In the wake of a recent federal case, large power plants are off the hook for now as far as complying with the U.S. Environmental Protection Agency’s (EPA’s) 2004 rule intended to protect fish and other aquatic organisms by controlling cooling water intake practices. However, now many plant personnel at these same facilities feel caught in a net of confusion about what their current compliance obligations are.

Legal background

Established four years ago by the EPA under section 316(b) of the Clean Water Act (CWA), the Cooling Water Intake Structures Phase II regulations set national standards for cooling water withdrawals from water bodies by large, existing power plants. The agency based the Phase II regulations on performance standards aimed at minimizing the number of aquatic organisms adversely affected by intake structures (Figures 1 and 2). The rules provided five compliance alternatives and two economic tests that allowed site-specific alternative limits in cases where the actual costs of compliance would be “significantly greater” than the cost that the EPA considered in developing the standards. Consequently, many in the power industry thought the Phase II rule gave facilities and regulators an opportunity to ensure that the requirements under the regulations were economically reasonable and dealt with unique site-specific factors.

1. Down by the river. The Nearman Creek Power Station’s cooling water intake structure is located on the shoreline of the Missouri River. Courtesy: Kansas City, Kansas, Board of Public Utilities

2. Powering up Kansas. A close-up of the Quindaro Power Station’s cooling water intake structure on the Missouri River. Courtesy: Kansas City, Kansas, Board of Public Utilities

After being enacted, these Phase II regulations were quickly challenged in federal court by Riverkeeper Inc., an advocacy group dedicated to protecting the ecological integrity of the Hudson River and other water bodies. The environmental activist group sought through its litigation to protect aquatic organisms from being harmed by power plant operations.

According to statements published by Riverkeeper, a large power plant can withdraw several billion gallons of cooling water per day, killing the overwhelming majority of organisms in the withdrawn water through “entrainment” (dragging them into the facility) or “impingement” (striking them against the facility’s intake screens). The group asserted that, for example, on the Hudson River a cluster of power plants were found to have reduced specific fish species by nearly 80% in certain years. Riverkeeper also argued that in the U.S., the toll on fish by power plants rivals, and in some cases even exceeds, that of the fishing industry.

On January 25, 2007, the U.S. Court of Appeals for the Second Circuit issued its decision in the case Riverkeeper, Inc. v. U.S. Environmental Protection Agency, 475 F.3d 83 (2d Cir. 2007). This lawsuit dealt with the status of the Phase II regulations. The appellate court remanded back to the trial court several provisions of the rule.

Because so many provisions of the Phase II rule were affected by the court’s decision, the EPA decided to suspend the rule and issued its notice of the suspension in the Federal Register on July 9, 2007 (vol. 72, no. 130).

Industry’s reaction

Many power plant personnel and other professionals in the power generation industry are dissatisfied with the Second Circuit’s ruling in the Riverkeeper case. For example, Edison Electric Institute (EEI), the association of U.S. shareholder-owned electric companies, has criticized the appellate court’s decision. Last year C. Richard Bozek, EEI’s director of environmental policy, wrote about the impact of the case on the industry in an article published in the association’s publication, Electric Perspectives.

“States and permittees are now in the untenable position of complying with the spirit of a remanded rule while knowing that a new rule will likely be issued in the future. It is vital that electric companies work with their states to inform permit decision making during this interim period,” stated Bozek. “Whatever the outcome, it will not quell the debate. Much more effort, time, and expense will be necessary to obtain a rational, environmentally protective, and economically viable national 316(b) policy.”

Compliance in a post-Riverkeeper world

In September, POWER interviewed Dr. Gregory Howick, senior aquatic ecologist in the Environmental Studies and Permitting Division of Burns & McDonnell Engineering Co., to find out what laws currently govern Phase II facilities now that the Phase II regulations have been suspended by the EPA in response to the Riverkeeper court decision. Earlier this year, Howick and three of his colleagues at Burns & McDonnell—Terry Larson, PE; Jason Eichenberger; and Willie Goh, PE—gave a presentation at the 2008 Electric Utilities Environmental Conference (EUEC) entitled “Section 316(b) Compliance: Where Do We Go from Here?”

Determining BPJ

“After the section 316(b), Phase II rule was suspended, EPA issued in December 2007 guidance to state discharge permit writers on how to develop section 316(b) permit conditions using Best Professional Judgment (BPJ),” said Howick. “Section 316(b) of the Clean Water Act still applies; it is just that now it will be up to the individual states and permit writers to decide if a Phase II facility is currently in compliance or will have to take additional actions. My understanding is that before the Phase II rule was finalized in July 2004, BPJ was how cooling water intakes were evaluated vis-à-vis section 316(b).”

According to Howick, the Phase II rule provides fairly well-defined guidelines that were independent of the actual impact a facility has on the aquatic biota in the source water body. In contrast, under BPJ, a permit writer can take into consideration the ecological impacts. Howick explained that, for example, if the permit writer is of the opinion that the fish and shellfish communities of the source water body are “OK,” he or she might conclude that the current configuration and operation of the facility’s intake structure is “best technology available” (BTA) for that particular situation. Other issues include the following.

New role for state environmental agencies. In the aftermath of the suspension of the Phase II rule, personnel at many Phase II power plants now are seeking guidance about how to keep their cooling water intake operations in compliance. Howick advises plant personnel to turn to their state environmental regulatory agencies.

“Until new Phase II rules are finalized, I do not think power plants should do anything more regarding section 316(b) compliance than what their state regulators may require for renewal of their discharge permits,” said Howick.

Status of cost-cost and cost-benefit tests. Under the Phase II rules that the EPA suspended in 2007, Phase II facilities could use “cost-cost” and “cost-benefit” tests to determine if they should install certain types of equipment (such as screens and other equipment on water intake systems). Now many plant personnel are unsure how to handle this issue. According to Howick, until the U.S. Supreme Court rules on the industry’s challenge to the Second Circuit’s decision, cost-cost and cost-benefit should be not be considered as compliance options.

Restoration through fish restocking. Formerly, when the Phase II rule was in effect, Phase II power plants could comply with 316(b) by restocking fish to replace fish killed or injured by their plants’ water intake systems. Howick strongly advises discontinuing such practices now.

“The Second Circuit’s ruling was clear that restocking or other mitigation measures were not allowable substitutes for BTA. This portion of the ruling is not included in the challenge that the U.S. Supreme Court will hear this fall,” said Howick. “I cannot see how restocking or mitigation could be included as compliance measures in the new Phase II rule. I do not believe that power plants should initiate new restocking or ecological restoration programs under the assumption that such a program would result in compliance with section 316(b).”

Requirement to use EPA-approved technology. Since the suspension of the Phase II rule, some personnel at Phase II power plants are uncertain if they still need to use EPA-approved technology in connection with their cooling water intake structures for section 316(b) compliance purposes.

When asked about this issue, Howick responded that he does not believe that Phase II power plants have to do anything regarding section 316(b) compliance except respond to requests from their state regulators.

EPA’s projected costs of 316(b) compliance

Prior to the enactment of the Phase II rule in 2004, the EPA attempted to gather data about the costs of complying with the requirements of the standards. After performing its research, the EPA estimated in 2002 that section 316(b) compliance would cost electric power generators approximately $585 million and would affect more than 560 power plants across the nation.

“EPA’s estimate that about 555 power plants could be impacted by the new section 316(b), Phase II rule is probably pretty close. The compliance cost they came up with in 2002, however, was inaccurate to start with and is now completely out-of-date,” stated Howick

In reviewing the accuracy of the EPA’s cost projections, Howick presented the following analysis, focused on four key points:

  • First, construction costs have increased at a rate approximately double that of the overall inflation rate since 2002.
  • Second, the power plant database that the EPA compiled, and on which it made estimates of compliance options for each facility from which costs were estimated, contained many errors, particularly in misclassifying facilities as needing impingement mortality and entrainment reduction, or only impingement mortality reduction. (Indeed, it was the failure of the EPA to put its cost estimate data in the draft Phase II regulations that technically got the cost-cost test for site-specific determination of best technology available thrown out by the Second Circuit. If the EPA had put the data out for review, many of the errors would likely have been caught.)
  • Third, at the time the Phase II rule was being developed, the EPA was under pressure to show that the benefits from the regulations (aquatic life saved) would be greater than the cost of compliance. As a result, Howick thinks the EPA generally underestimated costs.
  • Fourth, if the U.S. Supreme Court denies the industry’s appeal, then compliance options that only reduce impingement mortality might no longer be useful and all Phase II facilities might have to comply with more costly entrainment and impingement mortality reduction requirements.

For their presentation at the 2008 EUEC event, Howick and his colleague, Terry Larson, put together estimates about the cost to the industry of converting all existing once-through facilities to cooling towers. According to their research, the costs to the power generation industry of retrofitting those facilities to include cooling towers would involve the following expenses:

  • Capital costs, such as the acquisition of towers, connections, and land.
  • Increased operations and maintenance, such as water treatment and tower maintenance costs.
  • Lost net generating demand capacity, such as condensers being rendered less efficient, and increased parasitic electrical losses.

Table 1. Industry’s cost for retrofitting cooling towers. Dollars shown in billions. Source: Burns & McDonnell

In contrast to the EPA’s projection of $585 million to retrofit 560 plants with cooling towers, Howick and Larsen estimated that the cost for 543 Phase II plants to be retrofitted with cooling towers would be approximately $180 billion (see Table 1).

Looking downstream

Currently, many professionals in the power generation industry are unhappy about being placed in limbo, waiting for the U.S. Supreme Court to make a decision concerning the Phase II regulations. Likewise, there is much speculation about the possible content of the new Phase II rule that will finally emerge from this long legal ordeal.

“Based on the Second Circuit’s ruling, I suspect the new Phase II rule will contain standards similar to those in the Phase I rule,” said Howick.

According to him, all facilities might have to implement through-screen velocities of no more than 0.5 feet per second (to minimize impingement) and convert to closed-cycle cooling to minimize intake rate and entrainment. Or they may have to implement other technologies to achieve substantially the same levels of impingement mortality and entrainment. Howick further speculated that the EPA might conclude that for some environments, such as freshwater lakes and large rivers, reducing entrainment rates to those commensurate with closed-cycle cooling would be an undue burden on the industry as a whole. Instead, according to Howick, the EPA might decide that locating cooling water intakes on such source water bodies is the BTA for entrainment.

“If the U.S. Supreme Court upholds the industry’s challenge to the Second Circuit’s ruling, then site-specific considerations of costs vs. benefits would drive determination of BTA,” Howick further commented.

Given the range of possible new regulations, he firmly recommends that power plants take a wait-and-see approach to section 316(b) compliance issues and instead comply with requests from their state regulators until the U.S. Supreme Court takes action.

“My crystal ball says that the U.S Supreme Court will issue a ruling on the challenge to the Second Circuit’s decision in spring 2009,” said Howick. “EPA will draft new rules that will hit the streets for comment in early 2010. Final rules will be issued in early 2011.”

We can only hope that when the U.S. Supreme Court’s new term commences in October, it doesn’t have “bigger fish to fry” and instead gives priority to resolving this important issue. The U.S. power generation industry needs a sensible section 316(b) policy that balances economic needs with protecting our natural resources.

—By Angela Neville, JD