costs to new entrants into the meat and poultry products industry by
calculating

[[Page 54495]]

the ratio of average capital costs to average total assets as a measure
of the potential for barriers to entry that the MPP rule could create
for these facilities. If the barrier to entry ratio is large, then
there is a possibility that the rule will discourage entry into the
meat and poultry products market.
EPA has estimated the ratio of costs to assets for facilities for
Options 2.5, 2.5+P and Option 4. The ratios are 1.6% for Option 2.5,
2.6% for Option 2.5+P, 3.3% for Option 4. The estimates for Option
2.5+P and Option 4, however, do not reflect EPA's additional evaluation
of the costs for chemical phosphorus based on comments EPA received
(see DCN 300-015). From this additional evaluation, EPA concludes that
the average annualized costs may be $108,000 to $378,000 per facility
more for chemical phosphorus removal than those used in EPA's barrier
to entry analysis, as discussed here. EPA is concerned that, with these
additional costs, the ratio may rise to a level that the Agency would
consider to be a barrier to entry for Option 2.5+P and Option 4.
EPA has decided to revise the standards for new sources for ammonia
(as nitrogen) for facilities in subcategories A-D to be equivalent to
the BPT limitations being established today and to establish standards
for total nitrogen equivalent to the BAT limitations being established
today based on Option 2.5. These standards do not present a barrier to
entry. Although there are existing NSPS for these facilities, they do
not include standards for total nitrogen.

C. What Is the Basis for EPA's Selected Technology Options for
Subcategory E (Meat Small Further Processors)?

Subcategory E includes the smallest meat further processing
facilities (i.e., meat further processing facilities that produce 6,000
pounds or fewer per day). In 2002, EPA proposed not to revise the
regulations for existing or new direct dischargers in Subcategory E.
EPA did not propose to revise the existing limitations applicable to
smaller MPP facilities (including all facilities in Subcategory E) to
the proposal because EPA determined that ``small'' MPP facilities
discharge a very small proportion of the total industry discharge and
that improved treatment would produce only a limited amount of loadings
removal (67 FR 8582; February 25, 2002). EPA did not receive comment or
additional information to persuade EPA to revise the existing effluent
limitations guidelines and standards for this subcategory. Therefore,
the current part 432 regulations continue to apply to those facilities
(Sec. 432.50).

D. What Is the Basis for EPA's Selected Technology Options for
Subcategories F-I (Meat Further Processing)?

In order to allow for different limitations for small and non-small
meat further processing facilities, EPA's 2002 proposal called for a
production threshold of 50 million pounds (finished product) for
facilities in Subcategories F-I. EPA is retaining that production
threshold for the final rule. Therefore, EPA addresses small facilities
and non-small facilities separately. Note the meat processors that
process 6,000 or fewer pounds per day (1.56 million pounds per year)
are not included in Subcategories F-I, but are covered under
Subcategory E (see Section VII.C). Costs presented in this section are
presented in 1999 year dollars which is the base year of the survey;
however, EPA provides updated estimates in 2003 year dollars in Section
VIII.B.
1. Meat Further Processors That Process More Than 6,000 Pounds Per Day
but Less Than or Equal to 50 Million Pounds Per Year (Small)
EPA is not revising limitations or standards for small facilities
in Subcategories F-I except to correct an error in the BAT ammonia
limitation. Meat further processing facilities that produce greater
than 6,000 pounds per day but less than or equal to 50 million pounds
per year of finished product will continue to be subject to the current
limitations in the Meat and Poultry Products effluent limitations
guidelines (part 432), as applicable. The following sections discuss
EPA's decision to retain the current BPT, BCT, and BAT limitations and
NSPS for small direct discharge facilities in Subcategories F-I.
a. BPT/BCT/BAT
EPA proposed not to revise the BPT, BCT or BAT limitations for
existing small meat further processors in Subcategories F-I. In part
432, small facilities in Subcategories F-I currently have BPT
limitations for the five conventional pollutants and BAT limitations
for ammonia. EPA did not propose to revise BPT limitations for
conventional pollutants for small facilities in these subcategories.
EPA evaluated the cost of additional technology (e.g., filtration)
under the BCT cost test and it failed. Therefore, EPA is not revising
the conventional pollutant limitations under BCT for small facilities
in Subcategories F-I.
For the final rule, EPA considered revising the ammonia (as
nitrogen) limitations under BAT. EPA evaluated the cost of achieving
pollutant reductions and the economic achievability of compliance with
limitations based on Option 1 and Option 2 technology. Option 1
includes biological treatment, partial nitrification, and disinfection,
and Option 2 accomplishes more complete nitrification (i.e., ammonia
removal) than Option 1 technology. When evaluating BAT technology, EPA
must determine whether the technology is available and economically
achievable. EPA must also determine whether the identified technology
is best. EPA typically evaluates a technology's cost-effectiveness as a
factor in its decision. When considering cost-effectiveness (except for
nutrients), EPA typically evaluates additional pollutant reductions in
toxic pound-equivalents. EPA estimates that the annualized cost of
Option 1 and Option 2 are about $1.10 and $1.11 million (pre-tax, 1999
dollars), respectively, which represents approximately 9.4% of net
income (as shown in Table IX.B-5). Using the closure methodology
described in Section IX, there is a very small probability that there
could be one facility closure out of sixteen facilities under either
option: the probability of closure is 1.49% and 1.51%, respectively.
EPA estimates that Option 1 achieves a reduction of 5 toxic pound-
equivalents per year, and Option 2 achieves a reduction of 15.2 toxic
pound-equivalents per year, resulting in a toxic cost-effectiveness of
$129,000 per toxic pound-equivalent (in 1981 dollars) for Option 1 and
$42,900 per toxic pound equivalent ($1981) for Option 2. Historically,
EPA has evaluated BAT technology using a toxic cost-effectiveness value
of $200/toxic pound-equivalents (in 1981 dollars). Therefore, EPA has
determined that Options 1 and 2 are not cost-effective and are not
economically achievable best available technology.
For existing small direct dischargers in the Subcategories F-I, the
Agency found neither Option 1 nor Option 2 is the best practicable
control technology, best conventional pollutant control technology, or
best available technology economically achievable. Therefore, EPA is
not revising BPT, BCT, or BAT limitations for existing small meat
further processors. These facilities will remain subject to sections
432.60-432.90, as applicable.

[[Page 54496]]

b. New Source Performance Standards (NSPS)
In 2002, EPA proposed not to revise the current new source
performance standards for small facilities in Subcategories F-I (meat
further processors). For the final rule, EPA has concluded that the
data on these facilities is insufficient to determine if Option 1 or
Option 2 technology would present a barrier to entry. In addition, the
analysis of barrier to entry data for these subcategories was
complicated by the fact that some facilities performing operations
fitting within the scope of Subcategories F-I also perform operations
that are regulated under Subcategory L (poultry further processors).
(See Section IX for discussion of ``mixed processors.'') EPA notes that
its analysis of Options 1 and 2 as candidate BAT technologies for
ammonia removal in these subcategories showed insignificant additional
removals at extremely high cost (several orders of magnitude above its
cost-effectiveness benchmark). While new facilities may be able to
install technology at lower cost than existing facilities, it is
unlikely that the costs would be low enough for the cost-effectiveness
to approach a reasonable value. Finally, EPA also considered whether or
not there were any new source performance standards currently in place
when deciding whether to revise new source performance standards. There
are current new source performance standards for these facilities which
appear to be adequate. Therefore, EPA is not revising NSPS for new
small meat further processors. New sources are subject to the current
NSPS limitations in sections 432.65, 432.75, 432.85, and 432.95.
2. Meat Further Processors That Process More Than 50 Million Pounds Per
Year (Non-Small)
a. Pollutants
For non-small facilities in Subcategories F-I, EPA is establishing
limitations for total nitrogen for existing sources, correcting an
error in the BAT limitation for ammonia, and establishing nitrogen and
ammonia (as nitrogen) standards for new sources. EPA is not revising
the current limitations (BPT/BCT) or new source performance standards
(NSPS) for conventional pollutants and is not revising the current BAT
limitations for ammonia (as nitrogen). The current regulations include
production-based limitations and standards for these facilities for
BOD, TSS, oil & grease, pH, and fecal coliforms for existing and new
sources and a concentration-based limitation for ammonia (as nitrogen)
for existing sources. As discussed in Section V.G, the new limitations
and standards are concentration-based. The following sections discuss
the technology bases EPA selected for the final rule for the non-small
direct discharge facilities in Subcategories F-I.
b. Best Practicable Control Technology Currently Available (BPT)
EPA established BPT for the meat further processors (Subcategories
F-I) in 1975, based on biological treatment (e.g., aerobic and
anaerobic treatment) to control five conventional pollutants or
pollutant parameters (BOD₅, TSS, oil & grease, fecal
coliforms, and pH). The current limitations for ammonia (as nitrogen)
for non-small meat further processors are contained in BAT and not BPT
(see Section VII.D.2.d for discussion of BAT options for ammonia
removal). Therefore, this section does not discuss BPT limitations for
ammonia (as nitrogen). In February 2002, EPA proposed new BPT
limitations for chemical oxygen demand (COD) based on Option 2 in an
effort to better reflect current BPT treatment technology for non-small
meat further processing facilities (67 FR 8630; February 25, 2002). See
Section V.B for discussion on why EPA is not establishing BPT
limitations for COD in today's final rule.
EPA did not propose revising BPT limitations for conventional
pollutants. (See Section VII.D.2.c on BCT for additional information on
why EPA is not revising current limits for conventional pollutants for
facilities in these subcategories.) Therefore, EPA is not revising the
conventional pollutant limitations for non-small meat further
processing facilities (Subcategories F-I) in today's final rule and
such facilities will remain subject to the BPT limitations in sections
432.62, 432.72, 432.82, and 432.92.
c. Best Conventional Pollutant Control Technology (BCT)
When deciding whether to adopt more stringent limitations for BCT
than BPT, EPA considers technologies that might achieve greater
removals of conventional pollutants than those adopted for BPT.
EPA is not promulgating new BPT effluent limitations for
conventional parameters (i.e., pH, BOD₅, TSS, O&G, and fecal
coliforms) for non-small meat further processors (Subcategories F-I).
When considering a technology that would achieve greater removals of
conventional pollutants than adopted for BPT, EPA compared the removals
achievable through implementation of the Option 2 technology (which EPA
considered as the possible technology basis for BCT) to current BPT
limitations. EPA estimates that Option 2 removes approximately 21,700
pounds more per year of BOD₅ compared to conventional
pollutant reductions by facilities meeting or exceeding current BPT
limitations. There are no additional removals of TSS, O&G, or fecal
coliforms.
EPA evaluated Option 2 under the BCT cost test and it failed (see
EPA's Economic and Environmental Benefits Analysis for details on the
Agency's analysis). EPA did not evaluate other technology options, such
as Option 2 + F (Option 2 plus the addition of a filter), because they
are more costly and do not remove significantly more conventional
pollutants than Option 2. If Option 2 did not pass, these more
expensive options would not pass the BCT cost test. The Agency did not
identify any technologies that pass the BCT cost test and achieve
greater removals of conventional pollutants than the current BPT
technology. Thus, EPA is not revising the BCT limitations for these
facilities. Non-small meat further processing facilities in
Subcategories F-I will remain subject to the current BCT limitations
(which are equivalent to the current BPT limitations for conventional
pollutants) in sections 432.67, 432.77, 432.87, and 432.97.
d. Best Available Technology Economically Achievable (BAT)
EPA proposed to establish the BAT level of regulatory control for
non-small meat further processors (Subcategories F-I) based on Option 3
(i.e., biological treatment, more complete denitrification, more
complete nitrification, and disinfection). As discussed in the NODA,
after review and evaluation of the revised and new data, EPA has
reconsidered its assessment of Option 3 as BAT technology. EPA
determined that Option 3 did not meet all the statutory criteria for
BAT. The Agency refocused its evaluation for the technology basis for
BAT on Option 2.5, Option 2.5+P, or Option 4 for nutrient removal (see
Section VII.A of today's preamble for a description of the technology
options). For the final rule, EPA is basing the BAT limitations for
total nitrogen for these facilities on Option 2.5 technology and is
promulgating a limitation for total nitrogen on this basis. EPA is not
revising the current BAT limitation for ammonia (as nitrogen) except to
correct a typographical error in the daily maximum limitation.

[[Page 54497]]

EPA evaluated whether revising the current BAT limitation for
ammonia (as nitrogen) based on Option 2, Option 2.5, Option 2.5+P, or
Option 4 treatment technologies could be supported. When evaluating
revision of BAT for non-conventional pollutants that are not nutrients,
EPA considers not only whether the technology option is available and
economically achievable, but also whether it is best. EPA typically
evaluates a technology's cost-effectiveness as a factor in its
decision. When considering cost-effectiveness (except for nutrients),
EPA typically looks at the costs of the additional pollutant reductions
(in toxic pound-equivalents).
EPA has estimated the annualized cost of each technology option
under review. The approximate annualized cost of the technology options
ranged from $266,000 for Option 2 to $798,000 for Option 4 (pre-tax,
1999 dollars). Using the closure methodology described in Section IX,
EPA projects that there would be a slight probability (0.5%) that at
most one facility would close under any of the technology options.
However, the average toxic cost-effectiveness numbers range from $8,000
per toxic pound-equivalent ($1981) for Option 2 to $18,400 per toxic
pound-equivalent ($1981) for Option 4. These high values are due to the
very minimal incremental reduction in toxic pound-equivalents: 19.4
toxic pound-equivalents/year for Options 2, 2.5, or 2.5+P and 25.3
toxic pound-equivalents/year for Option 4. EPA typically uses $200 per
toxic pound-equivalents (in 1981 dollars) as an indication of cost-
effectiveness for toxic pollutants. Therefore, EPA has determined that
Options 2, 2.5, 2.5+P, and 4 are a not cost-effective basis for
revising current ammonia (as nitrogen) limitations for non-small
facilities in these subcategories when compared with those currently
being achieved.
The following section describes EPA's rationale for selecting
Option 2.5 technology and rejecting Option 2.5+P and Option 4 as the
basis of BAT limitations for nutrients. EPA did not consider Option 2
for control of nutrients as it is not designed to reduce total nitrogen
or total phosphorus. Both the proposal and the NODA contain detailed
discussions explaining why EPA rejected setting BAT limitations based
on other technology options (see 67 FR 8629; February 2002 and 68 FR
48499; August 13, 2003). The record for today's final rule provides no
basis for EPA to change these conclusions.
EPA selected Option 2.5 technology as the basis of BAT control for
total nitrogen for non-small meat further processing facilities
(Subcategories F-I) because it is demonstrated as available and is
economically achievable. First, although no facilities in these
subcategories use Option 2.5 technology, this technology has been
demonstrated as available in all other subcategories of the MPP
industry. EPA notes that it did not have any detailed survey
respondents that are within the scope of Subcategories F-I and that
based on its screener questionnaire database, EPA estimates only 4 non-
small facilities in these subcategories. Based upon information
collected from facilities in this subcategory who received screener
surveys, all of the facilities are estimated to be currently achieving
the LTA of Option 2.5 for total nitrogen.
Second, Option 2.5 is economically achievable. EPA estimates the
pre-tax annualized compliance costs (in 1999 dollars) for Option 2.5 to
be $329,000. These costs are conservative and may be overstated as they
include costs for the components of Option 2.5 technology even at
facilities where the effluent concentrations are below the LTA for
Option 2.5. EPA chose to possibly overestimate costs in this
subcategory because of the uncertainty regarding the numbers of
facilities in these subcategories and lack of detailed information on
their operations. This is due to the small number of screener survey
respondents and the fact that EPA does not have any detailed survey
respondents from these subcategories. In addition, EPA's finding of
economic achievability in this rule is based on the estimated costs of
implementing the components of the model technology, not on achieving
the resulting limitations. Using the facility and company closure
methodologies described in Section IX.A, EPA estimates a 0.2%
probability of facility-level closure (i.e., at most one facility closure).
EPA also considered the cost-effectiveness of nutrient removal when
evaluating BAT options for this industry segment. However, as
previously noted, all non-small meat further processing facilities
(Subcategories F-I) in EPA's database are already achieving the Option
2.5 LTAs. Therefore, EPA estimates zero additional pounds removed per
year of total nitrogen and could not calculate a nutrient cost-
effectiveness for nitrogen.
Furthermore, there is the possibility that facilities in
subcategories A-D that perform further processing may be at a
competitive disadvantage if facilities in subcategories F-I do not have
equivalent limits. In addition, EPA does not want to encourage
companies to split their operations in order to be subject to lower limits.
EPA considered Option 2.5+P as the basis of BAT, but rejected it
for the following reasons. First, no non-small meat further processing
facilities in EPA's database use Option 2.5+P technology. Second,
Option 2.5+P costs an additional $30,000 annually for no additional
pollutant reductions when compared to Option 2.5, because all of the
facilities in EPA's database were achieving LTAs for phosphorus much
lower than the LTA for 2.5+P. Therefore, this technology does not
appear to be cost-effective.
EPA considered Option 4 as the basis of BAT but did not select it
due to the lack of availability of the technology option, the high
increase in cost compared to Option 2.5, and the poor incremental
nutrient cost-effectiveness (i.e., the high cost to remove additional
nutrients compared to Option 2.5+P).
EPA estimates that there are no facilities in subcategories F-I
currently operating Option 4 technology. In addition, EPA estimates the
pre-tax annualized compliance costs for Option 4 to be $798,000
(1999$), which is $469,000 more than Option 2.5. EPA estimates that
Option 4 removes approximately 80,000 pounds per year of nitrogen and
zero pounds per year of phosphorus. Using the facility and company
closure methodologies described in Section IX.A, EPA estimates a 0.5%
probability of facility-level closure (i.e., at most one facility
closure). Finally, EPA estimates the average nutrient cost-
effectiveness for nitrogen to be $10.02 per pound of total nitrogen
removed, while the incremental nitrogen cost-effectiveness relative to
Option 2.5 is $5.89 per pound. Both of the figures are above the $4 per
pound benchmark for nitrogen removal. Therefore, EPA does not consider
Option 4 to be cost-effective.
e. New Source Performance Standards (NSPS)
In 2002, EPA proposed to revise the current new source performance
standards for non-small facilities in Subcategories F-I (meat further
processors) based on Option 3 technology. EPA estimates only four non-
small direct discharge meat further processing facilities, and
therefore, has insufficient data on these facilities to determine if
Options 2.5, 2.5+P, or 4 would present a barrier to entry. When
deciding whether to promulgate revised new source performance
standards, EPA also considers whether or not there are any new source
performance standards currently in place. As discussed in Section
VII.D.2.d, EPA is revising

[[Page 54498]]

existing source BAT limitations for non-small meat further processors
based on Option 2.5 technology for total nitrogen and is not revising
BAT limitations for ammonia (as nitrogen) (except to correct an error).
Although there currently are new source performance standards for these
facilities, they do not include limitations for total nitrogen or
ammonia (as nitrogen). Therefore, for non-small meat further
processors, EPA is setting NSPS for total nitrogen equivalent to the
BAT limitations based on Option 2.5 and for ammonia (as nitrogen) based
on Option 2 (because Option 2.5 does not provide any additional ammonia
removal). EPA is not revising the current NSPS for conventional pollutants.

E. What Is the Basis for EPA's Selected Technology Options for
Subcategory J (Independent Rendering)?

Currently section 432.101(b) defines a renderer subject to the
guidelines limitations as ``an independent or off-site rendering
operation * * * which manufactures at rates greater than 75,000 pounds
of raw material per day [or 19.5 million pounds per year based on 260
work days].'' In 2002, EPA proposed to lower the production threshold
to 10 million pounds per year based on a review of the available data
at that time (i.e., screener survey data). EPA selected the threshold
to design model facilities for use in estimating costs, pollutant
loadings, non-water quality impacts, and economic impacts for the
proposed rule. EPA is promulgating this production threshold of 10
million pounds per year. There were no comments opposing this change in
the threshold. Facilities that manufacture at rates less than or equal
to 10 million pounds per year will remain out of the scope of Part 432,
while facilities above the threshold will be covered by today's final
regulation. EPA has not identified any additional direct discharging
rendering facilities producing at rates between 10 million and 19.5
million pounds per year in its database.
1. Pollutants
For facilities in Subcategory J, EPA is establishing limitations
and standards for total nitrogen for existing and new sources. EPA is
not revising the current limitations (BPT/BCT) or new source
performance standards (NSPS) for conventional pollutants and is not
revising the current BAT limitations or NSPS for ammonia (as nitrogen).
The current regulations include production-based limitations and
standards for these facilities for BOD₅, TSS, oil & grease
(O&G), pH, fecal coliforms and ammonia (as nitrogen). As discussed in
Section V.G, the new limitations and standards are concentration-based.
The following sections discuss the technology bases EPA selected for
the final rule for the direct discharge facilities in Subcategory J.
2. Best Practicable Control Technology Currently Available (BPT)
EPA established BPT for Subcategory J (Renderers) in 1975, based on
biological treatment (e.g., aerobic and anaerobic treatment) to control
five conventional pollutants or pollutant parameters (BOD₅,
TSS, oil & grease, fecal coliforms, and pH). The current limitations
for ammonia (as nitrogen) for non-small meat further processors are
contained in BAT and not BPT (see Section VII.E.4 for discussion of BAT
options for ammonia removal). Therefore, this section does not discuss
BPT limitations for ammonia (as nitrogen). In February 2002, EPA
proposed new BPT limitations for chemical oxygen demand (COD) based on
Option 2 in an effort to better reflect current BPT treatment
technology for renderers (67 FR 8630; February 25, 2002). See Section
V.B for discussion on why EPA is not establishing BPT limitations for
COD in today's final rule.
EPA did not propose revising BPT limitations for conventional
pollutants. (See Section VII.E.3 on BCT for additional information on
why EPA is not revising current limits for conventional pollutants for
facilities in this subcategory.) Therefore, EPA is not revising the
conventional pollutant limitations for independent rendering facilities
(Subcategory J) in today's final rule and such facilities will remain
subject to the BPT limitations in section 432.102.
3. Best Conventional Pollutant Control Technology (BCT)
In deciding whether to adopt more stringent limitations for BCT
than BPT for facilities in subcategory J, EPA considered technologies
that might achieve greater removals of conventional pollutants than
those adopted for BPT. EPA also looked at whether those technologies
are cost-reasonable under the standards established by the CWA. EPA
generally refers to the decision criteria as the ``BCT cost test.''
As discussed in Section VII.E.1, EPA is not promulgating new BPT
effluent limitations for conventional parameters (i.e., pH,
BOD₅, TSS, O&G, and fecal coliforms) for independent
rendering facilities (Subcategory J). Therefore, when considering a
technology that would achieve greater removals of conventional
pollutants than adopted for BPT, EPA compared the removals achievable
through implementation of the Option 2 technology (which EPA considered
as the possible technology basis for BCT) to current BPT limitations.
EPA estimates that Option 2 removes approximately 34,000 pounds more
per year of BOD₅ compared to conventional pollutant
reductions by facilities meeting or exceeding current BPT limitations.
There are no additional removals of TSS, O&G, or fecal coliforms.
EPA evaluated Option 2 under the BCT cost test and it failed (see
the Economic and Environmental Benefits Analysis for details on EPA's
analysis). For the final rule, EPA did not evaluate other technology
options, such as Option 2 + F (Option 2 plus the addition of a filter),
because they are more costly and do not remove significantly more
conventional pollutants than Option 2. Therefore, if Option 2 did not
pass, these more expensive options would not pass the BCT cost test.
The Agency did not identify any technologies that pass the BCT cost
test and achieve greater removals of conventional pollutants than the
current BPT technology. Thus, EPA is not revising the BCT limitations
for these facilities. Independent rendering facilities in Subcategory J
will remain subject to the current BCT limitations (which are
equivalent to the current BPT limitations for conventional pollutants)
in section 432.107.
4. Best Available Technology Economically Achievable (BAT)
EPA proposed to establish the BAT level of regulatory control for
independent renderers (Subcategory J) based on Option 2 and took
comment on other options in the NODA. For the final rule, EPA is basing
the BAT limitations for these facilities on Option 2.5 technology and
is promulgating a limitation for total nitrogen on this basis. EPA is
not revising the current BAT limitation for ammonia (as nitrogen).
EPA evaluated whether revising the current BAT limitation for
ammonia (as nitrogen) based on Option 2, Option 2.5, Option 2.5+P, or
Option 4 treatment technologies could be supported. When evaluating
revision of BAT for non-conventional pollutants that are not nutrients,
EPA not only considers whether the technology option is available and
economically achievable, but also whether it is best. EPA typically
evaluates a technology's cost-effectiveness as a factor in its
decision. When considering cost-effectiveness (except for nutrients),
EPA typically

[[Page 54499]]

evaluates the additional pollutant reductions (in toxic pound-equivalents).
EPA has estimated the annualized cost of each technology option
under review. The approximate annualized cost of the technology options
ranged from $628,000 for Option 2 to $10.2 million for Option 4 (pre-
tax, 1999 dollars). Using the closure methodology described in Section
IX, there is a slight probability (no more than 3.3%) that there could
be one facility closure under Options 2, 2.5, and 2.5+P and one closure
under Option 4. However, the average toxic cost-effectiveness numbers
range from $4,100 per toxic pound-equivalent ($1981) for Option 2 to
$29,000 per toxic pound-equivalent ($1981) for Option 4. These high
values are due to the very minimal incremental reduction in toxic
pound-equivalents (i.e., 90 toxic pound-equivalents/year for Option 2,
2.5, or 2.5+P and 205 toxic pound-equivalents/year for Option 4) and
the high incremental cost. EPA typically uses $200 per toxic pound-
equivalents (in 1981 dollars) as an indication of cost-effectiveness
for toxic pollutants. Therefore, EPA has determined that Options 2,
2.5, 2.5+P, and 4 are a not cost-effective basis for revising current
ammonia (as nitrogen) limitations for independent renderers in
Subcategory J when compared with those currently being achieved.
The following section describes EPA's rationale for selecting
Option 2.5 technology and rejecting Option 2.5+P and Option 4 as the
basis of BAT limitations for nutrients. EPA did not consider Option 2
for control of nutrients as it is not designed to reduce total nitrogen
or total phosphorus. Both the proposal and the NODA contain detailed
discussions explaining why EPA rejected setting BAT limitations based
on other technology (see 67 FR 8629; February 25, 2002 and 68 FR 48499;
August 13, 2003). The record for today's final rule provides no basis
for EPA to change these conclusions. EPA did not propose Option 3 for
facilities in Subcategory J based on concerns over the economic impact
and nitrogen cost-effectiveness estimated for the proposed rule.
However, as discussed in the NODA (68 FR 48476; August 13, 2003), EPA
has incorporated a significant amount of information into its analyses
since proposal. This includes surveys from independent rendering
facilities and comments from a trade association representing
independent rendering facilities. In light of that data and
information, EPA now finds a technology option that includes some
denitrification (Option 2.5) is economically achievable and nutrient
cost-effective for total nitrogen for independent rendering facilities.
EPA selected Option 2.5 technology as the basis of BAT limitations
for total nitrogen for total nitrogen for independent rendering
facilities because it is demonstrated as available and is economically
achievable. First, Option 2.5 technology has been demonstrated as
available in Subcategory J as 38 percent of facilities in EPA's
database use components of Option 2.5 technology (or more advanced
technology).
Second, Option 2.5 is economically achievable. EPA estimates the
pre-tax annualized compliance costs (in 1999 dollars) for Option 2.5 to
be $2.8 million. Using the facility and company closure methodologies
described in Section IX.A, EPA estimates a 1.3% probability of
facility-level closure (i.e., at most one facility closure).
EPA also considered the cost-effectiveness of nutrient removal when
evaluating BAT options for this industry segment. For Option 2.5, EPA
estimates 1.5 million pounds removed per year of total nitrogen and the
nutrient cost-effectiveness to be $1.92 per pound of total nitrogen
removed. Because Option 2.5 does not include phosphorus removal, EPA
did not calculate nutrient cost-effectiveness for phosphorus for Option
2.5. EPA concludes that Option 2.5 is nutrient cost-effective for total
nitrogen.
EPA considered Option 2.5+P as the basis of BAT, but rejected it
for the following reasons. Option 2.5+P costs $7.4 million annually for
1.5 million pounds of total nitrogen reduction per year (i.e., the same
reduction of total nitrogen as Option 2.5) and 590,000 pounds of total
phosphorus reduction per year. Therefore, the average nitrogen cost-
effectiveness for Option 2.5+P is $5.06 per pound of total nitrogen
removed and the average phosphorus cost-effectiveness is $12.59 per
pound of total phosphorus removed. The nutrient cost-effectiveness
values for nitrogen and phosphorus exceed the benchmarks that EPA uses;
therefore, EPA did not select Option 2.5+P.
EPA considered Option 4 as the basis of BAT but did not select it
due to the lack of availability of the technology option, the high
increase in cost compared to Option 2.5, and the poor incremental
nutrient cost-effectiveness (i.e., the high cost to remove additional
nutrients compared to Option 2.5+P).
Based on its database, EPA estimates that there are no facilities
in subcategory J currently operating Option 4 technology. In addition,
EPA estimates the pre-tax annualized compliance costs for Option 4 to
be $10.2 million (1999$), which is $7.4 million more than Option 2.5.
EPA estimates that Option 4 removes approximately 1.7 million pounds
per year of total nitrogen (200,000 more than Option 2.5) and 620,000
pounds per year of total phosphorus (30,000 more than Option 2.5+P).
Using the facility and company closure methodologies described in
Section IX.A, EPA estimates a 4.8% probability of facility-level
closure (i.e., 1 facility closure). Finally, EPA estimates the
incremental nutrient cost-effectiveness to be $40 per pound of total
nitrogen removed (compared to Option 2.5) and $85 per pound of total
phosphorus removed (compared to Option 2.5+P). The nutrient cost-
effectiveness of Option 4 is well above the $4 per pound total nitrogen
removed and $10 per pound total phosphorus removed benchmarks and
therefore, EPA does not consider Option 4 to be cost-effective.
5. New Source Performance Standards (NSPS)
In 2002, EPA proposed to revise the current new source performance
standards for independent rendering facilities in Subcategory J based
on Option 2 technology. As discussed in the NODA, with the development
of Option 2.5, EPA reconsidered technology basis for all subcategories
(68 FR 48500; August 13, 2003). EPA has selected Option 2.5 technology
as the basis for BAT limitations (see Section VII.E.4); therefore, EPA
did not consider Option 2 technology (a less stringent technology) as
the basis for NSPS for the final rule. EPA has estimated the ratio of
costs to assets for Options 2.5, 2.5+P and Option 4. The ratios are
0.3% for Option 2.5, 0.4% for Option 2.5+P, and 0.5% for Option 4. The
estimates for Option 2.5+P and Option 4, however, do not reflect EPA's
additional evaluation of the costs for chemical phosphorus based on
comments EPA received (see DCN 300-015). EPA performed an analysis
using increased quantities of alum for chemical phosphorus removal for
the detailed survey respondents (i.e., non-small meat and poultry
slaughterers). From this additional evaluation, EPA concludes that the
average costs for meat and poultry slaughterers may be between 4 and 26
percent more per facility for chemical phosphorus removal (including
increased sludge disposal) than those used in EPA's barrier to entry
analysis, as discussed here. EPA is concerned that, with similar
additional costs, the ratio for independent renderers may rise to a
level that the Agency would consider to

[[Page 54500]]

be a barrier to entry for Option 2.5+P and Option 4.
Although this subcategory does have current NSPS, they do not
include limitations for total nitrogen. Therefore, EPA is establishing
NSPS for total nitrogen based on Option 2.5 technology. EPA is not
revising NSPS for ammonia (as nitrogen) or for the conventional pollutants.

F. What Is the Basis for EPA's Selected Technology Options for
Subcategory K (Poultry First Processing)?

In 2002, EPA proposed a production threshold of 10 million pounds
(live weight killed) per year for facilities in Subcategory K. EPA
proposed this threshold to allow for different limitations for small
and non-small poultry first processing facilities. As discussed in
Section V.A, EPA has raised the production threshold for the final rule
from 10 to 100 million pounds per year. Therefore, this section
discusses small and non-small facilities separately. Costs presented in
this section are presented in 1999 year dollars which is the base year
of the survey; however, EPA provides updated estimates in 2003 year
dollars in Section VIII.B.
1. Poultry First Processors That Slaughter Less Than or Equal to 100
Million Pounds Per Year (Small)
For the final rule, small poultry first processing facilities
include facilities with production rates less than or equal to 100
million pounds per year (live weight killed). EPA is not establishing
limitations for any existing small poultry first processing facilities
in Subcategory K. However, EPA is establishing new source performance
standards for new facilities. The following sections discuss EPA's
decision not to establish BPT, BCT, or BAT limitations and to establish
NSPS for small direct discharge facilities in Subcategory K.
a. BPT/BCT/BAT
In 2002, EPA proposed new BPT/BCT/BAT for the small poultry first
processors based on Option 1. EPA has also evaluated Option 2 for small
facilities in this subcategory. Based on comments on the proposal and
the incorporation of data from the detailed surveys, EPA is not
establishing BPT/BCT/BAT limitations for small facilities in
Subcategory K (poultry first processors) for this final rule for the
following reasons.
First, even though Option 1 and Option 2 are available technologies
(i.e., partial and more complete nitrification, respectively) readily
applicable to all small facilities in Subcategory K, the cost of
compliance with these limitations in relation to the effluent reduction
benefits is disproportionate. For poultry first processor facilities
with production rates less than or equal to 100 million pounds of live
weight killed (LWK) per year EPA estimates it will cost $1,487 per
pound of pollutant removed (1999$) for Option 1 and $501 per pound
(1999$) for Option 2. These values significantly exceed the $37 per
pound removed benchmark that EPA is using, as guidance, to assess BPT
cost reasonableness.
Consequently, EPA has determined the total cost of effluent
reductions using the Option 1 technology and the Option 2 technology
are not reasonable in relation to the effluent reduction benefits. The
Agency tried to avoid ``double-counting'' pollutant reductions that
would occur if, for example, EPA summed removals of COD and BOD.
Therefore, EPA used the sum of BOD₅ and ammonia (as
nitrogen) removed to estimate the pounds of pollutant removed under the
technology options for these facilities. As noted previously, EPA
estimates this cost as $1,487 per pound removed for Option 1 and $501
per pound removed for Option 2. Second, EPA found that compliance with
limitations based on Option 1 or Option 2 technology will result in at
least 36 closures for the existing small direct dischargers for which
facility-level financial data exists. As discussed in Section IX, EPA
only had sufficient financial data for 9 out of an estimated 37 small
facilities in this subcategory. Therefore, there may be more closures
than EPA is able to project.
Existing small direct discharge facilities in Subcategory K will
remain subject to permit limits based on the best professional judgment
of the permit writer.
b. New Source Performance Standards (NSPS)
For the 2002 proposal, EPA proposed new NSPS based on Option 1. In
the NODA (68 FR 48500; August 13, 2003), EPA gave notice that it was
considering the modified options (i.e., Option 2.5, Option 2.5+P, and
no revision/no regulation) in addition to the proposed options (i.e.,
Option 1 and Option 2) for small slaughtering facilities. Based on
comments received on the proposal and the completion of the review and
incorporation of data from the detailed surveys, EPA is establishing
NSPS standards for small facilities in Subcategory K based on Option 2.
There are no current new source performance standards for small poultry
first processors and 75 percent of small facilities in EPA's database
currently use Option 2 technology (or more advanced technology);
therefore, Option 2 is demonstrated technology for this segment of
facilities. However, EPA determined that the ratio of capital costs to
total assets for the facilities in this subcategory to be 13% for both
Option 1 and Option 2 technology levels. While 13 percent of average
total assets is a significant level, EPA has concluded that the limited
amount of data for these facilities limited the analysis and the actual
ratio of capital costs to total assets for new facilities may be much
lower. For example, the analysis includes one facility whose ratio is
greater than 30%, while another facility has a ratio of approximately
4%. Thus, since the barrier to entry test results are identical for
Options 1 and 2, and 75% of existing facilities use Option 2
technology, EPA selected the more stringent Option 2 as the level of
control for new sources for ammonia (as nitrogen) and the five
conventional pollutants.
2. Poultry First Processing Facilities That Slaughter More Than 100
Million Pounds Per Year (Non-Small)
a. Pollutants
For non-small facilities in Subcategory K, EPA is, for the first
time, establishing limitations and standards for BOD₅, TSS,
O&G (as HEM), pH, fecal coliforms, ammonia (as nitrogen), and total
nitrogen for existing and new sources. As discussed in Section V.G, the
new limitations and standards are concentration-based. The following
sections discuss the technology bases EPA selected for the final rule
for the direct discharge non-small facilities in Subcategory K.
b. Best Practicable Control Technology Currently Available (BPT)
In 2002, EPA proposed new BPT for the non-small poultry first
processors (Subcategory K) based on Option 3 to control five
conventional pollutants or pollutant parameters (BOD₅, TSS,
O&G (as HEM), fecal coliforms, and pH) and also control ammonia (as
nitrogen), total nitrogen, and total phosphorus. As discussed in the
NODA, after review and evaluation of the revised and new data, EPA has
reconsidered its assessment of Option 3 technology.
EPA is establishing BPT limitations for BOD₅, TSS, O&G
(as HEM), fecal coliforms, pH, and ammonia (as nitrogen) for non-small
direct dischargers in Subcategory K based on technology Option 2. (See
Section 8 of the TDD for today's final rule for

[[Page 54501]]

additional details on the Option 2 technology).
The Agency concluded that the Option 2 treatment technology
represents the best practicable control technology currently available
and is the basis for the BPT limitations for these facilities for the
following reasons.
First, this technology is available technology and is readily
applicable to all non-small facilities in Subcategory K. More than 92
percent of the non-small direct discharging facilities in these
subcategories are using Option 2 technology, or more advanced
technology, today. Although most facilities have the components of
Option 2 technology in place (e.g., nitrification basin/aerobic
reactor), some facilities are not achieving the projected Option 2
long-term average concentrations (LTAs). EPA attributes this to their
failure to operate or maintain the Option 2 technology adequately. (See
Sections 10 and 11 of the final rule TDD for additional discussion of
the cost and loading methodologies.) Consequently, when estimating the
costs of compliance with Option 2, EPA included costs for treatment
optimization for a number of facilities to achieve the Option 2 LTA.
For example, EPA included costs for increased aeration, chemical
addition, sludge handling, process controls, in-process sampling,
analytical testing, and capacity.
Second, the cost of compliance with these limitations in relation
to the effluent reduction benefits is not disproportionate. EPA
projects that compliance with BPT limitations based on Option 2
technology will not result in closures of existing non-small direct
dischargers in these subcategories. Moreover, adopting this level of
control will create a significant reduction in pollutants discharged
into the environment. For poultry first processor facilities with
production rates greater than 100 million pounds LWK per year using
Option 2, EPA estimates an annual compliance cost of $17.7 million
(pre-tax, 1999$) and removal of 980,000 pounds of BOD₅ and
ammonia (as nitrogen) from current discharges into the Nation's waters
at a cost of $18.18 per pound of pollutant removed (1999$). This cost
per pound of pollutant removed is below the $37 per pound benchmark
that EPA is using, as guidance, to evaluate cost-reasonableness.
EPA considered Option 2.5 (which also includes partial
denitrification) as the basis for BPT limitations. However, Option 2.5
does not remove any additional pounds of conventional pollutants or
ammonia (as nitrogen) and costs $9.4 million more annually than Option
2. In addition, EPA found that 45 percent of non-small facilities in
Subcategory K in EPA's database are using the components of Option 2.5
technology (e.g., facility has in place a denitrification basin,
nitrification basin and disinfection) or more advanced technology.
Because Option 2.5 costs more, does not remove additional pollutants,
and is not as widely available as Option 2 technology, EPA did not
select it as the basis of BPT limitations.
Furthermore, EPA did not select Option 2.5+P or Option 4 as the
basis for BPT limitations, as they do not achieve adequate additional
pollutant reductions as compared to their additional compliance costs.
Specifically, Option 2.5+P does not achieve any additional removals of
conventional pollutants or ammonia (as nitrogen) as compared to Option
2, but it would cost an additional $45.7 million (in 1999 dollars)
annually. Option 4 would remove an additional 170,000 pounds of ammonia
(as nitrogen) for an additional $91.4 million (in 1999 dollars)
annually. Other options the Agency considered for BPT were not selected
due to lack of availability and/or poor BPT cost and removal
comparison. Both the proposal and the NODA contain detailed discussions
explaining why EPA rejected setting BPT limitations based on other
technology (see 67 FR 8629; February 25, 2002 and 68 FR 48499; August
13, 2003). The record for today's final rule provides no basis for EPA
to change these conclusions.
c. Best Conventional Pollutant Control Technology (BCT)
In deciding whether to adopt more stringent limitations for BCT
than BPT for Subcategory K, EPA considered whether technologies other
than those adopted for BPT will achieve greater removal of conventional
pollutants and whether the costs of those technologies are reasonable
under the standards established by the CWA. EPA generally refers to the
decision criteria as the ``BCT cost test.'' EPA is promulgating BCT
effluent limitations for conventional parameters (e.g., pH, TSS, O&G
(as HEM)) equivalent to BPT for this subcategory because the Agency did
not identify technologies that can achieve greater removals of
conventional pollutants that also pass the BCT cost test. EPA evaluated
adding a filter to the BPT technology (i.e., Option 2 + F) in order to
get further conventional pollutant reductions. However, this technology
option failed the BCT cost test. (For a more detailed description of
the BCT cost test and details on EPA's analysis, see the Economic and
Environmental Benefits Analysis in the rulemaking record.)
d. Best Available Technology Economically Achievable (BAT)
EPA proposed to establish the BAT level of regulatory control for
non-small facilities in Subcategory K based on Option 3 (i.e.,
biological treatment, more complete nitrification, more complete
denitrification and disinfection). As discussed in the NODA, after
review and evaluation of the revised and new data, EPA has reconsidered
its assessment of Option 3 as BAT technology. EPA determined that
Option 3 did not meet all the statutory criteria for BAT. The Agency
refocused its evaluation for the technology basis for BAT on Option
2.5, Option 2.5+P or Option 4 for nutrient removal (see Section VII.A
of today's preamble for a description of the technology options). For
the final rule, EPA bases the BAT limitations for these facilities on
Option 2.5 technology and is promulgating a limitation for total
nitrogen on this basis. However, EPA is setting a limitation for
ammonia (as nitrogen) that is equal to BPT, because using Option 2.5
technology or higher does not result in any additional ammonia removal
than the technology used to establish BPT (Option 2).
The following section describes EPA's rationale for selecting
Option 2.5 technology and rejecting Option 2.5+P and Option 4. The
proposal and the NODA (see 67 FR 8629 and 68 FR 48499) contain detailed
explanations why EPA rejected setting BAT limitations based on other
technology options, and the record for today's final rule provides does
not support EPA changing these conclusions.
EPA has determined that Option 2.5 technology is available in
Subcategory K, as 45 percent of the non-small facilities in this
subcategory in EPA's database use the components of Option 2.5 (or more
advanced technology) and is economically achievable. EPA estimates the
compliance costs for Option 2.5 to be $31.8 million (in 1999 dollars).
Using the facility and company closure methodologies described in
Section IX.A, EPA believes that no facilities or companies will close.
For a sensitivity analysis, EPA also estimated closures using a less
stringent decision rule (closure under one of three forecast
methodologies rather than at least two of three). Using the alternate
analysis, EPA estimates no facilities will close under Option 2.5.
EPA also considered nutrient removal cost-effectiveness when
evaluating BAT options for this industry. For Option

[[Page 54502]]

2.5, EPA estimates 9.4 million pounds removed per year of total
nitrogen and a nutrient cost-effectiveness of $3.40 per pound of total
nitrogen removed. Because Option 2.5 does not include phosphorus
removal, EPA did not calculate nutrient cost-effectiveness for
phosphorus for Option 2.5. EPA concludes that Option 2.5 is nutrient
cost-effective for total nitrogen.
EPA considered Option 2.5+P as the basis of BAT, but rejected it.
Fourteen percent of non-small facilities in Subcategory K in EPA's
database use Option 2.5+P technology (or more advanced technology). EPA
estimates the pre-tax annualized cost of Option 2.5+P is $63.4 million
(1999$), which is $31.6 million more than Option 2.5. EPA estimates no
facility closures and one company closure for Option 2.5+P Note:
Facilities that are owned by the company that is projected to close did
not provide facility-level financial information; therefore, those
facilities are not part of the facility-level analysis). Option 2.5+P
removes 4.1 million pounds per year of total phosphorus and achieves
the same level of nitrogen and conventional pollutant reduction as
Option 2.5. Therefore, EPA estimates the average nutrient cost-
effectiveness to be $6.77 per pound total nitrogen removed and $15.28
per pound total phosphorus removed. These values exceed the benchmark
that EPA is using, as guidance, for cost-effectiveness. Therefore, EPA
did not select Option 2.5+P due to the poor cost-effectiveness for
nutrients.
EPA also considered, but did not select, Option 4 as the basis of
BAT limitations due to the high increase in cost as compared to Option
2.5, the poor incremental nutrient cost-effectiveness (i.e., the high
cost to remove additional nutrients as compared to Option 2.5+P), and
high number of closures.
EPA estimates that almost 3 percent of direct discharge non-small
facilities in this subcategory currently operate Option 4 technology
(or more advanced technology). EPA estimates the pre-tax annualized
compliance costs for Option 4 to be $109.1 million (1999$), which is
$45.7 million more than Option 2.5+P and $77.3 million more than Option
2.5. EPA also estimates that Option 4 removes 20.9 million pounds per
year of nitrogen (11.5 million more than Option 2.5 or Option 2.5+P)
and 4.7 million pounds per year of phosphorus (about 520,000 pounds per
year more than Option 2.5+P). However, EPA projects 22 facility
closures and one company closure under Option 4 and estimates the
average nutrient cost-effectiveness to be $5.22 per pound total
nitrogen removed and $23.35 per pound total phosphorus removed (see
Section IX for nutrient cost-effectiveness result for all options by
subcategory). The incremental nutrient cost-effectiveness is $6.71 per
pound of nitrogen removed (relative to Option 2.5) and $87.17 per pound
of phosphorus removed (relative to Option 2.5+P). Option 4 exceeds the
$4 per pound removed benchmark value for nitrogen and the $10 per pound
removed benchmark value for phosphorus. Therefore, EPA finds that
Option 4 is not cost-effective for total nitrogen or phosphorus removal
and is not economically achievable technology.
EPA is establishing BAT limitations for ammonia (as nitrogen) that
are equivalent to the limitations it is promulgating today under BPT
for facilities in Subcategory K. EPA considered setting more stringent
limitations for ammonia (as nitrogen) under BAT; however, the selected
BAT technology option (Option 2.5) does not remove any additional
quantity of ammonia (as nitrogen). Although Option 4 does remove some
additional pounds of ammonia (as nitrogen) as compared to Option 2, EPA
did not select Option 4 for BAT for the reasons discussed earlier in
this section.
e. New Source Performance Standards (NSPS)
EPA considers the barrier to entry into the industry for a new
facility that results from the compliance costs of the regulation and
whether or not there are new source standards in place for the
facilities. For this rule, EPA used the ratio of average capital costs
to average total assets to measure the potential for barrier to entry
due to the MPP rule. EPA estimated the ratio of costs to assets for
Option 2.5, 2.5+P, and Option 4: they range from 4.0% for Option 2.5 to
4.2% for Option 2.5+P to 12.3% for Option 4. The estimates for Option
2.5+P and Option 4, however, do not reflect EPA's additional evaluation
of the costs for chemical phosphorus based on comments EPA received
(see DCN 300-015). From this additional evaluation, EPA concludes that
for non-small poultry first processors costs may be $25,000 to $106,000
more per facility for chemical phosphorus removal (including costs for
additional sludge disposal) than those used in EPA's barrier to entry
analysis, as discussed here. EPA is concerned that, with these
additional costs, the ratio may rise to a level that the Agency would
consider to be a barrier to entry for Option 2.5+P and Option 4.
Therefore, EPA is setting standards for new sources equivalent to the
BAT limitations established by today's final rule (i.e., based on
Option 2.5 technology) for total nitrogen and equivalent to BPT (i.e.,
based on Option 2 technology) for ammonia (as nitrogen) and the five
conventional pollutants.

G. What Is the Basis for EPA's Selected Technology Options for
Subcategory L (Poultry Further Processing)?

In 2002, EPA proposed a production threshold of 7 million pounds
(finished product) per year for facilities in Subcategory L. EPA
proposed this threshold to allow for different limitations for small
and non-small poultry further processing facilities. EPA is retaining
the proposed threshold for the final rule. Therefore, this section
discusses small and non-small facilities separately. Costs presented in
this section are presented in 1999 year dollars which is the base year
of the survey; however, EPA provides updated estimates in 2003 year
dollars in Section VIII.B.
1. Poultry Further Processing Facilities That Produce Less Than or
Equal to 7 Million Pounds Per Year (Small)
For the final rule, small poultry first processing facilities
include facilities with production rates less than or equal to 7
million pounds (finished product) per year. EPA is not establishing
limitations for any existing small poultry further processing
facilities in Subcategory L. However, EPA is establishing new source
performance standards for new facilities. The following sections
discuss EPA's decision not to establish BPT, BCT, or BAT limitations
and to establish NSPS for small direct discharge facilities in
Subcategory L.
a. BPT/BCT/BAT
In 2002, EPA proposed new BPT/BCT/BAT for the small poultry further
processors based on Option 1. EPA has also evaluated Option 2 for small
facilities in this subcategory. Based on incorporation of data from the
detailed surveys, EPA is not establishing BPT/BCT/BAT limitations for
small facilities in Subcategory K (poultry first processors) for this
final rule for the following reasons.
First, even though Option 1 and Option 2 are available technologies
(i.e., partial and more complete nitrification, respectively) readily
applicable to all small facilities in Subcategory L, the cost of
compliance with these limitations in relation to the effluent reduction
benefits is disproportionate. For poultry further processor facilities
with production rates less than or equal to 7 million pounds of live
weight killed (LWK) per year EPA estimates it will cost approximately
$74 per pound of

[[Page 54503]]

pollutant removed (1999$) for Option 1 or Option 2, which exceeds the
$37 per pound removed benchmark that EPA is using, as guidance, to
evaluate BPT cost-reasonableness.
Consequently, EPA has determined the total cost of effluent
reductions using the Option 1 or Option 2 technology is not reasonable
in relation to the effluent reduction benefits. Second, due to lack of
facility-level financial data, EPA could not estimate closures that
would result with BPT limitations based on Option 1 or Option 2
technology. In addition, the analysis of financial data for small
facilities in Subcategory L was complicated by the fact that some
facilities performing operations fitting within the scope of
Subcategory L also perform operations that are regulated under
Subcategories F-I (meat further processors). (See Section IX for
discussion of ``mixed processors.'') Existing small direct discharge
facilities in Subcategory L will remain subject to permit limits based
on the best professional judgment of the permit writer.
b. New Source Performance Standards (NSPS)
In 2002, EPA proposed new NSPS for small poultry further processors
(Subcategory L) based on Option 1. In the NODA (68 FR 48500; August 13,
2003), EPA gave notice that it was considering the modified options
(i.e., Option 2.5, Option 2.5+P, and no revision/no regulation) in
addition to the proposed options (i.e., Option 1 and Option 2) for
these facilities. After considering comments and the data from the
detailed surveys, EPA is establishing NSPS standards for small poultry
further processing facilities based on Option 2. EPA determined that
all existing small poultry further processors in EPA's database
currently use the components of Option 2 technology, although, as noted
above, they would incur additional costs to meet the Option 2 LTAs. In
addition, EPA determined that there is no barrier to entry for either
Option 1 or Option 2 as the ratio of capital costs to total assets for
the facilities in this subcategory is 0.4% for both Option 1 and Option
2 technology levels. Finally, there are no current new source
performance standards in place for small facilities in Subcategory L.
Since the barrier to entry test results are identical for Options 1 and
2, and all existing facilities have the components in place for Option
2 technology, EPA selected the more stringent Option 2 as the level of
control for new sources for ammonia (as nitrogen) and the five
conventional pollutants.
2. Poultry Further Processing Facilities That Produce More Than 7
Million Pounds Per Year (Non-Small)
a. Pollutants
For non-small facilities in Subcategory L, EPA is, for the first
time, establishing limitations and standards for BOD₅, TSS,
O&G (as HEM), pH, fecal coliforms, ammonia (as nitrogen), and total
nitrogen for existing and new sources. As discussed in Section V.G, the
new limitations and standards are concentration-based. The following
sections discuss the technology bases EPA selected for the final rule
for the direct discharge non-small facilities in Subcategory L (poultry
further processors).
b. Best Practicable Control Technology Currently Available (BPT)
In 2002, EPA based its proposal for new BPT for the poultry further
processors (Subcategory L) on Option 3 to control five conventional
pollutants or pollutant parameters (BOD₅, TSS, O&G (as HEM),
fecal coliforms, and pH) and also control ammonia (as nitrogen), total
nitrogen, and total phosphorus. As discussed in the NODA, after review
and evaluation of the revised and new data, EPA has reconsidered its
assessment of Option 3 technology.
EPA has today decided to establish BPT limitations for
BOD₅, TSS, O&G (as HEM), fecal coliforms, pH, and ammonia
(as nitrogen) for non-small direct dischargers in Subcategory L based
on technology Option 2. (See Section 8 of the TDD for today's final
rule for additional details on the Option 2 technology).
The Agency concluded that the Option 2 treatment technology is the
best practicable control technology currently available, and it should
be the basis for the BPT limitations for these facilities. First, this
technology is available and readily applicable to all non-small
facilities in Subcategory L. EPA estimates that all non-small direct
discharge facilities in this subcategory currently operate Option 2
technology (or more advanced technology).
Second, the cost of compliance with these limitations in relation
to the effluent reduction benefits is not disproportionate. For poultry
further processing facilities with production rates greater than 7
million pounds finished product per year, EPA estimates an annual
compliance cost under Option 2 of $557,000 (pre-tax, 1999$) and 18,600
pounds of BOD₅ and ammonia (as nitrogen) removed from
current discharges at a cost of $29.88 (1999$) per pound of pollutant
removed. In estimating the pounds of pollutant removed based on Option
2 technology for these facilities, EPA used the sum of BOD₅
and ammonia (as nitrogen) removed. The cost per pound removed
approaches but is still below the $37 per pound value that EPA uses as
guidance in evaluating BPT cost-reasonableness.
EPA considered Option 2.5 (which also includes partial
denitrification) as the basis for BPT limitations. However, Option 2.5
does not remove any additional pounds of conventional pollutants or
ammonia (as nitrogen) compared to Option 2 but costs almost $426,000
more annually. In addition, EPA found that Option 2.5 technology is not
as widely available as Option 2 technology. That is, 37 percent of non-
small poultry further processors in EPA's database use Option 2.5 (or
more advanced) technology, while 100 percent use Option 2 (or more
advanced) technology. Thus, EPA did not select Option 2.5 as the basis
of BPT limitations.
Furthermore, EPA did not select either Option 2.5+P or Option 4 as
the basis for BPT limitations because they do not achieve adequate
pollutant reductions relative to additional compliance costs.
Specifically, Option 2.5+P does not achieve any additional removals of
conventional pollutants or ammonia (as nitrogen) but would cost
$918,000 more each year than Option 2. Option 4 would remove an
insignificant amount of ammonia (as nitrogen) for an additional $2.7
million annually. EPA did not select other options it considered for
BPT due to lack of availability and poor BPT cost and removal
comparison. The 2002 proposal and the NODA (see 66 FR 457 and 68 FR
48499) contain detailed explanations of why EPA rejected BPT
limitations based on other BPT technology options. The information in
the record for today's final rule does not support EPA's changing these
conclusions.
c. Best Conventional Pollutant Control Technology (BCT)
In deciding whether to adopt more stringent limitations for BCT
than BPT, EPA considered whether there are technologies other than
those adopted for BPT that achieve greater removals of conventional
pollutants and whether those technologies are cost-reasonable under CWA
standards. EPA generally refers to the decision criteria as the ``BCT
cost test.'' EPA is promulgating effluent limitations for conventional
parameters (e.g., pH, TSS, O&G (as HEM)) equivalent to BPT for
Subcategory L because it identified no technologies achieving greater
removals of conventional pollutants that also pass

[[Page 54504]]

the BCT cost test. EPA considered adding a filter to the BPT technology
(i.e., Option 2 + F) to get further conventional pollutant reductions;
however, this technology option failed the BCT cost test. For a more
detailed description of the BCT cost test and details on EPA's
analysis, see the Economic and Environmental Benefits Analysis in the
rulemaking record.
d. Best Available Technology Economically Achievable (BAT)
EPA proposed to establish the BAT level of regulatory control for
non-small facilities in Subcategory L based on Option 3 (i.e.,
biological treatment, more complete denitrification, more complete
nitrification, and disinfection). As discussed in the NODA, after
review and evaluation of the revised and new data, EPA has reconsidered
its assessment of Option 3 as BAT technology. EPA determined that
Option 3 did not meet all the statutory criteria for BAT. The Agency
refocused its evaluation for the technology basis for BAT on Option
2.5, Option 2.5+P, or Option 4 for nutrient removal (see Section VII.A
of today's preamble for a description of the technology options). For
the final rule, EPA bases the BAT limitations for these facilities on
Option 2.5 technology and is promulgating a limitation for total
nitrogen on this basis. EPA is, however, setting a limitation for
ammonia (as nitrogen) that is equal to BPT.
The following section describes EPA's rationale for selecting
Option 2.5 technology and rejecting Option 2.5+P and Option 4. The
proposal and the NODA (see 67 FR 8629 and 68 FR 48499) contain detailed
explanations why EPA rejected setting BAT limitations based on other
technology options, and the record for today's final rule does not
support EPA changing these conclusions.
EPA selected Option 2.5 technology as the basis of BAT for non-
small facilities in Subcategory L for two reasons. First, Option 2.5
technology has been demonstrated as available in Subcategory L. EPA
estimates that 37 percent of non-small direct discharge facilities in
this subcategory in EPA's database currently operate at or above the
Option 2.5 technology level. Second, Option 2.5 is economically
achievable. EPA estimates the compliance costs (pre-tax, 1999$) for
Option 2.5 to be $983,000 per year. Using the closure methodology
described in Section IX, there is a slight probability (0.9%) that
there could be one facility closure under Option 2.5.
EPA also considered nutrient removal cost-effectiveness when
evaluating BAT options for this industry. For Option 2.5, EPA estimates
146,000 pounds removed per year of total nitrogen and a nutrient cost-
effectiveness of $6.71 per pound total nitrogen removed. Option 2.5
does not include phosphorus removal; therefore, EPA did not calculate
nutrient cost-effectiveness for phosphorus for Option 2.5. For the
subcategory, Option 2.5 exceeds the $4/lb removed value EPA uses as
guidance for nitrogen cost-effectiveness. However, facilities in
Subcategory L perform operations similar to the facilities covered in
other subcategories being regulated for nitrogen. Due to the
competitiveness among these facilities and its economic achievability,
EPA is including nitrogen limitations in the final rule for this
subcategory. EPA also notes that Option 2.5 also results in a
substantial increase in removals of conventional pollutants relative to
Option 2--in excess of 136,000 pounds of BOD.
EPA considered Option 2.5+P as the basis of BAT but rejected it.
EPA estimates that 9 percent of the non-small poultry further
processors use Option 2.5 (or more advanced) technology with phosphorus
removal. The pre-tax annualized cost of Option 2.5+P is $1.5 million
(1999$) and the probability of a facility-level closure is less than
1.4% (i.e., at most one facility closure). Option 2.5+P removes 25,000
pounds per year of total phosphorus and achieves the same level of
nitrogen and conventional pollutant reduction as Option 2.5. Therefore,
EPA estimates the average nutrient cost-effectiveness to be $58.98 per
pound of total phosphorus removed. Therefore, EPA did not select Option
2.5+P due to the poor cost-effectiveness for phosphorus.
EPA also considered Option 4 as the basis of BAT but did not select
it due to the high increase in cost compared to Option 2.5 and the poor
nutrient cost-effectiveness (i.e., the high cost to remove additional
nutrients compared to Option 2.5+P).
Nine percent of non-small direct discharge facilities in this
subcategory operate Option 4 technology (or more advanced technology).
Therefore, EPA considers the technology to be available. EPA estimates
the pre-tax annualized compliance costs for Option 4 to be $3.3 million
(1999$), which is $1.8 million more than Option 2.5+P and $2.3 million
more than Option 2.5. Option 4 removes 354,000 pounds per year of
nitrogen (208,000 more than Options 2.5 or 2.5+P) and 27,000 pounds per
year of phosphorus (approximately 2,000 more pounds per year than
Option 2.5+P). There is a 3% probability of a facility-level closure
for Option 4 (i.e., at most one facility closure) and a ratio of 16.8%
when comparing annualized compliance costs to net income. EPA considers
this cost to revenue ratio high and an indication that Option 4 is not
economically achievable for non-small facilities in Subcategory L.
Finally, the incremental nutrient cost-effectiveness for nitrogen (as
compared to Option 2.5) is $11 per pound total nitrogen removed and for
phosphorus (as compared to Option 2.5+P) is $902 per pound total
phosphorus removed. Therefore, EPA finds that Option 4 is not nutrient
cost-effective for total nitrogen or total phosphorus removal and is
not economically achievable.
EPA is establishing BAT limitations for ammonia (as nitrogen) that
are equivalent to the limitations it is promulgating today under BPT.
EPA considered setting more stringent limitations for ammonia (as
nitrogen) under BAT; however, the selected BAT technology option
(Option 2.5) does not remove any additional quantity of ammonia (as
nitrogen). Although Option 4 does remove some additional pounds of
ammonia (as nitrogen) as compared to Option 2, EPA did not select
Option 4 for BAT for the reasons discussed earlier in this section.
e. New Source Performance Standards (NSPS)
For this rule, EPA used the ratio of average capital costs to
average total assets to measure the potential barrier to entry due to
the MPP rule. However, several non-small facilities in Subcategory L
also perform operations that fall under the scope of Subcategories F-I.
This complicates the analysis of the barrier to entry data. EPA
estimated the ratio of costs to assets for Option 2.5, Option 2.5+P,
and Option 4 for non-small poultry further processing facilities
(Subcategory L). The ratios range from 0.1% for Option 2.5 and Option
2.5+P to 0.6% for Option 4. The estimates for Option 2.5+P and Option
4, however, do not reflect EPA's additional evaluation of the costs for
chemical phosphorus based on comments EPA received (see DCN 300-015).
EPA performed an analysis using increased quantities of alum for
chemical phosphorus removal for the detailed survey respondents (i.e.,
non-small meat and poultry slaughterers). From this additional
evaluation, EPA concludes that costs for poultry slaughterers may be
between 2 percent and 43% more per facility for chemical phosphorus
removal (including increased sludge disposal) than those used in EPA's
barrier to entry analysis, as discussed here. EPA is concerned that,
with similar additional costs, the

[[Page 54505]]

ratio for further processors may rise to a level that the Agency would
consider to be a barrier to entry for Option 2.5+P and Option 4. Based
on these results, EPA has decided to establish standards for new
sources equivalent to the BAT limitations based on Option 2.5
technology for total nitrogen and equivalent to BPT (based on Option 2)
for ammonia (as nitrogen) and the five conventional pollutants.

VIII. How Did EPA Estimate the Pollutant Loadings and Compliance Costs
for the Final Rule?

A. Pollutant Reductions

1. How Did EPA Estimate Pollutant Loadings and Reductions for the Final
Rule?
As discussed in Section V, in response to comments on the proposal
EPA revised the method to estimate compliance costs. The revised
assessment of pollutant loading reductions was developed at the
facility-level similar to the revised analysis of costs.
EPA developed target effluent concentrations for each treatment
option for 11 pollutants of concern. These 11 pollutants of concern are
comprised of the eight pollutants that EPA proposed for regulation
(ammonia (as N), 5-day biochemical oxygen demand (BOD5), chemical
oxygen demand (COD), fecal coliforms, oil and grease (as hexane
extractable material), total nitrogen, total phosphorus, and total
suspended solids (TSS)), with the addition of 3 other pollutants
(carbonaceous biological oxygen demand (CBOD), nitrate+nitrite as
nitrogen, and total Kjeldahl nitrogen (TKN)) that EPA also considered
for regulation after the proposal. For a discussion on pollutants
selected for regulation in today's final rule see Section V.B.
To estimate the baseline pollutant loadings, EPA first established
baseline pollutant concentrations for the selected 11 pollutants of
concern for each facility for which EPA had estimated costs. Facility
baseline concentrations are the estimated pollutant concentrations in
the MPP wastewaters that a facility is currently discharging.
For each facility, EPA made extensive efforts to obtain analytical
effluent wastewater concentration data representative of the treatment
system in place at the facility. Data sources EPA used to establish the
baseline pollutant concentration for a specific facility included the
following: Data provided in the detailed survey; corrections to a
``fact sheet'' sent to each facility that summarized information about
the facility's effluent concentrations, wastewater flows, and
wastewater treatment operations; data provided by the facility through
telephone communications; sampling episode data; site visit data;
discharge monitoring report (DMR) data from the EPA Permit Compliance
System (PCS), EPA Regional Office, or State regulatory agency; and
effluent data provided in the facility's NPDES permit application.
When effluent data were available, EPA used the annual average
concentrations reported for 1999 because 1999 was the base year of the
MPP detailed survey. EPA also used concentrations reported for years
after 1999, but only when data from 1999 were unavailable and only if
facility operations or treatment performance had not significantly
changed since 1999. In instances where data from more than one source
were available for a particular facility, EPA used the data that
represented and encompassed the largest span of time. For example, if
both detailed survey data and sampling episode data were available for
a facility, EPA used average concentration from the detailed survey
data instead of the sampling episode data. In this example the detailed
survey data represented the average pollutant concentration over a year
while the sampling episode data represented the average concentration
over a period of 3 or 5 days.
When EPA could not obtain effluent data for a pollutant or
pollutants from any of the above data sources, EPA derived default
concentrations. In particular, EPA derived default concentrations for
certain pollutants if data on an associated pollutant parameter were
available. For example, based on the available data from the sampling
episodes and detailed survey data, EPA found a strong relationship
between BOD and CBOD concentrations in MPP wastewaters. Therefore, when
a facility did not have data on effluent CBOD concentrations, but did
have effluent BOD data, EPA estimated the CBOD concentration based on
the BOD data (more detailed information on the calculations and
formulas development are available in Section 19.6.1, DCN 100-784 of
the rulemaking record).
Considerable effort was made to either obtain analytical effluent
concentration data or to calculate pollutant concentrations based on
another pollutant where EPA's data demonstrated a correlation. For
example, EPA calculated baseline concentrations for total nitrogen
(based on TKN and nitrate+nitrite values) for many facilities. However,
when analytical effluent data for a particular pollutant was
unavailable and could not be calculated, then EPA used a default value
for the facility. EPA calculated default concentrations for
BOD₅, COD, fecal coliforms, ammonia as nitrogen, oil and
grease (HEM), and TSS. For each regulatory subcategory, EPA averaged
all the available analytical data for a particular pollutant from all
the facilities matching the subcategory and EPA used this average as
the default value. Previously, default concentrations were also
developed for nitrate+nitrite as nitrogen concentrations. However, by
using default nitrate+nitrite values it was observed that
inconsistencies between the influent and effluent total nitrogen
concentrations occurred at certain facilities. For example, facilities
with only nitrification treatment would appear to have significant
denitrification based on the use of default nitrate+nitrate
concentrations. Therefore, EPA revised the calculation of
nitrate+nitrite concentrations for facilities with only nitrification
treatment based on a total nitrogen balance between the influent and
effluent wastewater concentrations. For facilities with partial
denitrification treatment, the calculated average total nitrogen
percent removal at facilities with partial denitrification treatment
was applied to the influent value to calculate the effluent
concentration. More detailed information is available in the Technical
Development Document.
Because of the general lack of data for the pollutants of concern
and the similarity in wastewater characteristics for stand-alone meat
and poultry further processors (Subcategories F-I and L, respectively),
EPA combined the baseline data from these two facility types. The
result was one set of default baseline concentrations that applied to
all further processors, regardless of whether the facility was a meat
or poultry further processor. EPA has found that the wastewater
characteristics at further processors are more likely to be dependent
on the processing operation (e.g., breading, frying) than on the type
of meat.
For independent rendering facilities (Subcategory J), in addition
to the available analytical data from the sources described previously
in this section, EPA used data provided by the MPP Industry Coalition
for three independent rendering facilities, and data provided by the
National Renderers Association for two independent rendering facilities
in the development of default concentrations for Subcategory J
facilities.
After EPA determined pollutant concentrations for each facility, EPA

[[Page 54506]]

compared and adjusted the facility baseline concentrations for each
facility using the permit limits required at the facility. When permit
limit data were available for a facility (from a copy of the facility's
NPDES permit or from PCS), EPA lowered the concentration equal to the
facility's permit limit value if EPA's calculated average baseline
effluent concentration was greater than the limit specified in the
permit. When available, EPA used monthly average limits contained in
the permit. EPA used maximum daily limits when monthly average limits
were not available. When permits included seasonal limits, EPA
calculated an average concentration for the permit using all seasonal
limits. For example, if the permit BOD limit was 20 mg/L for 6 months
and 10 mg/L for 6 months, EPA used the average value of 15 mg/L for the
permit limit. In this example, if the facility's average effluent BOD
was 21 mg/L, EPA would adjust the facility's baseline BOD concentration
to the average permit limit of 15 mg/L.
After EPA established baseline pollutant concentrations for each
facility, EPA calculated baseline pollutant loadings (in pounds per
year, or million colony-forming units per year) based on the facility's
baseline concentration and wastewater flow. EPA then estimated national
baseline pollutant loadings by multiplying each facility's baseline
pollutant loading by the corresponding survey weight assigned to the
facility.
In order to estimate pollutant reductions after the implementation
of the final limitations and standards for the MPP industry, EPA
estimated technology option loadings. Technology option loadings are
defined as the estimated pollutant loadings in MPP wastewaters after
implementation of the selected technology option; they are also
referred to as post-compliance or treated pollutant loadings. To
estimate the technology option loadings for each technology option that
EPA considered, EPA derived post-compliance pollutant concentrations
for each facility for which EPA had developed baseline pollutant loadings.
EPA determined post-compliance concentrations for each facility by
comparing the facility's baseline concentration with the technology
option target effluent concentration. When the technology option target
effluent concentration was lower than the facility's baseline
concentration, EPA used the technology option target effluent
concentration to represent the facility's effluent pollutant
concentration after implementation of the final limitations and standards.
EPA then calculated technology option loadings for each facility
using the facility's post-compliance pollutant concentrations and
wastewater flow. EPA estimated national technology option loadings by
multiplying each facility's technology option loading estimates by the
corresponding survey weight assigned to the facility. Finally, for each
technology option EPA calculated the national pollutant reductions as
the difference between the national baseline pollutant loads and the
national technology option pollutant loads.
2. What Are the Pollutant Reductions Associated With This Rule?
Tables VIII.A-1 and VIII.A-2 show the estimated pollutant
reductions for each treatment option. The conventional pollutant
loadings (i.e., 5-day biological oxygen demand, total suspended solids,
and oil & grease (as HEM)) removed for Options 2, 2+P, 2.5, and 2.5+P
are the within each subcategory because the additional components above
Option 2 technology (i.e., denitrification or phosphorus removal) are
not designed to remove conventional pollutants. Therefore, in EPA
analysis of pollutant reductions Options 2+P, 2.5 and 2.5+P represent
additional removals of nutrients, not conventional pollutants, compared
to Option 2. In practice, the addition of chemicals (e.g., alum) to
remove phosphorus would cause incidental reductions of total nitrogen,
BOD₅, and TSS. Option 4 provides additional removals of both
nutrients and conventional pollutants relative to other options. For
information see the Technical Development Document in the rulemaking
docket.

Table VIII.A-1.--Removal of Specified Pollutants by Subcategory and Option \1\--Non-Small Facilities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Removals (pounds per year)
Subcategory Pollutant ---------------------------------------------------------------
Option 2 Option 2.5 Opt. 2.5+P Option 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
A through D (non-small)........................ 5-Day Biochemical Oxygen Demand........ 609,665 609,665 609,665 640,054
Total Suspended Solids................. 967,092 967,092 967,092 1,116,025
Chemical Oxygen Demand................. 0 0 0 0
Carbonaceous Biochem. Oxygen Demand.... 511,342 511,342 511,342 511,342
Ammonia as Nitrogen.................... 2,250,306 2,250,306 2,250,306 2,309,928
Total Nitrogen......................... 0 15,400,791 15,400,791 18,456,984
Total Phosphorus....................... 0 0 4,519,867 4,972,188
Nitrate/Nitrite........................ 0 13,574,558 13,574,558 16,374,921
Total Kjeldahl Nitrogen................ 2,212,522 2,212,522 2,212,522 2,228,721
Oil & Grease (HEM)..................... 0 0 0 0
F through I (non-small)........................ 5-Day Biochemical Oxygen Demand........ 21,703 21,703 21,703 24,467
Total Suspended Solids................. 0 0 0 0
Chemical Oxygen Demand................. 42,213 42,213 42,213 42,213
Carbonaceous Biochem. Oxygen Demand.... 18,395 18,395 18,395 18,395
Ammonia as Nitrogen.................... 10,575 10,575 10,575 13,804
Total Nitrogen......................... 0 0 0 79,677
Total Phosphorus....................... 0 0 0 0
Nitrate/Nitrite........................ 0 0 0 0
Total Kjeldahl Nitrogen................ 12,945 12,945 12,945 15,677
Oil & Grease (HEM)..................... 0 0 0 0
J.............................................. 5-Day Biochemical Oxygen Demand........ 34,176 34,176 34,176 36,734
Total Suspended Solids................. 0 0 0 19,871
Chemical Oxygen Demand................. 0 0 0 0
Carbonaceous Biochem. Oxygen Demand.... 28,570 28,570 28,570 28,570

[[Page 54507]]

Ammonia as Nitrogen.................... 48,965 48,965 48,965 56,388
Total Nitrogen......................... 0 1,469,407 1,469,407 1,652,506
Total Phosphorus....................... 0 0 590,434 622,583
Nitrate/Nitrite........................ 0 1,465,011 1,465,011 1,644,216
Total Kjeldahl Nitrogen................ 51,819 51,819 51,819 54,788
Oil & Grease (HEM)..................... 0 0 0 0
K (non-small).................................. 5-Day Biochemical Oxygen Demand........ 643,830 643,830 643,830 868,841
Total Suspended Solids................. 1,309,553 1,309,553 1,309,553 2,573,666
Chemical Oxygen Demand................. 6,513,778 6,513,778 6,513,778 11,244,275
Carbonaceous Biochem. Oxygen Demand.... 725,207 725,207 725,207 725,207
Ammonia as Nitrogen.................... 331,973 331,973 331,973 502,103
Total Nitrogen......................... 0 9,367,808 9,367,808 20,883,771
Total Phosphorus....................... 0 0 4,147,385 4,671,571
Nitrate/Nitrite 2...................... 0 10,112,961 10,112,961 20,103,140
Total Kjeldahl Nitrogen................ 223,255 223,255 223,255 800,944
Oil & Grease (HEM)..................... 313,477 313,477 313,477 329,373
L (non-small).................................. 5-Day Biochemical Oxygen Demand........ 9,143 9,143 9,143 18,672
Total Suspended Solids................. 135 135 135 3,923
Chemical Oxygen Demand................. 43,609 43,609 43,609 59,123
Carbonaceous Biochem. Oxygen Demand.... 13,889 13,889 13,889 13,889
Ammonia as Nitrogen.................... 9,492 9,492 9,492 16,123
Total Nitrogen......................... 0 146,364 146,364 354,355
Total Phosphorus....................... 0 0 25,012 27,000
Nitrate/Nitrite 2...................... 0 153,476 153,476 335,921
Total Kjeldahl Nitrogen................ 5,685 5,685 5,685 19,039
Oil & Grease (HEM)..................... 0 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Incremental to baseline of current performance. Current performance based on summarized 1999 DMR data provided in response to detailed surveys.
Pollutant loading for various treatment options based on sampling data, survey information, and DMR data. (See Section 11 of the Technical Development
Document for a detailed discussion of loadings methodology).
\2\ EPA recognizes that total nitrogen should be more than nitrate/nitrite as nitrogen because total nitrogen is the sum of nitrate/nitrite as nitrogen
and total Kjeldahl nitrogen. However, the target effluent concentrations were taken from different sets of facilities (i.e., those that provided total
nitrogen data and those that provided nitrate/nitrite as nitrogen data). EPA is regulating total nitrogen, not nitrate/nitrite nitrogen for the final
rule.

Table VIII.A-2.--Removal of Specified Pollutants by Subcategory and Option \1\--Small Facilities
----------------------------------------------------------------------------------------------------------------
Removals (pounds per year)
Subcategory Pollutant ----------------------------------
Option 1 Option 2
----------------------------------------------------------------------------------------------------------------
A through D (small)....................... 5-Day Biochemical Oxygen Demand.. CBI Not estimated
Total Suspended Solids........... CBI Not estimated
Chemical Oxygen Demand........... 0 Not estimated
Carbonaceous Biochemical Oxygen CBI Not estimated
Demand.
Ammonia as Nitrogen.............. 0 Not estimated
Total Nitrogen................... 0 Not estimated
Total Phosphorus................. 0 Not estimated
Nitrate/Nitrite.................. 0 Not estimated
Total Kjeldahl Nitrogen.......... 0 Not estimated
Oil & Grease (HEM)............... 0 Not estimated
F through I (small)....................... 5-Day Biochemical Oxygen Demand.. 45,264 45,264
Total Suspended Solids........... 52,452 52,452
Chemical Oxygen Demand........... 0 0
Carbonaceous Biochemical Oxygen 40,586 40,586
Demand.
Ammonia as Nitrogen.............. 2,732 8,297
Total Nitrogen................... 0 0
Total Phosphorus................. 0 0
Nitrate/Nitrite.................. 0 0
Total Kjeldahl Nitrogen.......... 12,423 16,616
Oil & Grease (HEM)............... 0 0
K (small)................................. 5-Day Biochemical Oxygen Demand.. CBI CBI
Total Suspended Solids........... CBI CBI
Chemical Oxygen Demand........... CBI CBI
Carbonaceous Biochemical Oxygen CBI CBI
Demand.
Ammonia as Nitrogen.............. 0 CBI
Total Nitrogen................... 0 0
Total Phosphorus................. 0 0

[[Page 54508]]

Nitrate/Nitrite.................. 0 0
Total Kjeldahl Nitrogen.......... 0 CBI
Oil & Grease (HEM)............... 0 0
L (small)................................. 5-Day Biochemical Oxygen Demand.. 3 3
Total Suspended Solids........... 0 0
Chemical Oxygen Demand........... 0 0
Carbonaceous Biochemical Oxygen 11 11
Demand.
Ammonia as Nitrogen.............. 179 179
Total Nitrogen................... 0 0
Total Phosphorus................. 0 0
Nitrate/Nitrite.................. 0 0
Total Kjeldahl Nitrogen.......... 139 139
Oil & Grease (HEM)............... 0 0
----------------------------------------------------------------------------------------------------------------
\1\ Incremental to baseline of current performance. Current performance based on summarized 1999 DMR data
provided in response to detailed surveys. Pollutant loading for various treatment options based on sampling
data, survey information, and DMR data. (See Section 11 of the Technical Development Document for a detailed
discussion of loadings methodology).
CBI = Confidential business information is not disclosed due to the limited number of facilities estimated to be
in the subcategory.

B. Compliance Costs

1. How Did EPA Estimate the Compliance Costs of the Final Rule?
EPA developed cost models to estimate the costs required to modify
an existing nitrifying wastewater treatment system to achieve long-term
average (LTA) concentrations (i.e., target effluent concentrations) of
the technology options considered for the final rule. EPA developed
five cost models: the Option 2 cost model, Option 2+P cost model,
Option 2.5 cost models, Option 2.5+P cost model, and Option 4 cost
model. EPA used Option 2 cost model with Option 1 LTA concentrations to
estimate Option 1 costs for small facilities.
The primary cost model inputs required for each MPP facility are
treatment in place, wastewater treatment plant flow, and influent and
effluent pollutant concentrations for select parameters. EPA obtained
data inputs for each facility from a variety of sources, including the
MPP detailed survey, sampling episode reports, site visit reports, and
discharge monitoring reports. In the absence of influent concentrations
for a facility, EPA used default concentrations. See discussion on
development of default baseline concentrations in Section VIII.A.1. The
cost models have the ability to cost several alternate treatment
systems for the technology options. After reviewing the current
influent and effluent concentrations and treatment in place at a
facility, EPA selected and calculated costs for a particular treatment
system to achieve the Option LTA concentrations.
Based on the input parameters, the model calculates the design
parameters (e.g., volume of tanks) of the equipment required to achieve
the Option LTA concentrations. The calculated design parameters are
used in the cost equations in the model to estimate the cost of the
equipment. The summation of the capital costs is annualized and added
to the total operation and maintenance (O&M) costs to provide the
overall incremental compliance cost of the rule. EPA developed the
capital and O&M cost equations from the information obtained from
vendors, survey, cost models, and industry comments.
The cost model estimates capital costs for the following treatment
components: anoxic tanks, aeration tanks, pumps, mixers, an aeration
system, methanol, polymer and alum feed systems, mix tanks, a
filtration system, a sludge dewatering system, a holding pond, a lagoon
bypass cost, and miscellaneous cost. The O&M costs include costs for
maintenance, labor, energy, alkalinity, alum, methanol, polymer, sludge
disposal, sampling and analytical, performance improvement, and methane
revenue loss due to lagoon bypass. For information see the Technical
Development Document in the rulemaking record.

2. What Are the National Costs Associated With the Final Rule?

This section presents EPA's estimate of the total annual costs to
the meat and poultry products industry as a result of today's rule. All
costs presented in this section are reported in pre-tax 2003 dollars
(unless otherwise indicated).
EPA estimates the total pre-tax annualized costs of the final rule
at $58.2 million for the selected option (see Table VIII.B-1). Capital
costs account for $234 million under the selected regulatory option.
Estimated costs per facility are consistently highest for Subcategories
A-D ($0.6 million), and lowest for Subcategories F-I ($91,000). Table
VIII.B-1 presents compliance costs by subcategory and treatment option
for non-small facilities.
The table shows both pre-tax and -tax and post-tax costs. Pre-tax
annualized costs are the most complete estimates of annualized control
costs and reflect the overall cost to society. EPA presents pre-tax
costs also for its Executive Order 12866 analysis (Section XIII.A) and
cost-effectiveness analysis (Section IX.H). EPA uses post-tax costs to
assess financial impacts under the regulation because they net out tax
savings and more accurately reflect the costs that businesses will incur.

[[Page 54509]]

Table VIII.B-1.--Total and Average Compliance Costs for Non-Small Facilities by Subcategory and Option
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs (1000's, 2003 dollars) Average facility costs (1000's, 2003 dollars)
-----------------------------------------------------------------------------------------------
Option Post-tax Pre-tax Post-tax Pre-tax
Capital annualized annualized Capital annualized annualized
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subcategory A-D
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2................................................ $27,165 $5,179 $8,051 $937 $179 $278
Option 2.5.............................................. 75,061 12,395 18,435 2,588 427 636
Option 2.5+P............................................ 97,662 30,794 47,412 3,368 1,062 1,635
Option 4................................................ 121,753 37,382 57,451 4,198 1,289 1,981
---------------------------------------------------------
Subcategory F-I \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2................................................ 1,106 294 294 276 73 73
Option 2.5.............................................. 1,124 363 363 281 91 91
Option 2.5+P............................................ 1,216 396 396 304 99 99
Option 4................................................ 2,350 882 882 588 220 220
---------------------------------------------------------
Subcategory J \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2................................................ 1,429 695 695 75 37 37
Option 2.5.............................................. 7,755 3,123 3,123 408 164 164
Option 2.5+P............................................ 9,978 8,212 8,212 525 432 432
Option 4................................................ 12,827 11,237 11,237 675 591 591
---------------------------------------------------------
Subcategory K
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2................................................ 70,650 15,026 19,598 736 157 204
Option 2.5.............................................. 147,592 28,067 35,151 1,537 292 366
Option 2.5+P............................................ 177,432 53,370 70,027 1,848 556 729
Option 4................................................ 366,069 93,408 1,205,090 3,813 973 1,255
---------------------------------------------------------
Subcategory L \1\ \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2................................................ 1,495 615 615 149 62 62
Option 2.5.............................................. 2,615 1,086 1,086 262 109 109
Option 2.5+P............................................ 4,207 1,630 1,630 421 163 163
Option 4................................................ 8,641 3,612 3,612 864 361 361
---------------------------------------------------------
Totals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 2................................................ 101,845 21,808 29,253 645 138 185
Option 2.5.............................................. 234,147 45,033 58,157 1,482 285 368
Option 2.5+P............................................ 290,495 94,403 127,677 1,839 597 808
Option 4................................................ 511,639 146,521 193,691 3,238 927 1,226
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For non-small facilities in Subcategories F-I, J, and L, post-tax annualized costs are equal to pre-tax annualized costs because the analysis is
based on model facilities, and EPA assumed a tax shield of $0 to avoid underestimating impacts.
\2\ Subcategory includes partial costs for 7 mixed processor facilities with non-small levels of production in Subcategory L and small levels of
production in Subcategory F-I; on average, 61 percent of their production falls into Subcategory L. Compliance costs for mixed processor facilities
are distributed between subcategories and tables based on their percentage of production in each.

Table VIII.B-1 shows only that percentage of costs for mixed
processors that is attributable to non-small levels of production of
further processed poultry (Subcategory L). Because EPA chose not to set
new effluent limitations and guidelines for small facilities under the
final rule, the costs that small facilities would have incurred under
the considered (but not selected) options are shown separately in Table
VIII.B-2.
Table VIII.B-2 presents estimated total and average compliance
costs for small facilities under the various options considered. Table
VIII.B-2 includes costs for mixed processors that are attributable to
small levels of production of further processed meat (Subcategories F-
I) and poultry (Subcategory L). Thus costs for mixed processors are
split between different tables and/or subcategories within tables as
appropriate.

Table VIII.B-2.--Total and Average Compliance Costs for Small Facilities by Subcategory and Option
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total costs (1000's, 2003 dollars) Average costs (1000's, 2003 dollars)
-----------------------------------------------------------------------------------------------
Option Post-tax Pre-tax Post-tax Pre-tax
Capital annualized \1\ annualized Capital annualized \1\ annualized
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subcategory A-D \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 1................................................ $2,000-4,000 $1,000-2,500 $1,000-2,500 $150-175 $80-120 $80-120
Option 2 \3\............................................ NA NA NA NA NA NA
---------------------------------------------------------

[[Page 54510]]

Subcategory F-I \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 1................................................ 2,550 1,224 1,224 121 58 58
Option 2................................................ 2,550 1,233 1,233 121 59 59
---------------------------------------------------------
Subcategory K \2\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 1................................................ 7,500-10,000 2,500-5,000 2,500-5,000 200-400 75-100 75-100
Option 2................................................ 7,500-10,000 2,500-5,000 2,500-5,000 200-400 75-100 75-100
---------------------------------------------------------
Subcategory L \5\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 1................................................ 19 15 15 6 5 5
Option 2................................................ 19 15 15 6 5 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ For small facilities, post-tax annualized costs are equal to pre-tax annualized costs because (1) the facility is an S corporation or LLC
(Subcategories A-D and K), so taxes are paid on the income of the owning partners or (2) the analysis is based on model facilities (Subcategories F-I
and L), and EPA assumed a tax shield of $0 to avoid underestimating impacts.
\2\ Estimated costs are presented as a range to prevent the disclosure of confidential business information.
\3\ Option 2 was not costed for small facilities in this subcategory, because EPA did not propose further regulations.
\4\ Subcategory includes a share of costs for 7 mixed processor facilities with small levels of production in Subcategory F-I and non-small levels of
production in Subcategory L. This subcategory also includes 3 mixed processor facilities with small levels of production in Subcategory F-I and small
levels of production in Subcategory L. Compliance costs for mixed processor facilities are distributed between subcategories based on their percentage
of production in each.
\5\ Subcategory includes a share of costs for 3 mixed processor facilities with small levels of production in Subcategory L and small levels of
production in Subcategory F-I. Compliance costs for mixed processor facilities are distributed between subcategories based on their percentage of
production in each.

IX. What Are the Economic Impacts Associated With This Rule?

This section presents EPA's estimate of the economic impacts that
would be incurred by both existing and new meat and poultry products
facilities as a result of today's rule. This section also presents
EPA's cost-effectiveness and cost-reasonableness analysis. All costs
presented in this section are reported in pre-tax 2003 dollars (unless
otherwise indicated).
At the time of the proposal, EPA did not have detailed survey
financial data to use as a basis for an economic impact assessment. EPA
therefore developed economic impact methodologies based on publicly
available information for the proposed rule. These methodologies are
described in detail in the proposal (67 FR 8614; February 25, 2002) and
in the accompanying Economic Analysis for the proposed rule. EPA's
analysis for the proposed rule also describes the methodology it
anticipated using to evaluate economic impacts based on the detailed
survey data. EPA described further refinements to those methodologies
in its NODA (68 FR 48487; August 13, 2003). However, as EPA analyzed
the results of the detailed survey data, it became clear that few
direct discharging further processors or renderers (Subcategories E-I,
Subcategory J, and Subcategory L) had received a detailed survey. Based
on the screener survey data, EPA has concluded that there are a few
direct discharging facilities in these subcategories (see EPA's
proposal at 67 FR 8591 for more information on the screener survey).
For the final rule, EPA projects economic impacts to direct
discharging slaughtering facilities (Subcategories A-D and Subcategory
K) using detailed survey data and the associated methodologies
described in supporting documents for the proposed rule and in the
Agency's NODA. EPA projects economic impacts to direct discharging
facilities that perform further processing and rendering (Subcategories
F-I, Subcategory J, and Subcategory L) using the methodology described
in the preamble to the proposed rule, publicly available information,
and screener survey data. EPA did not revise its estimates of economic
impacts for Subcategory E (Small Processors) developed for the proposed
rule because EPA did not propose further regulation of this subcategory
(see Section VII for discussion on the regulation of facilities in
Subcategory E).
Section A of this section reviews the different methodologies EPA
developed to evaluate economic impacts on MPP facilities from expected
incremental pollution control costs that will be incurred under the
final rule. More information on these methodologies is also provided in
the NODA, the Economic Analysis for the proposed rule, and the Economic
and Environmental Benefits Analysis for the final rule. Section B
presents EPA's estimate of the number of facility closures for each
subcategory under the regulation; Sections C and D present EPA's
analysis of the projected effects at the company level and market
level. Sections E and F show EPA's estimate of the final regulation's
effects on foreign trade and communities, respectively. Section G
covers EPA's estimate of the economic impacts to new meat and poultry
products facilities from complying with today's rule, measured in terms
of business barriers to entry. Section H present EPA's cost-
reasonableness and cost-effectiveness analyses.
EPA has been examining the causative agents of transmissible
spongiform encephalopathies (TSEs) as they relate to such matters as
surface treatments and waste disposal. Given the early stages of this
examination and ongoing work by other agencies, EPA acknowledges that
it cannot presently account for the projected costs associated with the
regulatory demand that may be placed on meat processing facilities in
the future to deal with transmissible spongiform encephalopathies.
These cost will depend on future decisions by the relevant federal
agencies and are not

[[Page 54511]]

available for inclusion in today's rule. Based on what EPA now knows,
however, the rule is economically achievable.

A. What Methods Were Used To Determine the Costs and Economic Impacts?

EPA examined impacts at several levels: facility, company, market,
and national. Several facets of various analyses were modified in
response to comments on the proposed rule and the NODA. These changes
are identified in the following sections.
1. What Method Was Used To Assess Business Closures?
The facility-level analysis examines whether an otherwise
profitable site closes in response to the additional costs of increased
pollution control. EPA calculates direct impacts, such as closures and
losses in employment and revenue based on the survey data for the
facilities projected to close as a result of the regulation. EPA
developed two methods of evaluating facility closure. EPA bases the
first method, as described in the following section (``Facility-
Analysis Method for Sites with Detailed Questionnaire Data''), on
detailed questionnaire data and uses this approach to estimate closures
for Subcategories A-D and Subcategory K facilities. As previously
noted, the detailed questionnaires returned to EPA do not fully
represent Subcategories E-I, Subcategory J, and Subcategory L
facilities. Therefore, for these facilities EPA used a combination of
screener survey data and public data to estimate closures among these
facilities (see the discussion in the section titled ``Facility-
Analysis Method for Sites without Detailed Questionnaire Data'').
a. Facility-Analysis Method for Subcategories With Sufficient Detailed
Questionnaire Data
EPA's closure analysis is a discounted cash flow analysis that
compares the costs incurred during a 16-year period from 2005 to 2020
to the earnings accumulated during that same period. This analysis
discounts both costs and earnings with the facility-specific discount
rate reported in the detailed questionnaire. This takes into account
the time value of money and places both time series on a comparable
basis. To be considered a closure under the final rule, a facility has
to show both (1) positive long-term earnings without the regulation and
(2) negative long-term earnings as a result of the regulation in the
majority of the forecasts. While the analysis may be described simply,
EPA does address many complexities within the model, including what to
consider as earnings, which costs to consider, and the number and type
of forecasting methods used.
Earnings. EPA uses net income as the basis for earnings where it is
calculated from detailed questionnaire data as revenues minus operating
costs; selling, general, and administrative expenses; depreciation;
interest; and taxes.
Forecasting Methods. EPA uses a 16-year time period to forecast
facility future income. For the proposal, EPA stated it would use the
survey period, 1997 to 1999, as the baseline for projecting facility
and company net income for use in the closure model. Commenters felt
that it was not appropriate to use this period as the baseline because
unusual supply and demand conditions resulted in unusually large
margins for meat companies, and therefore, atypically profitable years.
EPA concurs with this assessment. To address these concerns EPA
developed a forecasting model that uses historical data on the periodic
cycles of the relevant markets to generate an index. As discussed in
the NODA, EPA uses this index to forecast net income for MPP
facilities, accounting for cyclical effects on profits.
In the meat packer and processing sectors, EPA uses time series
data from U.S. Department of Agriculture's Economic Research Service
(USDA/ERS) to develop a forecast of the annual farm-to-wholesale price
margin. To forecast this margin in the poultry sector, EPA developed a
new time series by subtracting the USDA/ERS broiler wholesale
production cost time series from its broiler wholesale price time
series. These time series data, which span from 1970 to 2002 for beef
and pork, and from 1990 to 2002 for poultry, are expressed in constant
1999 prices and are deseasonalized.
For this analysis, EPA identified ``normal'' or ``average'' margin
cycles for each animal type over the 1970 to 2002 period, which were
then econometrically tested to ensure statistical validity. EPA uses
these cycles to forecast the wholesale margin for the 2005 to 2020 time
period. Complete details of EPA's methodology to measure and forecast
the wholesale margin cycles are provided in the docket (see Section
21.2, DCN 125-502).
EPA forecasts facility earnings for use in the closure model by
first developing indices using the historical and projected wholesale
margin time series and then applies these indices to survey net income
data. EPA projects net income to vary directly with the farm-to-
wholesale price spread: as the spread narrows, net income declines. As
noted in public comments received by EPA, the 1997 to 1999 survey
period was at or near the peak of a cycle, and as a result net income
could be expected to decline as industry moved toward the cycle trough.
Therefore, EPA selected cycle high points (largest annual margin) for
the base period of its indices. Accordingly, both the margin and
facility net income will, in general, decline as the forecast moves
further from the baseline year.
Weight of Evidence to Determine Closure. To account for uncertainty
in both the forecast future facility net income, and the appropriate
start point of the forecast, EPA selected three methods for projecting
future facility net income. One forecast method uses a simple average
of 1997, 1998, and 1999 net income projected over the 16-year project
life. Based on comments that these were unusually profitable years, EPA
developed alternate forecasts where future net income is projected to
vary directly with a forecast of the farm-to-wholesale price margin.
Thus, the alternate forecasts can be defined by a combination of start
points: the net income start point (i.e., the year from which facility
net income is taken from the survey), and the initial value for the
price margin. The second forecast starts with both 1999 net income and
the 1999 margin value as the start point of the business cycle
forecast. The third forecast takes the simple average of 1997, 1998,
and 1999 to use as the net income start point, then, to capture the
peak of the business cycle, selects the largest margin value in the
1995 to 2001 time frame as the start point of the business cycle
forecast. EPA used the preponderance of evidence under different
forecasting methods to determine if a facility is projected to close.
That is, EPA projects a facility will close if the present value (PV)
of future compliance costs exceeds the forecast PV of net income under
two of the three forecasting methods.
Alternate Analysis. As an alternate analysis, EPA projects closures
if the PV of future compliance costs exceeds the forecast PV of net
income under one of the three forecasting methods. EPA believes this
constitutes a more conservative approach to estimating potential
closures. The alternative analysis focuses on subcategories A-D and K
only. The results of this analysis do not indicate that there would be
a substantial change in the number of estimated facility closures: EPA
estimates that there could be two closures among subcategory A-D
facilities and no change for subcategory K facilities. See the
rulemaking record for additional details.

[[Page 54512]]

Baseline Industry Conditions. The focus of EPA's analysis is to
evaluate financial impacts that result from complying with the final
regulation. However, there are two situations where EPA cannot perform
this analysis: if (1) The company does not assign costs and revenues
that reflect the site's true financial health (e.g., the facility is a
cost center or a captive site), or (2) the site is already in financial
trouble. Under the first condition, EPA does not have sufficient
information to evaluate impacts at the site level as a result of the
rule. In the second case, the facility is unprofitable prior to the
regulation, and the company may decide to close the site even in the
absence of the rule. The projected closure of a site that is
unprofitable prior to a regulatory action is not attributed to the
regulation. This second case is referred to as a baseline closure.
In the first situation, EPA is not able to analyze facility-level
closure impacts when the company does not record sufficient information
at the site level for the closure analysis to be performed. In the case
of the MPP industry, many companies do not maintain financial records
at the facility level. Instead they maintain their financial records
at, for example, the company level, division level or product line
level. EPA's detailed survey provides facility-level financial data for
less than 40 percent of direct discharging facilities. EPA also
collected company-level financial data in the detailed survey.
Therefore, EPA performed a closure analysis at the company level as a
supplement to the facility-level analysis, to compensate for the
relatively low percentage of detailed surveys with facility-level data.
Adjustment of Facility Weights to Account for Nonresponse. Detailed
survey data was not available for use at the time of the proposed
rulemaking. For proposal, EPA used screener survey data combined with
model facilities derived from Census data to perform the facility-level
closure analysis. EPA did use detailed survey data to perform the
facility-level closure analysis, as presented in the NODA. However, as
previously noted, EPA did not receive facility-level financial data
from a significant portion of respondents in response to the Agency's
detailed survey. In particular, 10 facilities (18 weighted) in
Subcategory A-D (both small and non-small) and 27 facilities (97
weighted) in Subcategory K facilities (both small and non-small) did
not provide sufficient financial information for use in EPA's closure
analysis. This was generally because the companies do not maintain the
type of information about each facility that EPA requested. Instead,
the information is consolidated at the company level. Therefore, EPA
conducted its facility-level closure analysis on the 10 facilities (28
weighted) in Subcategory A-D (both small and non-small) and 9
facilities (45 weighted) in Subcategory K (both small and non-small)
that provided sufficient data about each facility. As discussed in the
NODA, analysis of economic impacts to the facilities that did not
provide financial data were subsumed under the company-level closure
analysis.
EPA received public comments on the NODA recommending that the
Agency account for all surveyed facilities in its facility closure
analysis, even if no financial information on a facility was obtained
through the detailed survey. To address these public comments for the
final rule, EPA accounted for missing data as follows.
For its facility closure analysis and small business sales test in
Subcategories A-D and Subcategory K, EPA incorporated additional
adjustments to the survey weights to account for the facilities without
the financial information, but that had otherwise responded to the
questionnaire. EPA believes that its approach is simpler and more
robust than the approach proposed in the public comments and consistent
with accepted survey statistical practice. By adjusting in this manner,
EPA is assuming that the facilities that provided facility-level
information are similar to those that did not. EPA has no information
to suggest that this is not the case.
Commenters suggested that EPA account for incomplete facility-level
data using available financial data combined with production data to
estimate a distribution for the facility's net income in 1997, 1998,
and 1999, thereby allowing the Agency to forecast this net income
distribution over the 16-year project life. After careful review, EPA
decided not to adopt this distribution approach for the following
reasons. First, EPA believes that a distribution approach does not
maintain the characteristics of facility-level financial conditions as
compared to an approach that uses adjustment of facility weights. A
distribution approach also relies on too many statistical assumptions
to make such an approach workable. Second, EPA believes that
forecasting a distribution results in greater uncertainty about future
net income per pound. The resulting broad range of outcomes would make
meaningful comparisons of costs and incomes streams difficult. The
distributional approach suggested by commenters has merit and could add
value if all survey data were initially reported on a per pound basis
along product, facility, and distributional lines. Third, the
recommended distribution approach proposed that EPA pool observations
of net income per pound from both poultry and meat slaughter
facilities, which have very different economic and financial
characteristics. Finally, EPA's preliminary assessment indicates that
its estimate of facility closures using either approach would not be
significantly changed. More detailed information is available in EPA's
comment response document and in the rulemaking record.
Table IX.A-1 lists the number of facilities by subcategory and
production size, as well as the numbers of facilities that did and did
not provide financial information for the closure analysis (see the TDD
and the rulemaking docket for further details on survey stratification
and facility counts).

Table IX.A-1.--Facility Counts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facility counts ``Economic
--------------------------------------------------------- analysis''
Subcategory Production size adjustment factor
Eligible (N) With data (n1) Without data (n2) (N/n1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A-D......................................... non-small..................... 31 13 18 2.38
small......................... 15 15 0 1.00
K........................................... non-small..................... 105 36 69 2.92
small......................... 36 9 27 4.15
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 54513]]

The final weight w_hi for a facility i in stratum h can
be written as follows:

W_h,i = (base weight)_h,i x (economic analysis
adjustment factor)_h
W_h,i = (base weight)_h,i x (N/
n₁)_h

(See the Economic Analysis for the proposed rule). In other words,
there are 31 non-small direct dischargers in subcategories A-D, of
which 13 provided facility-level financial data; 18 facilities did not.
The 13 non-small facilities would have their detailed survey weight
multiplied by 2.38 (\31/13\ = 2.38) to account for the 18 that did not
provide facility-level data, and so forth for the remaining
subcategories and size classes.
b. Facility-Analysis Method for Subcategories Without Sufficient
Detailed Questionnaire Data
Facilities in Subcategories E-I, J, and L are not well represented
in the detailed questionnaire data. EPA uses screener survey data to
estimate compliance costs, then uses size and process information to
match the screener survey facilities with model facilities to project
economic impacts using the methodology from the proposed rule.
EPA's economic model facilities are based on the U.S. Census
Bureau's 1997 Economic Census of the four NAICS codes for meat and
poultry product industries (NAICS 311611: Animal (Except Poultry)
Slaughtering, 311612: Meat Processed From Carcasses, 311613: Rendering
and Meat Byproduct Processing, and 311615: Poultry Processing). EPA
uses Census revenue and cost information at both the employment class
(that is, disaggregated into size groupings based on annual production)
and the industry level. At the employment class level, EPA uses the
Census' value of total shipments (a proxy for total revenues), payroll
and material costs data. EPA uses industry level data on benefits,
depreciation, rent, and purchased services and attributes it to the
employment class level using certain assumptions (e.g., employment
benefits are proportionate to payroll, refuse removal costs are
proportionate to material costs). EPA divides each component of
facility income by the number of establishments in the employment class
to calculate the average for that class. EPA then estimates model
facility earnings before taxes (EBT) in each class as the average value
of shipments minus payroll, material costs, benefits, depreciation,
rent, and purchased services. Because revenues, payroll and cost of
materials are the most significant components of EBT, the relative
error introduced by attributing industry level data to the employment
class level should be small.
EPA uses data from Census' Annual Survey of Manufacturers (ASM),
1997 Economic Census, and the Internal Revenue Service code combined
with additional assumptions to estimate model facility net income from
EBT. EPA assumes model facility EBT is equal to business entity taxable
income as the basis for calculating tax payments; EPA then applies 1999
Federal and an average of State corporate tax rates to EBT. EPA
estimates industry level interest payments using a combination of ASM
data on past investment by industry, Census data on relative investment
in buildings and equipment, and assumptions about investment behavior
(e.g., all investment in each year was funded through bank loans, the
interest rate on those loans was equal to the nominal prime rate for
that year plus 1 percent). EPA attributes interest payments to each
employment class based on the percentage of industry investment
accounted for by that employment class in the 1997 Census. EPA
estimates net income as EBT less estimated tax and interest payments
for each model facility. EPA inflates all model income measures from
the Census year, 1997, to the baseline year, 1999, using the implicit
price deflator for the meat and poultry products industry.
The resultant model facility represents a distribution of facility
incomes around the mean. EPA estimates this distribution of income
around the model facility mean by obtaining from Census a special
tabulation of the variances and covariances for value of shipments,
material costs, and payroll in each employment class. EPA assumes that
the distribution of each variable is normal. Given the relatively large
number of observations within each employment class, EPA believes this
assumption is reasonable. Because EPA calculates model facility EBT as
a linear function of the means of its components, the variance of EBT
for each employment class can be derived as a linear function of the
variances and covariances of the components using well established
formulae. Because the actual income measures differed from the
approximate income measure (EBT) on which variance is estimated, EPA
adjusts the variance of each income measure using standard rules
concerning the expected value of mean and variance.
In order to perform the economic impact analysis, EPA matches its
economic model facilities to the engineering model facilities used to
estimate costs. All red meat (or meat) facilities that perform animal
slaughter, whether alone or in combination with other processes, are
assigned economic model facilities from NAICS 311611 (Animal (Except
Poultry) Processing). EPA assigns meat facilities that perform further
processing processes but no slaughtering activities to economic model
facilities from NAICS 311612 (Meat Processed From Carcasses), as are
facilities that process a mix of both meat and poultry (approximately
70 percent of their production is meat). EPA assigns facilities that
process poultry, with or without slaughter, to economic model
facilities from NAICS 311615 (Poultry Processing). EPA assigns
facilities that only perform rendering operations as NAICS 311613
(Rendering and Meat Byproduct Processing). EPA then matches the model
economic facilities to the model engineering facilities by size. EPA
uses production from each engineering model, combined with
representative meat product prices for 1999, to estimate model facility
revenues. EPA assigns the engineering model to an economic model that
most closely matched its estimated revenues.
For facilities in Subcategories E-I, J, and L, EPA chose the ratio
of cost/net income as its preferred (central) measure of economic
achievability (the results for all of the ratios are presented in the
Economic and Environmental Benefits Analysis for the final rule). EPA
also estimates the probability that a facility may close because
incremental compliance cost exceeds net income. EPA estimates these
probabilities using the variance and covariance information provided by
the Census Bureau to derive the variance of net income. The probability
that annualized compliance costs are greater than net income provides a
rough estimate of the probability of that facility closing.
EPA notes that the use of average ratios could mask considerable
variability in economic impacts. This is a shortcoming of the use of
model facilities. EPA has attempted to ameliorate this shortcoming to a
practicable extent by using multiple model facilities within each
subcategory. EPA also estimates probabilities of closure from the
distribution of income around each model facility's mean income to
account for the variability in economic impacts that would not
otherwise be reflected in an analysis based on model facilities.
2. What Methods Were Used for Company Analysis?
EPA uses three methods to examine impacts on companies: closure,

[[Page 54514]]

Altman's Z', and a financial ratio analysis. As with the facility
analysis, this approach depends on whether the subcategory is
adequately represented in the detailed questionnaire data. Because a
substantial portion of the industry does not maintain financial records
at the facility level, EPA developed a company-level closure analysis
approach. The Altman's Z' analysis is described in the Economic
Analysis for the proposed rule (Section 3.1.3.2). EPA uses its
financial ratio analysis to account for the segment of the industry not
represented in the detailed questionnaire.
a. Company-Analysis Method for Subcategories With Sufficient Detailed
Survey Data
Estimation of company costs. EPA compiled a list of all other meat
processing facilities owned by each of those corporate parents from a
review of the 52 non-small direct discharging facilities in
Subcategories A-D and Subcategory K that received a detailed survey. In
cases where information is not represented in the detailed survey
database, EPA relies on the screener survey and the PCS database to
estimate the number of direct discharging facilities owned by these
corporate parents. EPA estimates that the 25 corporate parents of those
52 non-small direct dischargers owned about 323 MPP facilities in 1999.
Of the 323 facilities owned by these corporate parents, approximately
117 were direct dischargers. Of these 117 direct dischargers, 52
received detailed surveys, and 65 required analyses based on non-survey
data. Indirect discharging facilities are not expected to incur costs
under this regulation.
To estimate compliance costs attributable to the 65 non-surveyed
facilities, EPA applies mean compliance costs by animal type (meat or
poultry) to each non-surveyed facility. EPA examines alternative means
of allocating compliance costs to these facilities, such as matching
costs from detailed survey facilities based on animal type and
processes performed. Because EPA is unable to determine with a high
degree of confidence the processes performed and level of production at
non-surveyed facilities, the Agency assigns the average costs of non-
small facilities in Subcategories A-D and K to the non-surveyed
facilities (according to meat type). This results in more conservative
(i.e., higher) cost estimates. See DCN 328-002 for additional
information on the estimation of non-surveyed direct discharge facilities.
Closure analysis. The company-level closure analysis is identical
to the facility-level closure analysis with company earnings and costs
replacing facility earnings and costs in the discounted cash flow
calculations. If a company is projected to close, company output and
employment are considered lost. EPA does not attempt to scale up the
projected company closures to correspond to a national estimate because
the Agency lacks data on which to base sample weights for the 25
companies. Thus, the company-level analysis reflects closures only
among the 25 companies analyzed. EPA made an effort to determine
whether there are additional companies that own direct discharging MPP
facilities and found three additional companies based on the screener
survey results that may own direct discharging MPP facilities.
Therefore, the company-level analysis could somewhat underestimate the
number of company closures nationally. See Section IX.B for results of
the company closure analyses.
Altman's Z'. To examine firm-level impacts in Subcategories A-D and
Subcategory K, EPA uses an Altman Z'-score analysis. Such an analysis
is based on a statistical technique called multiple discriminant
analysis to predict company bankruptcy based on a weighted combination
of financial ratios. The Altman Z'-score is a widely-used tool used to
predict firm ``financial distress'' or bankruptcy. It takes into
account a company's total assets, total liabilities and earnings, which
are influenced by total compliance capital costs and other costs
incurred by a company as a result of complying with the final regulation.
This approach places firms into three levels of financial health:
financial distress is unlikely, financial distress is indeterminate,
and financial distress is likely. EPA considers firms that move from an
indeterminate or unlikely distress prediction to a likely distress
prediction to be at risk of bankruptcy or other serious financial
disruption. The actual effects of financial distress are inherently
unpredictable and a firm may avoid legal bankruptcy by taking other
measures such as laying off employees, closing facilities, or selling
assets. These firms still may incur very significant impacts even if
they do not file for bankruptcy.
EPA uses the Altman Z'-score to assess the baseline financial
condition of MPP firms and the incremental impacts of the rule on their
financial health. This analysis includes the same 25 companies analyzed
for company closure analysis.
b. Company-Analysis Method for Subcategories Without Sufficient
Detailed Survey Data
For subcategories without sufficient detailed survey data, EPA
could not perform an Altman's Z' analysis (Subcategories F-I, J, and
L). For the purpose of analyzing facilities in these subcategories, EPA
assumes the facility and company are identical for this group. EPA
combines Census data (via the model facilities developed for the
closure analysis) with Dun & Bradstreet financial ratio data. For each
model facility, EPA divides net income by the median value for return
on assets reported by Dun & Bradstreet for the relevant industry to
estimate the model facility's total assets. Given the model facility's
net income and total assets, EPA calculates the post-regulatory return
on assets as: (net income-posttax annualized costs)/(total assets +
capital costs) and compares this to the current median return on assets
as an additional measure of the impacts of the rule.
3. What Method Was Used for Impacts on Price and Output?
EPA developed a market model to examine the impacts of the proposal
on the price and output of beef, pork, chicken, and turkey. The market
analysis for each product depends not only on the compliance costs for
that product but also on the impact of costs on the prices of the other
three meat and poultry products because as prices for one product rise,
consumers will purchase less of that product and more of the other
three products. EPA assumes a perfectly competitive structure for the
meat and poultry products market model after performing an extensive
literature search. EPA developed standard domestic supply, domestic
demand, import supply, and export demand equations for each meat and
poultry product. EPA specifies domestic demand for each meat and
poultry product as a function of the price of the other three meat and
poultry products in addition to its own price. EPA uses USDA data to
determine baseline market prices and quantities. EPA selected key model
parameters (e.g., price elasticities) from existing published sources
following an extensive data search. For each meat and poultry product
market to be in equilibrium, U.S. domestic demand plus foreign demand
(exports) must equal U.S. domestic supply plus foreign sales (imports)
at its current market price.
Compliance costs shift the supply curve for each meat and poultry
product by the pre-tax annualized compliance

[[Page 54515]]

costs per pound of carcass weight for each of the four animal types.
The most appropriate measure of the shift in supply is the cost per
pound of total industry production because (1) the majority of
facilities incur no costs and (2) the competition from facilities that
do not incur costs will discourage affected facilities from increasing
price by their full cost per pound increase due to today's rule.
Given the supply shift for each product, EPA solves for the post-
regulatory set of meat prices that result in equilibrium in all four
markets. This solution provides estimates of post-regulatory impacts.
Finally, EPA's analysis substitutes the post-regulatory prices back
into the individual component equations to estimate post-regulatory
domestic supply, domestic demand, import supply, and export demand for
each meat and poultry product. Changes in prices and these quantities
for each meat and poultry product measure the market-level impacts of
the final rule.

B. How Many Closures Are Projected as a Result of the Final Rule?

1. How Many Non-Small Facilities/Companies in Subcategories A-D and
Subcategory K Might Close?
A facility (or company) forecast to have a negative net present
value (NPV) of net income under at least 2 of 3 methods (described in
Section IX.A) prior to regulatory costs are called ``baseline
closures.'' Among non-small facilities in Subcategories A-D there are 5
baseline closures; in Subcategory K there are 30 baseline closures. The
economic impact of the rule on ``baseline closures'' cannot be assessed
using the closure model. Under the alternate analysis in which a
negative NPV forecast by only one method is sufficient to project a
closure, the number of baseline closures in each subcategory is unchanged.
For the facility-level closure analysis, EPA projects there are no
closures in Subcategories A-D under any options. For Subcategory K, EPA
projects that 22 of the 105 facilities will close under Option 4; no
facility closures are projected under other treatment options. Thus,
EPA projects that there are no closures in either subcategory under the
selected Option 2.5. In the alternate analysis, EPA projects 2 facility
closures for all options in Subcategory A-D, and 22 closures under
Option 4 in Subcategory K. Table IX.B-1 presents the facility closure
impacts for all options that were considered.

Table IX.B-1--Summary of Projected Non-Small Facility Closure Impacts by Subcategory and Option
----------------------------------------------------------------------------------------------------------------
Baseline conditions and projected incremental
closure impacts \1\
Option --------------------------------------------------
Number of Total revenues
facilities ($000) Employees
----------------------------------------------------------------------------------------------------------------
Subcategories A-D
----------------------------------------------------------------------------------------------------------------
Total Facilities Analyzed.................................... 31 $17,492,882 49,630
Baseline Closures............................................ 5 2,000,000-4,000 14,000-17,500
,000
Option 2 Closures............................................ 0 0 0
Option 2.5 Closures.......................................... 0 0 0
Option 2.5+P Closures........................................ 0 0 0
Option 4 Closures............................................ 0 0 0
--------------------------------------------------------------
Subcategory K
----------------------------------------------------------------------------------------------------------------
Total Facilities Analyzed.................................... 105 $13,022,059 107,096
Baseline Closures............................................ 30 4,326,777 41,038
Option 2 Closures............................................ 0 0 0
Option 2.5 Closures.......................................... 0 0 0
Option 2.5+P Closures........................................ 0 0 0
Option 4 Closures............................................ 22 800,000-1,000,0 12,500-15,000
00
----------------------------------------------------------------------------------------------------------------
\1\ Some revenue and employment impacts are presented as a range to prevent the disclosure of confidential
business information.

In the supplemental company-level closure analysis shown in Table
IX.B-2, EPA projects that one poultry company will close under Option
2.5+P and Option 4. This company employs between 2,500 and 5,000
workers. Note that the apparent discrepancy between the facility-level
and company-level analysis for poultry Option 2.5+P is explained by the
fact that the poultry company that is projected to close did not
provide facility-level financial information; therefore, the facilities
owned by this company were not included in the facility-level analysis.
Under the alternate analysis, the same poultry company (under the same
options) is projected to close, as well as one meat company under all
treatment options, and one mixed meat (i.e., company owns both poultry
and meat facilities) company under Options 2.5, 2.5+P, and Option 4.

[[Page 54516]]

Table IX.B-2.--Summary of Projected Company Closure Impacts by Subcategory and Option
----------------------------------------------------------------------------------------------------------------
Baseline conditions and projected incremental
closure impacts \1\
Option --------------------------------------------------
Number of Total revenues
companies ($millions) Employees
----------------------------------------------------------------------------------------------------------------
Meat (own facilities in Subcategories A-I)
----------------------------------------------------------------------------------------------------------------
Total Companies Analyzed..................................... 9 $29,949 80,755
Baseline Closures............................................ 1 250-500 1,000-4,000
Option 2 Closures............................................ 0 0 0
Option 2.5 Closures.......................................... 0 0 0
Option 2.5+P Closures........................................ 0 0 0
Option 4 Closures............................................ 0 0 0
--------------------------------------------------------------
Poultry (own facilities in Subcategories K and L)
----------------------------------------------------------------------------------------------------------------
Total Companies Analyzed..................................... 12 $15,441 135,850
Baseline Closures............................................ 5 3,384 31,042
Option 2 Closures............................................ 0 0 0
Option 2.5 Closures.......................................... 0 0 0
Option 2.5+P Closures........................................ 1 100-150 2,500-5,000
Option 4 Closures............................................ 1 100-150 2,500-5,000
--------------------------------------------------------------
Mixed (own facilities in both meat and poultry subcategories)
----------------------------------------------------------------------------------------------------------------
Total Companies Analyzed..................................... 4 $89,439 184,834
Baseline Closures............................................ 0 N/A N/A
Option 2 Closures............................................ 0 0 0
Option 2.5 Closures.......................................... 0 0 0
Option 2.5+P Closures........................................ 0 0 0
Option 4 Closures............................................ 0 0 0
----------------------------------------------------------------------------------------------------------------
\1\ Some revenue and employment impacts are presented as a range to prevent the disclosure of confidential
business information.

Company-level results are unweighted because the survey sampling
frame was stratified on the basis of facility-level data, and this
stratification could not be translated to the company level. Therefore,
the facility-level and company-level results are not additive. Because
of the large number of facilities that were unable to submit financial
data in their survey, EPA performed a subsidiary company-level analysis
to provide a consistency check on the primary facility-level analysis.
EPA estimates that the 25 companies in the company-level analysis own
at least 118 of the 136 in-scope facilities that EPA project will be
subject to regulation in Subcategories A-D and K. Note however that the
company-level and facility-level analyses are fairly consistent in that
both show no closures in the meat subcategories under any option, and
both show impacts in the poultry subcategories under Option 4. It is
not surprising that the impacts appear higher under this option for the
facility-level analysis, because the company-level analysis will not
capture situations where one or more facilities owned by a company
close but the company as a whole remains in business. The only
inconsistency is for poultry Option 2.5, which shows one company-level,
but no facility-level, impact. This is because the particular
facilities owned by the closing company did not have detailed survey
data and thus were not included in the facility-level analysis.
2. How Many Small Facilities in Subcategories A-D and Subcategory K
Might Close?
EPA is not promulgating any additional regulations for small
facilities in these subcategories, so there are no rule-related
closures. However, EPA analyzed potential closures under the options
(Options 1 and 2) that EPA considered for small facilities in these
subcategories.
Among small facilities in Subcategories A-D and Subcategory K,
there are no baseline closures. Under the alternate analysis, in which
a negative NPV under only one method is sufficient to project a
closure, EPA also estimates there are no baseline closures in either
subcategory.
In the facility-level closure analysis, EPA projects there are no
facility closures for Subcategories A-D under either the primary or
alternate analysis. The results of the closure analysis for Subcategory
K cannot be presented due to CBI reasons. However, EPA found a
substantial percentage of small facilities are projected to close under
both options in this subcategory. Table IX.B-3 presents these results.

Table IX.B-3.--Summary of Projected Small Facility Closure Impacts by Subcategory and Option
----------------------------------------------------------------------------------------------------------------
Baseline conditions and projected incremental
closure impacts \1\
Option --------------------------------------------------
Number of Total revenues
facilities ($thousands) Employees
----------------------------------------------------------------------------------------------------------------
Subcategories A-D
----------------------------------------------------------------------------------------------------------------
Total Facilities Analyzed.................................... 15 $150,000-200,00 500-750
0

[[Page 54517]]

Baseline Closures............................................ 0 0 0
Option 1 Closures............................................ 0 0 0
Option 2 Closures \2\........................................ NA NA NA
--------------------------------------------------------------
Subcategory K
----------------------------------------------------------------------------------------------------------------
Total Facilities Analyzed.................................... 36 250,000-500,000 2,000-4,000
Baseline Closures............................................ 0 0 0
Option 1 Closures............................................ (\3\) (\3\) (\3\)
Option 2 Closures............................................ (\3\) (\3\) (\3\)
----------------------------------------------------------------------------------------------------------------
\1\ Revenue and employment data are presented as a range to prevent the disclosure of confidential business
information.
\2\ Option 2 was not costed for small facilities in this subcategory, because EPA did not propose further
regulations.
\3\ CBI.

3. How Many Non-Small Facilities in Subcategories F-I, J, and L Might
Close?
Table IX.B-4 presents the closure analysis for non-small facilities
in Subcategories F-I, Subcategory J, and Subcategory L based on the
model facility methodology used to analyze screener survey facilities.
Under Option 2.5, EPA estimates that facilities in Subcategories F-I
will incur compliance costs that are 1.2 percent of net income;
facilities in these subcategories are expected to have about a 0.2
percent probability of closure due to the rule. EPA projects that
facilities in Subcategory J will incur compliance costs of 6.7 percent
of net income under Option 2.5. Probability of closure due to the rule
is 1.3 percent for these facilities under the selected option. In
Subcategory L, EPA expects that facilities will incur compliance costs
of 5.1 percent of net income under the selected option, with the
probability of closure due to the rule for these facilities about 0.9
percent.

Table IX.B-4.--Summary of Projected Non-Small Facility Closure Impacts by Subcategory and Option Screener Survey Facility Analysis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average
annualized Probability of
Option costs as closure due to Number of Total revenues Employees \2\
percent of net rule \1\ (%) facilities \2\ ($000) \2\
income \1\ (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subcategories F-I
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facilities Analyzed................................................ NA NA 4 $448,654 1,506
Option 2........................................................... 1.0 0.17 0.01 754 3
Option 2.5......................................................... 1.2 0.21 0.01 930 3
Option 2.5+P....................................................... 1.3 0.23 0.01 1,014 3
Option 4........................................................... 3.0 0.50 0.02 2,260 8
--------------------------------------------------------------------
Subcategory J
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facilities Analyzed................................................ NA NA 19 274,270 1,123
Option 2........................................................... 1.5 0.29 0.06 809 3
Option 2.5......................................................... 6.7 1.29 0.25 3,687 16
Option 2.5+P....................................................... 17.1 3.31 0.63 9,986 45
Option 4........................................................... 24.2 4.47 0.91 13,591 58
--------------------------------------------------------------------
Subcategory L \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facilities Analyzed................................................ NA NA 10 223,663 974
Option 2........................................................... 2.8 0.51 0.05 1,135 5
Option 2.5......................................................... 5.1 0.91 0.09 1,941 8
Option 2.5+P....................................................... 7.7 1.36 0.14 2,937 12
Option 4........................................................... 16.8 3.03 0.30 6,689 29
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Presented as a weighted average of results over all model facilities in the subcategory.
\2\ Calculated as the probability of closure for each individual model facility multiplied by the number of facilities, revenues and employment
represented by that model facility. The results are then summed over all model facilities in the subcategory.
\3\ Includes costs and impacts on the portion of production that falls under non-small processor Subcategory L guidelines for 7 mixed processors,
assuming no costs for that portion of their output that falls under small processor Subcategories F-I guidelines. Costs and impacts if guidelines for
both types of production are promulgated are covered in Section IX.B.5 below.

[[Page 54518]]

Table IX.B-4 shows that fractions of facilities are projected to
close under each option. This result is attributable to the methodology
used to estimate the probability of closure due to the rule. EPA
estimates the probability of closure using a continuous distribution
function. EPA then calculates the number of closures by multiplying the
probability of closure by the number of facilities represented by that
model facility. Because relatively few facilities are in each
subcategory, and because the probabilities of closure are relatively
small, the projected number of closures in each subcategory is less
than one. However, to report zero projected closures is not accurate
since the probability of closure, while small, is greater than zero.
4. How Many Small Facilities in Subcategories F-I and Subcategory L
Might Close?
Table IX.B-5 presents the closure analysis for small facilities in
Subcategories F-I and Subcategory L. EPA is not regulating small
facilities in these subcategories, but EPA projects that small
facilities in Subcategories F-I would incur compliance costs that are
9.4 percent of net income, resulting in a probability of closure due to
the rule of 1.5 percent if they were regulated based on Option 1 or 2.
In Subcategory L, facilities would incur costs that compose less than 1
percent of net income, resulting in a probability of closure due to the
rule of 0.15 percent if they were regulated.

Table IX.B-5.--Summary of Projected Small Facility Closure Impacts by Subcategory and Option Screener Survey Facility Analysis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average
annualized Probability of
Option costs as closure due to Number of Total revenues Employees \2\
percent of net rule \1\ (%) facilities \2\ ($000) \2\
income \1\ (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Subcategories F-I \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facilities Analyzed................................................ NA NA 21 $369,692 1,316
Option 1........................................................... 9.4 1.49 0.31 2,632 11
Option 2........................................................... 9.4 1.51 0.31 2,633 11
--------------------------------------------------------------------
Subcategory L \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Facilities Analyzed................................................ NA NA 3 22,712 97
Option 1........................................................... 0.9 0.15 0 33 0
Option 2........................................................... 1.0 0.15 0 33 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Presented as a weighted average of results over all model facilities in the subcategory.
\2\ Calculated as the probability of closure for each individual model facility multiplied by the number of facilities, revenues and employment
represented by that model facility. The results are then summed over all model facilities in the subcategory.
\3\ Includes costs and impacts on the portion of production that falls under small processor Subcategories F-I guidelines for 7 mixed processors,
assuming no costs for that portion of their output that falls under non-small processor Subcategory L guidelines, and for 3 mixed processors, assuming
no costs for that portion of their output that falls under small processor Subcategory L guidelines. Costs and impacts if guidelines for both types of
production are promulgated are covered in Section IX.B.5 below.
\4\ Includes costs and impacts on the portion of production that falls under small processor Subcategory L guidelines for 3 mixed processors, assuming
no costs for that portion of their output that falls under small processor Subcategories F-I guidelines. Costs and impacts if guidelines for both
types of production are promulgated are covered in Section IX.B.5 below.

5. How Many Mixed Processors Might Close?
For mixed processors, EPA presents the results of the closure model
as a matrix. This is because a mixed processing facility might be
subject to two different regulatory options depending on the type of
meat, type of production processes, and quantity of production in
different parts of the plant. Table IX.B-6 presents the average
annualized costs as a percent of net income and the probability of
closure due to the rule for 7 facilities that are both non-small
poultry further processors (and are therefore subject to Subcategory L
guidelines and limitations on that portion of their output) and small
meat further processors (Subcategories F-I). Each possible combination
of options under Subcategory L (rows) and Subcategory F-I (columns) are
shown. Under the combination of Option 2.5 selected for non-small
poultry further processing, and no option selected for small meat
further processing, these facilities are expected to incur compliance
costs of 6.2 percent of net income. These costs result in 1.1 percent
probability of closure due to the rule. To present results concisely,
the table does not show the number of projected closures, revenue and
employment losses among the three mixed processor facilities. However,
all information necessary to make those calculations is provided in the
tables, and the complete results are included in the rulemaking record.

Table IX.B-6.--Summary of Projected Non-Small Mixed Processor Facility Closure Impacts Screener Survey Facility
Analysis
----------------------------------------------------------------------------------------------------------------
Options for small facilities in
subcategories F-I \1\
Options for non-small facilities in Variable -----------------------------------
subcategory L \1\ Option 1 Option 2
None (%) (%) (%)
----------------------------------------------------------------------------------------------------------------
None..................................... Average Annualized Costs as NA 1.5 1.5
Percent of Net Income.
Probability of Closure Due to NA 0.3 0.3
Rule.

[[Page 54519]]

Option 2................................. Average Annualized Costs as 3.1 4.5 4.5
Percent of Net Income.
Probability of Closure Due to 0.5 0.8 0.3
Rule.
Option 2.5............................... Average Annualized Costs as 6.2 7.6 7.6
Percent of Net Income.
Probability of Closure Due to 1.1 1.3 1.3
Rule.
Option 2.5+P............................. Average Annualized Costs as 9.1 10.5 10.5
Percent of Net Income.
Probability of Closure Due to 1.6 1.8 1.8
Rule.
Option 4................................. Average Annualized Costs as 18.8 20.3 20.3
Percent of Net Income.
Probability of Closure Due to 3.3 3.5 3.5
Rule.
----------------------------------------------------------------------------------------------------------------
\1\ This group contains 7 facilities, with revenues of $132 million and 484 employees. On average, 39% of
production is subject to guidelines and limitations for small processors in Subcategories F-I, and 61% of
production is subject to non-small Subcategory L guidelines and limitations.

EPA identified three mixed processors as small further processors
in both the poultry (Subcategory L) and meat (Subcategories F-I)
sectors. EPA chose not to establish or revise limits for small
processors of either animal type. Therefore, no impacts are projected
for these facilities. Table IX.B-7 presents the results of the impact
analysis under all possible combinations of regulatory options to which
these facilities might have been subject. To present results concisely,
the table does not show the number of projected closures, revenue and
employment losses among the three mixed processor facilities. However,
all information necessary to make those calculations is provided in the
tables, and the complete results are included in the rulemaking record.

Table IX.B-7.--Summary of Projected Small Mixed Processor Facility Closure Impacts Screener Survey Facility
Analysis
----------------------------------------------------------------------------------------------------------------
Options for small facilities in
subcategories F-I \1\
Options for small facilities in Variable -----------------------------------
subcategory L \1\ Option 1 Option 2
None (%) (%) (%)
----------------------------------------------------------------------------------------------------------------
None..................................... Average Annualized Costs as NA 4.4 4.5
Percent of Net Income.
Probability of Closure Due to NA 0.7 0.7
Rule.
Option 1................................. Average Annualized Costs as 1.0 5.4 5.4
Percent of Net Income.
Probability of Closure Due to 0.2 0.8 0.8
Rule.
Option 2................................. Average Annualized Costs as 1.0 5.4 5.4
Percent of Net Income.
Probability of Closure Due to 0.2 0.8 0.9
Rule.
----------------------------------------------------------------------------------------------------------------
\1\ This group contains 3 facilities, with revenues of $22.7 million and 97 employees. On average, 18% of
production is subject to guidelines and limitations for small processors in Subcategories F-I, and 82% of
production is subject to small Subcategory L guidelines and limitations.

C. What Company-Level Impacts, Other Than Closure, Are Projected Due to
the Final Rule?

EPA also examined the impacts of the rule on affected firms'
balance sheets using financial ratio techniques as well as impacts on
facilities' income (i.e., the closure analysis). As noted previously,
the availability of detailed survey data affected the company-level
financial ratio analysis as well as the closure analysis.
1. How Might Companies With Facilities in Subcategories A-D and K Be
Impacted?
EPA uses the same method for estimating firm level compliance costs
for the Altman Z' analysis as it did for the company-level closure
analysis (see Section IX.A.2).
For companies that own non-small facilities in Subcategories A-D
and Subcategory K, the Altman Z' analysis shows that 7 meat companies
and 8 poultry companies are considered financially healthy in the
baseline. One meat company, 4 poultry companies, and 3 mixed meat
companies have Altman Z' scores in the indeterminate range for
financial health; one meat company and one mixed meat company are
considered financially stressed. Under Option 4, the Altman Z' score
for one poultry company changed from the financially healthy to the
indeterminate range (represented by the +1 and -1 on Table IX.C-1).

[[Page 54520]]

Table IX.C-1.--Projected Impacts on Non-Small Company Altman Z' Score by Animal Type and Option
----------------------------------------------------------------------------------------------------------------
Number of companies with baseline Altman Z' score in
specified range and incremental changes in score
Option -----------------------------------------------------
Financially Bankruptcy
healthy Indeterminate likely
----------------------------------------------------------------------------------------------------------------
Meat (own facilities in Subcategories A-I)
----------------------------------------------------------------------------------------------------------------
Baseline.................................................. 7 1 1
Option 2.................................................. 0 0 0
Option 2.5................................................ 0 0 0
Option 2.5+P.............................................. 0 0 0
Option 4.................................................. 0 0 0
-----------------------------------------------------------
Poultry (own facilities in Subcategories K and L)
----------------------------------------------------------------------------------------------------------------
Baseline.................................................. 8 4 0
Option 2.................................................. 0 0 0
Option 2.5................................................ 0 0 0
Option 2.5+P.............................................. 0 0 0
Option 4.................................................. -1 +1 0
-----------------------------------------------------------
Mixed (own facilities in both meat and poultry subcategories)
----------------------------------------------------------------------------------------------------------------
Baseline.................................................. 0 3 1
Option 2.................................................. 0 0 0
Option 2.5................................................ 0 0 0
Option 2.5+P.............................................. 0 0 0
Option 4.................................................. 0 0 0
----------------------------------------------------------------------------------------------------------------
Note: A change from one state e.g., financially healthy) to another state e.g., indeterminate) is indicated by
``-1'' and ``+1''. The numbers in the ``baseline'' rows represent all companies analyzed, while those in the
``option'' rows represent only changes from the baseline.

A small number of companies that own small facilities in
Subcategories A-D and Subcategory K provided sufficient financial data
to analyze using the Altman Z'-score. These companies were determined
to be financially healthy in the baseline, and did not incur financial
distress under any of the potential regulatory options examined.
2. How Might Companies With Facilities in Subcategories F-I, J, and L
Be Impacted?
EPA assesses impacts to the balance sheet of companies in
Subcategories F-I, Subcategory J, and Subcategory L by estimating the
effects of incremental compliance costs to median return on assets.
Table IX.C-2 presents the results of this analysis for non-small
companies. Table IX.C-3 shows the results for small companies.
For non-small companies in Subcategories F-I, the analysis shows
that the return on assets for the selected option would decrease from
5.50 percent to 5.42 percent. In Subcategory J, the analysis shows that
the return on assets would decrease from 2.0 percent to 1.86 percent;
in Subcategory L, it would decrease from 4.43 percent to 4.16 percent.
For small companies there are no effects, but Table IX.C-3 shows
impacts under the non-selected options.

Table IX.C-2.--Summary of Projected Impacts to Return on Assets Ratio by Subcategory and Option Non-Small
Processor Companies
----------------------------------------------------------------------------------------------------------------
Median return on assets Change in return on
Option (percent) assets (percent)
----------------------------------------------------------------------------------------------------------------
Subcategories F-I (4 companies)\1\
----------------------------------------------------------------------------------------------------------------
Pre-reg rate.................................................. 5.50 NA
Post-reg rate................................................. ....................... .......................
Option 2...................................................... 5.43 0.07
Option 2.5.................................................... 5.42 0.08
Option 2.5+P.................................................. 5.41 0.09
Option 4...................................................... 5.31 0.19
---------------------------------------------------------------
Subcategory J (19 companies)\1\
----------------------------------------------------------------------------------------------------------------
Pre-reg rate.................................................. 2.00 NA
Post-reg rate................................................. ....................... .......................
Option 2...................................................... 1.97 0.03
Option 2.5.................................................... 1.86 0.14
Option 2.5+P.................................................. 1.65 0.35
Option 4...................................................... 1.51 0.49
---------------------------------------------------------------

[[Page 54521]]

Subcategory L (10 companies)\1\ \2\
----------------------------------------------------------------------------------------------------------------
Pre-reg rate.................................................. 4.43 NA
Post-reg rate................................................. ....................... .......................
Option 2...................................................... 4.29 0.14
Option 2.5.................................................... 4.16 0.27
Option 2.5+P.................................................. 4.02 0.41
Option 4...................................................... 3.58 0.85
----------------------------------------------------------------------------------------------------------------
\1\ For the purpose of this analysis, EPA assumes the companies are identical to the facilities.
\2\ Includes costs and impacts on the portion of production that falls under non-small processor Subcategory L
guidelines for 7 mixed processors, assuming no costs for that portion of their output that falls under small
processor Subcategories F-I guidelines.

Table IX.C-3.--Summary of Projected Impacts to Return on Assets Ratio by Subcategory and Option, Small Processor
Companies
----------------------------------------------------------------------------------------------------------------
Median return on assets Percent change in
Option (percent) return on assets
----------------------------------------------------------------------------------------------------------------
Subcategories F-I (21 companies)\1\ \2\
----------------------------------------------------------------------------------------------------------------
Pre-reg rate.................................................. 5.50 NA
Post-reg rate................................................. ....................... .......................
Option 1...................................................... 4.94 0.56
Option 2...................................................... 4.94 0.56
---------------------------------------------------------------
Subcategory L (3 Companies)\1\ \3\
----------------------------------------------------------------------------------------------------------------
Pre-reg rate.................................................. 5.50 NA
Post-reg rate................................................. ....................... .......................
Option 1...................................................... 5.44 0.06
Option 2...................................................... 5.44 0.06
----------------------------------------------------------------------------------------------------------------
\1\ For the purpose of this analysis, EPA assumes the companies are identical to the facilities.
\2\ Includes costs and impacts on the portion of production that falls under small processor Subcategories F-I
guidelines for 7 mixed processors, assuming no costs for that portion of their output that falls under non-
small processor Subcategory L guidelines, and for 3 mixed processors, assuming no costs for that portion of
their output that falls under small processor Subcategory L guidelines.
\3\ Includes costs and impacts on the portion of production that falls under small processor Subcategory L
guidelines for 3 mixed processors, assuming no costs for that portion of their output that falls under small
processor Subcategories F-I guidelines.

D. What Market Level Impacts Are Projected?

The market model analysis shows that the decrease in supply will be
smallest for pork under the selected option, where the costs per pound
of total production are estimated at approximately $0.00014 and largest
for chicken with costs per pound of total production of about $0.00079.
The maximum projected price increase is less than 0.05 percent of
baseline price for all products under Option 2.5. Table IX.D-1 shows
the projected impacts for beef, pork, chicken, and turkey. Because
market impacts are global, the analysis assumes that the same option is
selected for all subcategories.
EPA's assessment projects that domestic production of meat and
poultry products, and therefore industry employment, would decrease by
less than 0.02 percent under Option 2.5. In general, impacts to
domestic consumption of meat products are somewhat smaller than impacts
to domestic supply due to partially offsetting increases in meat imports.

Table IX.D-1.--Projected Impacts on Meat Product Markets
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic supply Domestic demand Quantity imported Quantity exported Compliance costs
Option Price ($/lb.) (lbs. x 1 mil.) (lbs. x 1 mil.) (lbs. x 1 mil.) (lbs. x 1 mil.) per pound
--------------------------------------------------------------------------------------------------------------------------------------------------------
Beef
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.............................. $1.1105 26,386.0 26,843.0 2,874.0 2,417.0 .................
Option 2.............................. 1.1106 26,383.2 26,841.3 2,874.7 2,416.6 $0.00025
Option 2.5............................ 1.1108 26,380.3 26,839.6 2,875.4 2,416.1 0.00050
Option 2.5+P.......................... 1.1110 26,375.3 26,836.6 2,876.6 2,415.3 0.00095
Option 4.............................. 1.1111 26,373.3 26,835.5 2,877.2 2,415.0 0.00113
---------------------------------------
Pork
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.............................. 1.0038 19,278.0 18,827.0 827.0 1,278.0 .................
Option 2.............................. 1.0038 19,278.0 18,827.1 827.0 1,277.9 0.00003
Option 2.5............................ 1.0039 19,277.5 18,826.7 827.1 1,277.8 0.00014

[[Page 54522]]

Option 2.5+P.......................... 1.0040 19,276.0 18,825.7 827.3 1,277.5 0.00040
Option 4.............................. 1.0041 19,275.4 18,825.3 827.3 1,277.4 0.00051
---------------------------------------
Chicken
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.............................. 0.5807 29,741.0 24,826.0 5.0 4,920.0 .................
Option 2.............................. 0.5808 29,737.8 24,824.2 5.0 4,918.7 0.00044
Option 2.5............................ 0.5809 29,735.4 24,822.8 5.0 4,917.6 0.00079
Option 2.5+P.......................... 0.5812 29,729.7 24,819.6 5.0 4,915.1 0.00159
Option 4.............................. 0.5815 29,721.6 24,814.7 5.0 4,911.9 0.00270
---------------------------------------
Turkey
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.............................. 0.6898 5,297.0 4,919.3 1.3 379.0 .................
Option 2.............................. 0.6898 5,296.8 4,919.1 1.3 379.0 0.00018
Option 2.5............................ 0.6899 5,296.7 4,919.0 1.3 379.0 0.00030
Option 2.5+P.......................... 0.6899 5,296.5 4,918.8 1.3 378.9 0.00047
Option 4.............................. 0.6900 5,295.9 4,918.3 1.3 378.9 0.00092
--------------------------------------------------------------------------------------------------------------------------------------------------------

E. What Are the Potential Impacts on Foreign Trade?

Despite its position as one of the largest agricultural producers
in the world, historically the U.S. has not been a major player in
world markets for meat products. In fact, until recently, the U.S. was
a net importer of these products. The presence of a large domestic
market for meat has limited U.S. reliance on developing export markets
for its products. As the U.S. has taken steps to expand export markets
for meat, one major obstacle has been that it remains a relatively high
cost producer of these products compared to other net exporters, such
as New Zealand, Australia, Brazil, and other Latin American countries,
as well as other more established and government-subsidized exporting
countries, including Canada and the countries in the European Union.
Increasingly, however, continued efficiency gains and low-cost feed are
making the U.S. more competitive in world markets for meat.
In contrast, U.S. poultry products account for a significant share
of world trade, and exports account for a sizable and growing share of
annual U.S. production. However, the U.S. position in the world poultry
market has been subject to increasing competition from countries such
as Brazil. Because of those, EPA reviewed potential impacts to U.S.
poultry exports in more detail. One factor suggests that the impacts of
the rule to U.S. poultry exports may be smaller than projected using
the market model, at least for poultry products.
The U.S. primarily exports dark poultry meat, which is considered
inferior by U.S. consumers, while the U.S. domestic market is dominated
by sales of white poultry meat. However, dark meat and white meat are
joint products of the poultry industry--one cannot be produced without
simultaneously producing the other. Because the market for dark meat,
whether domestic or foreign, is secondary to U.S. producers, the
marginal cost of producing dark meat, and therefore its price, are
relatively low.
This is because chickens are bred, raised, slaughtered, and
processed primarily for their white meat. Given that the chicken has
already been processed for its white meat, the marginal cost of
producing dark meat is relatively low--the incremental cost of
processing the dark meat given that the white meat has been processed.
This is consistent with trade data: it has been estimated that U.S.
production costs per pound of broiler meat exceeds those of Brazil by
almost 50 percent. However, while the U.S. export price for both
boneless breast meat and whole broilers substantially exceeds the
Brazilian export price, the U.S. export price for chicken leg quarters
is less than the Brazilian export price.
For the same reason, there should be relatively little increase in
the marginal cost of processing dark meat due to the effluent guideline
and therefore little increase in its price. The impact on the marginal
cost of producing dark meat given that white meat is already produced
(and wastewater treatment already purchased for its processing) would
be relatively small. Therefore, the increase in the marginal cost of
producing dark meat should be smaller than the increase in the marginal
cost of producing white meat. The increase in price necessary to earn
an adequate rate of return can be smaller for exports than for domestic
sales, and therefore the decrease in exports of dark meat should be
smaller than projected by the market model, which is based on the
change in the overall domestic price. See the Economic and
Environmental Benefits Analysis for more details.
As part of its market analysis, EPA evaluated the potential for
changes in traded volumes, such as increases in imports and decreases
in exports. The results of this analysis are presented in Table IX.E-1.
EPA includes a sensitivity analysis of trade impacts in Table IX.E-
1. Under the standard analysis, the compliance costs per pound used to
project decrease in supply is calculated as a weighted average of
compliance costs per pound of production for direct dischargers and
compliance costs per pound for indirect dischargers (which are zero),
where the weights are the relative share of total production. The
sensitivity analysis assumes the decrease in supply is based on the
average compliance costs per pound of production to direct dischargers
only. The standard assumption is more appropriate because the
competition of indirect dischargers with zero compliance costs will
discourage direct dischargers from raising their price in response to
their increased costs. The sensitivity analysis provides a conservative
upper bound on impacts.
Under the sensitivity analysis, compliance costs per pound are 2.0
(chicken) to 6.3 (turkey) times larger than under the standard
analysis. The largest impact under the sensitivity analysis is observed
in the beef market, where exports are projected to decrease by 0.11
percent per year, and overall domestic production is projected to

[[Page 54523]]

decrease by 0.06 percent per year. Under the more realistic standard
analysis, the largest decrease in exports occurs in the chicken market
(0.05 percent per year) with an overall decrease in domestic production
of 0.02 percent per year.

Table IX.E-1.--Projected Impacts on Foreign Trade in Meat and Poultry Products Under the Selected Option
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic supply Domestic demand Quantity imported Quantity exported Compliance costs
Option Price ($/lb.) (lbs. x 1 mil.) (lbs. x 1 mil.) (lbs. x 1 mil.) (lbs. x 1 mil.) per pound
--------------------------------------------------------------------------------------------------------------------------------------------------------
Beef
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................. $1.1105 26,386.0 26,843.0 2,874.0 2,417.0 .................
Option 2.5 \1\........................... 1.1108 26,380.3 26,839.6 2,875.4 2,416.3 $0.00050
Sensitivity Analysis \2\................. 1.1113 26,369.1 26,832.6 2,878.0 2,414.4 0.00147
------------------------------------------
Pork
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................. 1.0038 19,278.0 18,827.0 827.0 1,278.0 .................
Option 2.5 \1\........................... 1.0039 19,277.5 18,826.7 827.1 1,277.8 0.00014
Sensitivity Analysis \2\................. 1.0040 19,276.8 18,826.6 827.3 1,277.5 0.00034
------------------------------------------
Chicken
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................. 0.5807 29,741.0 24,826.0 5.0 4,920.0 .................
Option 2.5 \1\........................... 0.5809 29,735.4 24,822.8 5.0 4,917.6 0.00079
Sensitivity Analysis \2\................. 0.5812 29,730.0 24,819.9 5.0 4,915.1 0.00156
------------------------------------------
Turkey
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................. 0.6898 5,297.0 4,919.3 1.3 379.0 .................
Option 2.5 \1\........................... 0.6899 5,296.7 4,919.0 1.3 379.0 0.00030
Sensitivity Analysis \2\................. 0.6903 5,294.9 4,917.5 1.3 378.7 0.00189
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Compliance costs per pound (shift in supply curve) are equal to the weighted average of compliance costs per pound of production for direct
dischargers and compliance costs per pound for indirect dischargers (which are zero), where the weights are the relative share of total production.
\2\ Compliance costs per pound (shift in supply curve) are equal to the average compliance costs per pound of production to direct dischargers.

F. What Are the Potential Impacts on Communities?

The communities where the meat and poultry products facilities are
located may be affected by the final regulation if facilities cut back
operations; local employment and income may fall, sending ripple
effects throughout the local community. Under the options selected for
this rule, EPA projects that no facilities will close, hence EPA
concludes that there are no community impacts under the regulation.
Under the alternative analysis, there are two closures among
subcategory A-D facilities and no change for subcategory K facilities.
However, as noted previously, not all surveyed facilities provided
facility-level financial data, and EPA therefore adjusted survey
weights to account for nonresponse. In essence, survey nonresponse
decreases the sample size for this analysis, which increases the
variance of the collected data. Because of this, EPA has a somewhat
lower level of confidence in these results than it would if all survey
recipients had been able to provide facility-level financial data. The
facility closure analysis and the company closure analysis show impacts
under Option 2.5+P and Option 4 in Subcategory K. The results of this
analysis can be found in the rulemaking record. Even under EPA's more
conservative alternative analysis where two subcategory A-D facilities
are projected to close, at most a handful of communities would be
impacted. EPA cannot project how great these impacts would be as it
cannot identify the communities where the impacts might occur. In
general, the smaller the community, the greater the impact and the
larger the community, the smaller the impact.

G. What Are the Projected Barriers to Entry for New Sources?

When establishing NSPS, EPA considers the barrier that compliance
costs due to the effluent guidelines regulation may pose to entry into
the industry for a new facility. In general, it is less costly to
incorporate waste water treatment technologies as a facility is built
than it is to retrofit existing facilities. Therefore, where the rule
is economically achievable for existing facilities, it will also be
economically achievable for new facilities that can meet the same
guidelines at lower cost. Similarly, even where the cost of compliance
with a given technology is not economically achievable for an existing
source, such technology may be less costly for new sources and thus
have economically sustainable costs. It is possible, on the other hand,
that to the extent the up-front costs of building a new facility are
significantly increased as a result of the rule, prospective builders
may face difficulties in raising additional capital. This could present
a barrier to entry. Therefore, as part of its analysis of new source
standards, EPA evaluates barriers to entry. EPA compares estimated
average incremental facility or company capital costs incurred to meet
the effluent guidelines to average total assets of existing facilities
to ensure that additional capital requirements are relatively small.
Tables IX.G-1 and IX.G-2, provide the results of the non-small
facility-level and company-level analysis. Average capital costs of
$1.9 million per facility under the selected Option 2.5 comprise 1.6
percent of average facility assets in Subcategories A-D. In Subcategory
K, average capital costs of $1.1 million per facility are 4.0 percent
of average facility assets under the selected option. The company-level
ratio of capital costs to total assets under Option 2.5 is 2.6 percent
for meat companies, and 1.6 percent for poultry companies. For

[[Page 54524]]

companies that own both meat and poultry facilities, the analysis
projects that capital costs will comprise about 0.1 percent of company
total assets under the selected option. Based on the results of this
analysis, EPA concludes that today's rule should not present barriers
to entry for new businesses. See Section VII for a more detailed
discussion by subcategory of NSPS and barriers to entry.

Table IX.G-1.--Summary of Non-small Facility-Level Ratio of Capital Costs to Assets (Barrier to Entry) \1\
----------------------------------------------------------------------------------------------------------------
Option 2 Option 2.5 Option Option 4
Subcategory (%) % 2.5+P (%) (%)
----------------------------------------------------------------------------------------------------------------
A-D......................................................... 0.6 1.6 2.6 3.3
K........................................................... 2.1 4.0 4.2 12.3
----------------------------------------------------------------------------------------------------------------
\1\ Percentages are based on those facilities for which EPA had asset data and compliance costs.

Table IX.G-2.--Summary of Non-Small Company-Level Ratio of Capital Costs to Assets (Barrier to Entry) \1\
----------------------------------------------------------------------------------------------------------------
Option 2 Option 2.5 Option Option 4
Subcategory (%) (%) 2.5+P (%) (%)
----------------------------------------------------------------------------------------------------------------
Meat........................................................ 0.8 2.6 3.5 4.4
Poultry..................................................... 1.0 1.6 2.1 4.6
Mixed Meat.................................................. 0.1 0.1 0.2 0.3
----------------------------------------------------------------------------------------------------------------
\1\ Percentages are based on those facilities for which EPA had asset data and compliance costs.

Table IX.G-3 provides the small facility-level ratios. In
Subcategories A-D, average capital costs comprise between 15 and 20
percent of average facility assets for the non-selected Option 1.
Average capital costs are 12.9 percent of average facility assets in
Subcategory K for both options, including Option2 which was selected as
the basis for the new NSPS.

Table IX.G-3.--Summary of Small Facility-Level Ratio of Capital Costs to
Assets (Barrier to Entry) \1\
------------------------------------------------------------------------
Option 1 Option 2
Subcategory (%) (%)
------------------------------------------------------------------------
A-D \2\....................................... 15--20 NA
K............................................. 12.9 12.9
------------------------------------------------------------------------
\1\ Percentages are based on those facilities for which EPA had asset
data and compliance costs.
\2\ Ratio of capital costs to total assets presented as a range to
prevent the disclosure of confidential business information.

EPA also compared projected capital costs with estimated total
assets for the model facilities used to analyze impacts in
Subcategories F-I, J, and L. EPA estimated model facility total assets
from model facility income (based on Census data) combined with the
median return on assets for the appropriate NAICS code as reported in
Dun and Bradstreet (see Proposal EA, Chapter 3 for more details). Thus,
the analysis presented below incorporates a greater degree of
uncertainty than the results based on detailed survey data for
Subcategories A-D and K.
Tables IX.G-4 and IX.G-5 present the results of this analysis to
non-small and small facilities respectively. These tables only include
facilities with production that is classified solely in the indicated
subcategories; the results for mixed processors, with production that
is classified in more than one subcategory, are presented in Table
IX.G-6 below. In general, the model facility analysis suggests that
capital costs are not expected to exceed 2 percent of facility assets.

Table IX.G-4.--Summary of Non-Small Facility-Level Ratio of Capital Costs to Assets (Barrier to Entry) Screener
Survey Facility Analysis
----------------------------------------------------------------------------------------------------------------
Option 2 Option 2.5 Option Option 4
Subcategory (%) (%) 2.5+P (%) (%)
----------------------------------------------------------------------------------------------------------------
F-I......................................................... 0.2 0.2 0.2 0.4
J........................................................... 0.1 0.3 0.4 0.5
L \1\....................................................... 0.1 0.1 0.1 0.6
----------------------------------------------------------------------------------------------------------------
\1\ Results do not include mixed processor facilities.

[[Page 54525]]

Table IX.G-5.--Summary of Small Facility-Level Ratio of Capital Costs to
Assets (Barrier to Entry) Screener Survey Facility Analysis
------------------------------------------------------------------------
Subcategory Option 1 Option 2
------------------------------------------------------------------------
F-I \1\....................................... 1.7% 1.7%
------------------------------------------------------------------------
\1\ Results do not include mixed processor facilities.

Table IX.G-6.--Summary of Mixed Processor Facility Ratio of Capital
Costs to Assets (Barrier to Entry) Screener Survey Facility Analysis
------------------------------------------------------------------------
Ratio of
capital
Subcategory combination and option costs to
assets
------------------------------------------------------------------------
Non-small L (Option 2.5), Small F-I (Option 2)............. 1.1%
Small L (Option 2), Small F-I (Option 2)................... 0.4%
------------------------------------------------------------------------

The results for mixed processors include capital costs for both
subcategories in which they operate, even though NSPS was not set for
small facilities in Subcategories F-I. Comparing capital costs for only
a percentage of production (i.e., small or non-small levels of
production in Subcategory L) with a facility's total assets for all
production could result in a misleadingly small ratio of capital costs
to total assets. Even with this more costly estimate, the ratio of
capital costs to total assets does not exceed 1.1 percent for mixed
processors.

H. What Do the Cost-Reasonableness and Cost-Effectiveness Analyses Show?

1. For Non-Small Facilities, What Is the Cost-Reasonableness for
Removing Pollutants?
EPA based the analysis of Option 2 on the sum of BOD₅
and ammonia (as nitrogen) removals. For Option 2.5, EPA used the sum of
BOD₅ and total nitrogen removals, and for Options 2.5+P and
4, EPA used the sum of BOD₅, total nitrogen, and total
phosphorus removed. EPA used these sets of pollutant removals to
characterize the different intentions of each treatment option. For
example, Option 2 is designed to include nitrification to reduce
ammonia, while Option 2.5 includes denitrification to reduce TN;
Options 2.5+P and 4 also include phosphorus treatment. The average BPT
cost and removal comparison of pollutant removals under the selected
Option 2 ranges from $2.55 per pound in Subcategories A-D to $29.88 per
pound in Subcategory L. Table IX.H-1 presents the results of this
analysis for all subcategories and options.

Table IX.H-1.--BPT Cost & Removal Comparison for Non-Small Facilities
----------------------------------------------------------------------------------------------------------------
Average BPT cost Incremental BPT
Pretax annualized Total pounds & removal cost & removal
Option costs (1999$) removed1 comparison comparison
(1999$/pound) (1999$/pound)
----------------------------------------------------------------------------------------------------------------
Subcategories A-D
----------------------------------------------------------------------------------------------------------------
Option 2............................ $7,287,580 2,859,971 2.55 NA
Option 2.5.......................... 16,685,857 16,010,456 1.04 NA
Option 2.5+P........................ 42,914,027 20,530,322 2.09 5.80
Option 4............................ 52,001,157 24,069,226 2.16 2.57
-------------------------------------
Subcategories F-I
----------------------------------------------------------------------------------------------------------------
Option 2............................ 265,976 32,278 8.24 NA
Option 2.5.......................... 328,936 21,703 15.16 NA
Option 2.5+P........................ 358,850 21,703 16.53 DOM 3
Option 4............................ 798,129 104,144 7.66 7.40
-------------------------------------
Subcategory J
----------------------------------------------------------------------------------------------------------------
Option 2............................ 628,890 83,141 7.56 NA
Option 2.5.......................... 2,826,384 1,503,583 1.88 NA
Option 2.5+P........................ 7,433,377 2,094,017 3.55 7.80
Option 4............................ 10,171,264 2,311,822 4.40 12.57
-------------------------------------
Subcategory K
----------------------------------------------------------------------------------------------------------------
Option 2............................ 17,738,550 975,803 18.18 NA
Option 2.5.......................... 31,816,725 10,011,639 3.18 NA
Option 2.5+P........................ 63,384,016 14,159,024 4.48 7.61
Option 4............................ 109,077,448 26,424,183 4.13 3.73
-------------------------------------
Subcategory L \2\
----------------------------------------------------------------------------------------------------------------
Option 2............................ 556,890 18,635 29.88 NA
Option 2.5.......................... 982,661 155,507 6.32 NA
Option 2.5+P........................ 1,475,209 180,519 8.17 19.69
Option 4............................ 3,269,380 400,027 8.17 8.17
----------------------------------------------------------------------------------------------------------------
\1\ Total pounds removed equals the: sum of BOD5 and ammonia (as nitrogen) for Option 2; sum of BOD5 and total
nitrogen for Option 2.5; and sum of BOD5, total nitrogen, and total phosphorus for Options 2.5+P and 4.
\2\ Includes costs and removals for mixed processors attributable to non-small production in Subcategory L.
DOM 3: Option is dominated because it has higher cost and lower or equivalent removals.

[[Page 54526]]

NA: The incremental cost reasonableness from Option 2 to Option 2.5 cannot be calculated because the pollutants
used as the basis for the analysis differs under the two options; the incremental cost reasonableness from
Option 2.5 to Option 2.5+P can be calculated because total phosphorus removals are zero under Option 2.5.

2. For Non-Small Facilities, What Is the Cost Effectiveness for
Removing Nitrogen and Phosphorus?
Tables IX.H-2 and IX.H-3 in this section provide both the
incremental and average nutrient cost-effectiveness values. For
nitrogen, EPA used a cost-effectiveness benchmark established by its
Chesapeake Bay Program to assess the costs to wastewater treatment
plants to implement system retrofits to achieve biological nutrient
removal. This nitrogen benchmark estimate is approximately $4 per pound
of nitrogen removed.
For phosphorus, EPA assumed a cost-effectiveness benchmark of
roughly $10 per pound based on a review of values reported in the
agricultural research of the costs to remove phosphorus using various
nonpoint source controls and management practices. For more information
about the development of these benchmarks, see Appendix E of the
Economic Analysis of the Final Revisions to the National Pollutant
Discharge Elimination System Regulation and the Effluent Guidelines for
Concentrated Animal Feeding Operations'' [EPA-821-R-03-002].
Table IX.H-2 displays the results for the nitrogen cost-
effectiveness and, therefore, includes only options specifically
designed to remove total nitrogen (i.e., Option 2.5 and Option 4).
Option 2.5+P is also omitted from Table IX.H-2 because it provides no
additional total nitrogen removals relative to Option 2.5. Similarly,
Table IX.H-3 displays the results for the phosphorus cost-effectiveness
and, therefore, only includes those options with a chemical phosphorus
treatment step (i.e., Option 2.5+P and Option 4).
Average cost-effectiveness (cost per pound of nitrogen removed)
ranges from $1.08 in Subcategories A-D to $6.71 in Subcategory L under
the selected option. Because Option 2 removes no total nitrogen, the
incremental cost-effectiveness for Option 2.5 is identical to the
average cost-effectiveness. In Subcategories A-D, Subcategory J, and
Subcategory K the average cost per pound of total nitrogen removed is
below the $4 per pound benchmark.
The average cost-effectiveness (cost per pound of phosphorus
removed) ranges from greater than $10 to $58.98 under Option 2.5+P.
Again, incremental cost-effectiveness is identical to the average cost-
effectiveness for this option because no total phosphorus is removed
under any lower options.
EPA notes that the nutrient cost-effectiveness numbers presented on
Table IX.H-2 represent upper bounds because they assign all the costs
for an option to either total nitrogen or total phosphorus removal even
though the options also remove other pollutants. EPA used this approach
to provide a conservative estimate of cost-effectiveness and because it
does not have a good basis to divide up removal costs among pollutants.
EPA received no public comments on this approach in its analysis
supporting the proposed rulemaking and NODA.

Table IX.H-2.--Nutrient Cost-Effectiveness for Non-Small Facilities: Total Nitrogen
----------------------------------------------------------------------------------------------------------------
Average Incremental
Pretax Total nutrient CE nutrient CE
Option annualized pounds for TN for TN
costs removed \1\ (1999$/ (1999$/
(1999$) pound) pound)
----------------------------------------------------------------------------------------------------------------
Subcategories A-D
----------------------------------------------------------------------------------------------------------------
Option 2.5.................................................. $16,685,857 15,400,791 1.08 1.08
Option 4.................................................... 52,001,157 18,456,984 2.82 11.56
-------------------------------------------------------------
Subcategory F-I
----------------------------------------------------------------------------------------------------------------
Option 2.5.................................................. 328,936 0 Undefined 2 DOM 2
Option 4.................................................... 798,129 79,677 10.02 10.02
-------------------------------------------------------------
Subcategory J
----------------------------------------------------------------------------------------------------------------
Option 2.5.................................................. 2,826,384 1,469,407 1.92 1.92
Option 4.................................................... 10,171,264 1,652,506 6.16 40.11
-------------------------------------------------------------
Subcategory K
----------------------------------------------------------------------------------------------------------------
Option 2.5.................................................. 31,816,725 9,367,808 3.40 3.40
Option 4.................................................... 109,077,448 20,883,771 5.22 6.71
-------------------------------------------------------------
Subcategory L \1\
----------------------------------------------------------------------------------------------------------------
Option 2.5.................................................. 982,661 146,364 6.71 6.71
Option 4.................................................... 3,269,380 354,355 9.23 10.99
----------------------------------------------------------------------------------------------------------------
\1\ Includes costs and removals for mixed processors attributable to non-small production in Subcategory L.
DOM 2: Option is dominated because it has higher cost and lower or equivalent removals. ``Undefined'' since
removals are estimated to be zero.

[[Page 54527]]

Table IX.H-3.--Nutrient Cost-Effectiveness for Non-Small Facilities: Total Phosphorus
----------------------------------------------------------------------------------------------------------------
Average nutrient Incremental
Option Pretax annualized Total pounds CE for TP (1999$/ nutrient CE for
costs (1999$) removed pound) TP (1999$/pound)
----------------------------------------------------------------------------------------------------------------
Subcategories A-D \1\
----------------------------------------------------------------------------------------------------------------
Option 2.5+P........................ >$42,914,027 4,519,867 >10.00 >10.00
Option 4............................ 52,001,157 4,972,188 10.46 20.09
-------------------------------------
Subcategory J
----------------------------------------------------------------------------------------------------------------
Option 2.5+P........................ 7,433,377 590,434 12.59 12.59
Option 4............................ 10,171,264 622,583 16.34 85.16
-------------------------------------
Subcategory K
----------------------------------------------------------------------------------------------------------------
Option 2.5+P........................ 63,384,016 4,147,385 15.28 15.28
Option 4............................ 109,077,448 4,671,571 23.35 87.17
-------------------------------------
Subcategory L \2\
----------------------------------------------------------------------------------------------------------------
Option 2.5+P........................ 1,475,209 25,012 58.98 58.98
Option 4............................ 3,269,380 27,000 121.09 902.36
----------------------------------------------------------------------------------------------------------------
\1\ Based on comments and further analysis, EPA concludes that the cost of increased alum addition and the
resulting increased sludge generation and disposal, may be between $108,000 to $378,000 more per facility for
Option 2.5+P than those used in EPA's analysis (see the rulemaking record)
\2\ Includes costs and removals for mixed processors attributable to non-small production in Subcategory L. DOM:
Option is dominated because it has higher cost and lower or equivalent removals.

3. For Non-Small Facilities, What Is the Cost Effectiveness for
Removing Toxic Pollutants
Table IX.H-4 presents the cost-effectiveness of removing toxic
pollutants from the wastewater streams of non-small direct dischargers.
Pollutant removals included in the analysis are ammonia (as nitrogen)
and nitrate/nitrite. Under the selected option, average cost-
effectiveness in 1981 dollars ranges from about $2,000 per pound
equivalent in Subcategories A-D to $21,300 per pound equivalent in
Subcategory L.

Table IX.H-4.--Toxic Cost-Effectiveness for Non-Small Facilities
----------------------------------------------------------------------------------------------------------------
Average cost- Incremental cost-
Pretax annualized Total pounds effectiveness effectiveness
Option costs (1999$) removed \1\ ($1981/pounds ($1981/pounds
equivalent) equivalent)
----------------------------------------------------------------------------------------------------------------
Subcategories A-D
----------------------------------------------------------------------------------------------------------------
Option 2............................ $7,287,580 2,250,306 1,032 1,032
Option 2.5.......................... 16,685,857 15,824,864 1,963 6,515
Option 2.5+P........................ 42,914,027 15,824,864 5,048 DOM
Option 4............................ 52,001,157 18,684,849 5,787 72,875
-------------------------------------
Subcategories F-I
----------------------------------------------------------------------------------------------------------------
Option 2............................ 265,976 10,575 8,018 8,018
Option 2.5.......................... 328,936 10,575 9,917 DOM
Option 2.5+P........................ 358,850 10,575 10,818 DOM
Option 4............................ 798,129 13,804 18,434 52,550
-------------------------------------
Subcategory J
----------------------------------------------------------------------------------------------------------------
Option 2............................ 628,890 48,965 4,095 4,095
Option 2.5.......................... 2,826,384 1,513,977 9,139 14,115
Option 2.5+P........................ 7,433,377 1,513,977 24,035 DOM
Option 4............................ 10,171,264 1,700,605 28,929 173,529
-------------------------------------
Subcategory K
----------------------------------------------------------------------------------------------------------------
Option 2............................ 17,738,550 331,973 17,035 17,035
Option 2.5.......................... 31,816,725 10,444,933 15,037 13,100
Option 2.5+P........................ 63,384,016 10,444,933 29,955 DOM
Option 4............................ 109,077,448 20,605,243 29,391 48,431
-------------------------------------

[[Page 54528]]

Subcategory L \1\
----------------------------------------------------------------------------------------------------------------
Option 2............................ 556,890 9,492 18,704 18,704
Option 2.5.......................... 982,661 162,968 21,324 26,105
Option 2.5+P........................ 1,475,209 162,968 32,012 DOM
Option 4............................ 3,269,380 352,044 37,897 56,902
----------------------------------------------------------------------------------------------------------------
\1\ Includes costs and removals for mixed processors attributable to non-small production in Subcategory L.
DOM: Option is dominated because it has higher cost and/or lower removals.

4. For Small Facilities, What Is the Cost-Reasonableness for Removing
Pollutants?
BPT costs per pound removed are significantly higher for small
facilities than for non-small facilities. In Subcategory F-I, for
example, average cost per pound removed is $24 under Option 2 for small
processors compared to $12 per pound for large processors under the
same option (Table IX.H-1). In the other subcategories, these figures
are even larger: BPT cost per pound approaches $200 in Subcategory A-D,
exceeds $1,400 per pound in Subcategory K, and approaches $4,000 per
pound in Subcategory L. Table IX.H-5 presents the results of this
analysis for all subcategories and options.

Table IX.H-5.--BPT Cost & Removal Comparison for Small Facilities
----------------------------------------------------------------------------------------------------------------
Average BPT Incremental BPT
Pretax Total pounds cost & removal cost & removal
Option annualized removed \1\ comparison comparison
costs (1999$) (1999$/pound) (1999$/pound)
----------------------------------------------------------------------------------------------------------------
Subcategories A-D
----------------------------------------------------------------------------------------------------------------
Baseline.................................... $0 0 NA NA
Option 1.................................... CBI CBI 198 198
Option 2.................................... NA NA NA NA
---------------------------------------------
Subcategories F-I \2\
----------------------------------------------------------------------------------------------------------------
Baseline.................................... 0 0 NA NA
Option 1.................................... 1,108,033 47,997 23 23
Option 2.................................... 1,116,096 53,562 21 1
---------------------------------------------
Subcategory K
----------------------------------------------------------------------------------------------------------------
Baseline.................................... 0 0 NA NA
Option 1.................................... CBI CBI 1,487 DOM
Option 2.................................... CBI CBI 501 501
---------------------------------------------
Subcategory L \2\
----------------------------------------------------------------------------------------------------------------
Baseline.................................... 0 0 NA NA
Option 1.................................... 13,258 183 73 73
Option 2.................................... 13,476 183 74 DOM
----------------------------------------------------------------------------------------------------------------
\1\ Total pounds removed equals the sum of BOD5 and ammonia (as nitrogen).
\2\ Includes costs and removals attributable to small levels of production in subcategory by mixed processors.
DOM: Option is dominated because it has higher cost and/or lower removals.

X. Water Quality Analysis and Environmental Benefits

A. Summary of the Environmental Benefits

This section presents EPA's estimates of the environmental and
human health benefits, including pollutant reductions, that will occur
from this rule. Table X.A-1 shows the annualized benefits EPA projects
will result from the effluent limitations and guidelines (ELG)
requirements for today's rule. The total monetized benefits associated
with the ELG requirements are estimated to approximate $2.6 million
with a range of approximately zero to $10 million annually. These
values represent those benefits which EPA is able to quantify and
determine an economic value. Evidence from the nutrient criteria
analysis (see Section X.C.3.d) suggests that nutrient loads from MPP
facilities are significant, relative to background loads. However, the
significance of MPP load reductions may not be fully captured by
monetized benefit, due to the fact that the water quality index used in
benefits analysis does not acknowledge current information about the
contribution of nutrients to water quality, as represented by recent
304(a) recommended ecoregional water quality criteria for nutrients
(see DCN 316-511). As discussed later in this section, EPA has also
identified additional environmental benefits that will result

[[Page 54529]]

from this rule but is unable to attribute a specific economic value to
these additional nonmonetized or nonquantified benefits.
EPA's detailed assessment of the environmental benefits that will
be gained by this rule, as well as the benefits estimates for other
regulatory options considered during this rulemaking, is presented in
the Economic and Environmental Benefits Analysis (DCN 320-001).

Table X.A-1.--Annualized Benefits of ELG Requirements for Meat and
Poultry Product Facilities (2003$)
------------------------------------------------------------------------
Types of benefits Total for all MPPs
------------------------------------------------------------------------
Recreational and non-use benefits from $2.6 million.
improved water quality in freshwater
rivers, streams, and lakes.
Reduced loadings of pathogens; oil and Non-monetized.
grease \1\.
Reduced public water treatment costs.... Negligible.
Reduced aquatic life and human health Negligible.
toxicity.
Reduced eutrophication (calculated as Non-monetized.
reduced exceedences of nutrient
criteria) \1\.
-------------------------------
Total Monetized Benefits................ $2.6 million.
------------------------------------------------------------------------
\1\ May be partially captured in the monitized recreational and non-use
benefits.

B. What Pollutants Are in MPP Wastewater, and How Do They Affect Human
Health and the Environment?

1. What Pollutants Are Present in the MPP Wastewater?
The primary pollutants associated with MPP wastes are nutrients
(particularly nitrogen and phosphorus), organic matter, solids, and
pathogens. EPA identified 30 pollutants of concern for the meat
processing segment of the industry and 27 pollutants of concern for the
poultry processing segment of the industry (see Section VB). This list
includes ammonia (as nitrogen), carbonaceous BOD₅ (CBOD),
chemical oxygen demand (COD), nitrate+nitrite (as nitrogen), oil &
grease, pH, temperature, total nitrogen and total phosphorus (as
PO₄). The following sections discuss the main constituents
in meat and poultry processing industry waste streams and information
from the National Water Quality Inventory: 2000 Report (hereinafter the
``2000 Inventory''). Prepared every two years under Sec. 305(b) of the
Clean Water Act, the 2000 Inventory summarizes State reports of the
impairment of their water bodies and their suspected sources.
a. Nutrients
The 2000 Inventory lists nutrients as the leading stressor of
impaired lakes, ponds, and reservoirs. Nutrients are also the fifth
leading stressor for impaired rivers and streams, among the top 10
stressors of impaired estuaries, and the second leading stressor
reported for the Great Lakes.
Nitrogen occurs in several forms, including ammonia and nitrate.
These forms of nitrogen may produce adverse environmental impacts when
available in excess quantitiest. Ammonia is of environmental concern
because it is toxic to aquatic life and exerts a direct oxygen demand
on the receiving water as it biodegrades, thereby reducing dissolved
oxygen levels and the ability of a water body to support aquatic life.
Excessive amounts of ammonia can lead to eutrophication, or nutrient
over-enrichment, of surface waters. The most documented impact of
nutrient pollution is eutrophication and its attendant overgrowth of
plants, including algal blooms, in surface waters. When blooms die and
decay oxygen levels are depressed and contribute further to eutrophication.
Like nitrogen, phosphorus is a nutrient that may lead to
eutrophication and associated adverse impacts, e.g. fish kills, reduced
biodiversity, objectionable tastes and odors, increased drinking water
treatment costs, and growth of toxic organisms. At concentrations
greater than 1.0 milligram per liter, phosphorus may interfere with the
coagulation process in drinking water treatment plants thus reducing
treatment efficiency. Phosphorus is of particular concern in fresh
waters, where plant growth is typically limited by phosphorus levels.
Under high pollutant loads of phosphorus, however, fresh water may
become nitrogen-limited. Then, because there is an abundance of
phosphorus available for plant growth, nitrogen becomes the limiting
factor for plants.
b. Organic Matter
BOD₅ and COD are important measures of the organic
content of an effluent. The 2000 Inventory indicates that low dissolved
oxygen (DO) levels caused by organic enrichment (oxygen-depleting
substances) are the third leading stressor in impaired estuaries. They
are the fourth greatest stressor in impaired rivers and streams, and
the fifth leading stressor in impaired lakes, ponds, and reservoirs.
Severe reductions in dissolved oxygen levels may lead to fish kills.
Even moderate decreases in oxygen levels may adversely affect water
bodies through decreases in biodiversity characterized by the loss of
fish and other aquatic animal populations, and a dominance of species
that can tolerate low levels of dissolved oxygen.
c. Solids
The 2000 Inventory indicates that dissolved solids are the fourth
leading stressor in impaired lakes, ponds, and reservoirs. Excessive
solids increase cloudiness of surface waters, physically damage aquatic
plants and animals, and provide a protected environment for pathogens.
Also, increased cloudiness reduces light penetration through the water
column and limits the growth of desirable aquatic plants that are
critical habitat for fish, shellfish, and other aquatic organisms.
Solids that settle out as bottom deposits may alter or destroy habitat
for fish and organisms that live at the bottom of the water.
d. Oil and Grease
Oil and grease may have toxic effects on aquatic organisms (i.e.,
fish, crustacea, larvae and eggs, gastropods, bivalves, invertebrates,
and flora). The marine larvae and benthic invertebrates appear to be
the most intolerant of oil and grease, particularly the water-soluble
compounds, at concentrations ranging from 0.1 ppm to 25 ppm and 1 ppm
to 6,100 ppm, respectively. The oil and grease designation includes
many organic compounds with varying physical, chemical, and
toxicological properties, and EPA has not established a numerical
criterion applicable to all types of oil and grease. Therefore, water
quality standards and some permit limits are described as requiring
``no visible sheen.'' For this assessment, EPA does not model the
effects of oil and grease on the environment.
e. Pathogens
Pathogens are defined as disease-causing microorganisms. A subset of

[[Page 54530]]

microorganisms, including species of bacteria, viruses, and parasites,
may cause sickness and disease in humans. The 2000 Inventory indicates
that pathogens (specifically bacteria) are the leading stressor in
impaired rivers and streams and the fourth leading stressor in impaired
estuaries. Pathogens are known to impact a variety of water uses
including recreation, drinking water sources, and aquatic life and
fisheries (Docket No. W-01-06, Record No. 10024--Pathogen TMDL report).
Bacteria (e.g., fecal coliforms, E. coli, and fecal streptococcus) are
introduced into natural waters by municipal and industrial wastewater
discharges, combined sewer overflows, and urban and rural runoff. High
loading rates are most commonly associated with untreated or poorly
treated human sewage or animal waste.
There are numerous reports associating E. coli 0157-caused illness
with consumption of contaminated beef (Valcour et al., 2002; Michino et
al., 1999; Tuttle et al., 1999), wild game (Gagliardi et al., 1999) or
under-processed fruit juice (Kudva et al., 1998). Additional cases of
illness have been caused by drinking water contaminated with the
pathogen (Novello, 1999; Bruce-Grey Owen Sound Health Unit, 2000;
Jackson et al., 1998). In most, if not all, these reports, animal
feces, bovine in particular, were the probable vehicle for transmitting
E. coli 0157:H7 to other animals, food, and into the environment.
Epidemiological investigations have demonstrated that cattle,
especially young animals, are a principal reservoir of E. coli 0157:H7
(Wang et al., 1996).
f. Other Potential Contaminants
Surfactants have been identified as an emerging issue related to
water quality from waste effluent. Alkylphenol polyethoxylates (AP) are
nonionic industrial surfactants used globally in detergents, paints,
herbicides, and cosmetics. All categories and subcategories of the MPP
industry addressed in this final rule conduct relatively thorough
sanitation processes, involving large amounts of chemical cleansers.
These agents contain alkylphenol ethoxylate (APE) surfactants.
Alkylphenols such as octylphenol, nonylphenol, and nonylphenol
diethoxylate are commonly found in sewage treatment plant effluents and
receiving waters as microbial breakdown products of these surfactants.
These degradation products have been shown to be estrogenic
(inadvertently mimic the biological activity of the female hormone
estrogen) in in vitro fish, avian, and mammalian assays, with their
molecular action mediated through the estrogen receptor (ER) (White et
al., 1994). Findings of AP estrogenicity in vitro have been
substantiated by reports of inhibited testicular growth after AP
exposure of rats (Sharpe et al., 1995) and fish (Jobling et al., 1996)
in vivo. The potential range of impacts of estrogen receptor binding
chemicals include altered protein expression on the cellular level,
changes in hormone levels in the ova and testis, expression of
secondary sex characteristics and altered reproductive capability of
individuals, which may lead to skewed genders within a population which
ultimately may impact the long-term efficacy of the population. While
these chemicals are relatively weak ER binders they may be of concern
due to their hydrophobicity (i.e., repel water) and potential to
bioaccumulate (Schmeider et al., 2000). Tighter discharge limits and
effluent treatment processes to reduce the concentration of AP and its
degradation products have been shown to reduce the estrogenic activity
of the watercourses into which the effluents are discharge (Sheehan et
al., 2002).
Growth promoters (e.g., trenbolone acetate--a synthetic anabolic
steroid used to promote growth in cattle) are extensively used in the
United States. These steroids, and more importantly their metabolites
(e.g., 17-beta-trenbolone from trenbolone acetate), have been shown to
be comparatively stable in animal waste, suggesting the potential for
exposure to aquatic animals via direct discharge, runoff, or both.
Reproductive alterations have been reported in fish living in waters
receiving cattle feedlot effluent (Jegou et al., 2001) and in in vitro
androgenic activity displayed by feedlot effluent samples (Gray et al.,
2001). Little is known of the toxicity of these promoters and
metabolites. However, recent studies on one such chemical, 17-beta-
trenbolone, indicate the potential for androgenic activity in in vitro
and in vivo assays and induction of developmental abnormalities (Wilson
et al., 2002). Furthermore, studies on 17-beta-trenbolone observed
androgenic activity in the fathead minnow as evidenced by secondary sex
characteristics in females (production of dorsal nuptial tubercles,
structures normally present only on the heads of males), and altered
reproductive physiology of the male (Ankley et al., 2003). The presence
of these chemicals in the environment and their potential toxicity are
the subject of further study.
2. How May Water Quality Be Impaired by MPP Wastewater?
EPA identified 10 articles documenting environmental impacts due to
meat and poultry processing facilities. Documented impacts include 4
stream reaches with nutrient loadings, 2 sites with contaminated well
water, 1 site with contaminated ground water, and 1 lake threatened by
nutrient loadings. Additional information may be found in the Economic
and Environmental Benefits Analysis (DCN 320-001) in the rulemaking docket.
EPA has made significant progress in implementing Clean Water Act
programs and in reducing water pollution. Despite such progress,
however, many water quality problems persist throughout the country.
Sources of information on these problems include reports from States to
EPA, documented in the 2000 Inventory, and the U.S. Geological Survey's
National Water Quality Assessment (NAWQA) Program.
The 2000 Inventory data identify the leading pollutants impairing
surface water quality in the United States to include nutrients,
pathogens, sediment/siltation, and oxygen-depleting substances. These
pollutants originate from many different sources, including the animal
production industry.
Over 40 percent of our assessed waters amounting to over 20,000
individual river reaches, lakes, and estuaries still do not meet the
applicable water quality standards. These impaired waters include
approximately 300,000 miles of rivers and shorelines and approximately
5 million acres of lakes. A majority of the U.S. population (218
million) live within 10 miles of the impaired waters.
Under section 303(d) of the 1972 Clean Water Act, states,
territories, and authorized tribes are required to assess and develop
lists of waters that do not meet water quality standards. The law
requires that these jurisdictions establish priority rankings for
waters and develop total maximum daily loads (TMDLs) for these waters.
A TMDL specifies the maximum amount of a single pollutant that a
waterbody can receive and still attain its applicable standard. The
calculation of the TMDL must include a margin of safety to ensure that
the waterbody can be used for the purposes the jurisdiction has
designated. The calculation must also account for seasonal variation in
water quality.
MPP facilities primarily discharge pollutants to rivers and
streams. EPA has found that 66 of the 112 waterbodies receiving
discharges from in scope meat

[[Page 54531]]

and poultry facilities are listed as impaired, meaning that these meat
and poultry processing facilities may be subject to requirements to
reduce their discharges of the impairing pollutants, if appropriate. Of
those 66 waterbodies, 19 have proposed or promulgated TMDLs, 11 of
which are for nutrients. Eight waterbodies are scheduled for TMDLs, and
of those, 5 are impaired for nutrients. The remaining 39 impaired
waterbodies have either no information on the timing of TMDLs that EPA
could find or the TMDLs are not scheduled. Of those 39 waterbodies, 18
are impairments are due to nutrients.

C. How Will Water Quality and Human Health Be Improved by This Rule?

1. What Reductions in Pollutant Discharges Will Result From This Rule?
The pollutant load reductions due to today's requirements were
estimated based on the additional wastewater treatment needed by
facilities to achieve the limits specified by this rule. See Section
VIII.A for discussion on EPA's pollutant loading reduction. These
estimates were used in the water quality models and other environmental
benefits assessment models to estimate the human health and
environmental benefits accruing from this rule.
EPA estimated the reduction of nitrogen and the metals barium,
chromium, copper, manganese, molybdenum, nickel, titanium, vanadium,
and zinc for the final rule. Fecal coliform was used as a surrogate
measure to estimate pathogen reductions that would be achieved by this
rule. EPA expects that other pathogens (e.g., E. coli) will also be
reduced to a similar degree due to disinfection requirements. Table
X.C-1 presents the pollutant reductions expected to result from this rule.

Table X.C-1.--Pollutant Reductions: Combined Total for All MPP Facilities
[Includes baseline closures facilities]
----------------------------------------------------------------------------------------------------------------
Baseline
Parameter pollutant loading Post-regulation Pollutant
(pre-regulation) pollutant loading reduction
----------------------------------------------------------------------------------------------------------------
Nitrogen (million lb)............................... 48.4 20.0 28.5
Pathogens (1019 cfu)................................ 1,340.2 249.0 1,091.2
Sediment (million lb)............................... 8.5 6.1 2.4
----------------------------------------------------------------------------------------------------------------

2. What Was the Approach for Determining the Benefits of This Rule?
EPA modeled the water quality improvements expected to result from
the new requirements being promulgated today and estimated the
environmental and human health benefits of the pollutant reductions.
The benefits described in this section are primarily associated with
direct improvements in surface water quality.
For this rule, EPA conducted five benefit studies to estimate the
impacts of reductions in pollutant discharges from MPP facilities. The
first study used the National Water Pollution Control Assessment Model
(NWPCAM) that estimates pollutant discharge to rivers, streams, and, to
a lesser extent, lakes in the U.S. in order to estimate the value
society places on improvements in surface water quality associated with
today's rule. As noted in Section X.C.3.a, EPA is using a newer version
of the NWPCAM than was used for the proposal that enables us to model
nutrient loadings. The second study evaluated reduced public water
treatment costs. The second study differs from the other four by
providing a change in costs. The third study assessed the potential
impacts of ten pollutants on aquatic life or human health by comparing
the modeled instream pollutant concentrations under baseline treatment
levels to EPA's published guidance for aquatic life criteria or human
health criteria. The fourth study assessed reductions of nutrient
criteria exceedances under today's technology options. In the fifth
study ORD compared the background concentrations of nitrogen with the
facility-generated loads.
For the benefits analyses, EPA translates, where possible,
pollutant reductions and other environmental improvements on human
health and the ecosystem to monetary values. In some cases, EPA could
identify some improvements that will result from this rule, but could
not estimate the monetary value of the improvement or quantify the
amount of improvement expected. Nevertheless, these environmental
improvements most likely result in improved ecological conditions. The
following discussion details these non-monetized and non-quantified
benefits. Given the limitations to assigning monetary values to some of
the improvements, the monetized benefit values described here and in
the Economic and Environmental Benefits Analysis should be considered
as a subset of the total benefits of this rule. For example, the
economic valuation EPA used for this rule assigns monetary values for
the improvements due to reductions of certain important pollutants from
MPP facilities (e.g., nitrogen). It does not include values for
improvements expected from reductions of other pollutants of potential
importance, such as oil and grease.
3. Benefits From Improved Surface Water Quality
Economic benefits of the MPP rule can be broadly defined according
to categories of goods and services provided by improved water quality.
The first category includes benefits that pertain to the use (direct or
indirect) of the affected resources. The direct use benefits can be
further categorized according to whether or not affected goods and
services are traded in the market. For this rule, EPA has not
identified any goods that are traded. The non-traded or non-market
``use'' benefits assessed in this final rule include recreational
activities and drinking water (treatment). The second category includes
benefits that are independent of any current or anticipated use of the
affected resource; these are known as ``nonuse'' or ``passive use''
values. Nonuse benefits reflect human values associated with existence
and bequest motives associated with preservation and/or quality of
environmental resources. Although the public may not use a resource
directly, they may nevertheless be affected by changes in the status or
quality of that resource.
The economic value of benefits is estimated using a range of
valuation methods, with the specific approach being dependent on the
type of benefit category, data availability, and other suitable
factors. Recreational use benefits can be valued using primary
(original) or secondary research involving revealed preference methods
(e.g., random utility models). Estimating nonuse benefits is more
challenging because these values cannot be observed in markets or
inferred from revealed or observed behavior. Researchers

[[Page 54532]]

therefore rely on stated preference methods to derive nonuse values,
whereby individuals are asked to ``state'' their preference or value
for particular (and often hypothetical) resource conditions outlined in
survey questions. For this final rule, time and resource constraints
preclude the use of primary research for deriving use or nonuse benefit
values. EPA therefore does not conduct primary research to support the
benefits analysis and instead relies on benefit transfer of values from
existing studies to monetize benefits. EPA's Guidelines for Preparing
Economic Analyses (EPA 240-R-00-003) recommends consideration of
benefits transfer under these conditions. The following sections
outline the methods and results of the benefits analysis
a. Freshwater Recreational Benefits
EPA used the NWPCAM to estimate the national economic benefits to
surface water quality that will result from implementation of today's
requirements. EPA used the NWPCAM to simulate the results of reductions
in pollutant loadings from meat and poultry product facilities on water
quality in the Nation's surface waters. MPP loads data for nitrogen,
phosphorus, pathogen indicators, BOD₅, DO, and TSS were used
as inputs to the NWPCAM for this analysis. EPA modeled a sample set of
65 facilities. EPA estimates that the final rule will improve overall
use of approximately 631 stream miles for the sample set. Most of the
improvements came from within a use designation (e.g., boatable waters
moved closer to becoming fishable waters). The MPP loadings were used
as inputs to the NWPCAM to estimate in-stream pollutant concentrations
on a detailed spatial scale and to produce estimates for changes in
concentrations resulting from this rule. EPA used the NWPCAM modeling
output (improved water quality) to monetize improvements to water
quality, and as inputs for other benefits analyses used to support this
rule.
EPA used a water quality valuation technique to estimate the
monetary value of the recreation and nonuse benefits associated with
the changes in water quality. This method uses a composite measure of
water quality calculated from six parameters (called the ``water
quality index'' approach) and further assigns monetary values along a
continuum of water quality improvements. The monetary value assigned to
the benefits captures what the public is willing to pay for these
improvements to water quality. The benefits of improved surface water
quality resulting from reduced pollutant discharges from the 65 non-
small direct discharge facilities are estimated to be $841,000 annually
(2003$).
Raking post-stratification was used to extrapolate these results
from the 65 non-small direct discharge facilities to the universe of
169 regulated facilities. The basic concept of the raking method is
that facility sample weights derived from the size of the plant and
type of production may not be the most appropriate for extrapolating
benefits to non-sample plants. Other factors influence the occurrence
and size of benefits so their omission can lead to a conditional bias
in the extrapolated results. The raking process proceeds by
categorizing all of the facilities that will be affected by the
regulation by their receiving waters and local population. The goal of
the post-stratification weighting process is to ensure that the revised
sample weights generate the same marginal percentages for the receiving
waters and local population categorization as found in the affected
population. For information see the Economic and Environmental Benefits
Analysis in the rulemaking docket.
The revised weights are applied to sample facilities to generate a
national total. However, the NWPCAM calculates changes in water quality
by river reach rather than facility. Using network analysis tools, EPA
identified the MPP model facilities upstream from each affected reach.
Up to six facilities may have contributed to the changes in any
particular reach. For most reaches, there was only one model facility
upstream so only that weight was used. Otherwise, the average raking
weight for all of the facilities upstream of the reach was applied to
aggregate the benefits estimated for reaches affected by the model
facilities to an estimate for all of the facilities within the scope of
the rule. Based on the NWPCAM analysis using the water quality index
approach, EPA estimates the benefits of improved surface water quality
resulting from reduced pollutant discharges from MPP facilities to be
$2.6 million annually (2003$).
Water quality predictions generated by the NWPCAM, as well as by
other models, contain prediction errors. As a consequence, there is
some degree of uncertainty associated with calculated values of
benefits. Monte Carlo analysis is used to characterize the uncertainty
and compute error bounds around calculated benefit values (see EEBA,
DCN 320-001). The range of benefits estimated by uncertainty analysis
is approximately zero to $10 million per year (2003$), based on 10
percent lower and 90 percent upper bound values respectively. The broad
range in values is not uncommon for large scale (i.e., national-level)
water quality models and is expected given the relatively small number
of facilities affected by the rule and the choice of the 10th and 90th
percentiles as uncertainty bounds.
b. Reduced Public Water Treatment Costs
Total suspended solids (TSS) entering surface waters from MPP
facilities may hinder effective drinking water treatment by interfering
with coagulation, filtration, and disinfection processes. EPA used the
NWPCAM to predict how pollutant reductions from MPP facilities would
affect the concentration of TSS in the source waters of public water
supply systems. To measure the value of reductions in TSS
concentrations, EPA estimated the extent to which lower TSS
concentrations reduce operation and maintenance (O&M) costs related to
conventional treatment techniques. EPA estimates reduced drinking water
treatment costs will be negligible from reduced discharges of
pollutants due to today's rule (see DCN 316-511 for details about the
reduced drinking water treatment costs).
c. Toxicity Assessment
EPA used a stream dilution modeling technique to assess the aquatic
life and human health toxicity impacts of releases of ten pollutants
(ammonia, barium, chromium, copper, manganese, molybdenum, nickel,
titanium, vanadium, and zinc). The stream dilution modeling techniques
assume complete immediate mixing of effluents and receiving water flows
and do not take into account fate processes other than complete
immediate mixing. These simplified stream dilution techniques have been
used in other effluent guidelines (e.g., Iron and Steel, Metal Products
and Machinery, and Transportation Equipment Cleaning). EPA based this
analysis on 53 MPP facilities that responded to detailed surveys and
directly discharge wastewaters to streams.
EPA projected possible impacts on aquatic life by comparing the
modeled instream pollutant concentrations under baseline treatment
levels to EPA's published aquatic life criteria guidance \2\

[[Page 54533]]

or, for pollutants for which there are no water quality criteria, to
toxic effect levels (i.e., lowest reported or estimated concentration
that is toxic to aquatic life).
---------------------------------------------------------------------------

\2\ In performing this analysis, EPA uses guidance documents
published by EPA that recommend numeric human health and aquatic
life water quality criteria for numerous pollutants. States often
use these guidance documents when adopting criteria as part of their
water quality standards. The simplified stream dilution techniques
are used for screening priority pollutants. Therefore, EPA uses the
national criteria values in lieu of more site-specific values. We do
not use this as a comprehensive analysis, but rather as a trigger to
identify potential impacts on aquatic life and human health. A more
site-specific analysis could be undertaken if the simplified stream
dilution technique projected in-stream exceedances of national
aquatic life and human health criteria.
---------------------------------------------------------------------------

EPA projects impacts to human health by (1) comparing estimated
instream pollutant concentrations to health-based toxic effect values
or criteria, and (2) estimating the potential noncarcinogenic hazards
from eating contaminated fish or drinking contaminated water. EPA
evaluated systemic hazards for the general population for drinking
water, and evaluated systemic hazards for sport and subsistence fishers
and their families from eating contaminated fish. However, EPA did not
look at carcinogenic risks because none of these 10 pollutants
discharged by MPP facilities and considered in this analysis are known
carcinogens.
EPA projects that modeled instream pollutant concentrations of
copper, at current discharge levels, will slightly exceed chronic
aquatic life criteria or toxic effects levels in one of the 53
receiving streams. The model did not predict any exceedances of acute
aquatic life criteria or toxic effect levels. EPA also projects that
manganese will marginally exceed human health criterion or toxic effect
levels in one of the receiving streams. At current discharge levels, no
systemic toxic effects are projected for fishers and their families
from eating fish they catch from any of the receiving streams. Because
EPA did not identify damages resulting from the MPP discharges for the
10 pollutants identified at the beginning of this section, EPA projects
no meaningful health or aquatic life benefits as a result of the
selected BPT or BAT options. (see DCN 316-518 for details about the
toxicity assessment).
d. Nutrient Criteria Assessment
EPA's recommended section 304(a) ecoregional water quality criteria
for nutrients were developed with the aim of reducing and preventing
cultural eutrophication (i.e., over enrichment of nutrient levels
associated with human activities) on a national scale. The criteria
were empirically derived to represent conditions of surface waters that
are minimally impacted by human activities and protective of aquatic
life and recreational uses. The nutrient criteria are numerical values
for both causative (phosphorus and nitrogen) and response (chlorophyll
a and turbidity) variables associated with the prevention and
assessment of eutrophic conditions. The problem of cultural
eutrophication is national in scope, but specific levels of
overenrichment leading to these problems vary from one region of the
country to another because of factors such as geographical variations
in geology, vegetation, climate, and soil types. EPA has, therefore,
developed its recommended nutrient criteria on an ecoregional basis.
For this analysis, EPA estimates nutrient concentrations one
kilometer downstream from facilities assuming (1) no background
concentrations of nitrogen, (2) 7Q10 and mean flow conditions, and (3)
exponential decay of nitrogen within the one kilometer stretch. EPA
then compares estimated concentrations with 304(a) criteria or
reference conditions. Given the assumptions, this analysis is not
designed to predict actual concentrations, but instead evaluate, at a
screening level, the relative impacts of MPP facilities and treatment
controls required under this rule. In the absence of all other sources
of nitrogen and assuming 7Q10 flow, the results of this analysis show
that, prior to the rule, loads from 45 MPP facilities (out of 63), are
projected as being capable of creating instream nitrogen concentrations
that exceed 304(a) nitrogen criteria representing the upper 25th
percentile reference conditions of ``least impacted'' streams in
respective subecoregions. The 25th percentile was chosen by EPA to
represent reference conditions; the natural least impacted conditions,
or what is considered the most attainable condition. The number of
exceedances drops to 41 facilities when estimated instream nitrogen
concentrations are compared to the 50th (i.e., median) percentile
reference conditions. It is possible, in reality, that many of these
streams will exceed the 25th and 50th percentile reference conditions,
even in the absence of MPP facility loads, but these results are
provided to demonstrate the potential for MPP loads to affect nutrient
water quality. The complete analysis is available in the EEBA.
When loads from the MPP facilities are reduced in accordance with
the requirements under this rule, a total of six of the 45 25th
percentile exceedances are projected to be eliminated. Correspondingly,
a total of four out of the 41 50th percentile exceedances are projected
to be eliminated. When mean flow (versus 7Q10) is assumed, eight out of
16 projected 25th percentile exceedances are estimated to be
eliminated, and seven out of 14 projected 50th percentile exceedances
are estimated to be eliminated. In reality, these exceedances may not
in fact be eliminated due to the assumptions outlined above for this
analysis, but these results demonstrate the potential capacity of this
rule to affect water quality related to nutrient loads.
Similar analyses have been conducted by EPA's Office of Research
and Development (DCN 317-001). Using land cover data, ORD estimated
non-point source (NPS) loads for watersheds containing MPP facilities.
NPS loads and recommended loads based on EPA's 304(a) nutrient criteria
guidance were compared to MPP loads. The results identified several
MPPs where NPS loads were substantially lower than MPP loads and BAT
Option 2.5 could significantly improve water quality. Other plants were
identified that currently exceed established EPA nutrient criteria
levels, and implementing BAT Option 2.5 would decrease nutrient loads.

XI. What Are the Other (Non-Water Quality) Environmental Impacts and
Benefits?

Under Sections 304(b) and 306 of the Clean Water Act, EPA may
consider non-water quality environmental impacts (including energy
requirements) when developing effluent limitations guidelines and
standards. Accordingly, EPA has considered the potential impact of
today's final regulation on air emissions, energy consumption, and
solid waste generation.
While it is difficult to calculate environmental impacts across all
media and energy use, EPA has determined that the benefits from
complying with these limitations and standards justify the multi-media
impacts identified in this section (see Section X for a discussion on
the environmental benefits associated with this regulation). Because
today's rule only affects non-small facilities who directly discharge
their wastewaters, impacts from those facilities are the only ones
discussed here. For impacts associated with treatment options that were
not selected for the final regulation and other information on non-
water quality impacts, see Section 12 of the ``Technical Development
Document for the Final Effluent Limitations Guidelines and Standards
for the Meat and Poultry Products Point Source Category.''

[[Page 54534]]

A. Air Emissions

EPA has determined that wastewater treatment processes recommended
in this rule will not generate significant air emissions above the
current emissions, either directly from the facility or indirectly from
the facilities that provide energy to MPP facilities. Possible non-
odorous gases that may be emitted from these processes include nitrogen
and carbon dioxide. Nitrogen gas will be formed during the
denitrification process, and will escape to the atmosphere. Since
nitrogen comprises over 78% of the Earth's atmosphere and is not
considered a greenhouse gas, its generation is not considered to pose
an environmental impact. Carbon dioxide will be released when BOD is
oxidized by oxygen-containing compounds. However, the BOD being treated
will generally not increase, and therefore there will generally be no
incremental increase in carbon dioxide over current treatment levels.
Carbon dioxide will be incrementally increased only for facilities
requiring additional BOD for denitrification, which constitutes
approximately 20% of the MPP facilities.
Odors are the only significant air pollution problem associated
with the treatment of MPP wastewaters and generally are associated with
anaerobic conditions. Thus, flow equalization basins, dissolved air
flotation (DAF) units, and anaerobic lagoons are possible sources of
malodors. Potential odorous substances associated with MPP wastewater
include ammonia, hydrogen sulfide, and organic compounds. Ammonia in
MPP wastewaters is typically due to breakdown of more complex
substances, and can be released under certain circumstances. However,
aerobic nitrifying conditions will favor keeping ammonia in solution as
it is converted to nitrate, meaning that odors will generally be
suppressed. In addition, maintenance of pH around neutral conditions
will disfavor stripping ammonia, leaving it in the wastewater to be
oxidized or assimilated. Furthermore, denitrification processes will
favor additional conversion of ammonia. Thus, any incremental ammonia
generation will be minimal.
Hydrogen sulfide can be formed under anaerobic and anoxic
conditions such as in the denitrification reactors. Hydrogen sulfide
generation requires the presence of sulfate in the wastewater, which is
typically low in MPP wastes. (In most cases the source of sulfates in
MPP wastewater is the source water supply.) In addition, the formation
of sulfide is less favored than the reduction of nitrate to nitrogen,
meaning that under most circumstances, sulfide will not be formed to a
greater degree than is currently the case, especially if the facility
is well-managed. Review of the MPP detailed surveys shows that only 20%
of the MPP facilities that currently do not denitrify or treat their
wastewater anaerobically have the potential for increased hydrogen
sulfide generation.
Volatile odorous organic compounds can be generated in anaerobic
lagoons. However, most facilities currently have such lagoons in place,
meaning that incremental additional generation of such substances will
be minimal. If specific facilities have odor difficulties, then covers
over the lagoons can be used to capture odorous substances that are
then subsequently destroyed by some oxidation or combustion process.
Some facilities capture anaerobically generated methane for fuel; if
that gas stream must be scrubbed before use, the waste will be recycled
to the wastewater treatment plant, resulting in no net environmental
impact. Such oxidation and combustion processes will potentially result
in additional carbon dioxide generation; however, that generation
constitutes minimal incremental generation, since the organic
substances involved would have gone through oxidation naturally.
Typically, odorous organic compounds are well-destroyed in aerobic
systems. Overall, the incremental odor problems associated with this
regulation are small. Odor problems usually are significant only when
the sulfur content of MPP wastewaters is high, especially when
treatment facilities are not well managed. Generally, MPP wastewater
treatment facilities using anaerobic processes for treating wastewater
with a low sulfur concentration have few odor problems. At such
facilities, maintaining a naturally occurring layer of floating solids
in anaerobic contact basins and lagoons generally minimizes odors.
Thus, the technology options should not increase emissions of odorous
compounds from well-managed MPP wastewater treatment facilities. EPA
visited several MPP facilities, and none had odor control problems.
If a facility uses nitrification to meet the ammonia limitations,
then any ammonia odors will be minimal because the process keeps the
ammonia in solution as it is converted to nitrate. However, using
anaerobic treatment for initial BOD reduction before aerobic treatment
will increase emissions of methane and volatile organic compounds, but
the increases should be negligible given today's extensive use of
lagoons and other anaerobic processes in MPP wastewater treatment. In
addition, covering anaerobic lagoons and flaring the gas captured can
reduce these emissions. If the volume of captured gas is sufficient, it
can be used as a fuel to produce process heat or electricity. EPA
observed a couple of facilities capturing gas for use as fuel during
its site visits.

B. Energy Consumption

EPA estimates that compliance with this rule will create a small
increase in nationwide energy consumption for all subcategories, except
Subcategory J, which is projected to have decreased energy
requirements. This estimated decrease for Subcategory J is because the
facilities will all have decreased aeration requirements due to BOD
removal during anoxic processes (before the aeration tank); because the
BOD is removed beforehand, less aeration is needed for BOD removal in
the aeration process. Although other subcategories may also decrease
their aeration requirements, that decrease may be offset by
requirements associated with ensuring there is enough BOD to achieve
the desired nitrate reduction. For non-small direct discharging
facilities nationwide, EPA estimates a 7.3 percent increase in annual
energy consumption for wastewater treatment (about 17.7 million
kilowatt-hours per year). Table XI.B-1 presents the estimates of energy
use EPA expects as a result of this regulation, organized by subcategory.
By comparison, electric power generation facilities generated 3.123
billion megawatt-hours of electric power in the United States in 1997
(Energy Information Administration, Electric Power Annual 1998 Volume
1, Table A1). Additional energy requirements for EPA's selected options
are acceptable (i.e., significantly less than 0.001 percent of national
requirements).

[[Page 54535]]

Table XI.B-1.--Incremental Energy Use for Non-Small Direct Discharging
MPP Facilities
------------------------------------------------------------------------
Incremental
Baseline energy use for
40 CFR 432 subcategorya energy use for MPP WWTP (KWH/
MPP WWTP (KWH/ yr) [%
yr) Increase]
------------------------------------------------------------------------
A, B, C, D.............................. 62,381,835 8,100,573
[11.5]
F, G, H, I.............................. 1,711,465 51,931
[2.9]
J....................................... 10,440,620 -611,232
[-6.2]
K....................................... 162,511,445 9,891,034
[5.7]
L....................................... 6,470,812 346,789
[5.1]
------------------------------------------------------------------------
a Facilities in Subcategory E are not affected by today's rule,
therefore, there is no net incremental energy use.

These are national estimates. Individual facilities may decrease
their energy consumption if they use the anaerobic lagoon effluent as
the source of organic carbon necessary for denitrification. BOD
reduction that occurs during denitrification reduces the oxygen
transfer requirements and associated electricity needed for aerobic BOD
reduction after the anaerobic treatment. For other facilities, energy
use may increase due to additional pumping requirements.

C. Solid Waste Generation

The most significant non-water quality impact for this rule is the
generation of solid wastes from MPP wastewater treatment. EPA estimates
that compliance with the final rule will slightly increase the amount
of wastewater treatment sludge generated for meat first and further
processors and decrease the amount for renderers and poultry first and
further processors. For non-small direct discharging facilities
nationwide, EPA estimates a 2.3 percent reduction in total annual
sludge produced ( or about 3,200 tons). The reduction in sludge
generation for renderers and poultry processes is due to the increased
use of anoxic processes, which inherently tend to generate less sludge
than aerobic processes, while not having increased sludge generation
from TSS removal. Table XI.C-1 presents the amount of wastewater
treatment sludge expected to be generated at non-small direct
discharging facilities as a result of this regulation. Actual sludge
generation at individual facilities will vary from the percentages
shown in the table. Depending on the current treatment process, a
facility's sludge generation may increase even though the total amount
for the subcategory decreases.

Table XI.B-1. Incremental Sludge Generation for Non-Small Direct
Discharging MPP Facilities
------------------------------------------------------------------------
Incremental
Baseline Sludge
Sludge Generation for
40 CFR 432 subcategorya Generation for MPP WWTP
MPP WWTP (tons/yr) [%
(tons/yr) Increase]
------------------------------------------------------------------------
A, B, C, D.............................. 25,503 675
[2.6]
F, G, H, I.............................. 1,586 0.64
[0.04]
J....................................... 6,514 -568
[-9.5]
K....................................... 96,846 -3,203
[-3.4]
L....................................... 7,606 -126
[-1.7]
------------------------------------------------------------------------
a Facilities in Subcategory E are not affected by today's rule,
therefore, there is no net incremental sludge generation.

The estimates of sludge production in Table XI.B-1 are based on the
concentrations of BOD entering the biological part of the treatment
system after pretreatment (e.g., DAF or anaerobic lagoon), and include
sludge generation by facilities that may require a supplemental carbon
source for denitrification. In a denitrification/nitrification process,
the denitrification portion of the process removes a significant
portion of BOD in the wastewater, thereby reducing the amount of BOD
available for removal during the aerobic portion of the treatment
process. The sludge yield coefficient for the denitrification process
is lower than the coefficient for the aerobic process, therefore the
amount of sludge generated per BOD unit will be lower for the
denitrification part than the nitrification part. The majority of MPP
facilities perform nitrification; converting a nitrification treatment
system to one that includes denitrification reduces the amount of
sludge generated.
EPA also expects that more emphasis on pollution prevention (e.g.,
by increased segregation of waste materials that can be used for
producing rendered products from wastewater flows) could further reduce
sludge generation,

[[Page 54536]]

although the Agency did not calculate these potential reductions as
they are not attributable to the rule. Examples of such pollution
prevention practices include using alternatives to fluming to remove
viscera from processing areas and ``dry cleaning'' facilities as the
initial step in the daily cleaning of equipment and facilities. If
contact with water is prevented, fats and proteins (that would
otherwise dissolve and pass through screening and dissolved air
flotation) do not become sources of BOD and ammonia and, consequently,
sources of sludge.

XII. How Will This Rule Be Implemented?

This section helps permit writers and MPP facilities implement this
regulation. This section also discusses the relationship of upset and
bypass provisions, variances, and modifications to the final
limitations and standards. For additional implementation information,
see Section 15 of the Technical Development Document for today's final
rule.

A. Implementation of the Limitations and Standards for Direct Dischargers

Effluent limitations and new source performance standards act as
important mechanisms to control the discharges of pollutants to waters
of the United States. These limitations and standards are applied to
individual facilities through NPDES permits issued by the EPA or
authorized States under Section 402 of the Act.
In specific cases, the NPDES permitting authority may elect to
establish technology-based permit limits for pollutants not covered by
this regulation. In addition, where State water quality standards or
other provisions of State or Federal law require limits on pollutants
not covered by this regulation (or require more stringent limits or
standards on covered pollutants in order to attain and maintain water
quality standards), the permitting authority must apply those
limitations or standards. See CWA Section 301(b)(1)(C).
1. What Are the Compliance Dates for Existing and New Sources?
New and reissued NPDES permits to direct dischargers must include
these effluent limitations, and the permits must require immediate
compliance with such limitations. If the permitting authority wishes to
provide a compliance schedule, it must do so through an enforcement
mechanism.
New sources must comply with the new source standards (NSPS) of
this rule when they commence discharging MPP process wastewater.
Because the final rule was not promulgated within 120 days of the
proposed rule, the Agency considers a discharger to be a new source if
its construction commences after October 8, 2004.
There are meat product facilities that were new sources subject to
the earlier NSPS provisions because they commenced construction after
promulgation of the earlier NSPS. The CWA provides for a protection
period for such facilities from any more stringent standards. The
protection period is generally 10 years from the completion of
construction. See section 306(d) of the CWA, 33 U.S.C. 1316(d) and 40
CFR 122.29(d). Thus, any source that commenced construction after
promulgation of the earlier NSPS and before promulgation of today's
NSPS will not be subject to any more stringent BAT limitations in
today's rule until the protection period identified in 40 CFR 122.29(d)
expires.
2. Who Does Part 432 Apply To?
In Section VI of this preamble and Section 2 of the TDD, EPA
provides detailed information on the applicability of this rule. The
revised 40 CFR part 432 will apply to all existing and new meat first
processing (slaughtering) and further processing facilities; existing
and new independent rendering facilities over a certain production
threshold (10 million pounds/year); existing poultry first processing
(slaughtering) and further processing facilities over a certain
production threshold (100 million pounds LWK/year and 7 million pounds/
year of finished product, respectively); and all new poultry first
processing and further processing facilities. EPA notes that in some
cases the limitations and standards for small MPP facilities may be
different (e.g., less stringent and/or production-based) than for non-
small MPP facilities in the same subpart.
3. How Will This Rule Be Implemented for Facilities That Perform
Multiple Operations?
The applicability of subparts A-D and subpart K are defined not
only to include wastewater discharges from first processing operations,
but also from further processing and rendering operations at the same
facility. For example, a facility that has wastewater discharges from
meat slaughtering and meat further processing would fall within
subparts A-D (whether it was subpart A, B, C, or D would depend on the
specific slaughtering operations), but would not be covered by any of
subparts E-I.
Facilities that discharge wastewater from both meat and poultry
processing operations, however, will have to comply with limitations
and standards from two subcategories. Permit writers would use the
``building block approach'' based on production or wastewater discharge
flow to combine the two sets of limitations into one final effluent
limitation in the facility's permit. For example, if an existing
facility discharges wastewater from meat slaughtering operations
commingled with wastewater discharges from poultry further processing
operations, the permit writer must calculate a single effluent limit
for the permit that is a weighted combination of the limitations for
subparts A-D and subpart L with the weights based on relative
production or wastewater discharge for the two types of operations. In
cases where one part of the wastewater comes from operations with no
limitations, (e.g., small poultry), the permit writer must first
establish best professional judgement (BPJ) limitations for this
portion of the wastewater, and then combine these with any applicable
national limitations using the building block approach.
4. How Can a Facility Get a Waiver for Pollutants That Are Not Present?
In May 2000, EPA promulgated a regulation streamlining the NPDES
regulations (``Amendments to Streamline the National Pollutant
Discharge Elimination System Program Regulations: Round Two'' (see 65
FR 30886; May 15, 2000)) which includes a monitoring waiver for direct
dischargers subject to effluent guidelines. Direct discharge facilities
may choose not to sample a guideline-limited pollutant if that
discharger ``has demonstrated through sampling and other technical
factors that the pollutant is not present in the discharge or is
present only at background levels from intake water and without any
increase in the pollutant due to activities of the discharger'' (see 65
FR 30908; 40 CFR 122.44). EPA noted in the preamble to the final NPDES
streamlining rule that the Agency is granting a waiver from monitoring
requirements but not a waiver from the limit. In addition, the
provision does not waive monitoring for any pollutants for which there
are limits based on water quality standards. The waiver for direct
dischargers lasts for the term of the NPDES permit and is not available
during the term of the first permit issued to a discharger. Any request
for this waiver must be submitted with the application for a reissued
permit or a request for modification of a reissued permit. When

[[Page 54537]]

their permit writer authorizes it, direct discharge facilities covered
by any effluent guidelines (including today's rule) may use the
monitoring waiver contained in the NPDES streamlining final rule.
5. Compliance With Limitations and Standards
The same basic procedures apply to the calculation of all effluent
limitations guidelines and standards for this industry, regardless of
whether the technology is BPT, BCT, BAT, or NSPS. For simplicity, the
following discussion refers only to effluent limitations guidelines;
however, the discussion also applies to new source standards.
a. Definitions
The limitations for pollutants for each option, as presented in
today's notice, are expressed as maximum daily discharge limitations
and maximum monthly average discharge limitations. Definitions provided
in 40 CFR 122.2 state that the ``maximum daily discharge limitation''
is the ``highest allowable `daily discharge' '' and the `` maximum
average for monthly discharge limitation'' is the ``highest allowable
average of `daily discharges' over a calendar month, calculated as the
sum of all `daily discharges' measured during a calendar month divided
by the number of `daily discharges' measured during that month.'' Daily
discharge is defined as the ``discharge of a pollutant'' measured
during a calendar day or any 24-hour period that reasonably represents
the calendar day for purposes of sampling.''
b. Percentile Basis for Limits, Not Compliance
EPA promulgates limitations that facilities are capable of
complying with at all times by properly operating and maintaining their
processes and treatment technologies. EPA established these limitations
on the basis of percentiles estimated using data from facilities with
well-operated and controlled processes and treatment systems. However,
because EPA uses a percentile basis, the issue of exceedences (i.e.,
values that exceed the limitations) or excursions is often raised in
public comments on limitations. For example, comments often suggest
that EPA include a provision that allows a facility to be considered in
compliance with permit limitations if its discharge exceeds the
specified monthly average limitations one month out of 20 and the daily
average limitations one day out of 100. As explained in Section 14 of
the TDD, these limitations were never intended to have the rigid
probabilistic interpretation implied by such comments. The following
discussion provides a brief overview of EPA's position on this issue.
EPA expects that all facilities subject to the limitations will
design and operate their treatment systems to achieve the long-term
average performance level on a consistent basis because facilities
using well-designed and operated treatment systems have demonstrated
that this can be done. Facilities that are designed and operated to
achieve the long-term average effluent levels used in developing the
limitations should be capable of compliance with the limitations at all
times, because the limitations incorporate an allowance for variability
in effluent levels about the long-term average. The allowance for
variability is based on control of treatment variability demonstrated
in normal operations.
EPA recognizes that, as a result of modifications to 40 CFR Part
432, some dischargers may need to improve treatment systems, process
controls, and/or treatment system operations in order to consistently
meet the new and/or revised effluent limitations and standards. As
noted previously, however, given the fact that the promulgated
limitations reflect an allowance for variability and the demonstrated
ability of facilities to achieve the LTA, the limitations are achievable.
c. Requirements of Laboratory Analysis
The permittee is responsible for communicating the requirements of
the analysis to the laboratory, including the sensitivity required to
meet the regulatory limits associated with each analyte of interest. In
turn, the laboratory is responsible for employing the appropriate set
of method options and a calibration range in which the concentration of
the lowest non-zero standard represents a sample concentration no
higher than the regulatory limit for each analyte. (See Sierra Club v.
Union Oil, 813 F.2d 1480, page 1492 (9th Cir. 1987).)
d. Monitoring
In developing the limitations and standards for today's rule, EPA
assumed a weekly monitoring frequency (approximately four times a
month). (The assumed daily monitoring frequency remains the same for
the unchanged limitations and standards.) EPA incorporated this assumed
monitoring frequency into the monitoring costs and determination of the
limitations for the final rule. However, actual monitoring requirements
for individual facilities are specified in the NPDES permits issued by
the States (or other authorized permitting authority). EPA has
concluded that facilities properly operating and maintaining the
treatment technology, used as the basis of today's limitations, will
comply with the monthly average limitation/standard when they sample at
the assumed weekly monitoring frequency, although compliance is
required regardless of the number of samples analyzed and averaged in a
month. EPA would, however, discourage the practice of allowing the
number of monitoring samples to vary arbitrarily merely to allow a
facility to achieve a desired average concentration, i.e., a value
below the limit. EPA expects that enforcement authorities would prefer,
or even require, monitoring samples at some regular, pre-determined
frequency. If a facility has difficulty complying with the standards on
an ongoing basis, then the facility should improve its equipment,
operations, and/or maintenance.

B. Upset and Bypass Provisions

A ``bypass'' is an intentional diversion of the streams from any
portion of a treatment facility. An ``upset'' is an exceptional
incident in which there is unintentional and temporary noncompliance
with technology-based permit effluent limitations beyond the reasonable
control of the permittee. You can find EPA's regulations concerning
bypasses and upsets for direct dischargers at 40 CFR 122.41(m) and (n)
and for indirect dischargers at 40 CFR 403.16 and 403.17.

C. Variances and Modifications

While the CWA requires application of effluent limitations
established pursuant to section 301 to all direct dischargers, the
statute also provides for the modification of these national
requirements in a limited number of circumstances. Moreover, the Agency
established administrative mechanisms to provide an opportunity for
relief from the application of the national effluent limitations
guidelines for categories of existing sources for toxic, conventional,
and nonconventional pollutants.
1. Fundamentally Different Factors Variances
EPA will develop effluent limitations or standards different from
the otherwise applicable requirements if an individual discharging
facility is fundamentally different with regard to the factors the
Agency used to establish the limitations or standards. Such a
modification is known as a

[[Page 54538]]

``fundamentally different factors'' (FDF) variance.
Early on, EPA by regulation provided for the FDF modifications for
direct dischargers from the best practicable control technology
effluent limitations (BPT), best available technology economically
achievable limitations for toxic and nonconventional pollutants, and
BPT limitations for conventional pollutants. For indirect dischargers,
EPA provided for modifications from pretreatment standards. FDF
variances for toxic pollutants were challenged judicially and
ultimately affirmed by the Supreme Court (Chemical Manufacturers Assn
v. NRDC, 479 U.S. 116 (1985)).
Subsequently, in the Water Quality Act of 1987, Congress added a
new section 301(n) explicitly authorizing modifications of the
otherwise applicable BAT effluent limitations or categorical
pretreatment standards for existing sources if a facility is
fundamentally different with regard to the factors EPA used to
establish the effluent limitations or pretreatment standards. Section
301(n) also defined the conditions under which EPA may establish
alternate requirements. Under Section 301(n), an application for a FDF
variance must be based solely on (1) information submitted during
rulemaking raising the factors that are fundamentally different or (2)
information the applicant did not have an opportunity to submit. The
alternate limitation or standard must be no less stringent than
justified by the difference and must not result in markedly more
adverse non-water quality environmental impacts than the national
limitation or standard would create.
EPA regulations (40 CFR part 125 Subpart D), authorizing the
Regional Administrators to establish alternate limitations and
standards, further detail the criteria used to evaluate FDF variance
requests for direct dischargers. Thus, 40 CFR 125.31(d) identifies six
factors (for example, volume of process wastewater or age and size of a
discharger's facility) that may be considered in determining if a
facility is fundamentally different. The Agency must determine whether,
on the basis of one or more of these factors, the facility is
fundamentally different from facilities and factors used by EPA to
develop the nationally applicable effluent guidelines. The regulation
also lists four other factors (for example, infeasibility of
installation within the time allowed or a discharger's ability to pay)
that may not be a basis for an FDF variance. In addition, under 40 CFR
125.31(b)(3), a request for limitations less stringent than the
national limitation may be approved only where compliance with the
national limitations would result in either (a) a removal cost wholly
out of proportion to the removal cost considered during development of
the national limitations or (b) a non-water quality environmental
impact (including energy requirements) fundamentally worse than the
impact considered during development of the national limits. The
conditions for approval of and factors considered for a request to
modify applicable pretreatment standards are the same as those for
direct dischargers.
The legislative history of Section 301(n) underscores the necessity
for the FDF variance applicant to establish eligibility for the
variance. EPA's regulations at 40 CFR 125.32(b)(1) explicitly impose
this burden upon the applicant. The applicant must show that the
factors controlled by the applicant's permit which the applicant claims
to be fundamentally different are, in fact, fundamentally different
from those factors EPA used to establish the guidelines. The
pretreatment regulations incorporate a similar requirement at 40 CFR
403.13(h)(9).
Facilities must submit all FDF variance applications to the
appropriate Director (defined at 40 CFR 122.2) no later than 180 days
from the date the limitations or standards are established or revised
(see CWA section 301(n)(2) and 40 CFR 122.21(m)(1)(i)(B)(2)). EPA
regulations clarify that effluent limitations guidelines are
``established'' or ``revised'' on the date those effluent limitations
guidelines are published in the Federal Register (see 40 CFR
122.21(m)(1)(i)(B)(2)). Therefore, all facilities requesting FDF
variances from the effluent limitations guidelines in today's final
rule must submit FDF variance applications to their Director (as
defined at 40 CFR 122.2) no later than March 7, 2005.
An FDF variance is not available to a new source subject to New
Source Performance Standards.
2. Water Quality Variances
So long as the discharge does not violate any water quality-based
effluent limitations, Section 301(g) of the CWA authorizes a variance
from best available technology economically achievable (BAT) effluent
guidelines for certain non-conventional pollutants due to local
environmental factors. These pollutants include ammonia, chlorine,
color, iron, and phenols (as measured by the colorimetric 4-
aminoantipyrine (4AAP) method). Dischargers subject to new or revised
BAT limitations promulgated today for those pollutants may be eligible
for a section 301(g) variance. Please note that section 301(g)(4)(c)
requires that section 301(g) variance applications pertaining to the
new or revised limits in this rule be filed not later than June 6,
2005. Existing section 301(g) variances for limitations not being
revised today are not affected by today's action.
3. Permit Modifications
Even after the permitting authority has issued a final permit to a
direct discharger, the permit may still be modified under certain
conditions. (When a permit modification is under consideration,
however, all other permit conditions remain in effect.) A permit
modification may be triggered by several circumstances, including a
regulatory inspection or information submitted by the permittee which
reveals the need for modification. Any interested person may request a
permit modification. There are two classifications of modifications:
Major and minor. From a procedural standpoint, they differ primarily
with respect to public notice. Major modifications require public
notice, while minor modifications do not. Virtually any modification
that results in less stringent conditions is treated as a major
modification, with provisions for public notice and comment. Conditions
that would necessitate a major modification of a permit are described
at 40 CFR 122.62. Minor modifications are generally non-substantive
changes. The conditions for minor modification are described at 40 CFR
122.63.

XIII. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

Under Executive Order 12866 [58 FR 51,735 (October 4, 1993)], the
Agency must determine whether the regulatory action is ``significant''
and therefore subject to OMB review and the requirements of the
Executive Order. The Order defines ``significant regulatory action'' as
one that is likely to result in a rule that may:
1. Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or communities;
2. Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
3. Materially alter the budgetary impact of entitlements, grants,
user fees,

[[Page 54539]]

or loan programs or the rights and obligations of recipients thereof;
or
4. Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, it has been
determined that this rule is a ``significant regulatory action.'' As
such, this action was submitted to OMB for review. Changes made in
response to OMB suggestions or recommendations will be documented in
the public record.

B. Paperwork Reduction Act

This action does not impose an information collection burden under
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
All facilities within the scope of the final regulations are direct
dischargers that, regardless of whether or not they are currently
regulated by effluent guidelines, must follow the compliance monitoring
and reporting requirements of the National Pollutant Discharge
Elimination System (NPDES). Therefore, there is no information
collection associated with this rulemaking.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust the existing ways to
comply with any previously applicable instructions and requirements;
train personnel to be able to respond to a collection of information;
search data sources; complete and review the collection of information;
and transmit or otherwise disclose the information.
An Agency may not conduct or sponsor, and a person is not required
to respond to a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C.
601 et seq., generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment
rulemaking requirements under the Administrative Procedure Act or any
other statute unless the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities.
Small entities include small businesses, small organizations, and small
governmental jurisdictions.
For the purposes of assessing the impacts of today's rule on small
entities, small entity is defined as (1) a small business that is small
according to RFA default definitions for small business (based on Small
Business Administration (SBA) size standards); (2) a small governmental
jurisdiction that is a government of a city, county, town, school
district or special district with a population of less than 50,000; and
(3) a small organization that is any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.
EPA expects this final rule to regulate up to 33 small businesses
that own MPP facilities. All small business-owned facilities that EPA
found to be affected by the rule are in Subcategories F-I, Subcategory
J, and Subcategory L. Thus, the economic impact analysis for these
facilities is based on screener survey data (see Section IX). The scope
of the final rule does not include any small governmental jurisdictions
or not-for-profit organizations.
Only facilities that exceed the subcategory-specific production
thresholds are subject to this rule. EPA projected no small business-
owned facility closures for the final rule. However, EPA cannot state
that the probability of closure as a result of the rule is zero for
those facilities, although it is small (see Table IX.B-4). In addition,
of the 33 potentially small entities, 2 entities are estimated to incur
annualized post-tax compliance costs greater than three percent of
revenues; 5 are estimated to incur compliance costs composing more than
one but less than three percent of revenues; 24 small entities are
estimated to incur compliance costs of less than one percent of
revenues. The scope of the final rule does not include any small
governmental jurisdictions or not-for-profit organizations.
Although this final rule will not have a significant economic
impact on a substantial number of small entities, EPA nonetheless has
tried to reduce the impact of this rule on small entities. The final
rule will include subcategory-specific production thresholds that will
allow smaller production facilities to retain their existing
limitations or to remain without national effluent limitations. In
addition, EPA is not promulgating pretreatment standards. In total, EPA
is excluding more than 6,400 of the estimated 6,600 MPP facilities.
After considering the economic impacts of today's final rule on
small entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities.

D. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and Tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective, or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective, or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including Tribal governments, it must have developed under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially 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.
EPA has determined that this rule does not contain a Federal
mandate that may result in expenditures of $100 million or more for
State, local, and Tribal governments, in the aggregate, or the private
sector in any one year. The total annual cost of this rule is estimated
to be no more than $60 million. Thus, today's rule is not subject to
the requirements of sections 202 and 205 of the UMRA. The facilities
which are affected by today's rule are direct dischargers engaged in
the slaughtering

[[Page 54540]]

or processing of meat and poultry and the rendering of by-products
resulting from these activities. These facilities are subject to
today's requirements through the issuance or renewal of an NPDES permit
either from the Federal EPA or authorized State governments. These
facilities should already have NPDES permits as the Clean Water Act
requires a permit be held by any point source discharger before that
facility may discharge wastewater pollutants into surface waters.
Therefore, today's rule requires these permits to be revised to comply
with revised Federal standards, but should not require a new permit
program be implemented. In addition, EPA did not propose and is not
promulgating pretreatment standards for indirect dischargers in this
point source category, therefore, there would be no impact on States or
local governments to oversee a pretreatment program. Thus, today's rule
is not subject to the requirements of sections 202 and 205 of the UMRA.
EPA has determined that this rule contains no regulatory
requirements that might significantly or uniquely affect small
governments. First, no governments are directly regulated by this
rulemaking. Second, as discussed above, these regulated facilities
should already have NPDES permits as the Clean Water Act requires a
permit be held by any point source discharger before that facility may
discharge wastewater pollutants into surface waters. Therefore, today's
rule requires these permits to be revised to comply with revised
Federal standards, but should not require a new permit program be
implemented.

E. Executive Order 13132: Federalism

Executive Order 13132, entitled ``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.''
This final 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. EPA estimates that, when
promulgated, these revised effluent guidelines and standards will be
incorporated into NPDES permits with minimal costs to authorized
States. Further, the revised regulations would not alter the basic
State-Federal scheme established in the Clean Water Act under which EPA
authorizes States to carry out the NPDES permitting program. The final
rule maintains the existing relationship between the national
government and the States in the administration of the NPDES program;
and it preserves the existing distribution of power and
responsibilities among various levels of government. Thus, Executive
Order 13132 does not apply to this rule.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

Executive Order 13175, entitled ``Consultation and Coordination
With Indian Tribal Governments'' (59 FR 22951, November 6, 2000),
requires EPA to develop an accountable process to ensure ``meaningful
and timely input by tribal officials in the development of regulatory
policies that have tribal implications.'' ``Policies that have tribal
implications'' are defined in the Executive Order to include
regulations that have ``substantial direct effects on one or more
Indian tribes, on the relationship between the Federal government and
the Indian tribes, or on the distribution of power and responsibilities
between Federal government and Indian tribes.''
This final rule does not have tribal implications. It will not have
substantial direct effects on tribal governments, on the relationship
between the Federal government and Indian tribes, or the distribution
of power and responsibilities between the Federal government and Indian
tribes as specified in Executive Order 13175. The MPP effluent
limitations guidelines and standards will be implemented through
permits issued under the NPDES program. No tribal governments are
currently authorized pursuant to section 402(b) of the CWA to implement
the NPDES program. In addition, EPA's analyses show that no facility
subject to this rule is owned by tribal governments and thus this rule
does not affect Tribes in any way in the foreseeable future. Thus,
Executive Order 13175 does not apply to this rule.

G. Executive Order 13045: Protection of Children From Environmental
Health and Safety Risks

Executive Order 13045: ``Protection of Children from Environmental
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies
to any rule that (1) is determined to be ``economically significant''
as defined under Executive Order 12866, and (2) concerns an
environmental health or safety risk that EPA has reason to believe may
have a disproportionate effect on children. If the regulatory action
meets both criteria, the Agency must evaluate the environmental health
or safety effects of the planned rule on children, and explain why the
planned regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by the Agency.
Today's rule is not subject to Executive Order 13045 because it is
not economically significant under Executive Order 12866. Further, this
regulation does not concern an environmental health or safety risk that
EPA has reason to believe may have a disproportionate effect on children.

H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use

This rule is not a ``significant energy action'' as defined in
Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355
(May 22, 2001)) because it is not likely to have a significant adverse
effect on the supply, distribution, or use of energy. As discussed in
Section XI, EPA estimates that compliance with this rule will create a
small increase in nationwide energy consumption for MPP facilities. For
non-small direct discharging facilities nationwide, EPA estimates an
approximate increase of 17.7 million kilowatt-hours per year for
wastewater treatment. By comparison, electric power generation
facilities generated 3,123 billion kilowatt hours of electric power in
the United States in 1997 (Energy Information Administration, Electric
Power Annual 1998 Volume 1, Table A1). Additional energy requirements
for EPA's selected options are acceptable (i.e., significantly less
than 0.001 percent of national requirements), and not significant under
the terms of Executive Order 13211.

I. National Technology Transfer and Advancement Act

Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (NTTAA), Public Law No. 104-113, section 12(d), (15 U.S.C.
272 note), directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical

[[Page 54541]]

standards (e.g., materials specifications, test methods, sampling
procedures, and business practices) that are developed or adopted by
voluntary consensus standards bodies. The NTTAA directs EPA to provide
Congress, through the OMB, explanations when the Agency decides not to
use available and applicable voluntary consensus standards.
This rulemaking involves technical standards. Today's rule requires
certain facilities that produce meat or poultry products to monitor for
fecal coliform, BOD₅, TSS, oil & grease (as HEM), ammonia
and total nitrogen (sum of nitrate/nitrite and total Kjeldahl nitrogen
(TKN)). As discussed in the proposed rule, EPA performed a search to
identify potentially voluntary consensus standards that could be used
to measure the parameters in today's guideline. EPA's search revealed
that consensus standards for these parameters exist and are already
specified in the tables at 40 CFR 136.3. In addition, EPA proposed to
add another method (Method 300.0) for measuring nitrate/nitrite and
solicited public comment. EPA did not receive any comments on this
aspect of the proposed rulemaking and is therefore adding Method 300.0
to measure nitrate/nitrite for the final rule.

J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

Executive Order 12898 requires that, to the greatest extent
practicable and permitted by law, each Federal agency must make
achieving environmental justice part of its mission. Executive Order
12898 states that each Federal agency must conduct its programs,
policies, and activities that substantially affect human health or the
environment in a manner that ensures such programs, policies, and
activities do not have the effect of excluding persons (including
populations) from participation in, denying persons (including
populations) the benefits of, or subjecting persons (including
populations) to discrimination under such programs, policies, and
activities because of their race, color, or national origin.
Today's final rule would require non-small MPP facilities to meet
specified technology-based limitations and standards to control the
discharge of conventional pollutants, ammonia, and nitrogen. EPA has
determined that this rulemaking will not have a disproportionate effect
on minority or low income communities because the technology-based
effluent limitations guidelines are uniformly applied nationally
irrespective of geographic location. The final regulation will reduce
the negative effects of meat and poultry products industry waste in our
nation's waters to benefit all of society, including minority and low-
income communities. The cost impacts of the rule should likewise not
disproportionately affect low-income communities given the relatively
low economic impacts of the rule.

K. Congressional Review Act

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996,
generally provides that before a rule may take effect, the agency
promulgating the rule must submit a rule report, which includes a copy
of the rule, to each House of the Congress and to the Comptroller
General of the United States. EPA will submit a report containing this
rule and other required information to the U.S. Senate, the U.S. House
of Representatives, and the Comptroller General of the United States
prior to publication of the rule in the Federal Register. A major rule
may not take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2). This rule will be effective 30 days from the date of publication.

List of Subjects in 40 CFR Part 432

Environmental protection, incorporation by reference, meat and meat
products, poultry and poultry products, waste treatment and disposal,
water pollution control.

Dated: February 26, 2004.
Michael O. Leavitt,
Administrator.

? For the reasons set forth in this preamble, 40 CFR part 432 is revised
as follows:

PART 432--MEAT AND POULTRY PRODUCTS POINT SOURCE CATEGORY

Sec
432.1 General applicability.
432.2 General definitions.
432.3 General limitation or standard for pH.
432.5 Incorporation by reference.

Subpart A--Simple Slaughterhouses

432.10 Applicability.
432.11 Special definitions.
432.12 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.13 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.14 Pretreatment standards for existing sources (PSES).
432.15 New source performance standards (NSPS).
432.16 Pretreatment standards for new sources (PSNS).
432.17 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart B--Complex Slaughterhouses

432.20 Applicability.
432.21 Special definitions.
432.22 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.23 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.24 Pretreatment standards for existing sources (PSES).
432.25 New source performance standards (NSPS).
432.26 Pretreatment standards for new sources (PSNS).
432.27 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart C--Low-Processing Packinghouses

432.30 Applicability.
432.31 Special definitions.
432.32 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.33 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.34 Pretreatment standards for existing sources (PSES).
432.35 New source performance standards (NSPS).
432.36 Pretreatment standards for new sources (PSNS).
432.37 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart D--High-Processing Packinghouses

432.40 Applicability.
432.41 Special definitions.
432.42 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.43 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.44 Pretreatment standards for existing sources (PSES).
432.45 New source performance standards (NSPS).
432.46 Pretreatment standards for new sources (PSNS).
432.47 Effluent limitations attainable by the application of the
best control

[[Page 54542]]

technology for conventional pollutants (BCT).

Subpart E--Small Processors

432.50 Applicability.
432.51 Special definitions.
432.52 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.54 Pretreatment standards for existing sources (PSES).
432.55 New source performance standards (NSPS).
432.56 Pretreatment standards for new sources (PSNS).
432.57 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart F--Meat Cutters

432.60 Applicability.
432.61 Special definitions.
432.62 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.63 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.64 Pretreatment standards for existing sources (PSES).
432.65 New source performance standards (NSPS).
432.66 Pretreatment standards for new sources (PSNS).
432.67 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart G--Sausage and Luncheon Meats Processors

432.70 Applicability.
432.71 Special definitions.
432.72 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.73 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.74 Pretreatment standards for existing sources (PSES).
432.75 New source performance standards (NSPS).
432.76 Pretreatment standards for new sources (PSNS).
432.77 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart H--Ham Processors

432.80 Applicability.
432.81 Special definitions.
432.82 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.83 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.84 Pretreatment standards for existing sources (PSES).
432.85 New source performance standards (NSPS).
432.86 Pretreatment standards for new sources (PSNS).
432.87 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart I--Canned Meats Processors

432.90 Applicability.
432.91 Special definitions.
432.92 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.93 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.94 Pretreatment standards for existing sources (PSES).
432.95 New source performance standards (NSPS).
432.96 Pretreatment standards for new sources (PSNS).
432.97 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart J--Renderers

432.100 Applicability.
432.101 Special definitions.
432.102 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.103 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.104 Pretreatment standards for existing sources (PSES).
432.105 New source performance standards (NSPS).
432.106 Pretreatment standards for new sources (PSNS).
432.107 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart K--Poultry First Processing

432.110 Applicability.
432.111 Special definitions.
432.112 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.113 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.114 Pretreatment standards for existing sources (PSES).
432.115 New source performance standards (NSPS).
432.116 Pretreatment standards for new sources (PSNS).
432.117 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Subpart L--Poultry Further Processing

432.120 Applicability.
432.121 Special definitions. [Reserved]
432.122 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).
432.123 Effluent limitations attainable by the application of the
best available technology economically achievable (BAT).
432.124 Pretreatment standards for existing sources (PSES).
432.125 New source performance standards (NSPS).
432.126 Pretreatment standards for new sources (PSNS).
432.127 Effluent limitations attainable by the application of the
best control technology for conventional pollutants (BCT).

Authority: 33 U.S.C. 1311, 1314, 1316, 1317, 1318, 1342 and 1361.

Sec. 432.1 General Applicability.

As defined more specifically in subparts A through L of this part,
this part applies to discharges of process wastewater to waters of the
U.S. from facilities engaged in the slaughtering, dressing and packing
of meat and poultry products for human consumption and/or animal food
and feeds. Meat and poultry products for human consumption include meat
and poultry from cattle, hogs, sheep, chickens, turkeys, ducks and
other fowl as well as sausages, luncheon meats and cured, smoked or
canned or other prepared meat and poultry products from purchased
carcasses and other materials. Meat and poultry products for animal
food and feeds include animal oils, meat meal and facilities that
render grease and tallow from animal fat, bones and meat scraps.
Manufacturing activities which may be subject to this part are
generally reported under the following industrial classification codes:

------------------------------------------------------------------------
North American industrial
Standard industrial classification \1\ classification system \2\
------------------------------------------------------------------------
SIC 0751.................................. NAICS 311611.
SIC 2011.................................. NAICS 311612.
SIC 2013.................................. NAICS 311615.
SIC 2015.................................. NAICS 311613.
SIC 2047.................................. NAICS 311111.
SIC 2048.................................. NAICS 311119.
SIC 2077.................................. NAICS 311999.
------------------------------------------------------------------------
\1\ Source: 1987 SIC Manual
\2\ Source: 1997 NAICS Manual

Sec. 432.2 General definitions.

As used in this part:
(a) The general definitions and abbreviations in 40 CFR part 401
shall apply.
(b) ELWK (equivalent live weight killed) means the total weight of
animals

[[Page 54543]]

slaughtered at locations other than the slaughterhouse or packinghouse
that processes the animals hides, blood, viscera or other renderable
materials.
(c) Fecal coliform means the bacterial count, as determined by
approved methods of analysis for Parameter 1 in Table 1A in 40 CFR 136.3.
(d) Finished product means the final fresh or frozen products
resulting from the further processing as defined below of either whole
or cut-up meat or poultry carcasses.
(e) Further processing means operations that utilize whole
carcasses or cut-up meat or poultry products for the production of
fresh or frozen products, and may include the following types of
processing: Cutting and deboning, cooking, seasoning, smoking, canning,
grinding, chopping, dicing, forming, breading, breaking, trimming,
skinning, tenderizing, marinating, curing, pickling, extruding and/or
linking.
(f) LWK (live weight killed) means the total weight of animals
slaughtered.
(g) Meat means products derived from the slaughter and processing
of cattle, calves, hogs, sheep and any meat that is not listed under
the definition of poultry below.
(h) Packinghouse means a plant that both slaughters animals and
subsequently processes carcasses into cured, smoked, canned or other
prepared meat products.
(i) Poultry means products derived from the slaughter and
processing of broilers, other young chickens, mature chickens, hens,
turkeys, capons, geese, ducks, small game fowl such as quail or
pheasants, and small game such as rabbits.
(j) Raw material means the basic input materials to a renderer
composed of animal and poultry trimmings, bones, blood, meat scraps,
dead animals, feathers and related usable by-products.
(k) Slaughterhouse means a facility that slaughters animals and has
as its main product fresh meat as whole, half or quarter carcasses or
small meat cuts.
(l) The approved methods of analysis for the following six
parameters are found in Table 1B in 40 CFR 136.3. The nitrate/nitrite
part of total nitrogen may also be measured by EPA Method 300.0
(incorporated by reference, see Sec. 432.5).
(1) Ammonia (as N) means ammonia measured as nitrogen.
(2) BOD₅ means 5-day biochemical oxygen demand.
(3) O&G means total recoverable oil and grease.
(4) O&G (as HEM) means total recoverable oil and grease measured as
n-hexane extractable material.
(5) Total Nitrogen means the total of nitrate/nitrite and total
Kjeldahl nitrogen.
(6) TSS means total suspended solids.

Sec. 432.3 General limitation or standard for pH.

Any discharge subject to BPT, BCT, or NSPS limitations or standards
in this part must remain within the pH range of 6 to 9.

Sec. 432.5 Incorporation by reference.

(a) The material listed in this section is incorporated by
reference in the corresponding sections in this part, as noted. The
Director of the Federal Register approves the incorporation by
reference of this material in accordance with 5 U.S.C. 552(a) and 1 CFR
part 51. This material is incorporated as it exists on the date of the
approval, and notice of any change in this material will be published
in the Federal Register. The material is available for purchase at the
address in paragraph (b) of this section and is available for
inspection at the Office of the Federal Register, 800 North Capitol
Street, NW., Suite 700, Washington, DC, or at the EPA Docket Center,
1301 Constitution Ave., NW., EPA West Room B-102, Washington, DC.
(b) The following material is available for purchase from the
National Technical Information Service, U.S. Department of Commerce,
5285 Port Royal Road, Springfield, Virginia 22161. The toll-free
telephone number is (800) 553-6847.
(1) ``Method 300.0 Determination of Inorganic Anions by Ion
Chromatography'' (Revision 2.1) found in ``Methods for the
Determination of Inorganic Substances in Environmental Samples,'' EPA
600-R-93/100 (order number PB94-120821), August 1993, IBR approved for
Sec. 432.2(l).
(2) [Reserved]

Subpart A--Simple Slaughterhouses

Sec. 432.10 Applicability.

This part applies to discharges of process wastewater resulting
from the production of meat carcasses, in whole or in part, by simple
slaughterhouses. Process wastewater includes water from animal holding
areas at these facilities.

Sec. 432.11 Special definitions.

For the purpose of this subpart: Simple slaughterhouse means a
slaughterhouse that provides only minimal, if any, processing of the
by-products of meat slaughtering. A simple slaughterhouse would include
usually no more than two by-product processing operations such as
rendering, paunch and viscera handling, or processing of blood, hide or
hair.

Sec. 432.12 Effluent limitations attainable by the application of the
best practicable control technology currently available (BPT).

Except as provided in 40 CFR 125.30 through 125.32, any existing
point source subject to this subpart must achieve the following
effluent limitations representing the application of BPT:
(a) Facilities that slaughter no more than 50 million pounds per
year (in units of LWK) must achieve the following limitations:
(1) In the case of process wastewater associated with the
slaughtering of animals on-site or the processing of the carcasses of
animals slaughtered on-site:

Effluent Limitations
[BPT]
------------------------------------------------------------------------
Maximum
Regulated parameter Maximum monthly
daily \1\ avg. \1\
------------------------------------------------------------------------
BOD 5......................................... 0.24 0.12
Fecal Coliform................................ (\2\) (\3\)
O&G \4\....................................... 0.12 0.06
TSS........................................... 0.40 0.20
------------------------------------------------------------------------
\1\ Pounds per 1000 lbs (or g/kg) LWK.
\2\ Maximum of 400 most probable number (MPN) or colony forming units
(CFU) per 100 mL at any time.
\3\ No maximum monthly average limitation.
\4\ May be measured as hexane extractable material (HEM).

(2) In addition to the limitations specified in paragraph (a)(1) of
this section, in the case of process wastewater associated with the
processing (defleshing, washing and curing) of hides derived from
animals slaughtered at locations off-site, the following limitations apply:

(3) In addition to the limitations specified in paragraph (a)(1) of
this section, in the case of process wastewater associated with the
processing of blood derived from animals slaughtered at locations off-
site, the following limitations apply:

[[Page 54544]]

(4) In addition to the limitations specified in paragraph (a)(1) of
this section, in the case of process wastewater associated with wet or
low-temperature rendering of material derived from animals slaughtered
at locations off-site and dead animals, the following limitations apply:

(5) In addition to the limitations specified in paragraph (a)(1) of
this sec