SUPPORTING
STATEMENT
FOR
INFORMATION
COLLECTION
REQUEST
FOR
PHASE
III
§
316(
B)
REQUIREMENTS
FOR
COOLING
WATER
INTAKE
STRUCTURES
UNDER
THE
NATIONAL
POLLUTANT
DISCHARGE
ELIMINATION
SYSTEM
PERMIT
PROGRAM
i
TABLE
OF
CONTENTS
PART
A
OF
THE
SUPPORTING
STATEMENT
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1
1.
Identification
of
the
Information
Collection
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1
1(
a)
Title
of
the
Information
Collection
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1
1(
b)
Short
Characterization
(
Abstract)
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1
2.
Need
For
and
Use
of
the
Collection
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4
2(
a)
Need/
Authority
for
the
Collection
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4
2(
b)
Practical
Utility/
Users
of
the
Data
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4
3.
Non­
duplication,
Consultations,
and
Other
Collection
Criteria
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5
3(
a)
Non­
duplication
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5
3(
b)
Public
Notice
Required
Prior
to
ICR
Submission
to
OMB
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6
3(
c)
Consultations
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7
3(
d)
Effects
of
Less
Frequent
Collection
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7
3(
e)
General
Guidelines
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7
3(
f)
Confidentiality
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7
3(
g)
Sensitive
Questions
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8
4.
The
Respondents
and
the
Information
Requested
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8
4(
a)
Respondents
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8
4(
b)
Information
Requested
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8
(
I)
Data
items,
including
record
keeping
requirements
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8
(
II)
Respondent
activities
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14
5.
The
Information
Collected
­
Agency
Activities,
Collection
Methodology,
and
Information
Management
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15
5(
a)
Agency
Activities
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15
ii
5(
b)
Collection
Methodology
and
Information
Management
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15
5(
c)
Small
Entity
Flexibility
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15
5(
d)
Collection
Schedule
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16
6.
Estimating
Respondent
Burden
and
Cost
of
Collection
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16
6(
a)
Estimating
Respondent
Burden
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16
6(
b)
Estimating
Respondent
Costs
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17
6(
c)
Estimating
Agency
Burden
and
Costs
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17
6(
d)
Respondent
Universe
and
Total
Burden
Costs
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17
6(
e)
Bottom
Line
Burden
Hours
and
Costs
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18
6(
f)
Reasons
for
Change
in
Burden
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18
6(
g)
Burden
Statement
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18
PART
B
OF
THE
SUPPORTING
STATEMENT
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19
ATTACHMENTS
Attachment
1:
EPA
Response
to
Public
Comments
from
the
American
Chemistry
Council
et
al.

and
Accompanying
Triangle
Economic
Research
(
TER)
Report
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20
Attachment
2:
EPA
Response
to
Public
Comments
from
the
American
Petroleum
Institute
.
.
.
39
Attachment
3:
EPA
Response
to
Public
Comments
from
the
Mercatus
Center,
George
Mason
University
.
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42
Attachment
4:
EPA
Response
to
Public
Comments
from
PSEG
Corporation
Services
.
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53
LIST
OF
TABLES
Table
A1:
Duration
of
Questionnaire
Activities
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16
Table
A2:
Total
Estimated
Bottom
Line
Burden
and
Cost
Summary
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18
1
PART
A
OF
THE
SUPPORTING
STATEMENT
1.
Identification
of
the
Information
Collection
1(
a)
Title
of
the
Information
Collection
Willingness
to
Pay
Survey:
Phase
III
Cooling
Water
Intake
Structures
1(
b)
Short
Characterization
(
Abstract)

The
U.
S.
Environmental
Protection
Agency
(
EPA)
is
in
the
process
of
developing
new
regulations
to
provide
national
performance
standards
for
controlling
impacts
from
cooling
water
intake
structures
(
CWIS)
for
Phase
III
facilities
under
section
316(
b)
of
the
Clean
Water
Act
(
CWA).
The
facilities
considered
Phase
III
facilities
under
Clean
Water
Act
section
316(
b)

regulations
include
existing
electrical
generators
with
cooling
water
intake
structures
that
are
designed
to
withdraw
50
million
gallons
of
water
per
day
(
MGD)
or
less,
as
well
as
existing
manufacturing
and
industrial
facilities
with
cooling
water
intake
structures,
that
withdraw
water
from
rivers,
streams,
lakes,
reservoirs,
estuaries,
oceans,
or
other
waters
of
the
United
States
for
cooling
purposes.
The
regulation
also
establishes
section
316(
b)
requirements
for
new
offshore
oil
and
gas
extraction
facilities.

EPA
has
previously
published
final
section
316(
b)
regulations
that
address
new
facilities
(
Phase
I)
on
December
18,
2001
(
66
FR
65256)
and
existing
large
power
producers
(
Phase
II)
on
July
9,
2004
(
69
FR
41576).
See
40
CFR
Part
125,
Subparts
I
and
J,
respectively.

As
required
under
Executive
Order
12866,
EPA
performs
economic
impact
and
cost/
benefit
analyses
of
the
section
316(
b)
regulation
for
Phase
III
facilities.
Comprehensive,

appropriate
estimates
of
total
resource
value
include
both
use
and
non­
use
values,
such
that
the
resulting
total
social
benefit
estimates
may
be
compared
to
total
social
cost.
"
Non­
use
values,
like
use
values,
have
their
basis
in
the
theory
of
individual
preferences
and
the
measurement
of
welfare
changes.
According
to
theory,
use
and
non­
use
values
are
additive"
(
Freeman,
1993).
Therefore,

use
values
alone
may
understate
total
social
values.
Recent
economic
literature
supports
the
1For
detail
see
"
Phase
II
­
Large
Existing
Electric
Generating
Plants
Response
to
Public
Comment,"
U.
S.
EPA,
2004.
Available
at:
http://
www.
epa.
gov/
waterscience/
316b/
commentph2.
htm
2
hypothesis
that
non­
use
values
are
greater
than
zero.
Moreover,
when
small
per
capita
non­
use
values
are
held
by
a
substantial
fraction
of
the
population,
they
can
be
very
large
in
the
aggregate.

Developing
comprehensive
quantified
benefit
estimates
for
the
section
316(
b)
regulation
requires
consideration
of
non­
use
values
because
nearly
all
(
96
percent)
of
impingement
and
entrainment
losses
at
CWIS
consist
of
either
forage
species,
or
non­
landed
recreational
and
commercial
species
that
do
not
have
direct
uses.
Although
individuals
do
not
use
these
resources
directly,
they
may
nevertheless
be
affected
by
changes
in
the
resource
status
or
quality,
such
that
they
would
be
willing
to
pay
to
maintain
these
resources.
It
is
generally
accepted
in
economic
literature
that
non­
use
values
may
be
substantial
in
some
cases,
and
that
failure
to
recognize
such
values
may
lead
to
improper
inferences
regarding
policy
benefits
and
costs.
Many
public
comments
on
the
proposed
section
316(
b)
regulation
for
Phase
II
facilities
and
the
Phase
II
Notice
of
Data
Availability
(
NODA)
suggested
that
a
properly
designed
and
conducted
stated
preference,

or
contingent
valuation
(
CV),
survey
would
be
the
most
appropriate
and
acceptable
method
to
estimate
non­
use
benefits
of
the
rule.
1
Stated
preference
survey
methodology
is
the
generally
accepted
means
to
estimate
non­
use
values.
Stated
preference
surveys
use
carefully
designed
questions
to
elicit
respondents'
willingness
to
pay
(
WTP)
for
particular
ecological
improvements,

based
on
their
responses
to
either
discrete
choice
or
open­
ended
questions
regarding
hypothetical
resource
improvements
or
programs.
Such
improvements
may
include
increased
protection
of
aquatic
habitats
or
species
with
particular
attributes.

To
assess
public
policy
significance
or
importance
of
the
ecological
gains
from
the
section
316(
b)
regulation
for
Phase
III
facilities,
EPA
proposes
to
develop
a
stated
preference
study
to
measure
non­
use
benefits
of
reduced
fish
losses
at
CWIS
due
to
the
regulation.
The
study
would
focus
on
a
broad
range
of
aquatic
species,
including
forage
fish
and
a
variety
of
fish
species
harvested
by
commercial
and
recreational
fisherman.
The
estimated
values
of
reducing
impingement
and
entrainment
losses
of
a
variety
of
fish
species
are
also
of
academic
interest
since
past
studies
focused
only
on
a
few
select
fish
species
such
as
salmon
and
striped
bass.
The
findings
from
this
study
would
be
pertinent
to
economists
and
policy
makers
studying
changes
in
fish
populations
and
aquatic
habitat
improvements.
3
To
assist
in
the
development
of
a
stated
preference
survey,
EPA
requests
approval
from
the
Office
of
Management
and
Budget
to
conduct
a
series
of
focus
groups.
Such
use
of
focus
groups
is
well
established,
as
is
the
capacity
of
focus
groups
to
provide
insight
into
motivations
underlying
respondents'
stated
willingness
to
pay
(
WTP)
values
(
Mitchell
and
Carson
1989;

Desvousges
et
al.
1984;
Desvousges
and
Smith
1988;
Johnston
et
al.
1995).
Focus
groups
are
among
the
most
significant
qualitative
research
tools
used
in
social
sciences
(
Bateman
et
al.

2002),
and
are
considered
by
many
stated
preference
practitioners
to
be
a
critical
component
of
contingent
valuation
survey
design
(
Arrow
et
al.
1993;
Johnston
et
al.
1995).

Focus
groups
are
often
described
as
"
informal
sessions
in
which
a
skilled
moderator
leads
a
group
of
individuals
through
a
discussion
of
specific
topics
to
discover
their
attitudes
and
opinions"
(
Desvousges
et
al.
1984,
p.
2­
1,
cited
in
Johnston
et
al.
1995
p.
56).
Following
standard
practice,
EPA
will
use
focus
groups
to
better
understand
the
public's
perceptions
and
attitude
concerning
fishery
resources,
to
frame
and
define
survey
questions
and
to
pretest
draft
survey
questions.
Focus
groups
will
also
be
used,
following
advice
of
Mitchell
and
Carson
(
1989),

Desvousges
et
al.
(
1984),
Johnston
et
al.
(
1995),
to
test
for
and
eliminate
or
reduce
potential
biases
that
may
be
associated
with
stated
preference
methodology,
and
to
ensure
that
both
researchers
and
respondents
share
interpretations
of
survey
language
and
scenarios.

EPA
plans
to
conduct
12
focus
groups
at
different
geographic
locations
in
the
United
States.
Specific
focus
group
locations
will
be
selected
based
on
the
locations
of
the
majority
of
Phase
III
facilities.
Following
generally
accepted
practice
(
e.
g.,
Desvousges
et
al.
1984),
EPA
will
recruit
seven
to
nine
individuals
for
each
focus
group.
These
individuals
will
be
randomly
selected
by
marketing
research
firms
from
panels
of
focus
group
participants
maintained
by
each
firm.

Participants
will
be
asked
to
attend
a
focus
group
session
and
participate
in
a
discussion
of
specific
topics
led
by
a
moderator.

The
total
nation
burden
estimate
for
the
focus
group
sessions
is
256
hours.
The
burden
estimate
is
based
on
the
assumption
that
EPA
will
conduct
12
focus
groups
with
seven
to
nine
participants
each.
EPA
assumes
an
average
burden
estimate
per
participant
of
160
minutes.
The
total
focus
group
participant
cost
is
$
4,534.

2.
Need
For
and
Use
of
the
Collection
4
2(
a)
Need/
Authority
for
the
Collection
The
project
is
being
undertaken
pursuant
to
sections
104
of
the
Clean
Water
Act
dealing
with
research.
Section
104
of
the
Clean
Water
Act
authorizes
and
directs
the
EPA
administrator
to
conduct
research
into
a
number
of
subject
areas
related
to
water
quality,
water
pollution,
and
water
pollution
prevention
and
abatement.
This
section
also
authorizes
the
EPA
administrator
to
conduct
research
into
methods
of
analyzing
the
costs
and
benefits
of
programs
carried
out
under
the
Clean
Water
Act.

This
research
project
is
exploring
how
public
values
for
fishery
resources
(
including
use
and
non­
use
values)
are
affected
by
fish
losses
from
impingement
and
entrainment
at
CWIS.

Understanding
total
public
values
including
non­
use
values
for
fishery
resources
lost
to
impingement
and
entrainment
is
necessary
to
determine
the
full
range
of
benefits
associated
with
reductions
in
impingement
and
entrainment
losses,
and
whether
the
benefits
of
government
action
to
reduce
impingement
and
entrainment
losses
at
Phase
III
facilities
are
commensurate
with
the
costs
associated
with
such
actions.
Because
non­
use
values
may
be
substantial
in
some
cases,

failure
to
recognize
such
values
may
lead
to
improper
inferences
regarding
policy
benefits
and
costs.
Although
the
findings
from
this
study
will
primarily
be
used
by
EPA
to
improve
estimates
of
the
economic
benefits
of
the
section
316(
b)
regulation
for
Phase
III
facilities
as
required
under
Executive
Order
12866,
these
findings
are
also
expected
to
be
useful
to
the
state
and
local
regulatory
agencies
dealing
with
fishery
resources
and
fish
habitat
and
the
research
community.

2(
b)
Practical
Utility/
Users
of
the
Data
EPA
will
use
focus
groups
to
assist
in
the
design
of
stated
preference
surveys
to
measure
total
(
i.
e.,
non­
use
and
use)
benefits
of
the
section
316(
b)
regulation
for
Phase
III
facilities,

following
standard
guidance
in
the
stated
preference
literature
(
Mitchell
and
Carson
1989).

Specifically,
EPA
will
use
focus
groups
to
better
understand
the
public's
perceptions
and
attitude
about
fishery
resources
and
to
obtain
insight
into
motivations
underlying
respondents'
willingness
to
pay
(
WTP)
values.
Information
obtained
during
focus
group
sessions
will
be
used
to
frame
and
define
survey
questions
to
ensure
that
the
stated
preference
survey
measures
willingness
to
pay
2
Olsen,
D.,
J.
Richards,
and
R.
D.
Scott.
1991.
"
Existence
and
Sport
Values
for
Doubling
the
Size
of
Columbia
River
Basin
Salmon
and
Steelhead
Runs."
Rivers.
2(
1):
44­
56.

3
Cameron,
T.
A.
and
D.
D.
Huppert.
1989.
OLS
versus
ML
Estimation
of
Non­
market
Resource
Values
with
Payment
Card
Interval
Data.
Journal
of
Environmental
Economics
and
Management.
17,
230­
246.

5
values
more
appropriately.
Focus
groups
will
also
be
used
to
pretest
draft
survey
questions,
and
to
test
for
the
presence
of
potential
biases
related
to
survey
design.
Input
from
focus
groups
will
enable
EPA
to
adjust
the
survey
instrument
to
ameliorate
or
reduce
the
potential
for
such
biases,

such
that
more
valid
estimates
of
WTP
may
be
generated.

3.
Non­
duplication,
Consultations,
and
Other
Collection
Criteria
3(
a)
Non­
duplication
EPA
has
not
identified
any
previous
studies
that
would
allow
estimation
of
the
social
benefits
of
nationwide
changes
in
populations
of
fish
species
(
including
forage,
recreational,
and
commercial
species)
affected
by
the
proposed
316(
b)
regulation.
Although
many
previous
studies
have
estimated
the
value
of
changes
in
catch
rates
or
populations
of
select
recreational
and
commercial
species
or
changes
in
water
quality
that
affect
fish,
no
studies
have
specifically
valued
changes
in
forage
fish
populations.
For
example,
Olsen
et
al
(
1991)
2
conducted
a
survey
of
Pacific
Northwest
residents,
including
both
anglers
and
non­
anglers,
to
determine
their
willingness­
to­
pay
(
WTP)
for
doubling
the
size
of
the
Columbia
River
Basin
salmon
and
steelhead
runs.
EPA's
proposed
survey
approach
differs
from
this
study
and
others
like
it
(
such
as
Cameron
and
Huppert,

19893)
in
that
it
would
include
respondents
from
various
geographic
regions
in
the
United
States
and
would
provide
values
for
a
variety
of
forage,
recreational,
and
commercial
species,
instead
of
valuing
a
few
recreational
species
in
one
specific
geographical
area.

Some
previous
studies
do
provide
values
for
changes
in
water
quality
that
affect
all
fish
species,
including
forage
fish.
However,
the
resulting
values
for
water
quality
improvements
from
these
studies
also
include
values
for
changes
in
other
factors
such
as
water
clarity,
pollution
levels,
4
Magat,
Wesley
A.,
J.
Huber,
K.
W.
Viscusi,
and
J.
Bell.
2000.
"
An
Iterative
Choice
Approach
to
Valuing
Clean
Lakes,
Rivers,
and
Streams."
Journal
of
Risk
and
Uncertainty.
21(
1):
7­
43.

5
Mitchell,
Robert
Cameron,
and
R.
T.
Carson.
1981.
An
Experiment
in
Determining
Willingness
to
Pay
for
National
Water
Quality
Improvements.
Preliminary
Draft
of
a
report
to
the
U.
S.
Environmental
Protection
Agency.
Resources
for
the
Future,
Inc.,
Washington.

6
Whitehead,
John
C.,
and
P.
A.
Groothuis.
1992.
"
Economic
Benefits
of
Improved
Water
Quality:
a
Case
Study
of
North
Carolina's
Tar
Pamlico
River."
Rivers.
3:
170­
178.

6
species
diversity,
etc.
For
example,
Magat
et
al.
(
2000)
4
asked
North
Carolina
and
Colorado
residents
to
value
an
increase
in
water
quality
under
which
fresh
water
in
their
states
would
become
safer
for
swimming
in,
fish
could
be
eaten
safely,
and
the
number
and
diversity
of
plants
and
aquatic
organisms
would
increase.
EPA's
proposed
survey
approach
differs
from
this
study
and
other
similar
studies
(
such
as
Mitchell
and
Carson,
19815;
or
Whitehead
and
Groothuis,
19926)

in
that
it
will
value
only
changes
in
fish
populations,
not
changes
in
general
water
quality
that
affect
a
variety
of
ecological
services
provided
by
a
water
body.

3(
b)
Public
Notice
Required
Prior
to
ICR
Submission
to
OMB
In
accordance
with
the
Paperwork
Reduction
Act
(
44
U.
S.
C.
3501
et
seq.),
EPA
published
a
notice
in
the
Federal
Register
on
November
23,
2004
announcing
that
the
focus
group
methodology
and
script
were
available
for
comment.
A
copy
of
the
Federal
Register
notice
is
attached
at
the
end
of
this
document.

EPA
received
four
public
comments
on
the
ICA
from
(
1)
the
American
Chemical
Council,

American
Forest
&
Paper
Association,
American
Iron
and
Steel
Institute,
American
Public
Power
Association,
American
Petroleum
Institute,
and
Utility
Water
Act
Group
(
Docket
ID:
OW­
2004­

0020­
0005);
(
2)
the
American
Petroleum
Institute
(
Docket
ID:
OW­
2004­
0020­
0008);
(
3)
the
Mercatus
Center
at
George
Mason
University
(
Docket
ID:
OW­
2004­
0020­
0003);
and
(
4)
PSEG
Service
Corporation
(
Docket
ID:
OW­
2004­
0020­
0007).
The
Agency's
responses
to
these
comments
can
be
found
in
attachments
1
through
4
of
this
document.

3(
c)
Consultations
7
EPA's
Office
of
Water
consulted
with
typical
focus
group
participants
while
developing
the
focus
group
format
and
script.
EPA
recruited
a
total
of
eight
individuals
to
participate
in
a
preliminary
focus
group
session.
These
individuals
provided
advice
about
the
content
and
format
of
the
focus
group
opening
statement,
introductory
materials,
the
sequence
and
content
of
questions
in
the
focus
group
script.
The
preliminary
focus
group
session
was
also
used
to
obtain
more
accurate
burden
estimates.

3(
d)
Effects
of
Less
Frequent
Collection
The
focus
groups
are
a
one­
time
activity.
Therefore,
less
frequent
collection
is
not
practical.

3(
e)
General
Guidelines
The
focus
groups
will
not
violate
any
of
the
general
guidelines
described
in
EPA's
ICR
Handbook.

3(
f)
Confidentiality
The
focus
groups
will
be
recorded
using
audiotapes,
which
will
later
be
transcribed.

However,
individuals
will
not
be
identified
on
the
transcripts.
To
insure
that
the
focus
groups
include
a
representative
and
diverse
sample
of
individuals,
EPA
will
tabulate
basic
demographic
information
for
participants,
such
as
age,
ethnicity,
occupation,
and
income.
However,
no
personal
identifying
information
about
participants,
such
as
names,
phone
numbers,
or
addresses,
will
be
included
in
the
focus
group
transcripts.
Prior
to
commencing
any
audio
recordings,
respondents
would
be
informed
of
EPA's
intentions
to
audiotape
the
focus
group
proceedings,
and
informed
that
all
taped
responses
will
be
strictly
anonymous
and
confidential.
8
3(
g)
Sensitive
Questions
No
sensitive
questions
pertaining
to
private
or
personal
information,
such
as
sexual
behavior
or
religious
beliefs,
will
be
asked
during
the
focus
groups.

4.
The
Respondents
and
the
Information
Requested
4(
a)
Respondents
Following
generally
accepted
practice
(
e.
g.,
Desvousges
et
al.
1984),
EPA
will
recruit
seven
to
nine
individuals
for
each
focus
group.
Focus
group
participants
will
be
randomly
selected
by
marketing
research
firms
from
panels
of
focus
group
participants
maintained
by
each
firm.

Participants
are
eligible
if
they
are
18
years
of
age
or
older;
if
they
are
not
full­
time
students;
if
they
do
not
have
occupations
related
to
the
environment,
including
water
treatment
and
sewage,
electric
or
nuclear
power
companies;
and
if
they
have
not
participated
in
a
survey
or
focus
group
in
the
last
six
months.
Each
of
the
focus
groups
will
include
a
mix
of
individuals
with
diverse
socioeconomic
backgrounds,
based
on
characteristics
such
as
income,
marital
status,
age,
race,
education,

occupation,
and
gender.
Participants
will
be
asked
to
attend
a
focus
group
session
and
participate
in
a
discussion
of
specific
topics
led
by
a
moderator.
Participation
in
the
focus
group
sessions
is
voluntary.
Participants
will
have
to
expend
time,
effort,
and
travel
to
participate
in
the
focus
group
sessions.
Following
standard
practice
in
marketing
research,
participants
will
be
compensated
for
their
time
and
effort.
The
offered
compensation
would
also
help
to
avoid
the
self
selection
bias
that
otherwise
may
result.
The
proposed
incentive
fee
is
$
50.00
per
participant.

4(
b)
Information
Requested
(
I)
Data
items,
including
record
keeping
requirements
Participant
information
typically
maintained
by
marketing
research
firms:

NAME:

ADDRESS:
9
CITY/
STATE/
ZIP:

PHONE:

DATE/
TIME
OF
INTERVIEW:

RECRUITER:

ASK
TO
SPEAK
TO
______________

The
initial
screener
questionnaire
used
by
the
marketing
research
firms
to
recruit
participants
for
the
focus
groups
will
have
the
following
format:

(
Introduction
to
respondent:)
Hello,
I'm
_____________________,
with
Abt
Associates,
a
national
public
policy
research
and
consulting
firm.
We
are
conducting
focus
groups
with
people
like
you,
for
a
research
study
on
the
views
of
Americans
on
environmental
issues
that
affect
water
resources.
Focus
groups
are
small
groups
discussions
led
by
a
moderator.
If
you
qualify,
we
will
offer
you
$
50.00
to
participate
in
a
focus
group
at
our
facility.

(
If
the
respondent
asks,
this
research
is
funded
by
the
Water
Office
of
the
United
States
Environmental
Protection
Agency.)

I
would
like
to
ask
you
a
few
questions
to
see
if
you
qualify.
Let
me
assure
you,
this
is
NOT
a
sales
call
and
the
information
is
for
research
purposes
only.

(
SCHEDULE
CALL
BACK
IF
NECESSARY.
GET
FIRST
AND
LAST
NAME
AND
DIRECT
TELEPHONE
NUMBER
OF
RESPONDENT.)

1.
What
is
your
age
(
RECORD
AGE)
______

If
younger
than
18:
terminate.

2.
Record
Gender
Male
.............................................................
1
Female
.........................................................
2
3.
Have
you
participated
in
a
focus
group
in
the
past
6
months?
Yes
...............................................................
1
(
Terminate)
No
................................................................
2
(
Continue)

4.
What
is
your
occupation?
RECORD
OCCUPATION:_________________________

If
occupation
is
related
to
the
environment,
including
water
treatment
and
sewage,
electric
or
nuclear
power
companies,
etc.:
terminate.
If
full­
time
student:
terminate.

5.
Do
you
currently
own
or
rent
your
primary
residence?
Own
.........................................................................................
1
Rent
.........................................................................................
2
Don't
know/
Refused
.................................................................
8
10
6.
What
is
your
marital
status?
Married
....................................................................................
1
Living
as
married
.....................................................................
2
Widowed
..................................................................................
3
Divorced/
Separated
..................................................................
4
Single
.......................................................................................
5
Refused
....................................................................................
8
7.
Do
you
have
any
children,
including
any
stepchildren
and/
or
adopted
children?
Yes
...........................................................................................
1
No
............................................................................................
2
Don't
know/
Refused
.................................................................
8
8.
What
level
of
education
have
you
completed?
Less
than
high
school
..............................................................................................................
1
High
school
graduate,
grade
12,
or
GED
certificate
.................................................................
2
Some
college
or
university
work,
but
no
four­
year
degree
........................................................
3
College
or
university
graduate
(
BA,
BS
or
other
four­
year
degree
received)
.............................
4
Post
graduate
or
professional
schooling
after
college,
but
no
degree
yet
(
including
work
toward
degree)
...............................................................................................
5
Master's
degree
or
higher
completed
(
M.
D.,
J.
D.,
Ph.
D.,
Ed.
D.,
Sc.
D.)
...................................
6
REFUSED
...............................................................................................................................
7
9.
What
is
your
race
or
ethnicity?
(
Circle
all
categories
that
respondent
mentions.)
American
Indian
or
Alaska
Native
.............................
1
Asian
(
Specify_______________)
.............................
2
Black
or
African
American
........................................
3
Hispanic
or
Latino
(
Specify_____________)
..............
4
Native
Hawaiian
or
Other
Pacific
Islander
..................
5
Caucasian
...................................................................
6
Other
(
Specify_______________)
..............................
7
REFUSED
..................................................................
8
10.
What
is
your
annual
combined
household
income?
Up
to
$
20,000/
year
.....................................................
1
$
21,000­$
40,000
........................................................
2
$
41,000­$
75,000
........................................................
3
More
than
$
75,000
.....................................................
4
REFUSED
..................................................................
8
IF
THE
RESPONDENT
DOES
NOT
MEET
THE
SPECIFICATIONS
OF
A
GROUP,
PLEASE
THANK
RESPONDENT
AND
TERMINATE
THE
CALL.
PLEASE
USE
THE
FOLLOWING
STATEMENT:

"
Thank
you
very
much
for
your
time.
It
appears
that
you
do
not
qualify
for
our
group
discussion
."

IF
THE
RESPONDENT
MEETS
THE
CRITERIA
FOR
A
GROUP,
PLEASE
INVITE
THEM
TO
PARTICIPATE.
11
I
would
like
to
invite
you
to
participate
in
a
small
group
discussion
with
other
people
like
yourself
to
help
us
better
understand
the
way
Americans
think
about
environmental
problems
that
affect
water
resources.
The
discussion
will
last
for
about
90
minutes
and
will
be
audio­
taped
(
if
respondent
asks
why
say:
this
is
standard
procedure
and
it's
for
the
researchers
note­
taking
purposes
only.)
You
will
be
asked
to
sign
a
consent
form
when
you
arrive
at
the
facility.
The
discussion
will
be
held
on
(
GIVE
DATE
AND
TIME).

Will
you
be
able
to
attend?
Yes
.....
1
(
GIVE
DIRECTIONS
TO
FACILITY)

No
......
2
Thank
you
again
for
agreeing
to
participate.
The
session
will
begin
promptly
at
6:
00
PM
so
please
be
there
at
least
15
minutes
early
to
sign
the
consent
form.
If
you
are
not
there
on
time
you
will
not
be
invited
into
the
group.
We
look
forward
to
your
participation.

Individuals
who
attend
the
focus
groups
will
be
asked
to
discuss
their
knowledge
and
opinions
about
freshwater
and
marine
fish
resources.
The
moderator
of
the
focus
group
will
read
and
ask
participants
questions
from
the
example
script
provided
below.
To
maximize
the
research
value
of
the
focus
group
sessions
for
stated
preference
survey
design,
EPA
will
proceed
iteratively.
The
version
of
the
focus
group
script
provided
below
will
undergo
several
modifications
based
on
findings
from
initial
focus
groups.
The
goal
of
subsequent
modifications
is
to
develop
and
refine
survey
questions
to
ensure
greater
clarity
of
survey
questions
and,
as
a
result,
validity
of
the
survey
responses.
Modifications
will
also
be
tested
in
terms
of
their
ability
to
eliminate
or
reduce
biases
that
may
occur
in
surveys
that
have
undergone
insufficient
testing
and
development
(
Mitchell
and
Carson
1989).
Based
on
the
planned
iterative
modification
of
focus
group
and
draft
survey
questions,
the
structure
of
subsequent
draft
survey
instruments
will
depend
on
how
people
respond
to
surveys
and
questions
in
previous
focus
groups.

Focus
Group
Script
[
Terms
in
bold
may
change
depending
on
the
terms
mentioned
by
participants
in
the
discussion.]
1.
Introduction
Welcome!
Thanks
for
coming
out.
I
very
much
appreciate
you
joining
us
this
evening
for
a
focus
group.
Focus
groups
are
small
group
discussions
led
by
a
moderator.
My
name
is
_________,
and
I
am
from
___________.
I
will
moderate
this
focus
group
session.
The
reason
that
we
have
invited
you
to
participate
in
a
focus
group
is
because
we
are
in
the
middle
of
a
large­
scale
research
project
looking
at
how
people
view
different
resources.
Focus
groups
are
small
group
discussions
led
by
a
moderator.
Today,
we
will
be
talking
about
fish
and
fish
habitat,
but
I
don't
want
to
be
too
specific,
because
I
want
to
hear
what
you
want
to
say,
instead
of
having
you
listen
to
me.
Eventually,
we
will
be
designing
a
survey
to
try
to
figure
out
how
we
can
better
manage
these
resources
to
suit
people
and
how
to
deal
better
with
these
resources
as
a
society.
However,
before
we
can
even
get
to
the
point
where
we
design
this
survey,
we
need
to
listen
to
people
like
you
and
learn
how
you
think
about
these
resources
and
if
they
matter
or
don't
matter
to
you.
That
can
help
us
to
figure
out
what
questions
we
should
ask.
I
very
strongly
believe
that
if
you
ask
a
confusing
question,
you
are
going
to
get
an
answer
that
doesn't
mean
very
much.
And
so
that
is
why
we
are
here.
12
At
the
end
of
this
discussion,
I
will
be
perfectly
happy
to
answer
any
questions
you
may
have.
However,
at
this
point
I
don't
want
to
give
out
too
much
information
because
the
purpose
of
this
focus
group
is
to
learn
from
you.
I
don't
know
if
any
of
you
have
ever
done
anything
like
this
before,
but
I
view
this
as
an
informal
discussion
where
there
is
no
right
or
wrong
answer.
Even
if
I
say
something
that
seems
a
little
bit
weird
or
is
different
than
how
others
view
things,
it
is
ok.
I
will
learn
from
you.
It
is
important
that
we
all
respect
each
other
and
give
everyone
a
chance
to
talk.
This
session
will
go
between
one
and
one
and
a
half
hours,
depending
on
how
the
discussion
goes.
We
are
going
to
audiotape
this
discussion
to
help
us
remember
what
was
said.
Your
names
will
not
go
on
the
tape,
and
there
is
no
one
videotaping.
Before
I
start,
does
anyone
have
any
questions?
[
If
no
one
has
questions,
begin
discussion.]

2.
Discussion
topics
What
comes
to
mind
when
I
ask
you
about
fish
that
live
in
saltwater
and
freshwater
in
this
country
(
name
local
water
body
or
region)?
[
May
want
follow­
up
with
more
focused
geography
­
such
as
local
waters,
state
waters,
and
national
waters.
Otherwise,
the
question
is
too
vague
an
invites
unfocused
speculation.]

How
do
fish
in
(
name
geographical
region)
affect
you
and/
or
your
family,
if
at
all?
[
Again,
follow­
up
with
a
more
narrow
geographic
focus
if
needed]

What
are
the
relationships
that
you
see
between
fish
and
your
local
environment,
if
any?

What
types
of
fish
were
you
thinking
about
as
you
answered
our
previous
questions?
Are
these
fish
found
in
your
local
community
or
environment?

Are
some
kinds
of
fish
more
important
to
you
than
others?
Why
are
these
fish
more
important
to
you?

Is
it
important
to
you
that
they
are
in
your
immediate
area,
in
your
state,
or
elsewhere
in
the
United
States?

When
you
think
of
fish
that
are
not
used
by
people,
what
kinds
of
fish
come
to
mind?
What
do
you
know
about
these
kinds
of
fish,
if
anything?
In
your
mind,
what
are
the
main
differences
between
fish
that
are
caught
by
humans
and
forage
fish
that
are
not
caught
by
humans?

When
you
hear
the
term
"
fish
habitat"
what
kinds
of
things
do
you
think
about?
What
does
it
mean
to
you?

What
do
you
think
about
coastal
waters
or
freshwater
bodies?
Are
you
telling
me
about
places
in
your
local
area,
state,
and/
or
the
country?

In
your
experience
are
there
different
types
of
fresh
water
habitats
for
fish,
or
are
they
all
similar?
In
your
experience
are
there
different
types
of
salt
water
habitats
for
fish,
or
are
they
all
similar?
13
For
the
fish
that
you
told
me
were
important
to
you
earlier,
what
habitat/
s
do
they
live
in?

When
you
think
about
fish
and
fish
habitat,
do
you
consider
them
to
be
a
local
issue,
or
a
national
issue?
Does
it
matter
to
you
what
happens
to
fish
in
other
areas
of
the
country?

What
different
kinds
of
benefits
do
freshwater
(
coastal)
habitats
provide
to
you
personally?
Why
are
they
important?
Does
it
matter
to
you
what
different
types
of
fish
or
shellfish
live
in
these
habitats?

Do
you
derive
any
personal
benefits
from
your
use
of
fish?
Could
you
describe
them
to
me?

Tell
me
about
your
personal
experiences
with
 
or
perceptions
of
 
the
current
health/
quality
of
fish
populations/
resources?

In
your
experience,
what
causes
or
factors
affect
the
health/
quality
of
fish?

Have
you
heard
about
any
notable
changes
in
your
local
fish
or
fish
habitat
in
recent
years?
What
do
you
think
is
responsible
for
those
changes?

Have
you
experienced
or
are
you
familiar
with
any
particular
threats
to
fish
and
fish
habitat
in
your
area?
In
other
areas?

The
numbers
of
fish
in
the
environment
have
been
found
to
go
up
and
down
according
to
natural
events.
Does
it
matter
if
those
natural
changes
in
the
numbers
of
fish
are
somehow
changed
by
man­
made
events?
Have
you
heard
of
times
when
this
has
happened?
Does
it
matter
to
you
what
kinds
of
fish
are
affected?

Compared
to
all
the
other
things
that
government
policies
might
address,
is
the
health
and
abundance
of
fish
in
nearby
fresh
and
salt
water
an
important
issue
to
you?
Why
or
why
not?
When
considering
government
regulations
that
protect
fish,
does
it
matter
what
kinds
of
fish
are
affected?
Would
it
matter
whether
the
types
of
fish
are
directly
used
for
commercial
or
recreational
fishing?
What
about
the
abundance
of
fish
species
that
are
rarely
used
by
humans­
species
like
minnows,
shiners
and
chubs?

There
are
many
public
policy
issues
that
society
might
choose
to
address
 
things
like
security,
education,
and
other
environmental
issues.
Compared
to
issues
such
as
these,
how
would
you
rank
the
importance
of
programs
to
protect
stocks
of
fish
from
human
damage?

Compared
to
other
important
environmental
issues
that
affect
your
community,
how
would
you
rate
changes
in
fish
populations,
in
terms
of
importance
to
you
personally?
Would
you
be
willing
to
accept
decreases
in
the
abundance
of
fish
in
areas
near
your
home,
in
return
for
increases
in
other
resources
such
as
birds,
wildlife,
or
fish
in
other
areas?
Why
or
why
not?

If
you
had
to
vote
for
a
referendum
on
a
program
that
would
reduce
fish
mortality
or
losses
of
fish
associated
with
man­
made
actions,
what
additional
information
would
you
want
to
know?

Do
you
think
you
would
vote
for
a
referendum
on
a
regulatory
program
that
would
increase
the
number
of
sport
or
commercial
fish?
What
if
that
program
would
increase
the
costs
of
living
14
faced
by
your
household,
through
such
things
as
increased
electricity
bills
or
increased
costs
of
products
that
you
buy?

Why
would
you
vote
for
(
or
against)
such
a
program?

Would
you
still
vote
for
the
program
knowing
most
of
those
fish
protected
would
never
be
caught
by
anyone?
What
if
the
program
would
have
no
effect
on
recreational
or
commercial
fishing?

Why
would
you
vote
for
(
or
against)
these
programs?

Why
would
you
spend
your
money
to
protect
fish?

Is
the
protection
of
forage
fish
important?
Explain.
If
you
say
that
the
protection
of
forage
fish
is
important,
is
it
for
their
own
sake,
or
because
they
are
food
for
other
fish
that
people
might
use?

It
is
difficult
to
predict
the
impact
of
reducing
fish
losses
on
fish
populations
or
ecological
health.
If
you
were
told
it
is
not
possible
to
predict
the
impact
of
the
program
on
fish
populations
or
health,
how
would
that
affect
your
decision
to
vote
for
a
referendum
to
protect
fish?
Would
it
matter
to
you
if
you
heard
that
some
human
activity
had
killed
a
large
number
of
fish,
even
if
scientists
are
unsure
whether
it
would
have
any
long­
term
effect
on
fish
populations?

EPA
notes
that
not
all
discussion
topics
would
be
covered
in
one
focus
group
session
due
to
time
constrains.
In
subsequent
focus
groups,
the
moderator
would
also
offer
some
sample
valuation
questions
to
focus
group
participants.
The
focus
group
participants
will
be
debriefed
after
completing
responses
to
the
sample
survey
questions.

(
II)
Respondent
activities
We
expect
individuals
to
engage
in
the
following
activities
during
their
participation
in
the
focus
groups:


Respond
to
phone
recruitment
from
the
marketing
research
firm.


Travel
to
and
from
the
focus
group
location.


Review
and
sign
a
consent
form.


Participate
in
focus
group
discussion
and
answer
draft
survey
questions.

A
typical
participant
will
be
recruited
by
phone
to
participate
in
the
focus
group
(
about
10
minutes).
On
the
day
of
the
focus
group,
the
participant
will
travel
to
the
focus
group
facility
15
(
about
30
to
60
minutes
round­
trip).
Before
the
focus
group
session,
the
participant
will
review
and
sign
a
consent
form
(
15
minutes).
During
the
focus
group
session,
the
participant
will
participate
in
discussion
and
answer
draft
survey
questions
(
90
minutes).

5.
The
Information
Collected
­
Agency
Activities,
Collection
Methodology,
and
Information
Management
5(
a)
Agency
Activities
These
focus
groups
are
being
conducted
by
Abt
Associates
Inc.
and
are
funded
by
EPA
contract
No.
68­
C99­
239,
which
provides
funds
for
the
purpose
of
analyzing
the
economic
benefits
of
the
proposed
rule
for
Phase
III
facilities
subject
to
the
section
316(
b)
regulation.
EPA
would
use
information
obtained
from
the
focus
groups
to
design
and
pre­
test
a
survey
that
can
be
used
to
estimate
the
social
value
of
changes
in
impingement
and
entrainment
losses
and
populations
of
forage,
recreational,
and
commercial
species
of
fish.

5(
b)
Collection
Methodology
and
Information
Management
The
target
population
for
the
focus
groups
is
members
of
households
of
the
United
States
who
are
18
years
of
age
or
older,
who
are
not
full­
time
students,
whose
occupation
is
not
related
to
the
environment,
including
water
treatment
and
sewage,
electric
or
nuclear
power
companies,

and
who
have
not
participated
in
a
survey
or
focus
group
in
the
last
six
months.
EPA,
with
assistance
from
the
marketing
research
firms,
will
take
measures
to
recruit
individuals
from
diverse
socioeconomic
backgrounds.

As
a
means
of
recording
information
provided
by
focus
group
participants,
the
focus
groups
will
be
audiotaped
and
then
transcribed.
Individuals
will
not
be
identified
in
the
transcripts.

EPA
will
use
the
information
to
aid
in
designing
questions
for
its
stated
preference
survey.

5(
c)
Small
Entity
Flexibility
16
This
survey
will
be
administered
to
individuals
(
not
businesses)
who
will
be
compensated
for
their
time
and
effort.
This
section
is
not
applicable.

5(
d)
Collection
Schedule
The
focus
group
schedule
will
be
as
follows:

Table
A1:
Duration
of
Focus
Group
Activities
Activity
Duration
of
Each
Activity
(
in
days)
Total
Elapsed
Time
Period
for
Project
Following
OMB
Approval
(
in
days)

Per
Focus
Group
Focus
Group
Participants
Recruited
7
per
group
7
Focus
Group
Session
1
per
group
7
Total
per
Group
8
per
group
8
Total
for
12
Focus
Groups
Total
for
12
Focus
Groups
96
96
Preparation
of
Focus
Group
Report
10
106
6.
Estimating
Respondent
Burden
and
Cost
of
Collection
6(
a)
Estimating
Respondent
Burden
The
focus
groups
will
require
subjects
to
expend
time
on
several
activities.
The
total
national
burden
estimate
for
all
focus
group
activities
is
256
hours.
A
typical
focus
group
participant
will
spend
10
minutes
responding
to
the
phone
recruiting
process;
30
to
60
minutes
traveling
to
and
from
the
focus
group
facility;
15
minutes
reviewing
and
signing
a
consent
form;

and
90
minutes
participating
in
discussion
and
answering
draft
survey
questions,
for
a
total
of
160
minutes
(
2.66
hours)
on
average.
EPA's
burden
estimates
are
based
on
average
duration
of
similar
activities
in
the
past
focus
groups.
Based
on
the
assumption
that
there
would
be
12
focus
groups
7
U.
S.
Department
of
Labor,
Bureau
of
Labor
Statistics.
"
Employer
costs
for
Employee
Compensation:

March
2004".
Press
release.
June
24,
2004.
http://
www.
bls.
gov/
news.
release/
pdf/
ecec.
pdf.
The
hourly
wage
rate
of
$
17.71
does
not
include
firm
benefits
and
overhead
costs
since
the
focus
group
participants
are
acting
as
individuals
and
not
as
agents
for
a
corporation
being
surveyed.

17
with
an
average
of
eight
participants
each,
the
total
national
burden
estimate
for
all
participants
is
256
hours.
This
burden
estimate
reflects
a
one­
time
expenditure
in
a
single
year.

EPA
does
not
anticipate
any
capital
or
operation
and
maintenance
costs
for
respondents.

6(
b)
Estimating
Respondent
Costs
According
to
the
Bureau
of
Labor
Statistics,
the
average
hourly
wage
for
private
sector
workers
in
the
United
States
is
$
17.71
(
2004$).
7
Assuming
an
average
burden
estimate
of
2.66
hours
per
participant
and
an
average
hourly
wage
of
$
17.71,
the
total
cost
per
participant
will
be
$
47.23.

6(
c)
Estimating
Agency
Burden
and
Costs
This
project
is
being
undertaken
by
Abt
Associates
Inc.
with
funding
of
$
70,000
from
EPA's
contract
No.
68­
C99­
239,
which
provides
funds
for
the
purpose
of
analyzing
the
economic
benefits
of
the
proposed
rule
for
Phase
III
facilities
subject
to
the
section
316
(
b)
regulation.
Abt
Associates
Inc.
staff
are
expected
to
spend
520
hours
conducting
focus
groups
and
designing
and
pre­
testing
draft
survey
questions
that
can
be
used
to
estimate
the
social
value
of
changes
populations
of
forage,
recreational,
and
commercial
species
of
fish.
In
addition
to
the
effort
expended
by
Abt
Associates
Inc.,
EPA
staff
are
expected
to
spend
200
hours
managing
and
reviewing
this
project.
The
cost
of
this
EPA
staff
time
is
$
6,035.
Thus,
total
agency
and
contractor
burden
is
720
hours,
with
a
total
cost
of
$
76,035.

6(
d)
Respondent
Universe
and
Total
Burden
Costs
EPA
expects
the
total
cost
for
focus
group
participants
to
be
$
4,534
(
2004$),
based
on
a
18
total
burden
estimate
of
256
hours
and
an
hourly
wage
of
$
17.71.

6(
e)
Bottom
Line
Burden
Hours
and
Costs
The
following
table
presents
EPA's
estimate
of
the
total
bottom
line
burden
and
costs
of
the
focus
group
information
collection:

Table
A2:
Total
Estimated
Bottom
Line
Burden
and
Cost
Summary
Affected
Individuals
Total
Burden
Total
Cost
(
2004$)

Focus
Group
Participants
256
hours
$
4,534
EPA
staff
200
hours
$
6,035
EPA's
contractora
520
hours
$
70,000
Total
Costs
976
hours
$
80,569
a
The
total
cost
listed
for
EPA's
contractor
includes
the
incentive
fee
for
focus
group
participants.
This
fee
is
$
50
per
participant,
so
the
total
cost
of
this
fee
for
12
focus
groups
with
seven
to
nine
participants
each
is
$
4,800.

6(
f)
Reasons
for
Change
in
Burden
The
focus
groups
are
a
one­
time
data
collection
activity.

6(
g)
Burden
Statement
EPA
estimates
that
the
public
reporting
and
record
keeping
burden
associated
with
the
focus
groups
will
average
2.66
hours
per
respondent
(
i.
e.,
a
total
of
256
hours
of
burden
divided
among
96
focus
group
participants).
Burden
means
the
total
time,
effort,
or
financial
resources
expended
by
persons
to
generate,
maintain,
retain,
or
disclose
or
provide
information
to
or
for
a
Federal
agency.
This
includes
the
time
needed
to
review
instructions;
develop,
acquire,
install,
and
utilize
technology
and
systems
for
the
purposes
of
collecting,
validating,
and
verifying
information,

processing
and
maintaining
information,
and
disclosing
and
providing
information;
adjust
the
existing
ways
to
comply
with
any
previously
applicable
instructions
and
requirements;
train
19
personnel
to
be
able
to
respond
to
a
collection
of
information;
search
data
sources;
complete
and
review
the
collection
of
information;
and
transmit
or
otherwise
disclose
the
information.
An
agency
may
not
conduct
or
sponsor,
and
a
person
is
not
required
to
respond
to,
a
collection
of
information
unless
it
displays
a
currently
valid
OMB
control
number.
The
OMB
control
numbers
for
EPA's
regulations
are
listed
in
40
CFR
part
9
and
48
CFR
chapter
15.

To
comment
on
the
Agency's
need
for
this
information,
the
accuracy
of
the
provided
burden
estimates,
and
any
suggested
methods
for
minimizing
respondent
burden,
including
the
use
of
automated
collection
techniques,
EPA
has
established
a
public
docket
for
this
ICR
under
Docket
ID
No.
OW­
2004­
0020,
which
is
available
for
public
viewing
at
the
Water
Docket
in
the
EPA
Docket
Center
(
EPA/
DC),
EPA
West,
Room
B102,
1301
Constitution
Ave.,
NW,

Washington,
DC.
The
EPA
Docket
Center
Public
Reading
Room
is
open
from
8:
30
a.
m.
to
4:
30
p.
m.,
Monday
through
Friday,
excluding
legal
holidays.
The
telephone
number
for
the
Reading
Room
is
(
202)
566­
1744,
and
the
telephone
number
for
the
Water
Docket
is
(
202)
566­
2426.
An
electronic
version
of
the
public
docket
is
available
through
EPA
Dockets
(
EDOCKET)
at
http://
www.
epa.
gov/
edocket.
Use
EDOCKET
to
submit
or
view
public
comments,
access
the
index
listing
of
the
contents
of
the
public
docket,
and
to
access
those
documents
in
the
public
docket
that
are
available
electronically.
Once
in
the
system,
select
"
search,"
then
key
in
the
docket
ID
number
identified
above.
Also,
you
can
send
comments
to
the
Office
of
Information
and
Regulatory
Affairs,
Office
of
Management
and
Budget,
725
17th
Street,
NW,
Washington,
DC
20503,
Attention:
Desk
Office
for
EPA.
Please
include
the
EPA
Docket
ID
No.
OW­
2004­
0020
in
any
correspondence.

Part
B
of
the
Supporting
Statement
The
primary
purpose
of
the
focus
groups
is
to
collect
qualitative
information
that
will
enable
EPA
to
design
a
survey
to
elicit
respondents'
values
for
changes
in
impingement
and
entrainment
losses
and
changes
in
populations
of
forage,
recreational,
and
commercial
species
of
fish.
Thus,
this
section
of
the
supporting
statement
is
not
necessary.
20
Attachment
1:
EPA
Response
to
Public
Comments
from
the
American
Chemistry
Council
et
al.
and
Accompanying
Triangle
Economic
Research
(
TER)
Report
(
Docket
ID:
OW­
2004­

0020­
0005)

I.
Responses
to
Comments
from
the
American
Chemistry
Council
et
al.
on
EPA's
Proposed
Information
Collection
Request
Many
of
the
comments
from
the
American
Chemistry
Council
et
al.
are
drawn
from
the
accompanying
TER
report,
which
EPA
comments
on
below.
However,
EPA
would
like
to
emphasize
a
number
of
misleading
statements
in
the
introductory
statement
preceding
the
TER
report.
The
material
up
to
page
4
is
introductory
in
nature,
and
draws
no
conclusions
regarding
the
ICR.
Thus,
no
response
is
required.
However,
EPA
finds
a
variety
of
incorrect
statements
on
pages
4­
7.
Some
of
the
more
notable
of
these
statements
include
the
following:

·
Page
4:
" 
EPA
has
already
provided
a
meaningful
way
to
assess
the
potential
magnitude
of
nonuse
benefits .
This
approach
allows
for
the
value
of
forage
fish
to
be
reflected
in
the
value
of
recreational
and
commercial
fish."

This
statement
reveals
a
misunderstanding
of
the
multiple
primary
ways
in
which
forage
fish
may
influence
the
utility
of
individuals.
Specifically,
it
fails
to
recognize
the
distinction
between
two
legitimate
sources
of
economic
value
related
to
forage
fish:
indirect
use
benefits
and
non­
use
benefits.
A
more
detailed
response
to
this
comment
is
provided
in
EPA's
response
to
Section
1.1
of
the
TER
report.

·
Page
4:
"
EPA
has
ignored
relevant
empirical
literature."

The
TER
report
identifies
no
"
relevant
economic"
literature
that
EPA
has
not
considered
in
the
development
of
the
ICR.
The
noted
literature
regarding
hypothetical
bias
is
well
known
to
EPA,
as
noted
below.
This
comment
is
dealt
with
in
greater
detail
below,
in
the
response
to
Section
X
of
the
TER
report.

·
Page
4:
"
TER
does
not
believe
that
it
is
possible
for
EPA
to
develop
reliable
estimate
of
nonuse
benefits
for
the
Phase
III
rule."

This
statement
is
an
opinion
that
is
largely
unsubstantiated
by
empirical
findings.
TER
does
not
provide
empirical
evidence
for
this
statement,
but
rather
based
it
on
the
"
difficulty"
of
the
21
proposed
benefit
measurement.
EPA
disagrees
based
on
its
research
of
empirical
literature.
Additional
comments
regarding
this
issue
are
provided
below
in
EPA's
response
to
Section
2
of
the
TER
report.

·
Page
5:
"
As
the
TER
Analysis
shows,
the
proposed
ICR
has
a
number
of
difficulties
both
conceptual
and
practical."

The
TER
report
identifies
no
conceptual
problems
with
the
ICR.
Rather,
the
TER
report
focuses
almost
exclusively
on
arguments
regarding
the
difficulty
of
non­
use
benefits
measurement
in
the
proposed
Phase
III
context.
In
fact,
the
TER
report
focuses
primarily
on
issues
not
directly
relevant
to
the
ICR,
which
describes
the
proposed
use
of
focus
groups
for
survey
design.
In
contrast,
the
TER
report
focuses
on
survey
design
and
stated
preference
valuation
in
general.
While
the
TER
report
identifies
many
complexities
and
challenges
associated
with
the
measurement
of
non­
use
benefits
for
the
Phase
III
policy
context,
none
of
these
represent
insurmountable
hurdles,
and
none
represent
conceptual
mistakes
on
the
part
of
EPA.
In
sum,
the
report
identifies
no
theoretical
or
conceptual
faults
with
EPA's
proposed
focus
groups
or
non­
use
benefits
measurement
approach
 
rather
only
opinions
regarding
the
perceived
difficulty
of
the
task.

·
Page
6:
" 
it
would
appear
to
be
a
better
use
of
agency
resources
to
focus
more
on
the
actual
benefits
to
be
realized
from
regulating
Phase
III
facilities."

The
implied
claim
that
non­
use
benefits
are
not
"
actual
benefits"
represents
a
misrepresentation
of
well­
documented
economic
theory.
As
clearly
stated
by
Freeman
(
2003)
and
many
others
(
including
the
attached
TER
report),
non­
use
benefits
are
legitimate
components
of
total
value.
"[
T]
he
hypothesis
of
nonuse
values
has
gained
wide
acceptance
among
economists
working
in
the
field
of
environmental
and
resource
economics ."
Freeman
(
2003,
p.
137).
Ignoring
such
values
"
in
natural
resource
policymaking
could
lead
to
serious
errors
and
resource
misallocations"
(
p.
138).
Furthermore,
the
TER
report
contradicts
itself
elsewhere
in
the
document
by
incorporating
nonuse
values
in
the
total
value
(
e.
g.,
page
one
of
the
TER
report
states
"
we
certainly
agree
 
that
nonuse
values
here
are
likely
to
be
positive.").

·
Page
6:
"
nonuse
benefits
cannot
be
greater
than
use
benefits"

There
is
no
theoretical
or
empirical
basis
for
this
comment.
The
commenter
does
not
provide
any
or
empirical
or
theoretical
evidence
suggesting
that
the
non­
use
benefits
from
reductions
in
I&
E
losses
cannot
exceed
use
benefits.
22
II.
Responses
to
the
TER
Report
General
Response
The
ICR
concerns
focus
groups
that
are
to
be
used
in
the
development
of
a
stated
preference
survey.
Most
of
the
material
in
this
section
does
not
address
focus
groups
explicitly,
but
rather
the
more
general
topic
of
resource
valuation.
Many
of
the
claims
made
in
the
Triangle
Economic
Research
(
TER)
report
represent
empirical
questions
that
are
appropriately
addressed
within
the
survey
design
process.
Page
one
of
the
TER
report
states
"
we
certainly
agree
 
that
nonuse
values
here
are
likely
to
be
positive."
Hence,
the
primary
question
is
not
whether
these
values
exist,
but
rather
whether
they
may
be
measured
appropriately
using
stated
preference
methodology.

EPA
believes
 
following
guidance
in
the
literature
 
that
stated
preference
methods
are
capable
of
measuring
such
values,
if
surveys
and
approaches
are
appropriately
designed.
As
clearly
stated
by
Johnston
et
al.
(
1995),
Mitchell
and
Carson
(
1989),
Bateman
et
al.
(
2002),
Desvousges
et
al.
(
1984),
Desvousges
and
Smith
(
1988)
and
many
others,
the
use
of
focus
groups
to
assist
in
the
design
of
stated
preference
surveys
is
well
established.
Moreover,
focus
groups
represent
one
of
the
primary
means
of
assessing
whether
many
of
the
as­
of­
yet
unsubstantiated
claims
of
the
TER
report
(
e.
g.,
regarding
the
inability
of
survey
instruments
to
measure
non­
use
values
for
fish
affected
by
entrainment
and
impingement)
are
indeed
accurate.
EPA
would
like
to
emphasize
that
the
TER
report
reflects
many
of
the
issues
that
will
be
addressed
in
focus
groups
 
indeed,
such
issues
are
one
of
the
primary
justifications
for
such
methods.
In
sum,
EPA
views
the
TER
report
as
additional
justification
as
to
why
focus
groups
are
clearly
needed
within
survey
design.
EPA
recognizes
the
difficulties
faced
in
the
design
of
appropriate
stated
preference
survey
instruments
 
indeed
this
is
why
the
focus
group
ICR
was
issued
 
but
does
not
consider
these
difficulties
to
be
insurmountable.
EPA
believes
that
this
position
is
in
correspondence
with
the
economic
literature,
as
noted
in
more
detail
below.
23
Specific
Responses
Section
1:
EPA's
View
of
Non­
Use
Values
as
Presented
in
the
Proposed
Rule
and
ICR
is
Conceptually
Flawed
The
TER
report
claims
that
EPA's
view
of
non­
use
values
is
conceptually
flawed,
but
offers
no
evidence
for
the
claimed
flaws.
Rather,
the
report
speaks
to
the
"
difficulty
of
measuring
nonuse
values
in
the
Phase
III
316b
context."
EPA
agrees
that
the
development
of
appropriate
stated
preference
instruments
requires
substantial
work
to
address
potential
biases,
including
those
that
may
lead
to
an
overstatement
of
willingness
to
pay.
For
this
reason,
EPA
has
proposed
the
use
of
focus
groups
for
survey
design.

Section
1.1:
Production
Foregone
Methodology
Provides
a
Reliable
Alternative
to
EPA's
Proposed
CV
Survey
The
commenter
argues
that
the
values
of
protecting
fish
from
impingement
and
entrainment
are
indirect
use
values
and
not
non­
use
values
and
these
values
are
already
captured
in
EPA's
analysis.
This
statement
reveals
a
misunderstanding
of
the
multiple
primary
ways
in
which
forage
fish
affect
the
utility
of
individuals.
Specifically,
it
fails
to
recognize
the
distinction
between
two
legitimate
sources
of
economic
value
related
to
forage
fish:
indirect
use
benefits
and
non­
use
benefits.
First,
forage
fish
may
influence
utility
indirectly,
through
their
influence
on
the
productivity
of
recreational
and
commercial
fish.
Such
benefits
may
be
largely
captured
by
a
trophic
transfer
approach.
However,
forage
fish
may
also
enter
individuals'
utility
functions
directly,
providing
non­
use
benefits
that
have
little
or
no
relationship
to
recreational
and
commercial
fish.
These
benefits
can
not
be
measured
using
a
trophic
transfer
approach.
EPA
refers
to
Freeman
(
2003),
who
provides
a
clear
distinction
between
indirect
use
benefits
and
true
non­
use
benefits.
EPA
also
emphasizes
the
well­
known
tenet
of
economic
theory
which
states
that
benefits
or
costs
from
multiple
direct
(
primary)
effects
on
markets
should
be
counted
within
a
benefit­
cost
analysis;
this
is
not
double
counting,
and
is
indeed
appropriate
(
Just
et
al.
1982).

The
TER
report
also
incorrectly
states
that
EPA
has
rejected
the
production
foregone
methodology
used
in
the
Phase
II
analysis.
Contrary
to
this
statement,
EPA
continues
to
use
the
production
foregone
methodology
to
estimate
the
contribution
of
forage
species
on
productivity
of
commercial
and
recreational
stocks.
For
detail
see
Chapter
A­
X
of
"
The
Regional
Benefits
Assessment
for
the
Proposed
Section
316(
b)
Rule
for
Phase
III
Facilities"
(
U.
S.
EPA
2004).

EPA
also
disagrees
with
the
TER
statement
that
the
two
approaches
(
i.
e.,
a
stated
preference
survey
to
estimate
total
value
of
fish
species
affected
by
impingement
and
entrainment
and
the
production
foregone
model
that
estimates
contribution
of
forage
fish
to
commercial
and
recreational
harvest)
are
potentially
inconsistent.
As
noted
above
there
are
two
legitimate
sources
of
economic
value
related
to
forage
fish:
indirect
use
benefits
and
non­
use
benefits.
EPA
24
emphasizes
that
the
production
foregone
model
captures
indirect
use
value
only
and
does
not
capture
non­
use
values.

The
TER
report
also
makes
another
misleading
statement
regarding
non­
use
values
for
forage
species.
"
If
forage
species
are
intrinsically
valuable
in
the
a
non­
use
context,
it
would
seem
that
their
value
is
independent
of
the
manner
in
which
they
die"
and
thus
"
welfare
gains
associated
with
commercial
and
recreational
fishing
should
also
net
out
the
non­
use
values
associated
with
the
forage
fish
biomass
these
predators
consume
as
they
grow
to
recreational
and
commercial
sizes."

First,
the
TER
report
fails
to
recognize
that
forage
fish
provide
a
number
of
ecological
services
that
are
not
directly
related
to
production
of
commercial
and
recreational
species.
For
example,
some
small
forage
fish
can
consume
macroalgae
on
a
massive
scale
and
contribute
to
reducing
diseases
of
submerged
aquatic
vegetation
and
corals
and
therefore
contributing
to
the
overall
health
of
an
ecosystem.
The
loss
of
benthic
fauna
(
including
forage
fish)
leads
to
"
shifts
from
ecosystems
once
dominated
by
benthic
production
to
those
dominated
by
planktonic
primary
production"
(
Bjernstad
and
Grenfell,
2001).
This
may
lead
to
ecosystem
collapse.
Therefore,
assigning
only
one
type
of
ecological
value
(
i.
e.,
food
for
predators)
to
forage
fish
is
misleading
and
inconsistent
with
ecological
literature.

Second,
the
TER
statement
that
"
welfare
gains
associated
with
commercial
recreational
fishing
should
also
net
out
the
non­
use
values
associated
with
the
forage
fish
biomass
these
predators
consume
as
they
grow
to
recreational
and
commercial
sizes"
is
unsupported
by
either
economic
theory
or
empirical
literature,
and
confuses
the
baseline
from
which
welfare
measures
are
to
be
assessed.
There
are
two
distinct
and
independent
issues
here,
a
fact
that
the
TER
report
obscures.

The
first
issue
concerns
the
appropriate
measurement
of
nonuse
values
associated
with
forage
fish.

The
second
concerns
the
appropriate
measurement
of
social
welfare
associated
with
landed
recreational
and
commercial
fish.

The
focus
groups
(
and
associated
stated
preference
survey)
address
the
first
issue
only­
the
appropriate
measurement
of
nonuse
values
associated
with
forage
fish.
EPA
is
well
aware­
as
reflected
in
prior
316b
materials
and
the
economic
literature­
that
nonuse
values
should
be
assessed
only
for
those
portion
of
forage
fish
affected
the
proposed
policies­
whether
losses
or
ultimate
population
effects.
The
numbers
used
by
EPA
as
a
basis
for
benefit
calculations
reflect
losses
of
forage
fish
due
to
water
intake
(
e.
g.,
in
Phase
III
facilities),
and
the
best
available
estimates
of
resultant
impacts
on
fish
populations.
That
is,
EPA
seeks
to
address
nonuse
values
associated
with
25
the
marginal
increment
to
fish
losses
and
populations
directly
associated
with
the
proposed
Phase
III
rule.
The
proposed
focus
groups
will
be
used,
in
part,
to
assess
whether
nonuse
values
are
associated
with
reduction
in
annual
fish
losses,
changes
in
long­
term
populations,
or
both.
In
all
cases,
the
baseline
from
which
changes
are
estimated
already
reflects
gains
and
losses
due
to
other
exogenous
factors­
both
natural
and
anthropogenic­
including
the
effect
of
natural
predation.
The
TER
report's
implication
that
this
represents
some
type
of
"
inconsistency"
is
incorrect.

As
noted
above,
the
second
issue
concerns
the
appropriate
measurement
of
social
welfare
associated
with
landed
recreational
and
commercial
fish.
EPA
emphasizes
that
this
is
NOT
a
concern
of
the
ICR
in
question,
or
of
the
proposed
focus
groups.
However,
as
it
is
mentioned
in
the
TER
report,
EPA
will
offer
a
brief
response.
EPA
once
again
emphasizes
the
importance
of
recognizing
the
appropriate
baseline.
Here,
reducing
I&
E
losses
in
Phase
III
facilities
will
result
in
a
net
reduction
in
fish
mortality
and
a
potential
increase
in
populations
of
both
forage
and
recreational
fish,
compared
to
the
baseline
in
which
I&
E
losses
remain
unabated.
Any
estimated
increase
in
population
and
harvest
is
measured
as
an
equilibrium
condition,
after
accounting
for
natural
predation
and
other
ecological
events.
Hence,
whether
predators
have
consumed
a
certain
quantity
of
forage
fish
during
their
life
span
is
immaterial,
as
the
relevant
comparisons
for
welfare
estimation
here
are
the
net
equilibrium
(
marginal)
changes
in
annual
fish
losses,
fish
populations,

and
harvest
resulting
from
the
Phase
III
rule.
(
Whether
the
"
manner
of
a
fish's
demise"
is
relevant
to
individuals
is
an
issue
that
will
be
address
in
the
proposed
focus
groups.)
The
discussion
of
predator­
prey
relationships
presented
by
TER
has
no
bearing
on
the
fundamental
comparison
of
pre­
and
post­
rule
ecological
services
to
be
valued
by
EPA.
(
As
an
aside,
EPA
emphasizes
that
if
one
follows
the
logic
of
the
TER
report
regarding
the
valuation
of
fish
harvest,
then
all
prior
valuations
of
predator
species
would
be
required
to
"
net
out"
nonuse
values
associated
with
prey
species
consumed
during
their
lifetimes.
EPA
is
aware
of
no
precedent
in
the
literature
for
such
analysis.)

EPA
recognizes
that
the
valuation
of
ecological
services
presents
a
number
of
challenges,
and
proposes
to
conduct
such
valuation
using
the
standards
set
by
the
most
recent
and
appropriate
economic
literature.
The
TER
comment­
while
raising
complex
issues­
neither
reflects
current
26
practice
in
the
valuation
literature,
nor
identifies
any
inconsistencies
in
EPA's
proposed
focus
groups
or
methods
of
nonuse
value
estimation.

Section
1.2:
EPA
fails
to
Identify
Distinct
Non­
use
Benefit
Categories,
Which
Would
Lead
to
Double
Counting
of
Benefits.
The
commenter
argues
that
because
EPA
failed
to
identify
distinct
non­
use
benefits
categories
applicable
to
the
Phase
III
regulation,
the
stated
preference
survey
would
substantially
overstate
non­
use
impacts
of
the
rule
by
double
counting
intermediate
and
final
impacts.
According
to
the
TER
report
there
is
only
one
benefit
category
affected
by
the
316(
b)
regulation
 
fish
populations.
EPA
points
out
that
the
destruction
of
individual
fish
and
larvae
may
lead
to
changes
in
fish
population
and
it
may
also
affect
higher­
level
ecosystem
functions
or
structural
attributes,
such
as
the
rates
of
material
and
energy
cycling
through
the
aquatic
ecosystem
or
the
harvestable
biomass
maintained
at
the
top
of
the
aquatic
food
web.
For
additional
discussion
of
ecosystem
services
provided
by
fish
see
Section
1.1
above.
EPA
also
points
out
that
the
stated
preference
study
proposed
by
EPA
is
intended
to
measure
total
values
of
reducing
fish
losses
from
impingement
and
entrainment
and
not
the
distinct
value
categories.
Therefore,
the
TER
statement
regarding
double
counting
of
non­
use
benefits
categories
in
EPA's
analysis
is
unsubstantiated.

Section
1.3:
EPA
Fails
to
Consider
the
Potential
of
Use
Values
in
Understanding
Non­
Use
Values
First,
the
commenter
refers
to
the
Fisher
and
Raucher
approach
to
estimate
non­
use
values
of
impingement
and
entrainment
reductions
used
in
the
proposed
Phase
II
rule
analysis
and
the
public
comments
on
this
approach.
EPA
notes
that
the
Fisher
and
Raucher
approach
was
not
used
in
the
benefits
analysis
of
the
final
Phase
II
regulation.
For
more
detail
on
EPA's
responses
to
public
comments
on
the
Phase
II
proposed
rule
and
Notice
of
Data
Availability
see
"
The
316(
b)
Phase
II
Rule
Comment
Response
Document"(
U.
S.
EPA
2004;
http://
www.
epa.
gov/
ost/
316b/
commentph2.
htm).

Second,
the
commenter
asserts
that
because
fish
are
renewable
resources
that
are
harvested
for
personal
consumption,
the
realization
of
use
benefits
impacts
non­
use
values
negatively.
The
commenter
further
argues
that
"
if
it
is
worth
more
to
recreational
anglers
to
leave
the
fish
in
the
water
and
never
use
them
(
i.
e.,
have
true
non­
use
value
based
on
existence
motive),
then
those
anglers
would
never
decide
to
consume
the
fish."
EPA
points
out
that
recreational
anglers
who
catch
fish
for
personal
consumption
represent
a
relatively
small
percentage
of
the
U.
S.
population.
The
majority
of
the
U.
S.
population
does
not
have
direct
use
values
for
fish
species
affected
by
impingement
and
entrainment.
Furthermore,
recent
studies
of
recreational
fishing
behavior
suggest
that
non­
use
values
of
fish
species
caught
by
recreational
anglers
may
in
fact
exceed
consumptive
use
values.
For
example,
Hicks
et
al.
(
2002)
found
that
only
24
percent
of
recreational
saltwater
27
anglers
in
the
Northeastern
United
States
keep
most
of
the
fish
they
catch,
19
percent
release
most
of
all
species
they
catch,
and
57
percent
release
some
fish
(
Hicks
et
al.
2002).
One
of
the
leading
causes
for
releasing
fish
was
that
"
the
angler
caught
the
amount
planned
to
eat."
This
findings
clearly
illustrate
that
non­
use
values
for
fishery
resources
are
likely
to
be
non­
trivial
and
that
while
the
direct
use
value
of
catching
the
first
fishes
exceeds
the
non­
use
value,
this
relationship
does
not
hold
as
the
number
of
fish
caught
increases.

EPA
also
disagrees
that
the
fishery
management
practice
to
limit
harvest
and
consumption
of
fish
would
imply
that
"
the
foregone
use
value
of
increased
fish
populations
is
a
reasonable
upper
bound
any
potential
non­
use
values."
The
value
of
increased
fish
populations
includes
the
use
value
of
an
increase
in
the
future
harvest
of
commercial
and
recreational
fish
and
the
value
of
ecological
services
provided
by
these
species.
Therefore,
the
total
value
of
changes
in
fish
population
associated
with
fishery
management
practices
is
likely
to
be
higher
than
the
use
value
of
foregone
fishery
yield
associated
with
the
catch
limit.

The
TER
report
also
claims
that
"
nonuse
benefits
cannot
be
greater
than
use
benefits":
There
is
no
theoretical
or
empirical
basis
for
this
comment.
There
is
no
literature
or
empirical
evidence
or
justification
in
accepted
theory
suggesting
that
the
non­
use
benefits
from
reductions
in
entrainment
and
impingement
losses
cannot
exceed
use
benefits.

Section
1.4:
EPA
Fails
to
Identify
Rationale
for
Significant
Benefits
The
TER
report
claims
that
EPA
fails
to
identify
a
rationale
for
significant
non­
use
benefits.
However,
the
evidence
provided
is
largely
based
on
speculation.
EPA
emphasizes
that
the
magnitude
of
non­
use
benefits
associated
with
the
Phase
III
rule
is
an
empirical
question
 
and
that
the
potential
significance
of
such
benefits
can
only
be
assessed
using
appropriate
empirical
methods.
For
example,
the
arguments
regarding
"
limited
existence
motive"
are
based
on
assumptions
regarding
behavior
and
underlying
utility
that
have
not
been
substantiated
by
any
literature
cited
in
the
TER
report.
EPA
is
aware
of
no
research
 
empirical
or
otherwise
 
that
demonstrates
that
individuals
have
limited
existence
motives
for
the
types
of
fish
that
would
be
protected
by
the
Phase
III
rule.
Indeed,
the
TER
report
explicitly
states
that
the
non­
use
benefits
of
fish
have
not
been
studied
 
hence
there
is
no
evidence
to
suggest
that
these
benefits
are
trivial,
as
implied
by
the
TER
report.
The
second
argument
presented
by
TER
is
that
the
resources
to
be
protected
by
the
Phase
III
rule
have
many
substitutes,
and
hence
likely
have
relatively
low
non­
use
values.
EPA
recognizes
the
position
that
larger
non­
use
values
would
be
expected
for
unique
resources
with
few
substitutes.
However,
EPA
again
emphasizes
that
the
magnitude
of
non­
use
benefits
in
the
Phase
III
context
is
an
empirical
issue
that
can
only
be
addressed
with
appropriate
research
methods.
Even
if
non­
use
values
for
fish
are
small
on
a
per­
capita
basis,
they
may
be
large
in
the
aggregate.
The
TER
claims
for
trivial
non­
use
benefits
in
the
Phase
III
policy
context
are
based
on
ad
hoc
assessments
unsubstantiated
by
the
empirical
literature.
28
Section
2:
Unreliable
Empirical
Estimates
Most
of
the
material
in
this
section
again
does
not
address
focus
groups
explicitly,
but
rather
the
more
general
topic
of
resource
valuation.
Nonetheless,
it
is
the
opinion
of
EPA
that
these
comments
reflect
the
perspective
of
a
relatively
narrow
portion
of
the
literature,
and
one
that
is
out
of
step
with
accepted
practices
in
benefit­
cost
analysis.
While
EPA
recognizes
that
some
researchers
consider
stated
preference
methods
to
be
controversial,
it
is
also
emphasized
that
standard
benefit­
cost
practice
considers
these
methods
to
provide
useful
information
concerning
resource
values
(
e.
g.,
Freeman
2003;
Carson
et
al.
1999;
Mitchell
and
Carson
1989;
Louviere
et
al.
2000;
Bateman
et
al.
2002).
For
example,
that
which
the
TER
report
describes
as
"
welldocumented
empirical
flaws"
are
more
appropriately
characterized
by
the
preponderance
of
the
literature
 
including
the
NOAA
Blue
Ribbon
Panel
on
Contingent
Valuation
(
Arrow
et
al.
1993)
 
as
potential
biases
that
may
be
avoided
or
largely
ameliorated
with
appropriate
bestpractices
in
stated
preference
survey
design
and
implementation.

EPA
is
aware
of
the
potential
biases
associated
with
poorly
conceptualized
and
implemented
stated
preference
studies.
However,
EPA's
proposed
use
of
these
methods
for
non­
use
WTP
estimation
reflects
the
standards
of
the
broader
literature,
which
considers
the
use
of
such
methods
appropriate.
As
stated
by
the
NOAA
Blue
Ribbon
Panel
on
Contingent
Valuation
(
Arrow
et
al.
1993,
p.
4610),
" 
some
antagonists
of
the
CV
approach
go
so
far
as
to
suggest
that
there
can
be
no
useful
information
content
to
CV
results.
The
Panel
is
unpersuaded
by
these
extreme
arguments."
The
panel
later
follows
with
the
conclusion
"[
t]
he
Panel
concludes
that
under
[
conditions
described
in
the
report],
CV
studies
convey
useful
information.
We
think
it
is
fair
to
describe
such
information
as
reliable
by
the
standards
that
seem
to
be
implicit
in
similar
contexts,
like
market
analysis
for
new
and
innovative
products "
In
the
opinion
of
EPA,
the
responses
in
this
report
largely
reflect
the
type
of
opinions
that
the
NOAA
panel
found
unconvincing
in
its
original
assessment.
Indeed,
many
of
the
citations
provided
in
the
TER
report
(
e.
g.,
Diamond
et
al.
1993;
Diamond
and
Hausman
1993)
reflect
research
that
was
reviewed
(
prior
to
publication
in
book
form)
by
the
NOAA
Blue
Ribbon
panel
during
its
deliberations.

In
the
opinion
of
EPA,
the
TER
comments
reflect
a
relatively
extreme
criticism
of
stated
preference
methods.
This
critical
assessment
is
at
odds
with
current
practice
as
reflected
by
the
NOAA
panel
(
p.
4610),
which
states
that
"
CV
studies
can
produce
results
reliable
enough
to
be
the
starting
point
of
a
judicial
process
of
damage
assessment,
including
lost
passive­
use
values."
Moreover,
as
stated
by
Freemen
(
2003,
p.
154),
"
stated
preference
valuation
methods 
are
likely
to
offer
the
only
feasible
approaches
to
estimating
nonuse
values."

More
broadly,
it
is
the
position
of
EPA
that
an
ICR
for
focus
groups
alone
need
not
incorporate
a
full
discussion
of
all
potential
biases
associated
with
stated
preference
methods
in
general.
The
potential
for
these
biases
in
poorly
designed
surveys
are
well
known
(
Mitchell
and
Carson
1989;
Bateman
et
al.
2002)
 
and
indeed
one
of
the
primary
purposes
of
focus
groups
is
the
amelioration
29
of
potential
biases
in
resulting
survey
instruments
(
Johnston
et
al.
1995).
For
this
reason,
EPA
considers
focus
groups
to
be
an
important
tool
in
designing
a
stated
preference
survey.

Section
2.1:
The
contingent
valuation
(
CV)
approach
that
EPA
intends
to
implement
to
measure
non­
use
values
for
the
Phase
III
rule
contains
hypothetical
bias,
which
would
lead
to
substantial
overestimates
of
potential
benefits.
While
recognizing
the
potential
for
hypothetical
bias
in
stated
preference
responses,
EPA
believes
that
this
comment
presents
a
one­
sided
view
of
the
literature
regarding
the
potential
for
such
biases.
EPA
also
emphasizes
that
many
of
the
citations
used
within
this
section
were
published
more
than
ten
years
ago,
based
on
research
conducted
prior
to
the
NOAA
Blue
Ribbon
Report
(
Arrow
et
al.
1993).
For
example,
the
NOAA
Panel
carefully
reviewed
the
research
underlying
Diamond
et
al.
(
1993)
prior
to
drawing
its
conclusion
that
"[
w]
e
think
it
is
fair
to
describe
[
information
from
well­
designed
CV
surveys]
as
reliable
by
the
standards
that
seem
to
be
implicit
in
similar
contexts,
like
market
analysis
for
new
and
innovative
products "
Hence,
the
NOAA
Panel
clearly
did
not
consider
such
evidence
overwhelming.

EPA
notes
that
this
comment
fails
to
consider
recent
work
when
drawing
conclusions
regarding
the
inevitability
of
hypothetical
bias.
A
more
thorough
review
of
the
recent
literature
reveales
many
advances
have
been
made
since
the
older
studies
cited
by
the
TER
report
were
published.
These
recent
works
provide
various
means
for
the
amelioration
of
hypothetical
bias.
For
example,
many
researchers
have
had
success
using
cheap
talk
methodology
and
other
methods
shown
to
have
the
promise
to
largely
eliminate
or
at
a
minimum
reduce
hypothetical
biases
(
e.
g.,
Champ
et
al.
1997;
2004;
Cummings
and
Taylor
1999).
While
the
evidence
regarding
the
ability
of
researchers
to
ameliorate
hypothetical
biases
is
best
characterized
as
mixed,
there
is
no
evidence
that
such
biases
are
unavoidable.

While
critics
of
stated
preference
methods
often
claim
insurmountable
divergences
between
stated
and
real
market
behavior,
evidence
from
comparisons
of
binding
referenda
to
stated
preference
responses
contradicts
this
opinion.
Existing
studies
find
close
correspondence
between
choices
in
stated
preference
surveys
and
voting
behavior
in
binding,
consequential
referenda
(
Bateman
et
al.
2002,
p.
318;
Schläpfer
et
al.
2004).
Hence,
in
these
true
tests
of
criterion
validity,
responses
in
hypothetical
and
real
contexts
comport
quite
closely,
suggesting
that
stated
preference
surveys
can
provide
useful
indications
of
that
which
individuals
"
are
willing
to
forgo
to
enjoy
a
particular
benefit"
(
Circular
A­
4,
as
quoted
in
the
received
comment).

EPA
notes
that
many
of
research
efforts
that
provide
evidence
for
the
presence
of
hypothetical
biases
are
carried
out
in
simulated
markets,
and
hence
do
not
reflect
true
assessments
of
criterion
validity
(
Bateman
et
al.
2002).
While
simulated
markets
 
experimental
or
otherwise
 
might
generate
unbiased
WTP
estimates,
they
are
often
conducted
in
institutional
settings
unfamiliar
to
respondents.
Such
settings
may
generate
novel
or
unusual
behavior,
confusion,
distrust
or
other
30
behaviors
that
may
lead
to
misstatements
of
true,
underlying
WTP.
For
such
reasons
Bateman
et
al.
(
2002)
argue
that
comparisons
involving
WTP
estimates
obtained
through
simulated
or
experimental
markets
do
not
qualify
as
true
tests
of
criterion
validity
(
i.
e.,
they
do
not
provide
unambiguous
measures
of
true
willingness
to
pay
in
actual
markets).
The
most
common
alternative
 
the
use
of
individual
or
group
donation
mechanisms
(
e.
g.,
Foster
et
al.
1997;
Seip
and
Strand
1992)
 
suffers
from
confounding
effects
of
free­
riding
and
the
associated
lack
of
incentive
compatibility
(
Bateman
et
al.
2002;
Shläpfer
et
al.
2004).
As
a
result,
as
stated
by
Murphy
and
Stevens
(
2004,
p.
185),
one
cannot
unambiguously
claim
that
values
estimated
using
laboratory
experiments
are
any
more
representative
of
true
willingness
to
pay
than
values
estimated
using
hypothetical
markets.

The
TER
report
also
states
that
"[
b]
ecause
the
respondent
does
not
actually
pay
the
stated
amount
in
a
CV
survey,
there
is
no
penalty
for
giving
an
answer
that
does
not
reflect
true
preferences."
EPA
emphasizes
that
this
statement
fails
to
recognize
the
role
of
incentive
compatibility
in
minimizing
strategic
and
hypothetical
biases
(
Sudgden
1999).

EPA
certainly
recognizes
the
potential
for
hypothetical
biases.
However,
EPA
intends
to
incorporate,
to
the
extent
possible,
the
important
steps
that
have
been
taken
in
recent
years
to
develop
means
to
ameliorate
such
biases.
EPA
is
mindful
of
the
important
role
of
appropriate
survey
design,
including
focus
groups,
in
the
development
of
surveys
that
minimize
biases
such
as
those
discussed
in
this
section
(
cf.
Mitchell
and
Carson
1989;
Desvousges
and
Smith
1988;
Desvousges
et
al.
1984;
Johnston
et
al.
1995).
To
reduce
the
potential
for
hypothetical
bias,
EPA
intends
to
use
focus
groups
to
frame
and
define
[
CVM]
survey
questions
and
to
pretest
questionnaires.

Section
2.2:
Marginal
Changes
in
Fish
Population
Present
Unique
Empirical
Valuation
Changes.
EPA
agrees
that
the
representation
of
marginal
changes
in
fish
stocks
represents
an
empirical
challenge.
However,
the
TER
report
provides
no
evidence
that
this
challenge
 
as
implied
by
the
section
title
 
is
"
unique"
or
otherwise
more
difficult
than
challenges
facing
numerous
other
stated
preference
studies
addressing
marginal
changes.
The
TER
report
again
cites
an
older
study
arguing
that
stated
preference
respondents
are
unable
to
comprehend
the
scope
of
resource
changes.
However,
since
that
time
there
have
been
numerous
studies
showing
that
stated
preference
WTP
estimates
are
indeed
sensitive
to
scope
(
e.
g.,
Smith
and
Osborne
1996).
Such
findings
extend
to
stated
preference
estimates
addressing
aquatic
resources,
habitat
and
wildlife
(
Johnston
et
al.
2002;
2003).
31
Section
2.3:
EPA
has
failed
to
identify
the
appropriate
regulatory
baseline
for
non­
use
values.
EPA
emphasizes
that
this
comment
has
little
to
do
with
the
submitted
focus
group
ICR.
EPA
strongly
agrees
that
any
valuation
associated
with
the
Phase
III
rule
must
appropriately
account
for
baselines.
We
also
agree
that
this
is
an
empirical
issue,
which
can
only
be
addressed
by
appropriate
stated
preference
survey
design,
including
focus
groups.
EPA
emphasizes
that
there
is
nothing
in
this
section
that
suggests
in
any
way
that
appropriately
representing
baselines
for
the
Phase
III
is
an
insurmountable
challenge.
EPA
also
recognizes
the
challenges
associated
with
the
communication
of
uncertainty
within
CVM
surveys
 
this
is
again
one
of
the
topics
that
will
be
addressed
in
the
proposed
focus
groups.

Section
3.
Proposed
ICR
Contains
Numerous
Flaws
that
Will
Result
in
Unreliable
Benefit
Estimates
The
TER
report
claims
that
EPA
does
not
appreciate
the
magnitude
of
the
difficulties
that
"
the
Agencies
is
going
to
encounter
in
developing
its
CV
questionnaire."
EPA
agrees
that
the
development
of
appropriate
stated
preference
instruments
requires
substantial
work
to
address
potential
biases
and
problems,
including
those
discussed
in
the
TER
report.
For
this
reason,
EPA
has
proposed
the
use
of
focus
groups
for
survey
design
because
focus
groups
are
considered
by
many
stated
preference
practitioners
to
be
an
critical
component
of
contingent
valuation
survey
design.

3.1
Proposed
ICR
fails
to
address
crucial
linkages
between
Phase
III
CMIS
purported
ecological
effects
and
hypothesized
benefits.

This
section
of
the
TER
comments
raises
a
number
of
concerns
regarding
the
type
of
fish
valued
in
the
proposed
stated
preference
study,
the
ability
to
distinguish
between
Phase
II
and
Phase
III
facility
impacts
on
fish,
people's
limited
knowledge
of
fish
populations,
and
the
effect
of
distance
on
non­
use
values.
EPA
recognizes
difficulties
faced
in
the
design
of
appropriate
stated
preference
survey
instruments
and
thus
many
of
the
issues
raised
in
this
section
will
be
addressed
in
focus
groups.
In
addition
EPA,
points
out
that
the
ability
to
distinguish
between
Phase
II
and
Phase
III
facility
impacts
is
irrelevant
to
the
proposed
ICR.
Phase
II
and
Phase
III
facilities
affect
similar
fish
species.
The
main
difference
between
Phase
II
and
phase
III
facility
impacts
is
the
magnitude
of
fish
losses
from
impingement
and
entrainment.
Hence,
the
primary
question
here
is
not
whether
EPA's
analysis
can
distinguish
between
Phase
II
and
Phase
III
facility
impacts,
but
rather
whether
the
benefit
valuation
function
developed
based
on
the
stated
preference
survey
would
allow
to
estimate
willingness­
to­
pay
values
based
on
different
policy
scenarios
(
i.
e.,
different
changes
in
fish
losses
from
impingement
and
entrainment).
EPA
emphasizes
that
this
issue
can
be
appropriately
address
in
the
survey
design
process.
32
3.2
EPA
provides
no
factual,
conceptual
or
empirical
arguments
to
support
the
contention
that
significant
non­
use
values
are
not
being
included
in
the
proposed
Phase
III
Rule.
A
detailed
response
to
this
comment
is
provided
in
Section
1.4
above.

3.3
The
focus
group
script
provided
in
the
ICR
demonstrates
numerous
problems
that
EPA
is
going
to
face
in
trying
to
elicit
non­
use
values
for
CWIS
regulations.
Specific
comments
from
this
section
are
addressed
below.

3.3.1:
The
materials
do
not
indicate
where
the
changes
in
fish
population
are
going
to
occur
and
why
they
would
be
relevant
to
a
particular
respondent.
A
detailed
response
to
this
comment
is
provided
in
Section
3.1
above.

Section
3.3.2:
The
ICR
fails
to
recognize
the
role
of
embedding
in
people's
preferences
for
environmental
commodities.
EPA
once
again
emphasizes
that
these
comments
extend
far
beyond
the
ICR
at
hand.
The
TER
comment
also
reflects
a
clear
conceptual
misunderstanding
of
the
role
of
focus
groups
in
stated
preference
survey
design.
For
example,
there
is
no
evidence
from
any
of
the
focus
group
literature
that
one
should
first
attempt
to
have
respondents
"
rank"
the
importance
of
fish
prior
to
engaging
in
general
discussions
of
their
perceptions
of
fish
and
fish
habitat.
To
the
contrary,
Johnston
et
al.
(
1995)
explicitly
emphasize
the
importance
of
commencing
focus
groups
with
general
"
grand
tour"
discussions
of
broad
issues,
in
the
participants'
language,
prior
to
introducing
sometimes
foreign
concepts
such
as
ranking
the
importance
of
policy
issues.
Hence,
before
one
can
begin
to
assess
the
importance
of
such
issues
to
participants,
one
must
obtain
an
understanding
of
the
language
that
they
use
to
describe
such
resources,
and
their
past
experiences
(
Johnston
et
al.
1995).

Many
of
the
TER
comments
in
this
section
do
not
refer
to
the
ICR
or
focus
groups
in
general,
but
rather
to
participant
comments
(
taken
out
of
context)
regarding
very
early
drafts
of
survey
questions.
It
is
the
express
purpose
of
focus
groups
to
obtain
reactions
such
as
these,
in
order
to
ameliorate
such
problems
in
the
final
instrument.
Indeed,
TER's
comments
again
further
support
EPA's
rationale
for
conducting
focus
groups.
EPA
strongly
agrees
that
the
design
of
the
CV
questionnaire
is
critical
in
this
case
 
this
is
why
focus
groups
are
required.
33
Section
3.3.3:
The
ICR
indicates
that
double
counting
could
be
a
significant
problem
with
the
implementation
of
the
proposed
CV
survey.
The
TER
comment
reflects
a
misunderstanding
of
the
distinction
between
the
use
of
focus
groups
and
the
implementation
of
actual
stated
preference
surveys.
It
also
reflects
a
mistaken
perception
that
people
may
not
have
non­
use
values
for
fish
of
the
types
that
are
harvested
by
recreational
and
commercial
fishers.
It
is
the
position
of
EPA
that
individuals
may
have
non­
use
values
for
any
and
all
fish
 
including
forage
fish
as
well
as
fish
harvested
by
humans.
The
TER
comment
blurs
the
distinctions
between
stated
preference
questions
 
which
must
be
worded
carefully
to
avoid
double
counting
 
and
focus
group
discussions,
whose
purpose
is
to
elicit
the
perceptions
and
language
of
respondents,
and
to
assess
their
reactions
to
draft
survey
questions.
Questions
such
as
that
quote
by
the
report
(
pg.
21)
are
important
to
understand
the
motivations
underlying
responses
to
potential
survey
questions
 
and
to
better
understand
participants'
underlying
utility.

Moreover,
the
TER
comment
reflects
a
lack
of
understanding
that
focus
group
questions
are
not
the
same
as
CVM
survey
questions.
The
TER
report
quotes
a
suggested
focus
group
question
(
p.
21)
 
a
question
to
be
asked
verbally
of
a
small
group
of
focus
group
respondents,
for
the
purposes
of
eliciting
discussion.
The
report
then
goes
on
to
discuss
this
question
as
if
it
were
a
question
to
be
included
in
an
actual
stated
preference
survey.
The
subsequent
discussion
of
anchoring
specifically
concerns
questions
included
in
CV
surveys,
not
questions
to
be
used
in
focus
groups.
Hence,
the
TER
comment
fails
to
distinguish
between
questions
to
be
asked
for
exploratory
purposes
in
a
focus
group,
and
final
questions
that
would
appear
in
a
contingent
valuation
survey.

The
last
paragraph
of
section
3.3.3
expresses
the
opinion
that
individuals
may
have
difficulty
separating
the
"
value
of
protecting
fish
from
the
value
of
fishing."
EPA
emphasizes
again
that
this
is
an
empirical
issue,
and
one
that
will
be
addressed
in
the
proposed
focus
groups.

Section
3.3.4:
Potential
questions
about
habitat
would
result
in
biased
values
for
marginal
changes
in
fish
populations.
EPA
again
emphasizes
the
distinction
between
questions
asked
in
focus
groups
and
questions
asked
in
a
final
stated
preference
survey.
EPA
agrees
that
the
distinction
between
values
for
habitat
and
values
for
fish
is
an
important
distinction,
and
that
it
represents
"
essential
information"
to
be
obtained
in
focus
groups.
The
fact
that
habitat
issues
are
raised
in
the
focus
group
(
to
obtain
this
essential
information),
does
not
suggest
that
they
will
appear
in
any
survey
that
results.
34
Section
3.3.5:
The
ICR
indicates
that
the
Agency
does
not
clearly
understand
the
geographical
scope
of
the
survey
and
the
potential
effects
of
that
scope
of
benefits
estimation.
Once
again,
EPA
would
like
to
emphasize
the
distinction
between
questions
asked
in
focus
groups
and
questions
asked
in
a
final
stated
preference
survey.
The
purpose
of
focus
groups
is
NOT
to
estimate
values.
On
page
23,
the
TER
response
states
"
each
answer
will
present
the
Agency
with
a
considerable
challenge
from
a
benefits
measurement
criterion."
It
is
also
stated:
"
how
the
Agency
would
attempt
to
aggregate
those
values
into
some
type
of
national
benefits
estimate
is
also
unclear."
Both
these
comments
seem
to
imply
that
focus
group
responses
are
somehow
to
be
used
to
estimate
values
 
a
misrepresentation
of
the
purposes
of
focus
groups
clearly
laid
out
by
the
literature
(
Desvousges
et
al.
1984;
Desvousges
and
Smith
1988;
Johnston
et
al.
1995;
Mitchell
and
Carson
1989).

EPA
agrees
that
a
clearly
defining
geographical
scope
is
an
important
part
of
CVM
survey
design.
However,
the
Agency
emphasizes
that
general
questions
asked
in
focus
groups
 
for
the
purposes
of
eliciting
general
perceptions
and
understandings
of
participants
relative
to
the
resource
in
question
 
neither
reflect
a
"
lack
of
understanding"
on
the
part
of
the
Agency,
nor
imply
that
similar
questions
will
appear
in
any
subsequent
survey
instrument.

Section
3.3.6:
The
ICR
appropriately
raises
questions
about
natural
variability
in
fish
populations,
which
raises
further
doubts
as
to
whether
the
survey
would
be
effective.
EPA
recognizes
the
challenges
associated
with
the
communication
of
effects
of
natural
variability
in
fish
population
and,
as
a
result,
uncertainty
of
the
impact
of
reduced
impingement
and
entrainment
on
fish
populations.
However,
communicating
uncertainty
in
the
316(
b)
regulation
context
is
again
one
of
the
topics
that
will
be
addressed
in
the
proposed
focus
groups.
EPA
emphasizes
that
here
is
nothing
in
this
section
that
suggests
in
any
way
that
appropriately
representing
baseline
factors
that
may
influence
fish
populations
in
the
survey
instrument.

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M.
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R.
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J.,
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L.
Hueth,
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A.
Hensher,
and
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D.
Swait.
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Mitchell,
R.
C.
and
R.
T.
Carson.
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Murphy,
J.
J.
and
T.
H.
Stevens.
2004.
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33(
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Schkade,
D.
A.
and
J.
W.
Payne.
1994.
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to
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an
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of
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26:
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Schläpfer,
F.,
A.
Roschewitz,
and
N.
Hanley.
2004.
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of
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Ecological
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51(
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16.
37
Seip,
K.
and
Strand,
J.
1992.
Willingness
to
Pay
for
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in
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with
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Environmental
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2:
91­
106.

Smith,
V.
K.
and
L.
Osborne.
1996.
Do
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the
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A
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Analysis.
Journal
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31(
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301.

Spencer,
M.
A.
S.
K.
Swallow,
and
C.
J.
Miller.
1998.
Valuing
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27(
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42.

Sugden,
R.
1999.
Alternatives
to
the
Neo­
Classical
Theory
of
Choice
in
Valuing
Environmental
Preferences:
Theory
and
Practice
of
the
Contingent
Valuation
Method
in
the
US,
EU,
and
Developing
Countries,
edited
by
I.
J.
Bateman
and
K.
G.
Willis,
Oxford
University
Press,
Oxford,
UK.

U.
S.
EPA.
2000.
Guidelines
for
Preparing
Economic
Analyses.
(
EPA
240­
R­
00­
003).
U.
S.
EPA,
Office
of
the
Administrator,
Washington,
DC,
September
2000.

U.
S.
EPA.
2004.
The
Regional
Benefits
Assessment
for
the
Proposed
Section
316(
b)
Rule
for
Phase
III
Facilities.
(
EPA­
821­
R­
04­
017).
U.
S.
EPA,
Office
of
Water,
Washington,
DC,
November
2004.
38
Attachment
2:
Response
to
Comments
from
the
American
Petroleum
Institute
(
Docket
ID:

OW­
2004­
0020
­
0008)

EPA
would
like
to
emphasize
that
the
ICR
in
question
concerns
focus
groups
that
are
to
be
used
in
the
development
of
a
stated
preference
survey.
The
brief
letter
from
the
American
Petroleum
Institute
(
API)
does
not
address
focus
groups
explicitly,
but
rather
the
more
general
topic
of
resource
valuation
and
stated
preference
surveys.
The
API
comment
refers
to
API
Publication
Number
316,
"
Identifying
and
Measuring
Nonuse
Values
for
Natural
and
Environmental
Resources:
A
Critical
Review
of
the
State
of
the
Art."
EPA
emphasizes
that
this
publication
provides
a
general
critical
assessment
of
stated
preference
methods
(
as
a
means
for
non­
use
value
assessment)
in
general,
and
does
not
provide
comments
on
the
focus
group
ICR
issued
by
EPA.

Regarding
API
publication
316,
EPA
emphasizes
that
this
manuscript
offers
material
that
largely
reflects
standard
positions
taken
by
more
extreme
critics
of
stated
preference
methods
and
non­
use
value
estimation.
It
is
the
opinion
of
EPA
that
these
comments
reflect
the
perspective
of
a
relatively
narrow
portion
of
the
literature,
and
one
that
is
out
of
step
with
accepted
practices
in
benefit­
cost
analysis.
While
EPA
recognizes
that
some
researchers
consider
stated
preference
methods
to
be
controversial,
it
is
also
emphasized
that
standard
benefit­
cost
practice
considers
these
methods
to
provide
useful
information
concerning
resource
values
(
e.
g.,
Freeman
2003;
Carson
et
al.
1999).
The
comments
offered
in
this
text
 
while
reflecting
the
legitimate
opinions
of
some
researchers
 
do
not
reflect
general
standards
or
practice
in
the
larger
benefit­
cost
analysis
literature.

As
stated
by
the
NOAA
Blue
Ribbon
Panel
on
Contingent
Valuation
(
Arrow
et
al.
1993,
p.
4610),
" 
some
antagonists
of
the
CV
approach
go
so
far
as
to
suggest
that
there
can
be
no
useful
information
content
to
CV
results.
The
Panel
is
unpersuaded
by
these
extreme
arguments."
The
panel
later
follows
with
the
conclusion
"[
t]
he
Panel
concludes
that
under
[
conditions
described
in
the
report],
CV
studies
convey
useful
information.
We
think
it
is
fair
to
describe
such
information
as
reliable
by
the
standards
that
seem
to
be
implicit
in
similar
contexts,
like
market
analysis
for
new
and
innovative
products ."
Many
of
the
arguments
in
the
API
publication
reflect
the
type
of
"
extreme"
opinions
that
the
NOAA
panel
found
unconvincing.

In
the
opinion
of
EPA,
the
API
publication
in
question
represents
a
relatively
extreme
criticism
of
stated
preference
methods.
This
critical
assessment
is
at
odds
with
current
practice
as
reflected
by
the
NOAA
panel
(
p.
4610),
which
states
that
"
CV
studies
can
produce
results
reliable
enough
to
be
the
starting
point
of
a
judicial
process
of
damage
assessment,
including
lost
passive­
use
values."
Moreover,
as
stated
by
Freemen
(
2003,
p.
154),
"
stated
preference
valuation
methods 
are
likely
to
offer
the
only
feasible
approaches
to
estimating
nonuse
values."

We
also
refer
API
to
EPA's
reply
to
comments
by
the
Mercatus
Center
(
George
Mason
39
University),
whose
comments
are
analogous
to
many
of
those
found
within
API
Publication
316.
Specifically,
these
arguments
represent
empirical
questions
that
are
appropriately
addressed
within
the
survey
design
process.
For
example,
with
regard
to
the
incentive
structure
of
stated
preference
questions
 
that
are
often
cited
as
a
key
distinction
between
stated
and
real­
market
choices
 
Carson
et
al.
(
1999,
p.
124)
state
that
"
one
must
endeavor
to
provide
questions
with
a
proper
incentive
structure."
As
emphasized
by
the
NOAA
Panel
(
Arrow
et
al.
1993),
Schkade
and
Payne
(
1994)
and
many
others,
appropriate
survey
design
can
identify
the
mechanisms
through
which
people
respond
to
CVM
questions
and
assess
whether
responses
reflect
the
types
of
tradeoffs
required
by
neoclassical
theory
for
appropriate
expressions
of
stated
values.

As
emphasized
by
Johnston
et
al.
(
1995),
Mitchell
and
Carson
(
1989),
Bateman
et
al.
(
2002),
Desvousges
et
al.
(
1984),
Desvousges
and
Smith
(
1988)
and
many
others,
the
use
of
focus
groups
to
assist
in
the
design
of
stated
preference
surveys
is
well
established,
as
is
the
capacity
of
focus
groups
to
provide
insight
into
motivations
underlying
respondents'
stated
willingness
to
pay
values.
Indeed,
EPA
emphasizes
that
focus
groups
will
be
used,
following
the
advice
of
Mitchell
and
Carson
(
1989),
Desvousges
et
al.
(
1984)
and
Johnston
et
al.
(
1995),
to
test
for
and
eliminate
or
ameliorate
potential
biases,
which
may
be
associated
with
the
stated
preference
methodology.

Within
this
context,
EPA
believes
that
the
potential
concerns
reflected
by
API
provide
an
even
stronger
rationale
to
conduct
focus
groups
 
as
these
comments
reflect
exactly
the
type
of
issues
that
focus
groups
are
meant
to
address
in
stated
preference
survey
design.
Accordingly,
EPA
will
take
special
care
within
the
proposed
focus
groups
to
address
the
concerns
and
issues
raised
by
this
section.

References
Arrow,
K.
,
R.
Solow,
E.
Leamer,
P.
Portney,
R.
Rander,
and
H.
Schuman.
1993.
Report
of
the
NOAA
Panel
on
Contingent
Valuation,
Federal
Register
58
(
10):
4602­
4614.

Bateman,
I.
J.,
R.
T.
Carson,
B.
Day,
M.
Hanemann,
N.
Hanley,
T.
Hett,
M.
Jones­
Leee,
G.
Loomes,
S.
Mourato,
E.
Ozdemiroglu,
D.
W.
Pierce,
R.
Sugden,
and
J.
Swanson.
2002.
Economic
Valuation
with
Stated
Preference
Surveys:
A
Manual.
Northampton,
MA:
Edward
Elgar.

Carson,
R.
T.,
N.
E.
Flores,
and
R.
C.
Mitchell.
1999.
The
Theory
and
Measurement
of
Passive­
Use
Value,
in
Valuing
Environmental
Preferences:
Theory
and
Practice
of
the
Contingent
Valuation
Method
in
the
US,
EU,
and
Developing
Countries,
edited
by
I.
J.
Bateman
and
K.
G.
Willis,
Oxford
University
Press,
Oxford,
UK.

Desvousges,
W.
H.,
V.
K.
Smith,
D.
H.
Brown,
and
D.
K.
Pate.
1984.
The
Role
of
Focus
Groups
in
Designing
a
contingent
Valuation
Survey
to
Measure
the
Benefits
of
Hazardous
Waste
40
Management
Regulations.
Research
Triangle
Institute:
Research
Triangle
Park,
NC.

Desvousges,
W.
H.
and
V.
K
Smith.
1988.
Focus
Groups
and
Risk
Communication:
the
Science
of
Listening
to
Data.
Risk
Analysis
8:
479­
484.

Freeman,
A.
M.
III.
2003.
The
Measurement
of
Environmental
and
Resource
Values:
Theory
and
Methods.
Washington,
DC:
Resources
for
the
Future.

Johnston,
R.
J.,
T.
F.
Weaver,
L.
A.
Smith
and
S.
K.
Swallow.
1995.
Contingent
Valuation
Focus
Groups:
Insights
From
Ethnographic
Interview
Techniques.
Agricultural
and
Resource
Economics
Review
24(
1):
56­
69.

Mitchell,
R.
C.
and
R.
T.
Carson.
1989.
Using
Surveys
to
Value
Public
Goods:
The
Contingent
Valuation
Method.
Resources
for
the
Future,
Washington,
D.
C.

Schkade,
D.
A.
and
J.
W.
Payne.
1994.
How
People
Respond
to
Contingent
Valuation
Questions:
A
Verbal
Protocol
Analysis
of
Willingness
to
Pay
for
an
Environmental
Regulation.
Journal
of
Environmental
Economics
and
Management
26:
88­
109.
41
Attachment
3:
EPA
Response
to
Public
Comments
from
the
Mercatus
Center,
George
Mason
University
(
Docket
ID:
OW­
2004­
0020­
0003)

Part
I,
Introduction
(
pages
1­
3)

This
section
first
provides
background
information
on
the
316(
b)
rulemaking,
including
Phase
I,
Phase
II,
and
the
proposed
Phase
III
rule.
Then,
the
commenter
briefly
summarizes
information
included
in
the
notice
of
the
proposed
information
collection
request
(
69
FR
68140)
issued
on
November
23,
2004.

No
response
is
necessary.

Part
II
(
pages
3­
4)

The
commenter
argues
that
non­
use
values
exist
for
innumerable
things
and
that
individuals
can
express
hypothetical
gains
and
losses
of
subjective
utility
that
do
not
correspond
to
market
values.
The
commenter
asserts
that
EPA
should
consider
the
possibility
of
non­
market
valued
effects,
including
potential
non­
use
value
effects,
on
"
cost­
side"
resources
that
are
directly
or
indirectly
affected
by
the
316(
b)
Phase
III
regulation.
The
comment
says,
"
If
EPA
is
to
consider
non­
use
value
effects
on
the
benefit
side
of
the
regulation,
then
EPA
should
also
consider
non­
market
and
non­
use
value
effects
on
the
cost
side
of
the
regulation."
The
comment
then
offers
several
costside
resources
and
effects
that
EPA
implicitly
should
account
for
in
a
comprehensive
cost­
benefit
analysis
framework.

While
EPA
acknowledges
the
theoretical
validity
of
the
commenter's
points,
EPA
judges
the
comment
to
be
of
negligible
consequence
in
the
context
of
the
316(
b)
Phase
III
regulation,
whether
for
evaluating
the
proposed
Willingness
to
Pay
Survey
or,
more
generally,
for
analyzing
the
cost
and
benefits
of
the
316(
b)
Phase
III
regulation.

In
general,
any
non­
market
effect
pertaining
to
specific
resources
on
the
cost
side
of
a
regulation
is
likely
to
be
of
no
consequence
 
particularly
in
relation
to
an
environmental
regulation's
benefits
 
because
of
the
dilution
of
the
impact
over
the
wide
range
of
resource
inputs
that
are
called
upon,
directly
or
indirectly,
to
support
regulatory
compliance.
In
contrast,
the
regulation's
benefits
are
focused
on
a
specific
environmental
resources
of
concern
and
are
thus
much
more
likely
to
have
meaningful
non­
market
effects,
including
potential
non­
use
effects.
Of
course,
the
presence
of
these
non­
market
considerations
on
the
benefit
side
of
the
analysis
is
the
reason
that
environmental
regulation
is
called
for
in
the
first
place.
For
this
reason,
EPA
judges
that
the
commenter's
points
have
little
merit
as
a
general
matter
of
environmental
regulatory
analysis.
In
rare
instances,
a
regulation
might
have
a
focused
impact
on
a
specific
input
resource
for
which
there
might
be
42
significant
non­
market
effects,
including
effects
valued
in
a
non­
use
context.
For
example,
to
create
a
hypothetical
case,
if
a
principal
cost­
side
effect
of
a
regulation
were
to
cause
an
increase
in
production
and
consumption
of
a
resource
that,
in
itself,
presented
a
material
environmental
health
risk,
then
it
would
be
incumbent
upon
the
Agency
to
consider
this
side­
damage
resulting
from
regulatory
compliance.
Even
in
this
case,
the
Agency
might
often
find
that
other
already
in­
place
environmental
regulations
sufficiently
manage
the
risk
issues
posed
by
the
other
resource
in
such
a
way
that
no
special
consideration
of
the
resource,
for
non­
market
value
effects,
was
warranted
in
the
cost­
benefit
analysis
for
the
regulation
in
question.

Consideration
of
the
specific
cost­
side
resource
effects,
as
raised
by
the
commenter,
illustrates
this
general
point.
Namely,
all
of
the
cost­
side
resource
effects
suggested
by
the
commenter
are
likely
to
be
remotely
small
or
non­
existent
in
the
context
of
the
316(
b)
regulation
(
and
in
one
instance
have
already
been
considered
in
the
course
of
the
316(
b)
regulatory
analysis):

·
"
Would
the
rule
make
electricity
production
less
energy
efficient?
How
do
people
feel
about
that?"
Because
the
lowest
of
the
applicability
thresholds
in
the
three
proposed
Phase
III
regulatory
options
is
the
same
as
the
applicability
threshold
of
the
Phase
II
regulation,

none
of
the
three
proposed
Phase
III
regulatory
options
would
apply
to
existing
generators
in
the
electric
power
industry.
The
regulation
could
affect
electricity
production
in
manufacturing
industries,
but,
as
a
practical
matter,
any
potential
effect
is
negligible
as
the
estimated
contribution
of
the
regulated
manufacturing
industries
to
total
electricity
production
is
less
than
0.02
percent
of
the
total
national
electricity
supply.
In
fact,
the
potential
for
non­
market
effects
of
the
regulation
on
energy
supply
and
energy
security
was
explicitly
considered
as
part
of
the
analysis
for
Executive
Order
13211,
Actions
Concerning
Regulations
that
Significantly
Affect
Energy
Supply,
Distribution
or
Use,
which
was
undertaken
for
the
proposed
regulatory
options.
This
analysis
concluded
that
the
regulation
has
no
meaningful
effect
relative
to
energy
supply,
distribution
or
use.

Accordingly,
EPA
sees
no
way
that
the
regulation
could
have
a
significant
non­
market
effect
relative
to
this
resource.

·
"
Are
we
extracting
more
material
 
coal,
or
cement
 
from
mines
in
order
to
comply
with
these
regulations?
Do
people
have
nonuse
values
related
to
mining?"
As
already
discussed,
the
Phase
III
regulation
has
no
consequential
effect
on
electricity
production,

which
is
the
presumed
logical
path
by
which
the
regulation
could
cause
an
increase
in
coal
43
mining.
EPA
is
aware
of
no
route
by
which
the
regulation
could
cause
more
than
a
negligible
increase
in
the
mined
production
inputs
required
for
cement
production.
In
addition,
other
Federal
and
state
regulations
are
in
place
to
address
mining­
related
issues.

·
"
Are
we
using
up
more
depletable
resources
in
order
to
save
resources
(
fish)
that
are
easily
renewable?"
Again,
EPA's
analysis
finds
no
concentration
of
cost­
side
resource
effects,
as
a
result
of
the
regulation,
that
would
imply
a
specific
need
to
consider
the
implications
of
the
regulation
on
depletable
resources
 
beyond
that
already
accounted
for
the
Executive
Order
13211
review.

·
"
Are
we
causing
more
intensive
use
of
hydroelectric
plants,
thus
killing
more
fish
than
we
are
saving?"
As
already
noted,
the
regulation's
effect
on
electricity
markets
is
inconsequential,
as
is
this
potential
concern.
Moreover,
because
of
its
very
low
variable
production
cost
 
virtually
zero
 
hydroelectric
generation
is
most
often
managed
and
dispatched
 
both
in
a
short­
term
and
longer­
term,
seasonal
usage
and
management,

sense
 
not
on
the
basis
of
demand
level
but
on
the
basis
of
supply
considerations:
e.
g.,

water
flow,
precipitation
level,
etc.
Said
another
way,
total
supply
over
a
production
season
is
not
generally
determined
by
demand.

In
sum,
EPA
concludes
that
none
of
the
commenter's
suggested
resource
issues
rise
to
a
level
that
would
warrant
specific
scrutiny
of
non­
market
value
effects,
including
non­
use
value
effects,
beyond
that
already
undertaken
by
EPA
in
the
context
of
its
Executive
Order
13211
review.
44
Part
II,
Section
A
(
page
4)

The
commenter
argues
that
the
proposed
survey
is
not
necessary
for
EPA
to
estimate
benefits
of
the
proposed
Phase
III
regulation
because
(
1)
Executive
Order
12866
does
not
require
that
EPA
quantify
non­
use
benefits
and
(
2)
EPA
has
not
justified
the
assertion
that
non­
use
benefits
exceed
non­
use
costs,
or
that
non­
use
benefits
are
greater
than
zero.
First,
EPA
disagrees
that
quantification
of
non­
use
benefits
of
the
316(
b)
regulation
is
unnecessary.
EPA
refers
the
commenter
to
the
"
best
practices"
for
preparing
the
economic
analysis
of
a
significant
regulatory
action
described
in
the
Office
of
Management
and
Budget
(
OMB)
document:
"
Economic
Analysis
of
Federal
Regulations
under
Executive
Order
12866"
(
OMB
1996).
This
document
explicitly
states
that
"
presentation
of
monetized
benefits
and
costs
is
preferred
where
acceptable
estimates
are
possible"
and
that
"
an
attempt
should
be
made
to
quantify
all
potential
real
incremental
benefits
to
society
in
monetary
terms
to
the
maximum
extent
possible."
Furthermore,
as
appropriately
noted
by
the
commenter,
OMB's
Circular
A­
4,
"
Regulatory
Analysis"
endorses
the
use
of
stated
preference
surveys
for
estimating
non­
use
benefits.
EPA
further
notes
 
following
guidance
in
the
economic
literature
 
that
stated
preference
methods
are
the
primary
means
for
estimating
non­
use
values
of
a
resource
in
question.
Second,
EPA
emphasizes
that
the
magnitude
of
non­
use
benefits
associated
with
the
Phase
III
rule
is
an
empirical
question
 
and
that
the
potential
significance
of
such
benefits
can
only
be
assessed
using
appropriate
empirical
methods.
EPA
is
aware
of
no
research
 
empirical
or
otherwise
 
that
demonstrates
that
individuals
have
limited
existence
motives
for
the
types
of
fish
that
would
be
protected
by
the
Phase
III
rule.
(
For
detail
on
EPA's
discussion
of
"
non­
use
costs"
see
the
preceding
paragraph.)
Therefore,
the
proposed
stated
preference
study
is
necessary
for
developing
comprehensive
benefits
of
the
final
316(
b)
regulation
for
Phase
III
facilities.

Part
II,
Section
A
(
page
5)

The
commenter
asserts
that
the
values
of
protecting
fish
from
impingement
and
entrainment
are
indirect
use
values
and
not
non­
use
values,
and
these
values
are
already
captured
in
EPA's
analysis.
This
statement
reveals
a
misunderstanding
of
the
multiple
primary
ways
in
which
forage
fish
affect
the
utility
of
individuals.
Specifically,
it
fails
to
recognize
the
distinction
between
two
legitimate
sources
of
economic
value
related
to
forage
fish:
indirect
use
benefits
and
non­
use
benefits.
First,
forage
fish
may
influence
utility
indirectly,
through
their
influence
on
the
productivity
of
recreational
and
commercial
fish.
Such
benefits
may
be
largely
captured
by
a
trophic
transfer
approach.
However,
forage
fish
may
also
enter
individuals'
utility
functions
directly,
providing
non­
use
benefits
that
have
little
or
no
relationship
to
recreational
and
commercial
fish.
These
benefits
are
not
measured
using
a
trophic
transfer
approach.
Similarly,
reductions
in
the
impingement
and
entrainment
losses
of
commercial
and
recreational
species
affect
the
utility
of
individuals
in
multiple
ways.
First,
it
affects
recreational
and
commercial
fishing
harvest.
As
pointed
out
by
the
commenter,
changes
in
recreational
and
commercial
fishing
harvest
8
The
estimated
fishing
mortality
for
commercial
and
recreational
fish
species
affected
by
impingement
and
entrainment
ranges
from
3%
to
50%;
for
most
of
the
affected
fish
species
fishing
mortality
does
not
exceed
20%.
For
details,
see
"
The
Regional
Benefits
Assessment
for
the
Proposed
Rule
for
Phase
III
Facilities"
(
U.
S.
EPA,
2004).

45
affect
direct
use
values,
which
are
captured
in
EPA's
analysis
of
the
316(
b)
regulation
for
Phase
III
facilities.
However,
the
fraction
of
recreational
and
commercial
species
lost
to
impingement
and
entrainment
that
will
eventually
be
caught
is
small.
8
The
remainder
of
the
commercial
and
recreational
species
(
i.
e.,
non­
landed
portion)
saved
from
impingement
and
entrainment
due
to
the
316(
b)
regulation
will
contribute
to
the
fish
stock.
The
non­
landed
recreational
species
may
influence
individuals'
utilities
indirectly
through
their
reproduction
which
may
partly
contribute
to
the
commercial
and
recreational
harvest.
But
both
landed
and
non­
landed
commercial
and
recreational
species
may
also
provide
non­
use
benefits
that
are
separate
from
their
indirect
impact
upon
commercial
and
recreational
harvests.
For
example,
individuals
who
do
not
eat
fish
and
do
not
participate
in
recreational
fishing
may
still
value
existence
of
healthy
commercial
and
recreational
stocks.
EPA
refers
to
Freeman
(
2003),
who
provides
a
clear
distinction
between
indirect
use
benefits
and
true
non­
use
benefits.

The
commenter
also
asserts
that
existence
and
bequest
values
are
only
likely
to
exist
for
unique
resources.
Because
the
fish
affected
by
impingement
and
entrainment
are
neither
a
unique
nor
a
diminishing
resource,
"
individuals
are
unlikely
to
give
up
their
income
for
the
mere
knowledge
that
a
larger
population
of
common
fish
exist."
EPA
agrees
that
larger
non­
use
values
would
be
expected
for
unique
resources
with
few
substitutes.
EPA,
however,
emphasizes
that
empirical
evidence
shows
that
fish
are
a
diminishing
resource.
Scientists
estimate
that
"
the
total
weight
of
table
fish
 
species
eaten
by
man
 
in
the
oceans
has
declined
by
a
total
of
85
percent
in
the
last
century
and
continues
to
decline
at
2
percent
or
more
per
year"
(
Trivedi
2002).
Another
study
found
that
"
large
predatory
fish
biomass
today
is
only
about
10%
of
the
pre­
industrial
level
(
Myers
and
Worm
2003).
Species
caught
by
commercial
and
recreational
fishermen
account
for
approximately
30
percent
of
the
total
impingement
and
entrainment
losses
at
cooling
water
intakes.
In
addition,
a
number
of
threatened
and
endangered
species
are
affected
by
cooling
water
intakes.
For
details,
see
"
The
Regional
Benefits
Assessment
for
the
Proposed
Rule
for
Phase
III
Facilities"
(
U.
S.
EPA,
2004).
EPA
points
out
that
the
magnitude
of
non­
use
benefits
in
the
Phase
III
context
is
an
empirical
issue
that
can
only
be
addressed
with
appropriate
research
methods.
Even
if
nonuse
values
for
fish
are
small
on
a
per­
capita
basis,
they
may
be
large
in
the
aggregate.
The
claims
of
trivial
non­
use
benefits
in
the
Phase
III
policy
context
are
based
on
ad
hoc
assessments
unsubstantiated
by
the
empirical
literature.

The
commenter
claims
that
respondents
cannot
"
distinguish
between
the
indirect
use
values
associated
with
the
fish
as
part
of
an
ecosystem
from
true
non­
use
values."
According
to
the
commenter,
EPA
should
focus
its
effort
on
measuring
the
direct
use
benefits
because
of
the
"
theoretical
and
empirical
problems
with
addressing
non­
use
values
and
the
questionable
merit
of
doing
so."
The
commenter
seems
to
misunderstand
the
purpose
of
the
proposed
stated
preference
46
study.
As
stated
in
Freeman
(
2003,
p.
154)
"
what
matters
for
policy
purposes
is
total
value,
regardless
of
how
it
is
divided
between
use
and
non­
use
values."
Accordingly,
the
stated
preference
study
proposed
by
EPA
is
intended
to
measure
total
values
(
including
use
and
non­
use)
of
reducing
fish
losses
from
impingement
and
entrainment.
EPA
also
points
out
that
it
is
generally
recognized
in
the
economic
literature,
that
it
is
preferable
to
estimate
total
value
of
a
given
resources
rather
that
to
estimate
components
of
the
total
value
(
e.
g.,
indirect
use
vs.
non­
use
values)
and
then
aggregate
them.
Survey
respondents
will
include
both
users
and
non­
users
of
the
fishery
resources.
For
individuals
who
are
users
of
the
resource
in
question,
stated
preference
methods
will
yield
estimates
of
total
values
(
including
use
and
non­
use),
while
revealed
preferences
methods
would
underestimate
total
value
(
Freeman
2003,
p.
154).
For
individuals
who
are
nonusers
of
a
resource
and
by
definition
can
hold
only
non­
use
values,
the
stated
preference
study
would
yield
estimates
of
non­
use
values
(
Freeman
2003,
p.
154).

Part
II,
Section
B
EPA
would
like
to
emphasize
that
the
ICR
in
question
concerns
focus
groups
that
are
to
be
used
in
the
development
of
a
stated
preference
survey.
Most
of
the
material
in
this
section
does
not
address
focus
groups
explicitly,
but
rather
the
more
general
topic
of
resource
valuation.
Nonetheless,
it
is
the
opinion
of
EPA
that
these
comments
reflect
the
perspective
of
a
relatively
narrow
portion
of
the
literature,
and
one
that
is
out
of
step
with
accepted
practices
in
benefit­
cost
analysis.
While
EPA
recognizes
that
some
researchers
consider
stated
preference
methods
to
be
controversial,
it
is
also
emphasized
that
standard
benefit­
cost
practice
considers
these
methods
to
provide
useful
information
concerning
resource
values
(
e.
g.,
Freeman
2003;
Boardman
et
al.
2001;
Carson
et
al.
1999;
Mitchell
and
Carson
1989).

EPA
recognizes
that
some
scientists
have
expressed
opinions
that
"
a
survey
cannot
reliably
ascertain
[
values
for
common
fish]."
Such
opinions
notwithstanding,
the
proposed
analysis
is
designed
to
follow
standard
benefit­
cost
practice,
as
reflected
in
the
preponderance
of
the
economic
literature.
The
comments
offered
in
this
section
 
while
reflecting
the
legitimate
opinions
of
some
researchers
 
do
not
reflect
general
standards
or
practice
in
the
larger
benefitcost
analysis
literature.
Indeed,
EPA
guidelines
for
economic
analysis
(
US
EPA
2000,
p.
84)
state
that
"
contingent
valuation
is
the
only
established
method
capable
of
measuring
non­
use
values."
As
an
aside,
EPA
notes
that
the
comments
in
this
section
are
drawn
from
only
two
citations,
one
of
which
is
published
outside
of
the
economic
literature.

As
stated
by
the
NOAA
Blue
Ribbon
Panel
on
Contingent
Valuation
(
Arrow
et
al.
1993,
p.
4610),
" 
some
antagonists
of
the
CV
approach
go
so
far
as
to
suggest
that
there
can
be
no
useful
information
content
to
CV
results.
The
Panel
is
unpersuaded
by
these
extreme
arguments."
The
panel
later
follows
with
the
conclusion
"[
t]
he
Panel
concludes
that
under
[
conditions
described
in
the
report],
CV
studies
convey
useful
information.
We
think
it
is
fair
to
describe
such
information
47
as
reliable
by
the
standards
that
seem
to
be
implicit
in
similar
contexts,
like
market
analysis
for
new
and
innovative
products ."
It
appears
that
the
comments
of
Section
B
reflect
the
type
of
"
extreme"
opinions
that
the
NOAA
panel
found
unconvincing.

Section
B
suggests
that
stated
preference
derived
from
CV
studies
are
akin
to
"
juries'
punitive
damage
awards,"
and
are
"
not
consistent
with
economists'
rational
models."
This
statement
is
again
at
odds
with
current
practice
as
reflected
by
the
NOAA
panel
(
p.
4610),
which
states
that
"
CV
studies
can
produce
results
reliable
enough
to
be
the
starting
point
of
a
judicial
process
of
damage
assessment,
including
lost
passive­
use
values."
Moreover,
as
stated
by
Freemen
(
2003,
p.
154),
"
stated
preference
valuation
methods 
are
likely
to
offer
the
only
feasible
approaches
to
estimating
nonuse
values."

The
primary
theme
of
the
comments
in
this
section
appears
to
be
the
distinction
between
behavior
in
real
markets
and
behavior
stated
in
surveys
 
with
the
former
assumed
by
the
commenter
to
reflect
true,
underlying
values,
and
the
latter
assumed
to
reveal
only
"
expressions
of
attitudes."
However,
while
critics
of
stated
preference
methods
often
claim
vast
divergences
between
stated
and
real
market
behavior,
evidence
from
comparisons
of
binding
referenda
to
stated
preference
responses
contradicts
this
extreme
opinion.
Existing
studies
find
close
correspondence
between
choices
in
stated
preference
surveys
and
voting
behavior
in
binding,
consequential
referenda
(
Bateman
et
al.
2002,
p.
318;
Schläpfer
et
al.
2004).
Hence,
in
these
true
tests
of
criterion
validity,
responses
in
hypothetical
and
real
contexts
comport
quite
closely,
suggesting
that
stated
preference
surveys
can
provide
useful
indications
of
that
which
individuals
"
are
willing
to
forgo
to
enjoy
a
particular
benefit"
(
Circular
A­
4,
as
quoted
in
the
received
comment).

As
a
final
note
on
this
section,
EPA
emphasizes
that
many
of
the
claims
made
in
Section
B
represent
empirical
questions
that
are
appropriately
addressed
within
the
survey
design
process.
For
example,
with
regard
to
the
incentive
structure
of
stated
preference
questions
 
that
are
often
cited
as
a
key
distinction
between
stated
and
real­
market
choices
 
Carson
et
al.
(
1999,
p.
124)
state
that
"
one
must
endeavor
to
provide
questions
with
a
proper
incentive
structure."
As
emphasized
by
the
NOAA
Panel
(
Arrow
et
al.
1993),
Schkade
and
Payne
(
1994),
Mitchell
and
Carson
(
1989)
and
many
others,
appropriate
survey
design
can
identify
the
mechanisms
through
which
respondents
respond
to
CVM
questions
and
assess
whether
responses
reflect
the
types
of
tradeoffs
required
by
neoclassical
theory
for
appropriate
expressions
of
stated
values.
Thus,
EPA
is
using
focus
groups
to
assist
in
the
design
of
the
stated
preference
study
to
value
ecological
gains
from
the
316(
b)
regulation.

As
emphasized
by
Johnston
et
al.
(
1995),
Mitchell
and
Carson
(
1989),
Bateman
et
al.
(
2002),
Desvousges
et
al.
(
1984),
Desvousges
and
Smith
(
1988)
and
many
others,
the
use
of
focus
groups
to
assist
in
the
design
of
stated
preference
surveys
is
well
established,
as
is
the
capacity
of
focus
groups
to
provide
insight
into
motivations
underlying
respondents'
stated
willingness
to
pay
values.
Indeed,
EPA
emphasizes
that
focus
groups
will
be
used,
following
the
advice
of
Mitchell
48
and
Carson
(
1989),
Desvousges
et
al.
(
1984)
and
Johnston
et
al.
(
1995),
to
test
for
and
eliminate
or
ameliorate
potential
biases
which
may
be
associated
with
stated
preference
methodology.

Within
this
context,
EPA
believes
that
the
potential
concerns
reflected
in
Part
B
provide
even
stronger
rationale
for
conducting
focus
groups
 
as
these
comments
reflect
exactly
the
type
of
issues
that
focus
groups
are
meant
to
address
in
stated
preference
survey
design.
Accordingly,
EPA
will
take
special
care
within
the
proposed
focus
groups
to
address
the
concerns
and
issues
raised
by
this
section.

Part
III
The
commenter
states
that
survey
respondents
will
be
unable
to
isolate
"
pure
non­
use
values
that
are
measurable
directly,
and
that
indirect
use
values
are
likely
to
capture
the
full
value
of
the
resource."
Thus,
EPA
should
use
other
methods
(
experimental
economics)
for
measuring
nonuse
values.
For
detailed
responses
to
this
comment,
see
EPA's
response
to
Part
I,
Section
A,
page5,
above
and
EPA's
response
to
Part
III,
Section
B.

Part
III,
Section
A
The
commenter
asserts
that
EPA
was
unable
to
demonstrate
that
the
values
of
reduced
damages
to
forage
species
and
non­
landed
commercial
and
recreational
species
are
"
indeed"
non­
use
values.
This
section
repeats
issues
raised
in
Part
II,
Section
A,
page
5.
For
a
response
to
this
comment,
see
EPA's
response
to
Part
I,
Section
A,
page5,
above.
Part
III,
Section
B
EPA
emphasizes
that
the
TER
comment
on
the
potential
of
the
experimental
economics
methods
to
provide
superior
estimates
compared
to
the
stated
preference
methods
(
as
in
Part
II
above)
is
focused
more
on
stated
preference
surveys
than
on
focus
groups.
The
ICR
in
question
addresses
focus
groups
 
not
the
survey
that
may
be
designed
using
the
proposed
focus
groups.
There
is
no
evidence
in
the
literature
that
suggests
that
experimental
economics
methods
provide
a
substitute
for
qualitative
evidence
that
may
be
gathered
from
appropriately
moderated
focus
group
sessions.

More
broadly,
however,
Part
III,
Section
B
of
the
received
comments
proposes
experimental
economics
as
a
means
to
measure
"
individuals'
true
willingness
to
pay
for
"
non­
use"
items,"
using
"
cash­
motivated
students."
EPA
has
a
number
of
concerns
with
this
proposed
solution,
as
reflected
in
the
current
literature.

First,
and
perhaps
most
importantly,
it
is
quite
unclear
how
the
proposed
experimental
economics
methods
would
estimate
non­
use
values,
given
the
majority
position
in
the
literature
that
"
stated
preference
valuation
methods 
are
likely
to
offer
the
only
feasible
approaches
to
estimating
nonuse
values"
Freemen
(
2003,
p.
154).
Indeed,
EPA
guidelines
for
economic
analysis
(
US
EPA
2000,
p.
84)
state
that
"
contingent
valuation
is
the
only
established
method
capable
of
measuring
49
non­
use
values."
While
experimental
methods
have
often
been
used
to
assess
the
convergent
validity
(
often
inappropriately
referred
to
as
criterion
validity
(
Bateman
et
al.
(
2002))
of
CVM
responses
addressing
private
and
in
some
cases
public
goods,
EPA
is
aware
of
no
literature
showing
conclusively
that
experimental
economics
methods
are
able
to
reliably
estimate
non­
use
values.

EPA
also
questions
the
supposition
that
experimental
economics
methods
will
by
default
provide
appropriate
measures
of
underlying
willingness
to
pay
 
or
criterion
values
from
which
stated
preferences
may
be
compared.
Notwithstanding
the
common
and
theoretically
unsupported
presumption
that
simulated
markets
requiring
real
payments
necessarily
reveal
true
criterion
values
(
i.
e.,
actual
WTP),
the
markets
used
in
economic
lab
experiments
universally
incorporate
simulated
elements
as
a
means
to
permit
comparisons
with
hypothetical
markets
 
particularly
in
cases
involving
public
goods.
For
example,
researchers
often
simulate
markets
in
experimental
laboratory
settings,
or
might
implement
surveys
that
require
respondents
to
mail
actual
payments
in
order
to
obtain
specified
public
goods
(
Murphy
and
Stevens
2004;
Spencer
et
al.
1998).

While
such
simulated
markets
 
experimental
or
otherwise
 
might
generate
unbiased
WTP
estimates,
they
are
often
conducted
in
institutional
settings
unfamiliar
to
respondents.
Such
settings
may
generate
novel
or
unusual
behavior,
confusion,
distrust,
or
other
behaviors
that
may
lead
to
misstatements
of
true,
underlying
WTP.
For
such
reasons
Bateman
et
al.
(
1987)
argue
that
comparisons
involving
WTP
estimates
obtained
through
simulated
or
experimental
markets
do
not
qualify
as
true
tests
of
criterion
validity
(
i.
e.,
they
do
not
provide
unambiguous
measures
of
true
willingness
to
pay
in
actual
markets).
The
most
common
alternative
 
the
use
of
individual
or
group
donation
mechanisms
(
e.
g.,
Champ
et
al.
1997;
Foster
et
al.
1997;
Seip
and
Strand
1992)
 
suffers
from
confounding
effects
of
free­
riding
and
the
associated
lack
of
incentive
compatibility
(
Bateman
et
al.
1987;
Shläpfer
et
al.
2004).
As
a
result,
as
stated
by
Murphy
and
Stevens
(
2004,
p.
185),
one
cannot
unambiguously
claim
that
values
estimated
using
laboratory
experiments
are
any
more
representative
of
true
willingness
to
pay
than
values
estimates
using
hypothetical
markets.

Moreover,
EPA
strongly
questions
the
ability
of
lab
experiments
with
college
students
 
as
proposed
in
Part
III,
Section
B
 
to
provide
valid
measures
of
non­
use
values
among
the
general
population.
The
literature
demonstrates
that
willingness
to
pay
varies
according
to
demographic
attributes
(
e.
g.,
Johnston
et
al.
2003).
Moreover,
theory
indicates
that
willingness
to
pay
is
bounded
by
income
(
i.
e.,
the
budget
constraint).
College
students
clearly
face
a
budget
constraint
distinct
from
that
faced
by
the
larger
population
 
and
likely
have
underlying
preferences
that
differ
as
well.
Hence,
EPA
feels
that
responses
from
college
students
 
like
responses
from
any
single
demographic
group
 
are
likely
to
biased
and
thus
unlikely
to
provide
valid
inferences
regarding
preferences
of
the
general
population
affected
by
the
proposed
Phase
III
regulations.
For
this
reason
EPA
is
using
focus
groups
drawn
from
general
population.
50
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52
Attachment
4:
EPA
Response
to
Public
Comments
from
PSEG
Corporation
Services
(
Docket
ID:
OW­
2004­
0020­
0007)

The
brief
letter
from
the
PSEG
Corporation
Services
(
PSEGCS)
does
not
address
focus
groups
explicitly,
but
rather
states
that
PSEGCS
agrees
with
and
supports
comments
submitted
by
the
Utility
Water
Act
Group
(
UWAG),
of
which
PSEGCS
is
a
member.
Thus,
EPA
refers
interested
parties
to
the
document
entitled
"
Response
to
Comments
from
the
American
Chemistry
Council,
American
Forest
&
Paper
Association,
American
Iron
and
Steel
Institute,
American
Public
Power
Association,
American
Petroleum
Institute,
and
Utility
Water
Act
Group
and
Accompanying
Triangle
Economic
Research
(
TER)
Report."
