--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
MEMORANDUM

TO:	Steam Electric Rulemaking Record

FROM:	TJ Finseth, ERG

DATE:	19 April 2013

SUBJECT:	Discussion of Costs and Cost Savings Associated with Impoundment Operations

ERG is providing technical support to the U.S. Environmental Protection Agency's Office of Water, Engineering and Analysis Division (EAD) for development of effluent limitations guidelines and standards (ELGs) for the Steam Electric Power Generating Point Source Category.  EPA, with the support of ERG, developed an approach to identify combustion residual surface impoundments that will likely realize no change in waste inputs, receive less combustion residuals, or cease receiving combustion residuals based on the regulatory options considered as part of the proposed rule. EPA developed this approach to determine which plants are expected to incur compliance costs for the best management practices (BMPs) under consideration by EPA.  For more information regarding this methodology, see the memorandum entitled, "Steam Electric Effluent Guidelines  -  Methodology for Identifying Surface Impoundment Closures Based on Regulatory Options" (DCN SE02125).  Table 1 identifies the technology options evaluated for each of the regulatory options considered as part of the rulemaking. This memorandum describes EPA's analysis of the costs and cost savings associated with changes in impoundment operations, which potentially include closure of impoundments that cease receiving combustion residuals.

Table 1. Steam Electric Regulatory Options

                                 Wastestreams
          Technology Basis for BAT/NSPS/PSES/PSNS
Regulatory Options

                                       1
                                       2
                                       3
                                       4
                                       5
FGD
Wastewater
Chemical Precipitation
Chemical Precipitation + Biological Treatment
Chemical Precipitation + Biological Treatment
Chemical Precipitation + Biological Treatment
Chemical Precipitation + Evaporation
Fly Ash Transport Water
Impoundment
(Equal to BPT)
Impoundment
(Equal to BPT)
Dry handling
Dry handling
Dry handling
Bottom Ash Transport Water
Impoundment (Equal to BPT)
Impoundment (Equal to BPT)
Impoundment (Equal to BPT)
Dry handling/
Closed loop
Dry handling/
Closed loop
Leachate
Impoundment (Equal to BPT)
Impoundment (Equal to BPT)
Impoundment (Equal to BPT)
Chemical Precipitation
Chemical Precipitation
FGMC
Wastewater
Impoundment (Equal to BPT)
Impoundment
(Equal to BPT)
Dry handling
Dry handling
Dry handling
Gasification
Wastewater
Evaporation
Evaporation
Evaporation
Evaporation
Evaporation
Nonchemical Metal Cleaning Wastes
Chemical Precipitation (Equal to BPT)
Chemical Precipitation (Equal to BPT)
Chemical Precipitation (Equal to BPT)
Chemical Precipitation (Equal to BPT)
Chemical Precipitation
(Equal to BPT)

The proposed ELGs do not include requirements that will force plants to close surface impoundments.  Therefore, there is no guarantee that plants will close the surface impoundments that EPA is projecting will close once they cease receiving combustion residuals. Although it is reasonable to anticipate that would occur, due to the cost of continuing to maintain these impoundments and the risks and potential liability associated with spills and structural failures of surface impoundments containing legacy wastes.  EPA's methodology for estimating impoundment closures for the purpose of best management practices (BMP) costs, as described in DCN SE02125, assumed that impoundments will close in cases where all the combustion residual wastestreams that are transferred to the impoundment under baseline conditions are no longer transferred to the impoundment after implementation of the regulatory option.  For example, an impoundment that receives both fly ash and bottom ash transport water is expected to close under Regulatory Option 4, but would remain open under Regulatory Option 3.  For the compliance costs that were developed for the proposed rule, EPA included costs associated with implementation of the BMPs under consideration for all impoundments that are expected to remain open. EPA did not include any BMP costs for impoundments that are expected to close.

EPA did not include impoundment closure costs in the compliance cost estimates for those impoundments expected to close. EPA determined that it was not necessary to include impoundment closure costs as part of the proposed ELG compliance costs because plants will dewater and close these impoundments eventually, even in the absence of the proposed ELG. EPA made this determination because in the absence of the proposed ELG, plants will continue to transfer the combustion residual wastewater to the impoundment.  At some point, the impoundment will reach its operating capacity and the plant will have to make one of the following decisions:

    1)       Dredge the impoundment and continue with current operations;
    2)       Build a new impoundment and continue with current operations; or
    3)       Convert to a dry ash handling system or transfer the wastewater to a tank-based treatment system.

For scenario 1, the plant will continue to incur occasional dredging expenses to continue operating the impoundment, which the plant would not have to incur if they converted to a dry ash handling system or began transferring the wastewater to a tank-based system.  EPA did not take credit for plants no longer incurring these occasional dredging expenses as part of the compliance cost estimates.  For scenario 2, the plant would incur a significant expense (potentially more than once) to build the new impoundment(s), which the plant would not have to incur if they converted to a dry ash handling system or began transferring the wastewater to a tank-based system.  For scenario 3, the plant would incur the costs that are estimated as part of the compliance costs for this proposed rule; therefore, the proposed rule only results in these plants incurring the costs earlier than they would have in the absence of the ELG.  EPA included the full cost of these conversions in its cost estimates.

None of the three scenarios identified above guarantee that plants will close the impoundment.  In fact, for scenario 1, it is likely that the plant would continue to dredge the impoundment until the plant retires or the impoundment reaches the end of its service life.  However, EPA still expects that plants will eventually close these impoundments, likely at the time the plant is retired, to reduce the potential liability associated with impoundment failures or overflows resulting from leaving the impoundment open and unmanaged. EPA's approach is supported by statements from industry announcing impoundment closures at the time of plant retirement, such as Duke Energy's Vice President of Environmental Services stating, "As older coal plants are retired, we will prepare to close ash basins in accordance with state regulations. This would follow a prescribed process with state oversight and approval." (DCN SE02944)

In summary, EPA calculated the costs associated with the BMPs under consideration for the proposed ELG based on EPA's estimation of whether the impoundment will close; however, EPA did not include impoundment closure costs in the estimated compliance costs developed for the proposed ELG for the following reasons:

   * The ELG does not require the closure of impoundments as part of the proposed rule;
   * The installation of the technology options associated with the proposed ELG will result in plants not needing to incur additional expenses associated with the operation of impoundments, for which EPA did not take credit in the estimation of compliance costs; and
   * Companies/plants anticipate closing the impoundments at the appropriate time in their service life (e.g., plant retirement), and therefore, expect to incur the closure costs in the future, regardless of the proposed rule.


Most importantly, the tools would be designed to help the agency learn how 2 complete and effective was its site planning and how well it made the outcome of 3 remediation. The tools would not be simply measures of the process of 4 participation. 5 6 Additionally, the goal of developing such measures is to be helpful to EPA, gather new 7 assessment data, and be relatively easy to collect and report. The Subcommittee has 8 offered suggestions on three types of measures to assess the effectiveness of EPA in 9 balancing the three approaches at each site. These types of measures are based on the 10 multifaceted definition of program effectiveness identified in EPA's Public Involvement 11 Policy. Appendix ___ includes a document that addresses the measures and their 12 application in more detail. 13 14 A Management Measure would focus upon use of local, Tribal, state and other relevant 15 knowledge and participation to design clean ups. Assessment should be done, for 16 example, of how well the agency assessed demographics around a site and solicited 17 information from users of resources impacted by a site. For example, the agency could 18 document subsistence use and report on how knowledge of resource use influenced 19 design of clean ups. The agency could receive grades based on the difficulty of 20 eliminating pathways of exposure distinct to a site. Likewise the public involvement in 21 the management approach could be assessed by measuring the incorporation into 22 remedial designs of proposals arising from independent technical studies done by 23 communities ( under the Technical Assistance Grant [ TAG] process) or responsible 24 parties. The general point of this set of measures would be did the agency take advantage 25 of resources other than its own to design and implement remediation. 26 27 A Representation Measure would focus on assessing inclusiveness and effectiveness of 28 the involvement of various interests in building support and avoiding conflict at the site. 29 Many potential measures of representation are already used, such as reporting on the 30 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 57 notice and comment requirements related to the Record of Decision ( ROD). A 1 quantitative measure that might add new information would be how many comments are 2 received on public notices and how many require additional changes. Many comments 3 would not be bad; however, indications that the process needed significant modification 4 would hint at potential problems. A qualitative measure that might reflect the last goal in 5 the Public Involvement Policy, explanation of how input affected the agency, might be a 6 valuable measure, especially if done through some independent mechanism. 7 8 A Legal Measurement might be helpful if it measured quantitatively the number and 9 consequences of formal legal challenges to agency actions at a site. Certainly the 10 number, duration, and cost of litigation related to each site could be measured and values 11 assigned based upon the type litigants and the outcome of litigation ( Did the agency 12 win?). Sites also could be measured on the amount of funding recovered through 13 litigation. Finally litigation could be classified and scored, such as that which is 14 primarily procedural ( Did the agency not respond to my comments about the proposed 15 clean up?) in contrast to substantive ( Am I responsible for dumping contaminants?). 16 17 Appendix ___ also includes a sample ( DRAFT) form for reporting on the progress of 18 involvement and coordination with Tribal governments, states, local governments, 19 communities and other parties using the proposed model. 20 21 Preparation of Annual Report 22 23 18. To increase transparency and accountability, EPA should prepare an annual report 24 which presents information on the status of the program, summary of sites listed 25 and considered, but not listed, budget/ expenditure analyses and other relevant 26 indices of the status of the Superfund program. 27 28 The Subcommittee recommends that the Agency look beyond the performance of site 29 cleanup activities to measures that address other critical aspects of a well functioning and 30 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 58 effective federal program. These other goals include: 1) budget transparency   that is, 1 how are dollars actually being used in the Superfund program, and 2) general program 2 tracking   assuring that needed information about the program is reliable and readily 3 accessible. These measures help to create accountability for the use of public funds. 4 Reporting of these measures can be accomplished through an annual report with 5 information on dollars spent on key functions that are meaningful to those outside of 6 government ( i. e., the public). Such an annual report should include a summary of actions 7 completed, underway, initiated since the last FY, actions waiting for funding, estimates of 8 future liability for cleanup activities by year for next five years and beyond, etc. The data 9 suggested are similar to those included in the Report to Congress. [ Note: should this 10 recommendation include an independent review or Third Party development of the 11 data/ report?] 12 13 As part of its responsibility to report complete and accurate information on an annual 14 basis, the Agency should adopt the following three objectives: 15 16 EPA should improve the quality of the information in its data systems. 17 18 The Subcommittee recognizes that the value of any performance measurement system is 19 limited by the quality of the data used for reporting. In addition to the aforementioned 20 recommendations addressing WHAT the system is reporting, the Subcommittee also 21 believes that it is critically important that EPA improve the quality of data it is using to 22 report against existing and future measures. Specifically, EPA needs to improve the 23 reliability and consistency of information in its main data systems related to the cost of 24 cleanup ( to EPA, PRPs and the states), risks at a site, a description of what portion of a 25 site is addressed by each operable unit, initial and post cleanup contamination, 26 institutional controls and restrictions on land/ water use, the type of remedy implemented, 27 and the remedy's effectiveness, among other information. The implementation of the 28 site performance profile, by drawing on existing data systems, will most likely lead to 29 improved data quality as the data become more visible. 30 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 59 1 EPA should not aggregate activities at alternative and NPL sites in its annual 2 reporting on Superfund progress in an attempt to show progress by including sites 3 addressed under this program. 4 5 The Subcommittee raised serious concerns about a policy EPA discussed only briefly 6 with the Subcommittee: the " Superfund Alternative Strategy." This program does not 7 appear to support the rules for prioritization and coordination with other programs 8 recommended by the Subcommittee in this report. Additionally, the alternative program 9 makes a number of EPA administrative reforms and guidance only discretionary. It is 10 based upon EPA's special arrangement with private parties outside of the NPL listing 11 process and although the guidance for the program requires consistency with the National 12 Contingency Plan ( NCP) and a mandatory Technical Advisory Group ( TAG) grant, it is 13 not at all clear what kind of oversight will be conducted, whether remedies selected will 14 be comparable, and whether these sites will go faster or slower than NPL sites. As a 15 result, the Subcommittee recommends that activities conducted under this program be 16 tracked independently from activities addressed under Superfund and the NPL. 17 18 Develop a system to track and evaluate the performance of institutional controls. 19 20 The tracking, implementation, and maintenance of institutional controls is critical at 21 many sites to assuring long term protectiveness. There are many issues still to be 22 addressed regarding the use and enforcement of institutional controls, as well as 23 questions about how to assure that needed controls are in fact implemented and who will 24 pay for the ongoing costs of institutional controls. The Subcommittee believes that these 25 issues are extremely important and should be a high priority for the Superfund program. 26 The Subcommittee further recognizes that there is a substantial effort underway at EPA 27 to develop an institutional controls tracking system and supports the continued 28 investment in such an effort. [ Note: should we propose a deadline.] 29 30 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 60 Summary of Recommendations Related to Measuring Program 1 Progress 2 In response to its charge and in light of factors described above, the Subcommittee makes 3 thee recommendations related to measuring program progress. 4 5 16. EPA should identify and accurately report a core set of data, such as those metrics 6 included in the performance profiles for all NPL sites and Program activities. 7 8 17. EPA should develop measures of performance that assess the effectiveness of 9 coordination with Tribal, State and community interests. 10 11 18. To increase transparency and accountability, EPA should prepare an annual 12 report which presents information on the status of the program, summary of sites 13 listed and considered, but not listed, budget/ expenditure analyses and other 14 relevant indices of the status of the Superfund program. 15 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 61 VII. Additional Issues Identified by the 1 Subcommittee 2 3 During the Subcommittee's deliberations a number of issues arose which were related to 4 the charge, but on which the Subcommittee did not have time to focus in depth. There 5 several of these issues which the Subcommittee believes merit further attention by EPA. 6 These issues are discussed in this section. 7 8 [ Review Note: We anticipate additional issues will be added to this section as a result of 9 Subcommittee discussions] 10 11 Agency for Toxics Substances Disease Registry ( ATSDR) and 12 National Institute of Environmental Health Sciences ( NIEHS) 13 14 The Subcommittee raised concerns about the Superfund appropriations going to these 15 two agencies. Where these funds are spent and how they benefited the Superfund 16 Program are unclear. The concerns related both to the accountability of these agencies to 17 the mission and priorities of the program and the relative benefit of that investment. 18 19 Specific questions raised by the Subcommittee included: 20 21 ( NOTE; we are awaiting responses from ATSDR and NIEHS with regard to the following 22 questions that were posed by the ad hoc group that discussed these issues following the 23 New Bedford meeting.) 24 25

What is the relationship/ interplay between ATSDR/ NIEHS and the EPA risk 26 assessment process? Are there efficiencies that could be gained through better 27 coordination of these processes? 28 29

What are the major activities/ programs of ATSDR/ NIEHS? 30 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 62 1

What criteria are used by ATSDR/ NIEHS to determine what types of studies are 2 done and where? 3 4

How much flexibility does ATSDR/ NIEHS have with regard to the activities it 5 undertakes at sites and overall? 6 7

What is the ATSDR/ NIEHS budget and what are the major categories of activities 8 on which it is expended? 9 10

Where does ATSDR/ NIEHS think it has been most effective and in what areas 11 would it like to be able to do more? 12 13

Are there aspects of the data collected by ATSDR/ NIEHS that could be applied to 14 better measuring program performance? 15 16 ( Additional information/ comments may be developed based on the response to the 17 Subcommittee's questions prepared by NIEHS and ATSDR.) 18 19 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 63 List of Figures 1 2 3 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 64 Glossary of Terms and Phrases 1 2 Institutional Controls 3 4 Outcome measures 5 6 Output measures 7 8 NPL Candidate Site 9 10 NPL Caliber Site 11 12 Superfund Site Assessment Process 13 14 No Further Remedial Action is Planned 15 DRAFT  FOR SUBCOMMITTEE DISCUSSION ONLY DOES NOT REPRESENT THE CONSENSUS OF THE SUBCOMMITTEE DO NOT CITE Draft of 08/ 12/ 03 Page 65 Appendices 1 2 [ Review Note: Additional appendices will be added. Appendix materials will be 3 reviewed by Subcommittee members prior to finalization of the report] 4 5 6 A. List of Subcommittee Members and Member Bios 7 8 B. Charge to the Subcommittee 9 10 C. Description of Subcommittee process, including list of individuals who made 11 presentations or comments to the Subcommittee 12 13 D. Law's memo 14 15 E. Installation Development/ Contracting presentation 16 17 F. Supporting documents for Measuring Program Performance Section 18