1
MEMORANDUM
Date:
June
3,
2004
To:
Aquatic
Animal
Production
Industry
Project
File
From:
Ian
Cadillac
and
Maureen
Kaplan,
Eastern
Research
Group,
Inc.
Subject:
Cost­
Reasonableness
and
Cost­
Effectiveness
The
costs
and
removals
presented
in
this
memorandum
are
based
on
the
August
2003
data
received
from
Tetra
Tech.
Following
standard
EPA
EAD
methodology,
neither
the
costs
nor
the
removals
for
baseline
facility
closures
are
included
in
the
analysis.

1.
COST­
REASONABLENESS
EPA
performed
cost
reasonableness
(
CR)
based
on
estimated
costs,
loadings,
and
removals
(
see
Development
Document
for
details,
EPA,
2004).
Option
costs
include
costs
for
BMP
components
that
address
invasive
species,
drugs,
and
chemicals
that
have
no
effect
on
nutrients,
BOD,
or
TSS.
That
is,
cost­
reasonableness
values
are
overstated.
For
comparison
with
the
information
provided
in
the
proposed
rule
and
the
2003
Notice,
the
results
are
presented
in
terms
of
2001
dollars.

Table
1
shows
the
cost­
reasonableness
values
for
conventional
pollutants.
EPA
estimated
BOD
and
TSS
removals
for
each
facility
for
each
option.
Because
BOD
can
be
correlated
with
TSS,
EPA
selected
the
higher
of
the
two
values
(
not
the
sum)
to
avoid
possible
double­
counting
of
removals.
For
commercial
flow­
through
facilities,
cost­
reasonableness
is
undefined
for
Option
A
because
there
are
no
removals
and
$
3.08/
lb
for
Option
B.
For
non­
commercial
flow­
through
facilities,
cost­
reasonableness
is
$
0.61/
lb
for
Option
A
and
$
1.03/
lb
for
Option
B.
Cost­
reasonableness
is
undefined
for
recirculating
systems.

2.
NUTRIENT
COST­
EFFECTIVENESS
RESULTS
EPA
previously
identified
benchmarks
or
thresholds
for
assessing
CE/
CR
results,
that
is,
$
4/
lb
for
nitrogen,
$
10/
lb
for
phosphorus
cost­
effectiveness
and
$
0.73/
lb
for
cost­
reasonableness
(
see
EPA,
2003;
68
FR
7249­
7250).
The
tables
in
this
section
provide
the
nutrient
cost­
effectiveness
values
for
nitrogen
and
phosphorus.
Table
2
presents
the
results
for
nitrogen
by
production
system,
commercial
and
noncommercial
sector,
and
option.
For
commercial
flow­
through
facilities,
the
average
cost­
effectiveness
for
nitrogen
is
undefined
for
Option
A
and
$
16/
lb
for
Option
B.
Nutrient
cost­
effectiveness
values
are
higher
for
non­
commercial
facilities.
The
average
cost­
effectiveness
for
nitrogen
is
$
866/
lb
for
Option
A
and
$
34/
lb
for
the
Option
B.
For
recirculating
facilities,
no
nitrogen
is
removed
so
nutrient
cost­
effectiveness
is
undefined.
2
Table
1
Cost­
reasonableness:
BOD
and
TSS
Subcategory,
Sector,
and
Option
Pre­
tax
Annualized
Costs
($
2001)
BOD
and
TSS
Removals
(
lb)
[
1]
Cost­
reasonableness
($
2001/
pound)

Commercial
Flow­
Through
Option
A
$
88,001
0
Undefined
Option
B
$
281,941
91,431
$
3.08
Non­
commercial
Flow­
Through
Option
A
$
723,288
1,196,426
$
0.61
Option
B
$
1,410,630
1,373,286
$
1.03
Commercial
Recirculating
Option
A
$
5,409
0
Undefined
Option
B
$
5,409
0
Undefined
Non­
commercial
Recirculating
Option
A
$
0
0
Undefined
Option
B
$
0
0
Undefined
Estimated
by
EPA
Undefined:
Option
costs
are
costs
for
BMP
components
that
address
invasive
species,
drugs,
and
chemicals
that
have
no
effect
on
BOD
or
TSS,
or
facilities
in
these
groups
have
adequate
treatment
to
achieve
requirements
for
pollutants
in
this
table
(
i.
e.,
no
incremental
removals
are
estimated).
[
1]
EPA
determines
the
higher
of
BOD
or
TSS
mass
removal
for
each
facility
and
then
aggregates
pounds
across
facilities.
3
Table
2
Nutrient
Cost­
effectiveness:
Nitrogen
Subcategory,
Sector,
and
Option
Pre­
tax
Annualized
Costs
($
2001)
Nitrogen
Removals
(
lb)
Cost­
effectiveness
($
2001/
pound)

Average
Incremental
Commercial
Flow­
Through
Option
A
$
88,001
0
Undefined
Undefined
Option
B
$
281,941
17,608
$
16.01
$
11.01
Non­
commercial
Flow­
Through
Option
A
$
723,288
846
$
865.93
$
865.93
[
1]

Option
B
$
1,410,630
41,917
$
33.65
$
16.52
Commercial
Recirculating
Option
A
$
5,409
0
Undefined
Undefined
Option
B
$
5,409
0
Undefined
Undefined
Non­
commercial
Recirculating
Option
A
$
0
0
Undefined
Undefined
Option
B
$
0
0
Undefined
Undefined
Estimated
by
EPA
Undefined:
Option
costs
are
costs
for
BMP
components
that
address
invasive
species,
drugs,
and
chemicals
that
have
no
effect
on
nutrients,
or
facilities
in
these
groups
have
adequate
treatment
to
achieve
requirements
for
pollutants
in
this
table
(
i.
e.,
no
incremental
removals
are
estimated).
[
1]
Option
A
is
incremental
to
baseline,
so
the
average
and
incremental
values
are
the
same.

Table
3
presents
the
results
for
phosphorus
by
production
system,
commercial
and
non­
commercial
sector,
and
option.
For
commercial
flow­
through
facilities,
the
average
cost­
effectiveness
for
nitrogen
is
undefined
for
Option
A
and
$
92/
lb
for
Option
B.
Nutrient
cost­
effectiveness
values
are
higher
for
noncommercial
facilities.
The
average
cost­
effectiveness
for
nitrogen
is
$
591/
lb
for
Option
A
and
$
174/
lb
for
the
Option
B.
For
recirculating
facilities,
no
phosphorus
is
removed
so
nutrient
cost­
effectiveness
is
undefined.
4
Table
3
Nutrient
Cost­
effectiveness:
Phosphorus
Subcategory,
Sector,
and
Option
Pre­
tax
Annualized
Costs
($
2001)
Phosphorus
Removals
(
lb)
Cost­
effectiveness
($
2001/
pound)

Average
Incremental
Commercial
Flow­
Through
Option
A
$
88,001
0
Undefined
Undefined
Option
B
$
281,941
3,050
$
92.45
$
63.59
Non­
commercial
Flow­
Through
Option
A
$
732,288
1,240
$
590.64
$
590.64
[
1]

Option
B
$
1,410,630
8,130
$
173.50
$
98.44
Commercial
Recirculating
Option
A
$
5,409
0
Undefined
Undefined
Option
B
$
5,409
0
Undefined
Undefined
Non­
commercial
Recirculating
Option
A
$
0
0
Undefined
Undefined
Option
B
$
0
0
Undefined
Undefined
Estimated
by
EPA
Undefined:
Option
costs
are
costs
for
BMP
components
that
address
invasive
species,
drugs,
and
chemicals
that
have
no
effect
on
nutrients,
or
facilities
in
these
groups
have
adequate
treatment
in
place
to
achieve
requirements
for
pollutants
in
this
table
(
i.
e.,
no
incremental
removals
are
estimated).
[
1]
Option
A
is
incremental
to
baseline,
so
the
average
and
incremental
values
are
listed
as
being
the
same.
1A
list
of
priority
("
toxic")
and
conventional
pollutants
are
defined
at
40
CFR
Part
401.
There
are
more
than
120
priority
pollutants,
including
metals,
pesticides,
and
organic
and
inorganic
compounds.
Conventional
pollutants
include
biological
oxygen
demand
(
BOD),
total
suspended
solids
(
TSS),
pH,
fecal
coliform,
and
oil
and
grease.
Non­
conventional
pollutants
comprise
all
other
pollutants,
including
nutrients
(
i.
e.,
they
do
not
include
conventional
and
priority
pollutants).

2EPA
defined
cost­
effectiveness
similarly
for
Phase
II
of
the
Storm
Water
rule
(
EPA,
1999)
and
examined
the
incremental
annualized
cost
of
each
pollution
control
option
to
the
incremental
pound
of
TSS
removed
annually.

3Human
health
and
aquatic
chronic
criteria
are
maximum
contamination
thresholds.
Units
for
criteria
are
micrograms
of
pollutant
per
liter
of
water.
Most
values
are
those
reported
in
the
toxicology
literature.

4Although
the
water
quality
criterion
has
been
revised
(
to
12.0
µ
g/
l),
all
C­
E
analyses
for
effluent
guideline
regulations
continue
to
use
the
"
old"
criterion
of
5.6
µ
g/
l
as
a
benchmark
so
that
cost­
effectiveness
values
can
continue
to
be
compared
to
those
for
other
effluent
guidelines.
Where
copper
is
present
in
the
effluent,
the
revised
higher
criterion
for
copper
results
in
a
toxic
weighting
factor
for
copper
of
0.467
rather
than
1.0.

5
3.
COST­
EFFECTIVENESS
FOR
METALS
AND
OTHER
POLLUTANTS
As
part
of
the
process
of
setting
effluent
limitations
guidelines
and
developing
standards,
EPA
uses
cost­
effectiveness
calculations
to
compare
the
efficiencies
of
regulatory
options
for
removing
priority
and
non­
conventional
pollutants.
1
Although
not
required
by
the
Clean
Water
Act,
a
cost­
effectiveness
(
C­
E)
analysis
offers
a
useful
metric
to
compare
the
efficiency
of
alternative
regulatory
options
in
removing
pollutants
and
to
compare
the
proposed
technology
option
to
other
regulatory
alternatives
that
were
considered
by
EPA.
2
A
recent
report
raised
the
possibility
of
PCBs
in
feed
for
farm­
raised
fish
(
Hites
et
al.,
2004).
The
aquaculture
rule
was
not
intended
to
control
the
discharge
of
metals
and
other
pollutants,
but
EPA
decided
to
evaluate
the
incidental
removal
of
pollutants
associated
with
TSS
removals.
EPA
estimated
removals
for
24
metals
and
polychlorinated
biphenyls
(
PCBs),
see
the
Development
Document
for
details.

In
cost­
effectiveness
analysis,
pollutant
removals
are
measured
in
toxicity­
normalized
units
called
"
pound­
equivalents"
or
"
lb­
eq."
Pound­
equivalents
are
calculated
by
multiplying
the
number
of
pounds
of
pollutant
removed
by
the
toxic
weighting
factor
(
TWF)
for
each
pollutant.
These
factors
are
used
to
account
for
differences
in
toxicity
among
the
pollutants
and
to
adjust
the
estimated
pollutant
loading
values
to
account
for
the
fact
that
different
pollutants
have
different
potential
effects
on
human
and
aquatic
life
(
e.
g.,
a
pound
of
zinc
in
an
effluent
stream
has
a
different
effect
than
a
pound
of
arsenic).
The
more
toxic
the
pollutant,
the
higher
will
be
the
pollutant's
toxic
weighting
factor.
Thus,
the
use
of
pound­
equivalents
gives
correspondingly
more
weight
to
pollutants
with
higher
toxicity.

TWFs
for
pollutants
are
derived
using
ambient
water
quality
criteria
and
toxicity
values.
3
The
factors
are
standardized
by
relating
them
to
a
"
benchmark"
toxicity
value
that
was
based
on
the
toxicity
of
copper
when
the
methodology
was
developed.
4
For
most
pollutants,
toxic
weighting
factors
are
derived
from
chronic
freshwater
aquatic
criteria.
In
cases
where
a
human
health
criterion
has
also
been
established
for
the
consumption
of
fish,
the
sum
of
both
the
human
and
aquatic
criteria
are
used
to
derive
toxic
weighting
factors.
The
toxic
weighting
factor
is
the
sum
of
two
criteria­
weighted
ratios:
the
6
"
benchmark/
old"
copper
criterion
divided
by
the
human
health
criterion
for
the
particular
pollutant
and
the
"
benchmark/
old"
copper
criterion
divided
by
the
aquatic
chronic
criterion.
Table
4
is
the
list
of
toxic
weighting
factors
used
in
the
analysis.

The
information
is
summarized
in
Table
5.
For
Option
A,
there
are
no
removals
of
metals
or
toxics
for
commercial
flow­
through
facilities,
so
cost­
effectiveness
is
undefined.
For
Option
B,
costeffectiveness
is
$
1,604/
lb­
eq.
For
public
flow­
through
facilities,
the
incremental
cost­
effectiveness
values
are
$
762/
lb­
eq.
and
$
1,726/
lb­
eq.
for
Options
A
and
B,
respectively.
Cost­
effectiveness
is
undefined
for
recirculating
systems.

Table
4
Toxic
Weighting
Factors
Pollutant
Toxic
Weighting
Factor
Removals
(
lb­
eq.)

Option
A
Option
B
Aluminum
0.06
15.46
24.61
Antimony
0.00
0.00
0.00
Arsenic
3.47
2.25
3.59
Barium
0.00
0.12
0.19
Beryllium
1.06
0.45
0.72
Boron
0.18
3.13
4.99
Cadmium
2.61
1.04
1.65
Chromium
0.08
0.18
0.28
Cobalt
0.11
0.05
0.07
Copper
0.63
24.18
38.49
Iron
0.01
4.02
6.40
Lead
2.24
3.14
4.99
Manganese
0.07
6.83
10.87
Mercury
117.08
20.78
33.08
Molybdenum
0.20
0.26
0.42
Nickel
0.11
0.13
0.21
Selenium
1.12
0.58
0.93
Silver
16.47
7.00
11.14
Thallium
1.00
0.16
0.26
Tin
0.30
0.12
0.20
Titanium
0.03
0.23
0.36
Vanadium
0.62
2.16
3.44
Zinc
0.05
13.98
22.25
PCBs
12,892.48
429.26
683.32
7
Table
5
Cost­
effectiveness
Subcategory,
Sector,
and
Option
Pre­
tax
Annualized
Costs
($
2001)
Pound­
equivalents
Removed
(
lb­
eq)
Cost­
effectiveness
($
1981/
lb­
eq)

Average
Incremental
Commercial
Flow­
Through
Option
A
$
88,001
0
Undefined
Undefined
Option
B
$
231,941
98
$
1,604
$
1,104
Non­
commercial
Flow­
Through
Option
A
$
732,288
536
$
762
$
762
[
1]

Option
B
$
1,410,630
755
$
1,042
$
1,726
Commercial
Recirculating
Option
A
$
5,409
0
Undefined
Undefined
Option
B
$
5,409
0
Undefined
Undefined
Non­
commercial
Recirculating
Option
A
$
0
0
Undefined
Undefined
Option
B
$
0
0
Undefined
Undefined
[
1]
Option
A
is
incremental
to
baseline,
so
the
average
and
incremental
values
are
the
same.

4.
REFERENCES
Hites,
et
al.
2004.
Ronald
A.
Hites,
Jeffery
A.
Foran,
David
O.
Carpenter,
M.
Correen
Hamilton,
Barbara
A.
Knuth,
and
Steven
J.
Swanger.
Global
Assessment
of
Organic
Contaminants
in
Farmed
Salmon.
Science
303:
226­
229.
9
January.

U.
S.
EPA.
2004.
United
States
Environmental
Protection
Agency.
Development
Document
for
the
Final
Effluent
Limitations
Guidelines
and
Standards
for
the
Aquatic
Animal
Production
Industry.
EPA­
821­
R­
04­
xxx.
Washington,
DC:
U.
S.
Environmental
Protection
Agency,
Office
of
Water.

U.
S.
EPA.
2003.
United
States
Environmental
Protection
Agency.
40
CFR
Parts
9,
122,
123,
and
412
National
Pollutant
Discharge
Elimination
System
Permit
Regulation
and
Effluent
Limitation
Guidelines
and
Standards
for
Concentrated
Animal
Feeding
Operations
(
CAFOs);
Final
Rule.
Federal
Register
68:
7175­
7274.
February
12.
8
U.
S.
EPA.
1999.
United
States
Environmental
Protection
Agency.
Economic
Analysis
of
the
Final
Phase
II
Storm
Water
Rule.
Washington,
DC:
U.
S.
Environmental
Protection
Agency,
Office
of
Water.
October.
http://
www.
epa.
gov/
npdes/
pubs/
econ_
cover.
pdf
and
subsequent
files.
