Pursuant to paragraph 3(a) of the Consent Decree in the above-referenced matter, the U.S. Environmental Protection Agency ("EPA" or "the Agency") provides this status report concerning its actions to propose and take final action with respect to regulations under § 316(b) of the Clean Water Act ("CWA").

As described in our April 12, 2000 status report, the Office of Water (OW) has shifted primary responsibility for the § 316(b) rulemaking program from the Office of Wastewater Management to the Office of Science and Technology (OST) under the direction of Office Director Geoffrey Grubbs. OST also is responsible for developing effluent limitations guidelines and standards under the Clean Water Act pursuant to court-ordered deadlines. This move will allow EPA, at critical times during the development of the § 316(b) rules, to utilize additional engineering, scientific, economic, and statistical expertise and resources that are resident in OST.

Phase I

As EPA stated in the Declaration of J. Charles Fox, Phase I will cover newly constructed facilities employing cooling water intake structures. Phase I will not cover retrofit or expansion of existing facilities; these will be addressed in Phase II.

Since our last report in April, OST and OW have taken the following steps leading towards the Phase I proposal: continued analyzing technical, economic, scientific, policy and programmatic issues and selected regulatory options; developed a preliminary draft Phase I proposal, draft supporting technical, environmental and economic analyses, and a draft information collection request; circulated the draft Phase I proposal to the Agency-wide § 316(b) staff-level workgroup for workgroup review; formally submitted the draft Phase I proposal into the Agency's Final Agency Review process and completed internal Agency review; and submitted draft regulatory and preamble language for the Phase I proposal, together with a draft of the supporting analyses and the draft information collection request, to the Office of Management and Budget (OMB) for review under Executive Order 12866. On June 28, OST managers and staff participated in a meeting coordinated by OMB involving the following federal Departments and Agencies interested in reviewing EPA's draft rulemaking package: the Department of Energy, the Small Business Administration, the Tennessee Valley Authority, the National Oceanic and Atmospheric Administration's National Marine Fisheries Service and the Department of Interior's U.S. Fish and Wildlife Service. During the OMB-coordinated interagency review process that is now underway, EPA is simultaneously continuing many tasks necessary to proposal of the Phase I rules, including completion of the requisite technical, environmental, and economic support documents and compilation of the rulemaking record.

During May and June, OW and OST conducted a series of stakeholder meetings in which the Agency presented a draft framework for the Phase I proposal to key groups interested in how the Agency might propose to regulate cooling water intake structures at new facilities. OW and/or OST managers have conducted three such meetings for environmental groups attended by representatives from between three and 15 organizations; each meeting included representatives of the plaintiffs in this action. OST managers have met once with the Association of State and Interstate Water Pollution Control Administrators (ASIWPCA) and, with the assistance of ASIWPCA, conducted a conference call in which representatives from at least 17 States or interstate organizations participated. In addition, OW and/or OST managers have met twice with representatives of the Utility Water Act Group and Edison Electric Institute, twice with representatives of an individual utility, and once each with representatives from the petroleum refining, pulp and paper, and iron and steel industries. On June 26, 2000, OST managers also participated in a meeting between utility representatives and officials in the Office of Management and Budget; this meeting was requested by utility representatives.

In the course of these meetings, representatives of a number of entities have raised a variety of strongly-held concerns and presented useful information for the Agency to consider. Issues raised in these meetings include whether the Agency should regulate cooling water intake structures at new facilities on a site-by-site, national, or broad, categorical basis; whether and how EPA should define "adverse environmental impact;" what constitutes the best technology available for minimizing adverse environmental impact; and whether the Agency should require environmental restoration measures as part of § 316(b) regulations.

Phase II

During the past quarter, OST has continued to administer the Detailed Industry Cooling Water Intake Questionnaire. The detailed questionnaire includes a short technical questionnaire for utility respondents, as a significant amount of economic and financial information on these companies is available from State public utility regulatory agencies. As of July 5, 2000, 607 (95%) of the short technical questionnaires had been returned. OST has conducted a quality assurance review of the returned questionnaires and completed data entry for 98% of the questionnaires we have received. As of July 5, 2000, 611 (94%) of the detailed questionnaires had been returned. EPA has contacted several respondents who have objected to supplying certain economic or financial information. OST is beginning to conduct a quality assurance review of the detailed questionnaires. The Office anticipates that data entry will begin in the next few weeks. Based on OST's experience in administering similar questionnaires, the Office expects that a significant effort will be needed over the next reporting period to verify ambiguous, inconsistent or incomplete questionnaire responses.

OST also continues to make progress on developing watershed case studies that will provide a basis for gauging the benefits of the Phase II regulations. The Office continues to analyze impingement and entrainment data from its first case study site and is developing criteria to evaluate and select other case study sites. OST's goal is to examine data on the effects of facilities that operate in a range of aquatic environments and geographic regions, and employ a broad range of technologies to minimize adverse environmental impact, including emerging technologies. The Office has begun collecting fisheries data from several potential case study sites where impingement and entrainment data are available. EPA would consider these data, together with data on facility characteristics from the detailed questionnaires when available, to compare facility characteristics to rates of impingement and entrainment.

EPA is on track to meet the July 20, 2000 deadline to propose the Phase I rule. EPA has not experienced any significant delays in developing the Phase I proposal since the last report and does not anticipate any such delays prior to proposal by the July 20, 2000 deadline.

EPA continues to believe that the public interest is best served by allowing at least 18 months after proposal for promulgation of the Phase I regulations. Based on OST's extensive experience in recent years, at least 18 months are needed to complete all activities necessary to move from proposal to promulgation for large, complex regulations with significant stakeholder interest. Indeed, in this case, the Agency anticipates an extremely large number of detailed comments on the Phase I proposal. Properly considering and responding to these comments in an expeditious manner will require considerable effort. Further, the effort to complete final rulemaking on Phase I will be complicated by the simultaneous effort to propose the Phase II rule as expeditiously as possible. Nevertheless, the Agency is taking all possible steps to minimize the time needed to promulgate the Phase I regulations.

EPA also continues to work toward proposal of the Phase II rule as quickly as possible. The Agency continues to believe, however, that it will have great difficulty in developing a sound, defensible, and robust proposal for the Phase II rule if it is compelled to complete all case studies and analyses, develop regulatory options, make critical decisions, develop rulemaking and preamble language, and complete the rulemaking record by the current deadline of July 20, 2001.

In accordance with the Court's opinion and order of March 27, 2000, EPA has continued to contact the plaintiffs to attempt to negotiate deadlines for final action on the Phase I rule and proposal and final action on the Phase II rule. In a separate document filed with the Court today, the Department of Justice, on behalf of EPA, is requesting a Court referral for mediation to assist these efforts.

Staffing and Funding of the Rulemaking Effort

Staffing for the rulemaking effort has not significantly changed. As reported to the Court on April 12, 2000, a supervisor in OST has joined the team full time to provide additional guidance, to assist the team in obtaining prompt feedback from management on issues requiring decision by senior officials, and to coordinate the stakeholder outreach and interagency review activities described above.

EPA's contract dollar level for development of the § 316(b) rule remains at $2,000,000 for FY 2000. The Agency is confident that $2,000,000 is sufficient to meet all contractor requirements to support this rulemaking effort through FY 2000, which ends on September 30, 2000.

The undersigned, Geoffrey H. Grubbs, is Director of the Office of Science and Technology of EPA's Office of Water. The Office of Science and Technology has primary responsibility for discharging EPA's duties under the Consent Decree.

/s/ _____________________________ Geoffrey H. Grubbs Office of Science and Technology U.S. Environmental Protection Agency