B. Summary of the Economic Analysis Methodology and Data EPA determined the annualized costs of compliance in exactly the same way as was done for proposal, with the exception of the choice of discount rate ( discussed in V. C). Costs are annualized at seven percent over 16 years ( a 1 year installation period a 15 year project life is assumed). The cost annualization also accounts for tax shields on both O& M and depreciation ( calculated using the modified accelerated cost recovery system allowed by IRS rules) to develop a posttax estimate of annual costs ( see Section 4 of the Economic Analysis for a detailed discussion). For analytical consistency, MACT standards costs are also annualized in the same way, both pretax and posttax. This is slightly different from the way EPA annualized the MACT standards costs in the preamble to the MACT standards rule, where costs are annualized at seven percent over ten years ( with no delay for installation) to create a pretax annual cost ( i. e., without accounting for tax shields). Additionally, the MACT standards costs presented in the preamble to the MACT standards rule include costs for new sources, which are not included in this preamble. Despite the differences in annualization http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 51 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule method, the current cost annualization approach in no way conflicts with the alternative analysis. To assess impacts on firms and facilities, EPA has set up three baselines in the analysis. Baseline 1 is the usual baseline analyzed in all effluent guidelines. It is a scenario that reflects a baseline condition without additional regulation, that is, no additional effluent limitations guidelines and standards or MACT standards costs are considered. This baseline is taken from the current ( i. e., 1990 Survey) financial data. Baseline 2 incorporates certain MACT standards costs pertaining only to wastewater emission controls, and does not include costs for controlling emissions from process vents, equipment leaks and storage tanks. This baseline is presented in the EA, but results of this baseline ( which are not appreciably different from those for Baseline 1) are not discussed at length in this preamble. Baseline 3 incorporates costs for all components associated with the MACT standards rule. EPA estimated the capital and operating costs for MACT standards cost components for emission controls on wastewater streams ( on which Baseline 2 is based), as well as the capital and operating costs for all MACT components ( on which Baseline 3 is based) as a part of the Agency's MACT standards rulemaking process. To model Baseline 2, EPA used the capital and operating costs associated with the wastewater emission controls for all facilities in the MACT analysis for which costs were developed and matched them to the facilities that are also in the effluent guidelines analysis. However, a number of facilities in the effluent guidelines analysis are not covered by the MACT standards and were not assigned MACT costs. EPA annualized the costs at seven percent over 16 years in the cost annualization model and also developed a present value of posttax compliance costs over this same time frame. EPA subtracted the present value posttax compliance costs from the Baseline 1 present value posttax facility earnings ( derived from the Survey data) to determine Baseline 2 posttax earnings for each facility in the effluent guidelines analysis. EPA used this same approach to derive Baseline 3 posttax earnings ( for those facilities without MACT standards costs, earnings are the same in all three baselines). A facility whose posttax earnings are zero or negative in Baseline 1 is counted as a Baseline 1 closure; a facility whose posttax earnings http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 52 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule are zero or negative in Baseline 2 is counted as a Baseline 2 closure; and a facility whose posttax earnings are zero or negative in Baseline 3 is counted as a Baseline 3 closure. EPA then incorporated the present value posttax costs of the effluent guidelines into each of the baselines in the same way as MACT standards costs were incorporated to calculate postcompliance, posttax earnings. EPA then tallied the closure results ( in terms of whether postcompliance, posttax earnings are zero or negative) by counting postcompliance closures incrementally from each baseline. In other words, EPA considered any closures that occurred additional to those occurring in each of the baselines as postcompliance closures under the three baseline scenarios. Any facilities that certified that the effluent guidelines would have no impact on them were assumed not to close under any baseline or in postcompliance. Note that as in the proposal Economic Impact Analysis ( EIA), impacts on single facility firms were assessed at the firm level. MACT standards costs were also incorporated into firm level data under the same three baseline scenarios. In the firm level analysis, however, the key data that could change were assets, liabilities, and earnings before interest and taxes, which were used in an equation called Altman's Z, a multi discriminant ratio analysis approach to identifying relative firm health. This equation is composed of several common financial ratios that are weighted according to their relative ability to predict bankruptcy based on empirical industry data. The result of this equation is called the Altman's Z score. Scores below a certain value are considered indicative of poor financial health and a high likelihood of bankruptcy. For Baseline 1, EPA used the current survey data in the Altman's Z model to determine a Baseline 1 Altman's Z score. For Baseline 2, EPA took the MACT standards capital costs aggregated at the firm level ( since firms often own more than one facility) and adjusted both assets and liabilities to reflect the acquisition of capital equipment through an increase in debt. EPA then adjusted earnings before interest and taxes by subtracting the annualized amount of operating costs plus depreciation computed by the cost annualization model, given the Baseline 2 MACT standards capital and operating costs ( also aggregated at the firm level) and then computed a Baseline 2 Altman's Z score.

http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 53 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule EPA used the same approach using the Baseline 3 MACT standards operating and capital costs to create the Baseline 3 Altman's Z score. If any of [[ Page 50404]]

these three baseline scores were below the cutoff point considered a sign of poor financial health, EPA considered the firm a baseline failure. Compliance costs for the effluent guidelines were then used in the same manner to further adjust the financial data used in the Altman's Z model in each of the baselines. Where the Altman's Z score changed from one reflecting a healthy firm or one in indeterminate status in any of the baselines to one of poor financial health, EPA considered the firm to be a postcompliance firm failure relative to the baseline under consideration. EPA's methodology for computing output and employment effects is discussed in detail in Section V. C. These effects are presented as net effects in Section V. D. 4. To compute net effects, EPA calculated both losses and gains in output and employment and subtracted losses from gains ( or vice versa). Thus EPA calculated net national level output effects, net national level employment effects, and net direct employment effects ( employment losses in the pharmaceutical industry driven by output losses in the industry). EPA also estimated the employment losses estimated to occur as a result of closures and failures. These types of losses were used to determine whether any community level impacts are likely. Trade impacts were assessed in the same way as in the EIA for the proposal, except that a profit margin analysis has been added, as described below in Section V. C. Impacts on inflation were assessed by comparing the cost of the regulation to gross domestic product ( GDP). The potential for distributional impacts was assessed by identifying facilities where compliance costs were greater than 10 percent of operating costs and determining what types of products might be most affected if costs are passed through to consumers. The users of these products were then qualitatively identified to determine if these potential users might be disproportionately represented by economically disadvantaged groups. Impacts on environmental justice were also http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 54 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule qualitatively addressed.

C. Changes to the Economic Analysis Since Proposal The most significant change in the EA since proposal is associated with the change in costs. The costs of the effluent limitations guidelines and standards for the pharmaceutical industry point source category are now substantially lower than those estimated at proposal because the costs of controlling air emissions are now a part of EPA's MACT standards. Impacts from the final rule do not change measurably from proposal, however, mostly because impacts both now and at proposal were estimated to be very small. Costs for control of air pollutants, previously assigned to the effluent guidelines at proposal, are now assigned to the MACT standards requirements. The economic analyses show the impacts of the effluent guidelines against three separate regulatory baselines: no MACT standards requirements in place, wastewater emissions control and treatment system requirements in place, and all MACT standards requirements in place ( see Section II. E. of this preamble for a description of MACT standards requirements). In this way, EPA can present impacts from the effluent guidelines alone and in combination with impacts from the MACT standards requirements. The methods EPA used to assess the impact of MACT standards on the baselines against which the effluent guidelines are measured were discussed in Section V. B. EPA is now using a seven percent discount rate in all of its analyses. Previously, the Agency used the seven percent rate only in determining the pretax cost of the regulation. EPA has chosen to use a seven percent social discount rate ( in real terms) in this analysis, rather than the 11.4 percent discount rate used in the proposal, for two reasons. First, the seven percent discount rate is strongly recommended by the Office of Management and Budget for use in economic analyses ( see the EA for more details). Second, the cost of capital has generally declined since 1990. This change in discount rate, however, has little effect on the analysis. A comparison of estimated impacts in the proposal to impacts as estimated here show that the analyses are not sensitive to assumptions about discount rates in the ranges used. In terms of content, the economic analyses are now presented as a more comprehensive report, in which the EIA and Regulatory Impact http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 55 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule Analysis ( RIA) have been combined into one report ( the EA). The costbenefit portion of the RIA is now contained in Section 10 of the EA report. EPA has also made a few methodological changes in its firm and facility analyses. In the EIA for the proposal, EPA included salvage value in the calculations for the facility closure analysis for projection of baseline closures ( i. e., before compliance costs are considered) and postcompliance closures. EPA recognized some potential difficulties with the salvage value calculations and, in the proposal EIA, investigated the effects of assuming salvage value does not play a role in determining facility viability. EPA found that the facility closure projections were not sensitive to the alternate salvage value assumption. Furthermore, industry also commented that using salvage value overstated baseline closures. Thus EPA believes that its current analysis, which does not consider salvage value but rather uses negative posttax earnings as the indicator of closure, is the best methodology to use, given the uncertainty of salvage value data. An additional difference in the closure analysis addresses the issue of non self supporting facilities ( baseline facility closures). In the current analysis, EPA investigates all baseline closures at the firm level to determine if a multi facility firm could install and operate pollution control equipment at all of its affected facilities, including those estimated as baseline closures. If the firms can continue to support a baseline closure facility without risk of failure, EPA determines that impacts to the firm and its affected facilities are minimal. EPA performed this analysis under the assumption that if the facility was not expected to support itself in the baseline, the firm level is the appropriate level at which to assess impacts. EPA also modified the methodology for determining impacts on firms. In response to comments that baseline firm failures were overstated because the Agency used benchmarks that identified lowest quartile firms as baseline failures, EPA reassessed the methodology and turned to a more sophisticated method for determining firm financial health. EPA used a multi discriminant analysis approach for evaluating the financial health of firms. This analysis, developed by Edward Altman, is known as Altman's Z score analysis. This approach allows the http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 56 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule simultaneous analysis of several common financial ratios and answers the question of how to determine financial health when some ratios appear strong and some appear weak. The equation developed by Altman assigns relative weights to the various ratios on the basis of how well they predict bankruptcy ( determined using actual firm data and information on whether the firms did in fact go bankrupt). This approach reduced the proportion of firms considered baseline failures from 28 percent in the EIA for the proposal to about 10 percent ( see Section V. D. 3), thus allowing for substantially more firms to be evaluated at the firm level in the postcompliance [[ Page 50405]]

analysis. The Altman's Z analysis is also described in Section V. B above and is fully described in Section 6 of the EA Report. The Agency has added an analysis of national level output and employment effects to the EA for the final rule. Output is measured in terms of revenues, and under the assumption that industry cannot pass through compliance costs to consumers, the worst case output loss to the pharmaceutical industry is equal to the pretax costs of compliance. The output losses occurring in the pharmaceutical industry ( direct effects) affect input industries, which are industries that provide inputs ( e. g., raw chemicals) to the pharmaceutical industry. These effects are known as indirect effects. The direct output losses also affect consumption, as workers lose jobs or work fewer hours and their households reduce purchases of goods and services. These effects are called induced effects. Thus a dollar of output lost in the pharmaceutical industry can also result in additional dollars lost in the U. S. economy as a whole through indirect and induced effects. EPA calculates these additional losses at the national level using inputoutput analysis. The relevant multipliers used in the analysis were developed by the U. S. Department of Commerce's Bureau of Economic Analysis ( BEA). In addition to output losses, EPA calculates national level output gains based on output gains in pollution control industries. These industries receive revenues from the pharmaceutical industry for pollution control equipment and operations. Using BEA multipliers, the Agency calculates the subsequent effect of these gains on the pollution http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 57 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule control industries' input industries and consumption ( i. e., indirect and induced effects). By comparing national level output losses and gains, EPA develops a net national level output loss or gain. In the EA, EPA no longer relies exclusively on employment losses from closures and failures to calculate employment losses in the pharmaceutical industry or national level employment losses. Because output effects and employment are linked in input output analysis, EPA calculates employment losses based on output effects using BEA's final demand and direct effect multipliers. EPA uses final demand employment multipliers to compute the total number of jobs lost ( including direct, indirect, and induced job losses) given the total loss of output in millions of dollars in the pharmaceutical industry and uses direct effect multipliers to compute the total number of job losses occurring just in the pharmaceutical industry ( direct losses), given the total jobs lost nationwide ( which include direct, indirect, and induced losses). Output based employment losses can be thought of as longer term losses associated with longer term market equilibrium, whereas losses associated with closures and failures can be considered the more immediate impact of the rule before market equilibrium is achieved. Thus output based employment losses may be greater than or less than the losses estimated on the basis of closures and failures, which means that nonclosing facilities might gain or lose production and employment depending on how many facilities close. If no facilities close, nonclosing facilities might lose some production and employment. If many facilities close, nonclosing facilities might actually gain production and employment if closure losses    overshoot'' the expected losses at market equilibrium. Note, however, that both the output based employment effects and the closure/ failure employment effects derived here are worst case impacts within the pharmaceutical industry since EPA assumes the industry cannot pass through the costs of compliance to consumers. EPA also computes employment gains on the basis of output gains in pollution control industries in much the same way as was done for the EIA for the proposal. The approach has been changed slightly to accommodate labor costs estimated as a part of the engineering cost analysis rather than relying on assumed labor shares. EPA compares the http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 58 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule employment losses and gains to estimate a net gain or loss in employment both at the national level and in the pharmaceutical industry alone ( some gains will occur in the pharmaceutical industry since labor to operate pollution control equipment is required). EPA now performs an assessment of impacts on profit margins to address commenter concerns that pharmaceutical firms will locate ( or relocate) facilities outside of the U. S. because of environmental regulatory requirements. EPA assumes that those firms most likely to consider relocating facilities are those with measurable differences in profitability with sufficient means to effect a relocation. EPA also addresses comments that reductions in loadings to POTWs will result in substantial impacts on POTWs. All other methodologies used and analyses undertaken in the EA remain substantively the same as those in the EIA for the proposal.

D. Estimated Economic Impacts 1. Costs of Compliance Table V. D. 1 presents a summary of compliance costs for the effluent limitations guidelines and standards and for the MACT standards. EPA estimated annualized compliance costs on both a pre tax and post tax basis; both sets of costs are shown in Table V. D. 1. Post tax costs reflect tax savings accruing to the industry from the installation and operation of pollution control equipment; the post tax costs are used in the economic analysis to assess impacts to facilities and firms in the industry. Pre tax costs are a component of the total social cost of the regulatory action ( see Section V. F). EPA describes the cost annualization procedure in Section V. B and in the EA. The annualized costs in Table V. D. 1 for both the effluent limitations guidelines and standards and the MACT standards rule incorporate the same annualization period assumptions. The annualized costs reported in the preamble to the MACT standards rule are based on another annualization period and thus, do not correspond exactly to Table V. D. 1. As noted in Section V. B, costs are annualized over 16 years ( with an 1 year installation period and a 15 year project life), while in the preamble to the MACT standards rule, costs are annualized over 10 years ( with no delay for installation). As an illustration, Table V. D. 1 reports pre tax annualized costs for the MACT standards http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 59 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule rule for all facilities ( referred to as    existing sources'' in the MACT standards rule) at $ 58.4 million. In the preamble to the MACT standards rule, the corresponding annualized costs are reported at $ 64.8 million. The annualized post tax compliance costs for effluent guidelines for the selected options are $ 39.4 million. The annualized post tax compliance costs of the MACT standards for the subset of facilities also subject to effluent guidelines are $ 32.4 million. The total annualized costs for facilities covered by both the effluent guidelines and MACT standards are $ 71.8 million, and the total annualized costs for all facilities ( i. e., including those facilities covered by MACT standards only) are $ 77.5 million.

[[ Page 50406]]

Table V. D. 1 Annualized Costs of Compliance for Effluent Guidelines and MACT Requirements

Posttax Pretax annualized annualized cost of cost of Subcategory Option compliance compliance ( million ( million 1997$) 1997$)   A/ C Direct.................................... BPT= Revise COD and modify $ 1.6 $ 2.5 cyanide. BAT= Add organics, ammonia and http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 60 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule 2.3 3.6 COD and modify cyanide. B/ D Direct.................................... Revise BPT COD and withdraw 0.9 1.4 cyanide. A/ C Indirect.................................. PSES= Add organics and ammonia 28.8 44.5 and modify cyanide. B/ D Indirect.................................. PSES= Add organics and withdraw 5.8 8.8 cyanide.

 Total Annualized Cost of Effluent ................................ 39.4 60.8 Guidelines for all Selected Options. Cost of MACT Standards........................ Effluent Guidelines Facilities.. 32.4 49.6 All Facilities.................. 38.1 58.4  Total Annualized Cost of Effluent ................................ 71.8 110.4 Guidelines and MACT Standards for Effluent Guidelines Facilities.

=============================== Total Annualized Costs of Effluent ................................ 77.5 119.2 Guidelines and MACT Standards for All Facilities.

2. Economic Impacts on Facilities EPA determined on the basis of zero or negative posttax earnings that 18 facilities, or 9 percent of all facilities in the analysis,

http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 61 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule would be likely to close even without the effect of the effluent guidelines or MACT standards requirements. The impacts to the firms of installing and operating pollution control equipment at these facilities are, however, assessed at the firm level to determine if the firms can continue to support these facilities postcompliance ( see below under results of the firm analysis). When all MACT standards costs are incorporated into the initial baseline financial conditions ( Baseline 3), no additional facilities close. When the costs of compliance for this final effluent guidelines rule are incorporated into the financial conditions of facilities in the analysis ( the postcompliance analysis), only one additional facility closes ( an A/ C indirect). Even though this facility does not close when faced with costs of meeting this effluent guidelines rule alone, EPA conservatively attributes this closure to the effluent guidelines. In general, however, neither MACT standards costs nor effluent guidelines costs singly or together have major impacts on pharmaceutical facilities operated by multifacility firms. 3. Economic Impacts on Firms EPA projected that 18 firms would be likely to fail even without the effect of the effluent guidelines or MACT standards requirements ( Baseline 1). Two additional firms are projected to fail before effluent guidelines costs are considered when all MACT standards costs are included in the initial baseline financial conditions ( Baseline 3). In the postcompliance analysis, EPA estimated that four firms would fail under the Baseline 1 scenario and two firms would fail under the Baseline 3 scenario. ( There are two fewer postcompliance firm failures under the Baseline 3 scenario because these failures were estimated to be precompliance failures when all MACT standards costs were included.) Thus at most, regardless of baseline, four firms fail postcompliance. To be conservative in the EA, EPA attributes these failures to the Pharmaceutical Effluent Guidelines alone. Out of the four firm failures projected to occur, EPA estimates only one will result in both a firm failure and a facility closure ( because earnings become negative at the only facility owned by the firm). The other three firms will incur substantial impacts, up to and including firm failure, but own financially viable facilities. Because the facilities are selfsupporting they are likely to be attractive for acquisition by http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 62 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule financially stronger firms. Therefore, the three failing firms with viable facilities might not fail, but instead might be forced to sell their facilities. As discussed in Section V. D. 2, EPA evaluated all facilities projected to close in the baseline analysis at the firm level, under the assumption that perhaps these facilities are not expected to be self supporting and thus might not close in the baseline. If this is so, the appropriate level of analysis is the firm. EPA determined that all facilities projected to close in the baseline facility closure analysis can continue to be supported by their firms postcompliance without significant impact on these firms.

Table V. D. 3 Firm Failure Analysis Results ( Baseline 1)

Failures only   Type of discharger Number Percentage of Percentage of Failures with total firms in Number total firms in closures subcategory subcategory   A/ C Direct.................................... 0 0 0 0 B/ D Direct.................................... 0 0 0 0 A/ C Indirect.................................. 2 3.2 1 1.6 B/ D Indirect.................................. 1 1.2 0 0 [[ Page 50407]]

http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 63 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule Total All Firms........................... 3 1.8 1 0.6

4. Impacts on Output and Employment EPA estimates that at the national level, output gains will exceed output losses. EPA determines a net output gain of about $ 21.7 million ( 1996$) as a result of the effluent guidelines. Net output gains for the combined rulemakings ( including MACT standards for facilities in the effluent guidelines analysis only) will total $ 40.1 million ( 1996$). EPA also determines that employment gains will exceed employment losses at the national level. The net gain in national level employment as a result of the effluent guidelines alone will total 218 full time equivalents ( a full time equivalent, or FTE, equals 2,080 hours per year of labor), and net employment gains for the combined rulemakings ( including MACT standards for facilities in the effluent guidelines analysis only) will total 407 FTEs. Despite net employment gains at the national level, EPA calculates that losses will exceed gains in the pharmaceutical industry. Direct losses in the pharmaceutical industry are composed of two types of losses output based losses and closure/ failure type losses. As noted in Section V. C., closure/ failure employment losses might be less than the output based employment losses that are driven by the contraction in the pharmaceutical industry as it responds to the compliance costs and a new market equilibrium is achieved. Closure/ failure employment losses can also be greater than these output based losses if they    overshoot'' the expected market equilibrium result. In this case, the direct losses computed on the basis of output losses ( and net of gains in employment in the industry due to the need to operate the pollution control equipment) are slightly greater than the closure/ failure losses ( which are estimated to total 139 FTEs). Output based losses total 138 FTEs, or 0.1 percent of pharmaceutical employment in the analysis. With MACT standards costs for facilities included in the effluent guidelines analysis, net direct employment losses will total 254 FTEs, or 0.1 percent of employment.

http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 64 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule Because output based employment losses are greater than closure/ failure employment losses, nonclosing facilities might experience some small reductions in labor hours and production over time that are additional to the losses of labor hours and production associated with facilities that close or fail ( assuming a worst case scenario where no costs can be passed through to consumers). The losses in employment due to closures/ failures will have a negligible impact on individual communities. No community is expected to experience a change in its unemployment rate exceeding 0.4 percent. 5. Other Secondary Impacts No trade losses or major changes in the balance of payments are associated with closures/ failures of firms or facilities, as these firms and facilities indicate no foreign shipments. Thus EPA finds that neither rule, together or separately, will have a substantial impact on trade or the balance of payments. An analysis of profit margin shows only a few firms will experience impacts on profit margin as a result of the effluent guidelines. A total of 8 firms ( 6 percent of the firms analyzed) have a greater than 10 percent change ( e. g., go from a 5 percent profit margin to a 4.5 percent profit margin) in their profit margin. Most of these firms are considered the least likely to relocate their facilities to foreign countries. These firms tend to be small, and generally, they are unlikely to have experience in international locations. The transaction costs of learning how to operate in foreign countries, along with the expense of relocating, are likely to be prohibitively expensive for these firms. With the MACT standards costs included for the facilities analyzed as part of this effluent guidelines final rule, one additional firm shows a greater than 10 percent change in profit margin. Thus EPA has determined that even under the combined effect of the two rules, firms are unlikely to relocate to foreign countries to escape the impacts on profitability induced by the two rules. The rules, together or separately, will have no major impact on inflation, as the costs of the two rules are at most only 0.001 percent of gross domestic product ( GDP). Although the Agency received comments on the proposal arguing otherwise, EPA expects that impacts on POTWS will be minimal. EPA is promulgating pretreatment standards for 24 VOCs for all four http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 65 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule subcategories and ammonia for subcategories A and C. The Agency expects that the reduction in the BOD discharged to POTWs as the result of compliance with PSES for these pollutants will be minimal. As a result, EPA believes that any reduction in revenue to POTWs that charge industrial users subject to the PSES will be insignificant. Since many of these pollutants are highly volatile and are volatilized in the POTWs primary units before they can be biodegraded, EPA believes that the final PSES should not have any substantial effect on the variable operating costs of POTWs as well. In summary, EPA believes that compliance with the final PSES by pharmaceutical facilities should not have any significant effect on the POTW revenues. Furthermore, EPA believes that the benefits associated with reduced discharges of VOCs and ammonia to POTWs by pharmaceutical industrial users will outweigh any revenue losses. Based on the analysis in the proposal EIA and further investigation in the EA for this final rule, the MACT standards and effluent guidelines, together or separately, will have no major distributional impacts. Compliance costs are generally a very small percentage of baseline operating costs, thus any cost increases are likely to be very small and are not likely to have any major effect on any one group of consumers. Impacts on environmental justice also should be minimal. As noted above, any price increases on drugs will be very small and impacts on disadvantaged groups such as the poor and certain minority groups will be minimal. Furthermore, many of these groups will benefit from the effluent guidelines final rule. A large portion of the affected facilities are located in urban areas where poor or minority populations tend to be high. Although everyone benefits, it is these populations that will [[ Page 50408]]

likely benefit the most from the cleaner water resulting from both rules. 6. Impacts on New Sources The selected options for new sources are equivalent to the selected options for existing sources. Because the costs for designing in pollution control technologies are generally no more expensive than and http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 66 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule are usually less expensive than retrofitting pollution control technologies, costs for new facilities will be no more expensive than costs for existing facilities. Because EPA has shown that the requirements for existing sources are economically achievable, they should be economically achievable for new sources. Furthermore, since the requirements for new sources will not be more expensive than those for existing sources, the rule will not pose a barrier to entry for new sources. In response to proposal comments, EPA also investigated whether impacts from the effluent guidelines rule ( with and without MACT standards) might contribute to firms locating new facilities in foreign countries. EPA found the median percentage of capital costs of compliance to total costs to build a new facility to be negligible ( 0.21 percent, on average including MACT standards costs among surveyed newer facilities). Thus compliance costs are unlikely to be a major impetus to locating new facilities outside the U. S.

E. Regulatory Flexibility Analysis There are no major changes to EPA's Regulatory Flexibility Analysis ( RFA), except that the Agency has undertaken a revenue test in addition to the closure analysis to better assess the potential impact on small firms. The revenue test measures impact on the basis of annual compliance costs as a percentage of annual revenues. The analysis indicates that out of 145 firms considered small ( i. e., firms with fewer than 750 employees), only four firms will experience annual compliance costs that are greater than one percent of annual revenues ( six with MACT costs included). No firms will experience annual compliance costs exceeding 3 percent. When MACT standards costs are included only one small firm will experience annual compliance costs that exceed three percent of annual revenues, but this firm is not estimated to incur any effluent guideline costs. The RFA further also considered impacts to small firms in terms of firm failures or facility closures. Five small firms are significantly affected by the rule. The regulatory action is found to be economically achievable for all dischargers, including small entities as detailed in Section V. D. Further, the analysis indicates no disproportionate effect on small entities, compared to large entities. Based on these findings, EPA certifies that this final rule does not have a significant impact http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 67 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule on a substantial number of small entities.

F. Cost Benefit Analysis Because the combined costs of the rules are at the level that defines a major rule both under Executive Order 12866 and UMRA ( although neither rule considered separately would be near this level), EPA has undertaken a cost benefit analysis. As in the proposal, pretax costs for all facilities are used as a proxy for social cost. The major portion of the social cost of the effluent guidelines is the total pretax annual cost, which is $ 60.8 million ( 1997$). Adding in the cost of administering the rule and providing administrative services to the unemployed ( the only other significant cost categories), the total social cost of the rule is $ 61.0 million ( 1997$). Combined with the costs of the MACT standards rule for facilities in the effluent guidelines analysis, the two rules together have annual social cost of $ 110.7 million ( 1997$). ( Costs of both rules including MACT standards costs to facilities that will not be affected by the effluent guidelines are $ 119.5 million ( 1997$)). Benefits include the benefits of water removals and benefits of air removals. Types of benefits analyzed include human health risk, recreational use benefits, benefits to POTWs, and benefits of reductions in VOCs ( other than human health). The benefits to POTWs, however, could not be monetized ( see Section VI. E. of this preamble for more details). Total monetizable benefits of the effluent guidelines alone total $ 0.93 to $ 14.0 million ( 1997$), while the combined benefits of the two rules total $ 4.06 to $ 81.1 million ( 1997$).

Table V. F. 1

 Costs ($ millions)  Total Social Cost of Effluent Guidelines. $ 61.0 Total Social Cost of MACT ( ELG facilities 49.7 only). Total Social Cost of MACT ( all 58.4 http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 68 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule facilities). Social Cost of Combined Rules ( ELG 110.7 facilities only). Social Cost of Combined Rules ( all 119.5 facilities).  Benefits ($ millions)  Effluent Guidelines...................... 0.9 to 14.0 MACT Standards........................... 3.9 to 67.2  Total................................ 4.8 to 81.1

G. Cost Effectiveness Analysis Cost effectiveness evaluates the relative efficiency of options in removing toxic pollutants. Costs evaluated include direct compliance costs, such as capital expenditures and operation and maintenance costs. Cost effectiveness results are expressed in terms of the incremental and average costs per pound equivalent removed. A pound equivalent is a measure that addresses differences in the toxicity of pollutants removed. Total pound equivalents are derived by taking the number of pounds of a pollutant removed and multiplying this number by a toxic weighting factor. EPA calculates the toxic weighting factor using ambient water quality criteria and toxicity values. The toxic weighting factors are then standardized by relating them to a particular pollutant, in this case copper. EPA's standard procedure is to rank the options considered for each subcategory in order of increasing pounds equivalent ( PE) removed. The Agency calculates incremental cost effectiveness as the ratio of the incremental annual costs to the incremental pounds equivalent removed under each option, compared to the previous ( less effective) option. Average costeffectiveness is calculated for each option as a ratio of total costs to total pounds equivalent removed. EPA reports annual costs for all cost effectiveness analyses in 1981 dollars to enable limited comparisons of the cost effectiveness among regulated industries.

http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 69 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule Table V. G. 1 presents the results of the cost effectiveness analysis for all subcategories. As the table shows, the average and incremental cost effectiveness of the selected BAT option for subcategories A and C is $ 224/ lb. eq., the average and incremental cost effectiveness of the selected PSES option for subcategories A and C is $ 96/ lb. eq. and the average and incremental cost effectiveness of the selected PSES option for subcategories B and D is $ 66/ lb. eq. The selected BAT option for the subcategories B and D directs is the no additional action alternative, so no cost effectiveness results are calculated. The cost effectiveness determined for this rule does not represent an estimate of the removal of the toxic pounds resulting from the removal of COD. As discussed previously in section IV. C., discharges from pharmaceutical manufacturing facilities exhibit toxicity as measured by the whole effluent [[ Page 50409]]

toxicity test and reported as part of the routine NPDES discharge monitoring reports ( DMRs). One study conducted by EPA at a pharmaceutical manufacturing facility showed a significant decrease in toxicity with a corresponding decrease in COD level for the tested effluent sample from the facility and a sample effluent of a pilot scale biological treatment plant study. Because of the limited amount of data, and the inability to identify the different mix of specific organic compounds represented by the COD measurement, the total amount of toxic pound equivalent represented by the nonconventional pollutant parameter of COD could not be determined. Based on the lack of pound equivalents associated with COD removals the cost effectiveness analysis results understates the true costeffectiveness of this rule. EPA therefore considers these options to be cost effective.

Table V. G. 1 Cost/ Effectiveness Analysis Results   Total Annual Incremental http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 70 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule   Average C E Incremental C Option Lb. eq. Lb. eq. ($/ lb. eq.) E ($/ lb. eq.) removed Cost ( 1981$) removed Cost ( 1981$)   A/ C Direct   MACT Only............................................... 0 $ 0 0 $ 0 NA NA Advanced Bio............................................ 9,780 2,186,106 9,780 2,186,106 $ 224 $ 224   A/ C Indirect   MACT Only............................................... 0 0 0 0 NA NA Steam Stripping no alcohols............................. 282,614 26,990,998 282,614 26,990,998 96 96   B/ D Indirect   MACT Only............................................... 0 0 0 0 NA NA Steam Stripping no alcohols............................. 80,807 5,353,790 80,807 5,353,790 66 66

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VI. Environmental Benefits In addition to costs and impacts, EPA also estimated the environmental and human health benefits of implementing CWA requirements. Benefits identified as a result of this final rule are associated with improvements in both water quality and air quality, since many of the regulated and incidentally controlled pollutants are prone to volatilization from the effluent waste streams. Section IV of this preamble and Section IX of the TDD describe the estimated reductions in effluent discharges, and those reductions and the estimates of incremental environmental improvements noted in Section IV are derived compared to a baseline consisting of current discharges. Because current discharges are a function of current technology, this is the same baseline that is used to establish the costs of complying with this rule. EPA is confident that its estimation of compliance costs is a full and accurate account of such costs; however, EPA is less confident that the estimation of benefits is similarly complete. EPA is not currently able to quantitatively evaluate all human health and ecosystem benefits associated with air and water quality improvements. EPA is even more limited in its ability to assign monetary values to these benefits. A comparison of costs to only the limited monetized subset compromises the validity of the cost benefit analysis. The economic benefit values described below and in Section 10.4 of the EA should be considered a limited subset of the total benefits of this rule and should be evaluated along with descriptive assessments of benefits and the acknowledgment that even these may fall short of the real world benefits that may result from this rule. For example, the analyses consider the impacts of toxic pollutants, but do not evaluate the impacts of other pollutants ( such as BOD< INF> 5</ INF>, COD, and TSS) which can produce significant adverse environmental impacts. Within these limitations, EPA analyzes the effects of current air and water emissions and assesses the benefits of reductions in these emissions resulting from this final regulation. EPA expects a variety of human health, environmental, and economic benefits to result from these reductions in effluent loadings and air emissions ( See http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 72 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule Environmental Assessment of the Final Effluent Guidelines for the Pharmaceutical Manufacturing Industry, ( July 1998, EPA 821 B 98 008). In particular, the benefits assessment addresses the following benefit categories: human health and agricultural benefits due to reductions in emissions of ozone precursors ( i. e., reductions in VOC emissions); human health benefits due to reductions in excess cancer risk; human health benefits due to reductions in non carcinogenic hazard ( systemic); ecological and recreational benefits due to improved water quality with respect to toxic pollutants, including intrinsic benefits; and benefits to publicly owned treatment works ( POTWs) from reductions in interference, pass through, and sludge contamination problems, improvements in worker health and safety, and elimination of some of the efforts associated with establishing local pretreatment limits. EPA monetizes the estimated benefits for reductions in air emissions of ozone precursors, cancer risk reductions, improvements in recreational fishing opportunities, and improvements in intrinsic value, but is unable to quantify the dollar magnitude of benefits from the other benefit categories. Air benefits due to reductions in emissions of ozone precursors, are estimated using the methods and data summarized in the November 5, 1997 OAQPS memorandum titled    Benefits Transfer Analysis for Pulp and Paper''. This methodology is based on the recently published benefits analyses provided in the Regulatory Impact Analyses for the Particulate Matter and Ozone National Ambient Air Quality Standards and Proposed Regional Haze Rule. The methodology and data used in the estimate of all benefits are described in detail in the Environmental Assessment.

[[ Page 50410]]

a. Reduced Emissions of Ozone Precursors These final effluent guidelines are expected to result in reductions in ambient ozone concentrations due to reductions in VOC emissions. Controlling VOC emissions is beneficial because some VOCs are precursors to ozone, which negatively affects human health and plant life. EPA estimates that the annual monetized benefits resulting from reductions in VOC emissions due to this final rule range from $ 755,000 http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 73 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule to $ 9.8 million ($ 1997). The benefits are monetized using a benefitstransfer based approach. Specifically, the estimated reductions in VOC emissions in nonattainment areas alone, and in both nonattainment and attainment areas ( 1,254 Mg to 3,608 Mg, respectively) are multiplied by an existing estimate of the range of the value of a unit reduction in VOC emissions ($ 602/ Mg to $ 2,723/ Mg, $ 1997). This range is based on the ozone National Ambient Air Quality Standard ( NAAQS) benefits analysis, which used new scientific studies to quantify the association between ozone exposure and premature mortality. The $ 602/ Mg estimate does not include mortality effects associated with ozone exposure, while the $ 2,723/ Mg estimate includes mortality effects. The overall benefit estimate for ozone precursor reduction also includes an estimate of the potential adverse effects which may result from increased emissions of particulate matter ( PM) and sulfur dioxide ( SO< INF> 2</ INF>) related to steam stripping of the VOCs. Emissions of PM and SO< INF> 2</ INF> arise from the use of fossil fuels as an energy source for the steam stripping technology basis. The quantity of these emissions is based on the type of fossil fuel ( natural gas or fuel oil) used. Particulate matter is associated with adverse human health and welfare effects. EPA estimates that the annual monetized adverse environmental impact resulting from increases in PM emissions due to this final rule is $ 266,000 ($ 1997). This value was obtained by using an estimated increase in PM emissions of 20 Mg multiplied by an estimate of the value of a unit reduction in PM emissions of $ 13,325 per Mg ($ 1997). This value is based on the PM NAAQS benefits analysis. Sulfur dioxide is associated with the adverse human health effects and environmental impacts, including    acid rain.'' EPA estimates that the annual monetized adverse environmental impact resulting from increases in SO< INF> 2</ INF> emissions range from $ 311,000 to $ 688,000 ($ 1997). This value was obtained using an estimated increase in SO< INF> 2</ INF> emissions of 52.1 Mg ( 51.8 Mg eastern U. S. and 0.3 Mg western U. S.) multiplied by an estimate of the value of a unit reduction in SO< INF> 2</ INF> emissions of $ 5,984 to $ 13,251 per Mg ($ 1997) for the eastern U. S. and $ 4,329 to $ 5,164 per Mg ($ 1997) for the western U. S. These ranges are based on the PM NAAQS benefits analysis and assumes emission reductions of SO< INF> 2</ INF> are http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 74 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule proportional to emission reductions of PM. The lower values include a measure of premature mortality due to short term exposure, and the higher values use a measure of premature mortality due to long term exposure. The benefits transfer method is utilized to value the pollutants discussed above ( VOCs, PM, and SO< INF> 2</ INF>). This method relies on previous benefit studies that have been conducted for the same pollutants that are identified in this rulemaking. These studies provide useful data that can be transferred across contexts in order to approximate the benefits of the pharmaceuticals industry's emission reductions. The impacts and benefits associated with the different emission components are aggregated by adding the lower values separately from the higher values to give a maximum total range. Using this method of analysis, the total monetized air benefits from reduction of ozone precursors, including associated PM and SO< INF> 2</ INF> increases, range from an adverse environmental impact of $ 0.20 million ($ 1997) to a benefit of $ 9.2 million ($ 1997).

b. Reduced Human Health Cancer Risk The benefits from the final rule include human health benefits from reductions in excess cancer risk. EPA expects the final rule to reduce loadings of toxic substances that otherwise would volatilize and pose a cancer risk to humans, resulting in reductions in excess cancer risk in exposed populations from inhalation of VOCs. In addition, EPA expects that reduced loadings to surface waters will improve water quality and thus reduce cancer risk to the exposed populations from consumption of contaminated drinking water and fish tissue. Based on the cancer risk assessment conducted for fugitive air emissions, EPA estimates that the final guidelines will result in 0.15 excess cancer cases avoided per year nationwide due to reduced exposure to four identified pollutants ( benzene, chloroform, 1,2 dichloroethane, and methylene chloride). The estimated monetized value of the human health benefits from these cancer risk reductions ranges from $ 350,000 to $ 1.9 million ($ 1997) annually. EPA developed these benefit estimates by applying an existing estimate of the value of a statistical life to the estimated number of excess cancer cases avoided. The estimated range of the value of a http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 75 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule statistical life used in this analysis is $ 2.3 million to 12.6 million ($ 1997). This estimated range is based on EPA's Office of Policy, Planning and Evaluation ( OPPE) review of willingness to pay studies for valuing an avoided event of premature mortality or a statistical life saved.

c. Reduced Noncarcinogenic Human Health Hazard Exposure to toxic substances poses risk of systemic and other effects to humans, including effects on the circulatory, respiratory or digestive systems and neurological and developmental effects. This final rule is expected to generate human health benefits by reducing exposure to these substances, thus reducing the hazards of these associated effects. As in the case of the cancer risk assessment, systemic hazards from exposure to fugitive air emissions and consumption of contaminated fish tissue and drinking water are evaluated. Based on this analysis, reductions in fugitive air emissions are expected to result in reduced systemic hazard to 32,300 individuals due to reduced exposure to four identified toxic pollutants ( ammonia, chlorobenzene, methyl cellosolve, and triethylamine). No systemic hazards reductions are expected to result from reduced exposure to contaminated fish tissue or drinking water. Sufficient data to quantify these benefits further are not available.

d. Improved Ecological Conditions and Recreational Activity EPA expects this final rule to generate environmental benefits by improving water quality. There are a wide range of benefits associated with the maintenance and improvement of water quality. These benefits include use values ( e. g., recreational fishing), ecological values ( e. g., preservation of habitat), and passive use ( intrinsic) values ( e. g., aesthetics). For example, water pollution might affect the quality of the fish and wildlife habitat provided by water resources, thus affecting the species using these resources. This in turn might affect the quality and value of recreational experiences of users, such as anglers fishing in the affected streams. EPA considers the value of the recreational fishing benefits and intrinsic benefits resulting from http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 76 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule this final rule, but does not evaluate the [[ Page 50411]]

other types of ecological and environmental benefits ( e. g., increased assimilative capacity of the receiving stream, protection of terrestrial wildlife and birds that consume aquatic organisms, and improvements to other recreational activities, such as swimming, boating, water skiing, and wildlife observation) due to data limitations. To estimate some of the benefits from the improvements in water quality expected to result from this rule, instream concentration estimates are modeled and then compared to both aquatic life and human health ambient water quality criteria ( AWQC) or toxic effect levels to evaluate whether these discharges pose risk to aquatic organisms or to human health. The projected reductions in toxic loadings to surface waters and POTWs are significant. Modeled end of pipe pollutant loadings are estimated to decline by 71 percent, from 11.2 million pounds per year under current conditions to 3.3 million pounds per year under this final rule.< SUP> 1</ SUP> The analysis comparing instream concentration levels to AWQC estimates that current discharge loadings result in excursions of AWQC at five locations. The analysis also indicates that no excursions are expected to occur at these five sites under this final rule.

\ 1 2 3\ These benefits are a result of the CAA MACT Rule and/ or the CWA Rule. Monetized benefits of $ 290,000 to $ 1.0 million ($ 1997) of the total recreational benefit to anglers can be solely attributed to the CWA Rule. Monetized benefits of $ 140,000 to $ 510,000 ($ 1997) of the total intrinsic benefit can be solely attributed to the CWA Rule.

EPA estimates that the annual monetized recreational benefits to anglers associated with the expected changes in water quality range from $ 520,000 to $ 1.8 million ($ 1997).< SUP> 2</ SUP> EPA evaluates these recreational benefits, applying a model that considers the increase in http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 77 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule value of a    contaminant free fishery'' to recreational anglers resulting from the elimination of pollutant concentrations in excess of AWQC at these five sites. The monetized value of impaired recreational fishing opportunity is estimated by first calculating the baseline value of the receiving stream using a value per person day of recreational fishing, and the number of person days fished on the receiving stream. The value of improving water quality in this fishery, based on the increase in value to anglers of achieving contaminant free fishing, is then calculated. In addition, EPA estimates that the annual monetized intrinsic benefits to the general public, as a result of the same improvements in water quality, range from at least $ 260,000 to $ 920,000 ($ 1997).< SUP> 3</ SUP> These intrinsic benefits are estimated as half of the recreational benefits and may be significantly underestimated.

e. Improved POTW Operations/ Conditions EPA considers three potential sources of benefits to POTWs from this final regulation: ( 1) reductions in the likelihood of interference, pass through, and sewage sludge contamination problems; ( 2) reductions in health and safety risks to POTW workers; and ( 3) reductions in costs potentially incurred by POTWs in analyzing toxic pollutants and determining whether to, and the appropriate level at which to, set local limits. Although the benefits from reducing these effects at POTWs might be substantial, the EPA does not quantify all of these benefits due to data limitations. First, regarding potential interference, pass through and sewage sludge contamination problems, this final rule is expected to help reduce these problems by reducing toxic loadings in the industry's effluent and reducing shock releases. Anecdotal evidence from POTW responses to an EPA survey and sampling results indicate that such effects can occur. In addition, based on an analysis comparing POTW influent levels to available data on inhibition levels, inhibition problems are projected to occur at three POTWs for five pollutants ( acetonitrile, diethylamine, N, N dimethylacetamide, N, Ndimethylformamide and triethylamine) under current conditions. Inhibition problems are projected to remain at the same three POTWs for three of these pollutants ( acetonitrile, N, N dimethylacetamide, and http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 78 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule N, N dimethylformamide) after this final rule.< SUP> 4</ SUP> While this rule is not expected to completely eliminate inhibition problems, the reduction in pollutant loadings is expected to reduce the severity of the impact. Sufficient data are not available to further quantify this benefit category.

\ 4\ This benefit is a result of the CAA MACT Rule and/ or the CWA Rule.

Furthermore, toxic substances, particularly the VOCs, in effluent discharges to POTWs pose health risks to POTW workers. This final rule is expected to reduce these risks, thus generating human health benefits. Based on the assessment of the risk posed to POTW workers from exposure to the toxic pollutants ( primarily acetonitrile, benzene, chloroform, diethylamine, n heptane, n hexane, methylene chloride, toluene, and triethylamine), this final rule is estimated to reduce occupational risk at nine POTWs.< SUP> 5</ SUP> Data are not available to monetize this benefit category.

\ 5\ This benefit is a result of the CAA MACT Rule and/ or the CWA Rule. Reduction of occupational risk at five POTWs can be solely attributed to the CWA Rule.

Finally, reducing the pollutant load to local POTWs may eliminate some of the efforts associated with establishing local pollutant limits. Local limits are sometimes required to protect against passthrough and interference, and to protect worker health and safety. Establishing local limits involves labor and analytical costs to determine the relative contribution of each industrial discharger and to set limits which will be protective of the treatment works, the workers, and the receiving environment. Several POTWs contacted in EPA's survey indicated that establishment of more effective national pretreatment standards would help them avoid these significant costs. In addition, they indicated that where local limits are still required,

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f. Other Unquantified Benefits The above benefit analyses focus mainly on identified compounds with quantifiable toxic or carcinogenic effects. This leads to a potentially large underestimation of benefits, since some significant pollutant characterizations are not considered. For example, the analyses do not include the benefits associated with reducing the particulate load ( measured as TSS), or the oxygen demand ( measured as BOD and COD) of the effluents. TSS loads can degrade ecological habitat by reducing light penetration and primary productivity, and from accumulation of solid particles that alter benthic spawning grounds and feeding habitats. BOD and COD loads can deplete oxygen levels, which can produce mortality or other adverse effects in fish, as well as reduce biological diversity. The benefits of COD reduction extend beyond reducing oxygen depletion, since COD also represents the presence of organic chemicals in a waste stream. Due to a lack of analytical methods, not all of the compounds represented by COD are identified. In this benefits [[ Page 50412]]

assessment, specifically identified compounds represent only 2.2 million pounds of the 11.5 million pounds of COD projected to be removed. This limits the estimate of benefits, since the analysis relies on comparing instream concentrations to established criteria, and there are obviously no established criteria for unidentified compounds. However, there is inherent value in reducing pollutant loads, despite ( or perhaps due to) the lack of quantifiable effects. The benefits analyses are further limited because they concentrate on projected excursions from established minimum standards, and do not http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 80 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule account for protection of higher quality conditions. Likewise, they do not account for prevention of future impacts which could occur due to increased effluent loadings.

g. Summary of Benefits from Effluent Limitations Guideline Final Rule EPA estimates that the annual monetized benefits resulting from this final effluent guidelines rule will range from $ 0.93 million to $ 14 million ($ 1997). This range includes $ 0.34 to $ 1.2 million that cannot be differentiated between the effluent guidelines rule and the wastewater portion of the MACT standard. Table XI. B. 9. g summarizes these benefits, by category. The range reflects the uncertainty in evaluating the effects of this final rule and in placing a dollar value on these effects. As indicated in the table, these monetized benefits ranges do not reflect many of the benefit categories expected to result under this final rule, including reduced noncarcinogenic human health hazards; improved ecological conditions from improvements in water quality; improved POTW operations; and improved worker health and safety at POTWs. Therefore the reported benefit estimate understates the total benefits of this final rule.

h. Benefits of the MACT Rule The CAA MACT Rule will regulate an estimated 101 facilities. The Rule is expected to produce environmental and human health benefits due to reductions in fugitive air emissions from four planks: wastewater, process vents, storage tanks, and equipment leaks. EPA conducted analyses on the 23 facilities covered under the wastewater plank, based on site specific raw loadings data from the 1990 Pharmaceuticals Section 308 Questionnaire. These analyses were conducted using the same methodologies, within the same limitations, as those conducted to evaluate the CWA Rule as discussed in the previous Sections. Data on emission reductions from the other planks were obtained by OAQPS, however, a detailed benefit analysis of these planks was not conducted due to data limitations ( specifically, the lack of site specific data). Within these limitations, the estimated benefits are as follows: Reduced Emissions of Ozone Precursors EPA estimates that the final MACT Rule will produce benefits due to http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 81 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule reductions in fugitive VOC emissions from wastewater, process vents, storage tanks, and equipment leaks at pharmaceutical manufacturing facilities. Considering the wastewater plank only, EPA estimates that the annual monetized benefits range from $ 1.2 million to $ 45 million ($ 1997). These benefits are based on estimated emission reductions in VOC emissions in nonattainment areas alone, and in both nonattainment and attainment areas ( 2,057 Mg to 16,619 Mg, respectively). The annual monetized adverse environmental impacts for these 23 facilities due to increases in PM emissions is estimated by EPA at $ 56,000 ($ 1997). This value is based on an estimated increase in PM emissions of 4.2 Mg. EPA also estimates that the annual monetized adverse environmental impacts for these 23 facilities due to increases in SO< INF> 2</ INF> emissions due to the final MACT Rule range from $ 65,000 to $ 143,000 based on an estimated increase in SO< INF> 2</ INF> emissions of 11.0 Mg ( 10.6 Mg eastern U. S., and 0.4 Mg western U. S.). The total monetized air benefits from reductions of ozone precursors from wastewater, after correction for PM and SO< INF> 2</ INF> increases, range from $ 1.0 million to $ 45 million ($ 1997). In addition, based on the analysis of the 101 pharmaceutical manufacturing facilities covered by the MACT rule, EPA estimates that the reductions in fugitive VOC emissions from process vents, storage tanks, and equipment leaks would result in a range of annual monetized air benefits of $ 0.77 million to $ 11 million ($ 1997). These benefits are based on estimated reductions in VOC emissions in nonattainment areas alone, and in both nonattainment and attainment areas ( 1,278 Mg to 4,027 Mg, respectively). Adverse impacts due to increased energy consumption from control of these planks are not quantified due to data limitations. The total monetized benefits from reductions in VOC emissions from all four planks are estimated to be $ 1.8 million to $ 56 million ($ 1997). Reduced Human Health Cancer Risk The estimated monetized value of the human health benefits from cancer risk reductions due to reductions in fugitive air emissions from wastewater ranges from $ 2.1 million to $ 11 million ($ 1997) annually. This is based on EPA estimates that the MACT Rule will result in 0.88 cancer cases avoided per year nationwide, considering an inhalation exposure route. EPA also expects that reduced loadings to surface http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 82 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule waters will improve water quality and thus reduce cancer risk to the exposed populations from consumption of contaminated drinking water and fish tissues. EPA estimates that cancer risk will be further reduced due to reductions in fugitive air emissions from process vents, storage tanks, and equipment leaks. However, these reductions were not quantified due to lack of site specific data. Reduced Noncarcinogenic Human Health Hazard EPA estimates that reductions in fugitive air emissions from wastewater are expected to result in reduced systemic hazard to 370,000 individuals due to reduced exposure to four identified toxic pollutants. EPA also expects that reductions in fugitive air emissions from process vents, storage tanks, and equipment leaks will result in reduced systemic hazard. However, EPA does not quantify these benefits due to data limitations. No systemic hazard reductions are expected to result from reduced exposure to contaminated fish tissue or drinking water. Improved Ecological Conditions and Recreational Activity EPA estimates that the annual monetized recreational benefits to anglers associated with the expected changes in water quality at two locations range from $ 230,000 to $ 820,000 ($ 1997). The annual monetized intrinsic benefits to the general public range from at least $ 115,000 to $ 410,000 ($ 1997). These benefits are a result of the CAA MACT Rule and/ or the CWA Rule. These monetized benefits cannot be solely attributed to the MACT Rule. Improved POTW Operations Inhibition problems are projected by EPA to occur at three POTWs for five pollutants under current conditions. Inhibition problems are projected to remain at the same three POTWs for three of these pollutants. The benefits cannot be solely attributed to the MACT Rule.

[[ Page 50413]]

Additionally, the MACT Rule is expected to reduce health risks to POTW workers. This rule is estimated to reduce occupational risks at four POTWs. However, these benefits cannot be solely attributed to the MACT Rule. Summary of Benefits From MACT Final Rule http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 83 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule EPA estimates that the annual monetized benefits resulting from the MACT final rule will range from at least $ 3.9 million to $ 67 million ($ 1997). Additional annual monetized benefits that cannot be solely attributed to the CAA portion of this final rule will range from $ 0.34 million to $ 1.2 million ($ 1997). Table VI. B. 9. h summarizes these benefits, by category. As explained previously in Section g, the expected benefit estimate understates the total benefits of the MACT rule. The estimate is further constrained by data limitations.

Table VI. B. 9. g. Potential Economic Benefits From Final Effluent Limitations Guidelines for the Pharmaceutical Industry  Millions of 1997 dollars Benefit category per year  Reduced Emissions of Ozone Precursors........ $ 0.20 to $ 9.2. Reduced Cancer Risk.......................... $ 0.35 to $ 1.9. Reduced Noncarcinogenic Hazard............... Unquantified. Improved Ecological Conditions............... Unquantified. Improved Recreational Activity............... $ 0.52 to $ 1.8. Improved Intrinsic Value..................... $ 0.26 to $ 0.92. Improved POTW Operations ( Inhibition and Unquantified. Sludge Contamination). Improved Occupational Conditions at POTWs.... Unquantified.  Total Monetized Benefits................. $ 0.93 to $ 14.0.  Note: These benefits include a portion of recreational and intrinsic monetized benefits attributed to the CAA Rule. Specifically, two facilities included in the modeling were required to have MACT strippers and were also costed for additional strippers to meet the CWA effluent guidelines. Overall removals due to these strippers cannot be differentiated between MACT and CWA requirements. These two facilities represent a total of $ 0.34 to $ 1.2 million based on improved recreational activity and improved intrinsic value.

Table VI. B. 9. h. Potential Economic Benefits From CAA MACT Rule for the http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 84 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule Pharmaceutical Industry   Millions of 1997 dollars per year Benefit category   Wastewater Other fugitive emissions\ 1\ Total benefits   Reduced Emissions of Ozone $ 1.0 to $ 45................. $ 0.77 to $ 11$.............. $ 1.8 to $ 56. Precursors. Reduced Cancer Risk........... $ 2.1 to $ 11................. Unquantified............... $ 2.1 to $ 11. Reduced Noncarcinogenic Hazard Unquantified................ Unquantified............... Unquantified. Improved Ecological Conditions Unquantified................ Unquantified............... Unquantified. Improved POTW Operations Unquantified................ Unquantified............... Unquantified. ( Inhibition and Sludge Contamination). Improved Occupational Unquantified................ Unquantified............... Unquantified. Conditions at POTWs. Total Monetized Benefits.. $ 3.1 to $ 56................. $ 0.77 to $ 11............... $ 3.9 to $ 67.     \ 1\ Includes process vents, storage tanks, and equipment leaks. Notes: These benefits exclude a portion of the recreational and intrinsic monetized benefits attributed to the CAA Rule. Specifically, two facilities included in the modeling were required http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 85 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule to have MACT strippers and were also costed for additional strippers to meet the CWA effluent guidelines. Overall removals due to these strippers cannot be differentiated between MACT and CWA requirements. These two facilities represent a total of $ 0.34 to $ 1.2 million dollars, based on improved recreational activity and improved intrinsic value. The benefits analysis for the MACT Rule is particularly limited due to data constraints.

VII. Non Water Quality Environmental Impacts The elimination or reduction of one form of pollution may create or aggravate other environmental problems. Therefore, Sections 304( b) and 306 of the Act call for EPA to consider the non water quality environmental impacts of effluent limitations guidelines and standards. Accordingly, EPA has considered the effect of these regulations on air pollution, solid waste generation, and energy consumption.

A. Air Pollution EPA estimated the impacts of the selected technology options for the existing source BAT and PSES regulations and the technology basis for the MACT standard on air emissions. EPA considered emissions of HAPs and non HAPs as well as criteria air pollutants ( CO, No< INF> X</ INF>, SO< INF> 2</ INF> and particulate matter) in its analysis. EPA estimates that the MACT standards steam strippers will reduce air emissions of HAPs and non HAPs at direct and indirect subcategory A and C facilities by 14.1 and 41.4 million lbs. per year, respectively. No emission reductions have been estimated for B and D subcategory direct and indirect dischargers as the result of the MACT standard because these facilities are not    major sources'' of hazardous air pollutants ( HAPs) ( defined as facilities with total annual emissions of HAPs greater than 25,000 metric tons). EPA has estimated the reduction in air emissions of HAPs and non HAPs as the result of steam strippers that may be installed to comply with PSES for VOC pollutants for A and C and B and D subcategory facilities to be 10.7 and 3.3 million lbs. per year, respectively. With http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 86 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule [[ Page 50414]]

respect to criteria pollutants, EPA estimates that as a result of steam generation requirements for PSES steam strippers, emissions of criteria pollutants will increase by 616,000 pounds per year.

B. Solid Waste EPA has estimated the increases in solid waste generation as from the use of advanced biological treatment ( the basis for BPT/ BCT limitations), and steam stripping technology ( the basis for PSES). EPA also estimated an increase in waste hydrogen chloride due to scrubber liquor generated by facilities with wastewater containing ammonia. EPA estimates that compliance with the BPT/ BCT limitations will increase the mass of wastewater treatment sludge by subcategories A and C and B and D direct dischargers by 343 and 194 tons per year, respectively. Compliance with BAT ammonia and organic limitations by A and C subcategory plants is expected to increase wastewater sludge generation by 308 tons per year. No increase in sludge generation is expected as the result of the subcategories B and D BAT COD limitations because these limitations are equivalent to the BPT COD limitations and there are no BAT organic compound limitations for these subcategories. EPA does expect that indirect discharging A and C facilities will generate an increase in waste aqueous hydrogen chloride resulting from the use of wet hydrogen chloride scrubbers to control air emissions from steam strippers used to remove ammonia from wastewater. EPA estimates that waste aqueous hydrogen chloride generation will increase by 283 tons per year. Compliance with PSES subcategory A and C and subcategory B and D facilities is expected to increase the amount of waste solvents generated. This increase in waste solvent generation is due to the waste solvents recovered from the in plant steam stripping operations at these facilities. EPA anticipates that 10,600 and 3,310 tons/ yr of waste solvents will be generated at subcategory A and C and B and D facilities, respectively. Ten of the pollutants being regulated by BAT limitations and pretreatment standards are solvents listed as hazardous waste http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 87 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule constituents ( F0002, F0003, and F0005) under 40 CFR 261.31. These pollutants are acetone, 4 methyl 2 pentanone ( MIBK), ethyl acetate, methanol, benzene, toluene, xylenes, methylene chloride, chlorobenzene, and o dichlorobenzene. EPA is promulgating PSES for nine of these pollutants and has included costs for disposal of all overheads from steam stripping as hazardous wastes in its steam stripping cost estimates. As noted above, EPA has estimated increased sludge generation as a result of compliance with BAT limitations for 29 pollutants including the 10 pollutants listed above. EPA has assumed that this sludge will be incinerated in developing its final BAT cost estimates, but does not believe that the increased sludge generated will be considered as hazardous.

C. Energy Requirements EPA has estimated the energy impacts on the pharmaceutical manufacturing industry associated with compliance with the final BPT, BAT and PSES regulations. The Agency estimates that electrical usage would increase for subcategory A and C and subcategory B and D facilities by 5.9 x 10< SUP> 6</ SUP> and 1.07 x 10< SUP> 6</ SUP> kilowatt hours ( kWh) as the result of the final BPT and BAT regulations. This increase is equivalent to a 0.1 percent increase above current electrical usage by the industry. EPA also estimated the increase in electrical usage as the result of increased steam generation. The increased steam generation is required to operate the steam strippers that EPA anticipates will be installed to comply with the pretreatment standards for VOCs. ( The impacts of the BPT and BAT regulations on electrical usage for steam generation are negligible). EPA estimates that electrical usage for steam generation will increase for subcategories A and C and subcategories B and D indirect dischargers by 454 x 10< SUP> 6</ SUP> and 58.8 x 10< SUP> 6</ SUP> kWh, respectively. The total of these two increases in electrical usage is equivalent to an eight percent overall increase in electrical usage above current levels.

VIII. Regulatory Implementation The purpose of this section is to provide assistance and direction http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 88 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule to permit writers and control authorities to aid in their implementation of this regulation and its unique compliance alternative. This section also discusses the relationship of upset and bypass provisions, variances and modifications, and analytical methods to the final limitations and standards.

A. Implementation of the Limitations and Standards Upon the promulgation of these regulations, the effluent limitations for the appropriate subcategory must be applied in all Federal and State NPDES permits issued to direct dischargers in the pharmaceutical manufacturing industry. In addition, the pretreatment standards are directly applicable to indirect dischargers. Permit writers and pretreatment authorities need to be aware of special circumstances involving compliance with the cyanide limitations and standards, ammonia pretreatment standards, pH monitoring and the portion of nonprocess wastewater in the final effluent. In the case of the cyanide limitations and standards, EPA determined that the monitoring point for purposes of compliance with the cyanide will generally be in plant at a point before the cyanide bearing wastewaters are commingled with noncyanide bearing waste streams in accordance EPA permit and pretreatment program regulations at 40 CFR 122.44( i)( 1)( iii) for direct dischargers and Sec. 403.6( e) for indirect dischargers. These regulations allow permit writers and pretreatment control authorities to establish in plant monitoring points for regulated pollutants in cases where it is impractical or infeasible to monitor at the normal end of pipe monitoring point e. g., because the regulated pollutant is not detectable at the end of pipe. This, in turn, is the result of the wastewater stream bearing the regulated pollutant being commingled with significantly higher volume streams not bearing the regulated pollutant. EPA's analysis of waste stream flow data, from subcategories A and C facilities containing cyanide in their wastewaters, indicate that the volume of cyanide bearing wastewaters is, on average, less than 2.1 percent of the total process wastewater flow and that all but two of the facilities required to monitor for cyanide do so at an in plant monitoring point. Facilities that can demonstrate that it is not impractical or infeasible to monitor for cyanide at the normal end of pipe point, i. e., cyanide can be detected http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 89 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule at the end of pipe point, may do so. In connection with the ammonia pretreatment standards being promulgated for subcategories A and C, EPA has determined that the pollutant ammonia does not passthrough POTWs that possess nitrification capability. As a result, ammonia pretreatment standards would not apply to subcategories A and C industrial users that discharge to these POTWs. In order to provide guidance to pretreatment authorities, EPA describes the treatment system requirements under which nitrification is considered to occur in section 17 of the final TDD and defines the basis for considering a POTW to have acceptable nitrification capability in Sec. 439.1 of the final rule. POTWs that nitrify should impose local limits for [[ Page 50415]]

ammonia if they believe that the ammonia load from the pharmaceutical industrial user( s) will nevertheless pass through their facilities ( see 40 CFR 403.5). During the post proposal period, EPA has received comments from industry commenters that complying with the pH requirements 100 percent of the time when using continuous monitoring is not practical for many facilities. Direct discharging pharmaceutical facilities are required by today's final regulation to maintain effluent pH in the 6.0 9.0 range. The general pretreatment regulations specifically in 40 CFR 403.5( b)( 2), set a pH minimum of 5.0, except in certain design conditions, but do not set an upper boundary. EPA has addressed the problem of random excursions at 40 CFR 401.17 for direct discharging facilities. This regulation recognizes that random excursions from the pH range ( 6.0 9.0) may occur in the process of continuous monitoring and these random excursions should not be treated as violations. EPA is developing a proposal for a similar provision for indirect dischargers and expects to propose this provision by the end of this year. In implementing the final limitations and standards, permit writers need to account for the facility's nonprocess wastewater contained in the effluent being discharged in developing either mass or concentration based permit limits. As discussed previously, in section IV of this preamble, the final limitations and standards are developed from data sets from plants which had less than 25 percent nonprocess http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 90 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule wastewater in the total plant discharge. The flow basis of the final limitations and standards is discussed in section 13 of the TDD. In addition, examples of BPT and BAT permit limit calculations involving different plant flow configurations are provided in Appendix A to the TDD. In addition, permitting authorities have requested clarification on whether certain operations performed at pharmaceutical facilities would cause those facilities to be regulated under additional effluent guidelines. Specifically, guidance has been requested in cases where pharmaceutical facilities, during routine maintenance and cleaning periods, use acid containing solutions on or in stainless steel processing equipment. Some permitting authorities have inquired whether these operations are considered passivation operations which would place the wastewater generated during such cleaning operations under the limitations set forth by 40 CFR Part 433, the Metal Finishing Point Source Category. The Food and Drug Administration requires that pharmaceutical products must be of high purity and cannot be contaminated with dirt, biological organisms, or corrosion products. The pharmaceutical production equipment includes many interconnected pipes, storage vessels, and reactors. Most of the piping system and tanks are fabricated from austenitic stainless steel similar to AISI 304. The Agency is aware of several pharmaceutical facilities which clean production equipment with a mild alkaline    soap'' followed by a flush with an acid containing solution. Some of these acid solutions contain nitric acid. The alkaline cleaner/ acid rinse operation is usually performed during plant shut downs or routine preventative maintenance. Because much of the plant piping is fabricated from austenitic stainless steel, and such stainless steels are known to be    passivated'' using nitric acid solutions, it has been asked if the nitric acid based process used by the pharmaceutical facilities would be considered    passivation'' or    cleaning'' for the purpose of regulation under the 40 CFR Part 433 Metal Finishing regulation. The    Development Document for Effluent Limitations Guidelines, New Source Performance Standards for the Metal Finishing Point Source Category'' describes the    coating'' unit operation, which includes    passivation'', as one of the six key    trigger'' processes, while the    cleaning'' operation description includes a discussion of acid cleaning as an operation that is not one of the six    trigger''

http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 91 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule processes. For a process wastestream to be regulated under 40 CFR Part 433, a facility must perform one of the six    trigger'' operations. To determine the status of the alkaline    soap''/ acid based operations performed at pharmaceutical facilities, key provisions of the    passivation'' and    cleaning'' definitions were reviewed. From the definitions provided in the Development Document    passivation'' is a process in which iron particles are removed from a surface, while a protective coating is formed.    Cleaning'' is a process in which acid can be used in combination with detergent to remove soil from metal surfaces. Based on these definitions from the Metal Finishing Development Document, the process conducted at pharmaceutical facilities should be considered cleaning for the following three reasons: 1. The processes in question use both acid and detergent. 2. The processes in question are not used to remove imbedded iron particles. 3. The processes in question are not used to form a coating on stainless steel piping. ( This conclusion can be reached based on the inherent vulnerability of non passivated stainless to corrosion. If the pipes in this system were not already passivated, they would corrode during the production operations and contaminate the pharmaceutical products.) For the reasons listed above, the pharmaceutical production operations performed at these facilities should be considered    acid cleaning'' and non    passivation'' with respect to 40 CFR Part 433 Metal Finishing. Because the facilities only perform    acid cleaning'' and not    passivation'' there is no metal finishing    trigger'' process performed at the facility and therefore the facility would not be regulated using 40 CFR Part 433.

B. Upset and Bypass Provisions A recurring issue is whether industry limitations and standards should include provisions authorizing noncompliance with effluent limitations during periods of    upset'' or    bypass''. An upset, sometimes called an    excursion,'' is an unintentional and temporary noncompliance with technology based effluent limitations occurring for reasons beyond the reasonable control of the permittee. EPA believes http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 92 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule that upset provisions are necessary to recognize an affirmative defense for an exceptional incident. Because technology based limitations can require only what properly designed, maintained and operated technology can achieve, it is claimed that liability for such situations is improper. While an upset is an unintentional episode during which effluent limitations are exceeded, a bypass is an act of intentional noncompliance during which wastewater treatment facilities are circumvented in emergency situations. EPA has both upset and bypass provisions in NPDES permits, and has promulgated NPDES and pretreatment regulations which include upset and bypass provisions. ( 40 CFR 122.41( m), 122.41( n) and 40 CFR 403.16 and 403.17.) The upset provision establishes an upset as an affirmative defense to prosecution for violation of technology based effluent limitations. The bypass provision provides that EPA may enforce against facilities that bypass except where necessary to prevent loss of life, personal injury, or severe property damage; there were no feasible alternatives; or permittee submitted notices as required under 122.41( n)( 3).

C. Variances and Modifications Upon the promulgation of these regulations, the effluent limitations for [[ Page 50416]]

the appropriate subcategory must be applied in all Federal and State NPDES permits issued to direct dischargers in the pharmaceutical manufacturing industry. In addition, the pretreatment standards are directly applicable to indirect dischargers.

1. Fundamentally Different Factors Variances For the BPT effluent limitations, the only exception to the binding limitations is EPA's    fundamentally different factors'' (   FDF'') variance ( 40 CFR Part 125 Subpart D). This variance recognizes factors concerning a particular discharger which are fundamentally different http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 93 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule from the factors considered in this rulemaking. Although this variance clause was set forth in EPA's 1973 1976 effluent guidelines, it is now included in the NPDES regulations and not the specific industry regulations. ( See 44 FR 32854, 32893 [ June 7, 1979] for an explanation of the    fundamentally different factors'' variance). The procedures for application for a BPT FDF variance are set forth at 40 CFR 122.21( m)( 1)( I)( A). Dischargers subject to the BAT limitations and PSES in these final regulations may also apply for an FDF variance, under the provisions of sec. 301( n) of the Act, which regulates BAT, BCT, and PSES for existing sources pretreatment FDFs. ( See 40 CFR 122.21 and 40 CFR 403.13, respectively) In addition, BAT limitations for nonconventional pollutants may be modified under sec. 301( c) ( for economic reasons) and 301( g) ( for water quality reasons) of the Act. Under sec. 301( l) of the Act, these latter two statutory modifications are not applicable to    toxic'' or conventional pollutants. 2. Removal Credits Congress, in enacting Section 307( b) of the CWA, recognized that, in certain instances, POTWs could provide some or all of the treatment of an industrial user's wastestream that would be required pursuant to the pretreatment standard. Consequently, Congress established a discretionary program for POTWs to grant    removal credits'' to their indirect dischargers. The credit, in the form of a less stringent pretreatment standard, allows an increased amount of pollutants to flow from the indirect discharger's facility to the POTW. Section 307( b) of the CWA establishes a three part test for obtaining removal credit authority for a given pollutant. Removal credits may be authorized only if ( 1) the POTW    removes all or any part of such toxic pollutant,'' ( 2) the POTW's ultimate discharge would    not violate that effluent limitation, or standard which would be applicable to that toxic pollutant if it were discharged'' directly rather than through a POTW and ( 3) the POTW's discharge would    not prevent sludge use and disposal by such [ POTW] in accordance with section [ 405]. . . .'' Section 307( b). EPA has promulgated removal credit regulations in 40 CFR 403.7. The United States Court of Appeals for the Third Circuit has interpreted the statute to require EPA to promulgate comprehensive sewage sludge http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 94 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule regulations before any removal credits could be authorized. NRDC v. EPA, 790 F. 2d 289, 292 ( 3rd Cir. 1986) cert. denied. 479 U. S. 1084 ( 1987). Congress made this explicit in the Water Quality Act of 1987 which provided that EPA could not authorize any removal credits until it issued the sewage sludge use and disposal regulations required by section 405( d)( 2)( a)( ii). Section 405 of the CWA requires EPA to promulgate regulations which establish standards for sewage sludge when used or disposed for various purposes. These standards must include sewage sludge management standards as well as numerical limits for pollutants which may be present in sewage sludge in concentrations which may adversely affect public health and the environment. Section 405 requires EPA to develop these standards in two phases. On February 19, 1993, EPA published the Round One sewage sludge regulations establishing standards, including numerical pollutant limits, for the use and disposal of sewage sludge. 58 FR 9248. EPA established pollutant limits for ten metals when sewage sludge is applied to land, for three metals when it is disposed of at surface disposal sites and for seven metals and total hydrocarbons, a surrogate for organic pollutant emissions, when sewage sludge is incinerated. These requirements are codified at 40 CFR Part 503. At the same time EPA promulgated the Round One regulations, EPA also amended its pretreatment regulations to provide that removal credits would be available for certain pollutants regulated in the sewage sludge regulations. See 58 FR at 9386. The amendments to Part 403 provide that removal credits may be made potentially available for the following pollutants: ( 1) If a POTW applies its sewage sludge to the land for beneficial uses, disposes of it on surface disposal sites or incinerates it, removal credits may be available, depending on which use or disposal method is selected ( so long as the POTW complies with the requirements in Part 503). When sewage sludge is applied to land, removal credits may be available for ten metals. When sewage sludge is disposed of on a surface disposal site, removal credits may be available for three metals. When the sewage sludge is incinerated, removal credits may be available for seven metals and for 57 organic pollutants. See 40 CFR 403.7( a)( 3)( iv)( A). ( 2) In addition, when sewage sludge is used on land or disposed of http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 95 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule on a surface disposal site or incinerated, removal credits may also be available for additional pollutants so long as the concentration of the pollutant in sludge does not exceed a concentration level established in Part 403. When sewage sludge is applied to land, removal credits may be available for two additional metals and 14 organic pollutants. When the sewage sludge is disposed of on a surface disposal site, removal credits may be available for seven additional metals and 13 organic pollutants. When the sewage sludge is incinerated, removal credits may be available for three other metals. See 40 CFR 403.7( a)( 3)( iv)( B). ( 3) When a POTW disposes of its sewage sludge in a municipal solid waste landfill that meets the criteria of 40 CFR Part 258 ( MSWLF), removal credits may be available for any pollutant in sewage sludge. See 40 CFR 403.7( a)( 3)( iv)( C). Thus, given compliance with the requirements of EPA's removal credit regulations, following promulgation of the pretreatment standards in today's rule, removal credits may be authorized for any pollutant subject to pretreatment standards if the applying POTW disposes of its sewage sludge in a MSWLF that meets the requirements of 40 CFR Part 258. Currently there are two pretreatment programs authorized to issue removal credits. EPA is not promulgating pretreatment standards for metals, thus removal credits for metals are not applicable. Given compliance with Sec. 403.7, removal credits may be available for the following organic pollutants ( depending on the method of use or disposal) if the POTW uses or disposes of its sewage sludge: benzene, chloroform, 1,2 dichloroethane, methylene chloride and toluene.

D. Analytical Methods Section 304( h) of the Act directs EPA to promulgate guidelines establishing test methods for the analysis of pollutants. These methods are used to determine the presence and concentration of pollutants in wastewater, and are used for compliance monitoring and for filing applications for the NPDES program [[ Page 50417]]

under 40 CFR 122.21, 122.41, 122.44 and 123.25, and for the http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 96 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule implementation of the pretreatment standards under 40 CFR 403.10 and 403.12. To date, EPA has promulgated methods for conventional pollutants, toxic pollutants, and for some nonconventional pollutants. The five conventional pollutants are defined at 40 CFR 401.16. Table IB at 40 CFR Part 136 lists the analytical methods approved for these pollutants. The 65 toxic metals and organic pollutants and classes of pollutants are defined at 40 CFR 401.15. From the list of 65 classes of toxic pollutants EPA identified a list of 126    Priority Pollutants.'' This list of Priority Pollutants is shown, for example, at 40 CFR Part 423, Appendix A. The list includes non pesticide organic pollutants, metal pollutants, cyanide, asbestos, and pesticide pollutants. Currently approved methods for metals and cyanide are included in the table of approved inorganic test procedures at 40 CFR 136.3, Table I B. Table I C at 40 CFR 136.3 lists approved methods for measurement of non pesticide organic pollutants, and Table I D lists approved methods for the toxic pesticide pollutants and for other pesticide pollutants. Dischargers must use the test methods promulgated at 40 CFR 136.3 or incorporated by reference in the tables, when available, to monitor pollutant discharges from the pharmaceutical manufacturing industry, unless specified otherwise by the permitting authority. As a part of today's final rule, EPA is promulgating additional test methods for the additional pollutants to be regulated under Part 439 by adding a new Table IF at 40 CFR 136.3 listing test methods for the pharmaceutical pollutants. To support the Part 439 regulations at the time of proposal, EPA published test methods developed specifically for the pharmaceutical industry in a compendium entitled,    Analytical Methods for the Determination of Pollutants in Pharmaceutical Manufacturing Industry Wastewater,'' EPA 821 B 94 001. These proposed test methods were discussed in the proposed rule. The proposed test methods have been revised in response to public comment and the revised test methods are available for monitoring some pollutants covered by today's final rule. The revised test methods have been published in a revised compendium ( the    Pharmaceutical Methods Compendium, Revision A''; EPA 821 B 98 016 [ A, July 1998] with the same title as the proposed compendium. EPA does not anticipate that any dischargers from industrial categories other than the pharmaceutical manufacturing industry will ever need to monitor for the additional pollutants ( with http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 97 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule methods listed in Table 1F). In addition, EPA is allowing use of applicable drinking water methods that have been promulgated at 40 CFR part 141 and use of ASTM Methods D3371, D3695, and D4763, for monitoring of the pollutants included in this rulemaking. The final rule allows for use of these additional test methods for several reasons: ( 1) it allows greater flexibility in monitoring as requested by some commenters; ( 2) it conforms use of methods in EPA's drinking water and wastewater programs, ( 3) it moves toward a performance based measurement system, and ( 4) it allows use of technical standards as contemplated by the National Technology Transfer and Advancement Act of 1995 ( NTTAA; see Section IX. G.). For pollutants to be monitored under today's final rule, EPA has included a new table of methods in Sec. 136.3( a). The methods in this table are in addition to other methods approved at 40 CFR 136.3. The listed methods are incorporated by reference into this rule. With the allowed use the methods included in the new Table IF at 40 CFR 136.3, in addition to those already approved in other Tables at 40 CFR 136.3, EPA believes that dischargers in the pharmaceutical manufacturing point source category will have great flexibility in selection of a method for monitoring the pollutants being regulated in today's final rule. On October 6, 1997, EPA published a Notice of the Agency's intent to implement a Performance Based Measurement System ( PBMS) in all of its programs to the extent feasible ( 62 FR 52098). The Agency is currently determining the specifics steps necessary to implement PBMS in its programs and preparing an implementation plan. Final decisions have not yet been made concerning the implementation of PBMS in water programs. However, EPA is currently evaluating what relevant performance characteristics should be specified for monitoring methods used in the water programs under a PBMS approach to ensure adequate data quality. EPA would then specify performance requirements in its regulations to ensure that any method used for determination of a regulated analyte is at least equivalent to the performance achieved by other currently approved methods. EPA expects to publish its PBMS implementation strategy for water programs in the Federal Register by the end of calendar year 1998.

http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 98 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule Once EPA has made its final determinations regarding implementation of PBMS in programs under the Clean Water Act, EPA would incorporate specific provisions of PBMS into its regulations, which may include specification of the performance characteristics for measurement of the regulated pollutants in today's final rule.

IX. Regulatory Assessment Requirements A. Executive Order 12866 Under Executive Order 12866, ( 58 FR 51735 ( October 4, 1993)) the Agency must determine whether the regulatory action is    significant'' and therefore subject to Office of Management and Budget ( OMB) review and the requirements of this 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 of 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, 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 this Executive Order. Pursuant to the terms of the Executive Order, 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 suggestions or recommendations are documented in the public record.

B. Regulatory Flexibility Act and the Small Business Regulatory Enforcement Fairness Act of 1996 ( SBREFA)

Under the Regulatory Flexibility Act ( RFA), 5 U. S. C. 601 et seq., as amended by SBREFA, EPA generally is required to conduct a regulatory flexibility analysis describing the impact of the regulatory action on http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 99 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule small entities as part of the rulemaking. However, under section 605 ( b) of the RFA, EPA is not required to prepare the regulatory flexibility analysis if EPA certifies that the rule will not have a significant economic impact on a substantial number of small entities.

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Pursuant to section 605( b) of the RFA, the Administrator certifies that this rule will not have a significant impact on a substantial number of small entities. Nevertheless, the Agency prepared a small business analysis, which is presented in the Economic Analysis for Final Effluent Guidelines and Standards for the Pharmaceutical Industry and summarized in Section V. E. of this document. Briefly, EPA estimates that 145 small businesses will incur costs to comply with this rule ( based on a small business definition of 750 or fewer employees as recommended by the U. S. Small Business Administration). EPA evaluated the compliance costs of the regulatory action relative to the company's annual revenue. When considering the effluent limitations guidelines and standards costs only, four small firms are estimated to incur annualized compliance costs exceeding one percent of revenue and no firms are estimated to incur annualized compliance costs exceeding three percent of revenue. When considering the aggregate costs of the effluent limitations guidelines and standards and the MACT standards, six small firms are estimated to incur annualized compliance costs exceeding one percent of revenue and one firm is estimated to incur annualized compliance costs exceeding three percent of revenue. No firms are expected to incur annualized compliance costs in excess of four percent of revenue. Further, EPA's economic achievability analysis considers the potential for facility closure and corporate bankruptcy. The analysis indicates no disproportionate effects for small businesses compared to large businesses. The regulatory action is found to be economically achievable for all dischargers, including small businesses.

C. Submission to Congress and the General Accounting Office Under 5 U. S. C. 801( a)( 1)( A) as added by the Small Business Regulatory Enforcement Fairness Act of 1996, EPA submitted a report http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 100 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule containing this rule and other required information to the U. S. Senate, the U. S. House of Representatives and the Comptroller General of the General Accounting Office prior to publication of the rule in today's Federal Register. This rule is not a    major rule'' as defined by 5 U. S. C. 804( 2).

D. Paperwork Reduction Act This rule contains no new information collection activities requiring an information collection request, and therefore, no information collection request was submitted to OMB for review under the provisions of the Paperwork Reduction Act, 44 U. S. C. 3501 et seq. OMB has approved information collection requirements for existing regulations ( 40 CFR Part 439) and assigned OMB Control No. 2040 0110 in connection with NPDES related information collection requirements and No. 2040 0009 in connection with pretreatment information collection requirements. The information collection requirements resulting from the regulations being promulgated today are covered by these OMB control numbers.

E. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 ( UMRA), P. L. 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 http:// www. epa. gov/ fedrgstr/ EPA WATER/ 1998/ September/ Day 21/ w21027. htm ( 101 of 169) [ 3/ 21/ 2003 8: 05: 02 AM] EPA: Federal Register: Pharmaceutical Manufacturing Category Effluent Limitations Guidelines, Pretreatment Standards, and New Source Performance Standards; Final Rule 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 CWA rule does not contain a Federal mandate that may result in expenditures of $ 100 million or more for State, local or tribal governments, in the aggregate, or the private sector in any one year. EPA estimates that the annual compliance costs to the private sector are $ 61.0 million ($ 1996). Thus, this rule is not subject to the requirements of sections 202 and 205 of UMRA. EPA has also determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments and thus, this rule is not subject to the requirements of section 203 of UMRA. Nevertheless, EPA has consulted with state and local governments pertaining to implementation issues. EPA's evaluation of their comments is reflected in the final rules.