5.1. Effluent Guidelines for Centralized Waste Treatment Facilities
This section reviews the report: Economic Analysis of the Effluent Limitations Guidelines and Standards for the Cnetralized Waste Treatment Industry. While not labeled an RIA by the EPA, it nonetheless contains virtually all the information called for in the OMB guidance regarding RIAs.
The centralized waste treatment industry (CWT) receives wastewater from industrial facilities and partially treats it before discharging to U.S. waters or to publicly-owned treatment works (POTW). As is the case with other industrial sectors, the Clean Water Act requires that EPA set effluent limitation guidelines based on Best Practicable Technology (BPT) and on the Best Available Technology economically achievable (BAT). For conventional pollutants such as biochemical oxygen demand, suspended solids, fecal coliform and pH, EPA must set standards based on Best Conventional Pollutant Control Technology (BCT). All of these standards are based on demonstrated technologies. For example, BPT is interpreted to mean the "average of the best existing performance by well-operated plants within each industrial category," however, costs, effluent reduction benefits and other factors may be taken into account. For indirect dischargers, the Act directs EPA to set pretreatment guidelines for existing sources (PSES) and pretreatment guidelines for new sources (PSNS).
To identify what technologies are available and the costs and impacts of using these technologies, in 1990 EPA distributed a questionnaire to 452 CWT facilities seeking technical information, such as quantities of waste treated, treatment technologies, and baseline pollutant releases, and economic information such as costs, revenues and profits. EPA used this data to identify and analyze the impact of alternative regulatory approaches. EPA estimates that in 1995 just 205 of the CWT facilities accepted wastes generated off-site for treatment. The remaining facilities serviced facilities under common ownership. Of the 205 CWT facilities, 14 are direct dischargers (to rivers, lakes or the ocean), 44 are zero dischargers, and the remaining 147 are indirect dischargers (to POTWs).
Consistent with the requirements of the Clean Water Act, EPA considered several standards for CWT facilities. The alternatives for directly discharging CWTs included: Best Practicable Technology Currently Available (BPT), Best Available Technology that is Economically Achievable (BAT), Best Conventional Pollutant Control Technology (BCT), and New Source Performance Standards (NSPS) based on the best demonstrated available control technology, Ppretreatment Standards for Existing Sources (PSES) and Pretreatment Guidelines for New Sources (PSNS).
For indirectly discharging CWT facilities, EPA examined numerous treatment options: three alternatives for metals treatment, three alternatives for cyanide destruction, four alternatives to reduce oily discharges, and two alternatives for organics.
EPA measured benefits in terms of cancer and non-cancer deaths avoided, impacts on recreational activities, and cost savings to publicly-owned treatments works (POTW) that receive partially treated wastewater from CWT facilities. The proposed effluent limitations guidelines and standards for the CWT industry would reduce discharges of conventional polutants to surface water by an estimated 14.3 million pounds per year and toxic and nonconventional pollutants by 4.1 million pounds per year. This reduction in pollutant loadings should improve both instream water quality and the status of ecological systems in waterbodies affected by the regulation. Moreover, POTWs should achieve a reduction in sludge disposal costs. To estimate the economic benefits of the proposed effluent limitations guidelines and standards, EPA first forecast changes in ambient water quality and related ecosystems that would result from the reduction in releases. Then, EPA estimated and valued reductions in cancer and non-cancer health effects, improvements in recreational fishing, and cost savings to POTWs.
TABLE 5.1.1 ANNUAL BENEFITS OF THE PROPOSED EFFLUENT
LIMITATIONS GUIDELINES AND STANDARDS ($millions 1997)
|Benefit Category||Range of Benefits|
|Reduction in Cancer Incidence from Fish Consumption||$1,492 – $8,043|
|Reduction in Lead-Related Health Effects from Fish Consumption||$2,999 – $5,242|
|Recreation Value of Reducing AWQC Exceedances||$414 – $1,177|
|Reductions in Sludge Disposal Costs||$149.4 – $928.1|
|Sum of These Benefits Categories||$5,054.4 – $15,390.1|
EPA estimated the costs to society of the proposed effluent limitations and standards. Social costs are defined as changes in consumer and producer surplus that result from the effluent limitations and standards. Table 5.1.2 summarizes the estimated social costs of the regulation. It should be noted that “consumers” are CWT customers and CWT services are intermediate goods, sold to producers of other goods and services. The EPA estimates that, overall, producers and consumers of CWT services will lose approximately $20 million in social welfare as a result of the proposed regulation. The CWT industry should experience increased profits as a consequence of the regulation, but this will be more than offset by increased costs to customers. Because EPA model analyzes impacts based on after-tax costs of compliance at CWT facilities, the above values do not include the costs to various levels of government. EPA estimates the government share of the costs of the proposed rule to be $12 million. Hence total cost of the proposed rule are estimated to be roughly $32 million.
TABLE 5.1.2 ESTIMATED AGGREGATE COST TO CONSUMERS AND
PRODUCERS ($millions 1997)
|Social Cost Component||Change in Value|
|Change in Consumer Surplus||$24.7|
|Change in Producer Surplus||$4.7|
|Sum of Changes in Consumer and Producer Surplus||$20.1|
Uncertainties and limitations inherent in both the estimated costs and benefits may have led to either underestimating or overestimating these values. Moreover data limitations prevent EPA from quantifying or valuing many other categories of benefits, including near-stream recreation, commercial fishing, diversionary users of affected waterbodies, all nonuse benefits. The Agency is confident that the benefits estimates presented are only a portion of total benefits and that the benefits of the proposed regulation fully justify its costs.
Initial Regulatory Flexibility Analysis
EPA’s assessment revealed that some options might have significant impacts on certain small CWT companies. Consequently, EPA performed an initial regulatory flexibility analysis (IRFA) and convened a Small Business Advocacy Review (SBAR) panel to receive advice and recommendations from small entity representatives (SERs) of CWT facilities. EPA considered 82 CWT companies that had revenues of less than $6 million per year as small companies for this analysis. Of these, the 63 that own discharging CWT facilities may experience increased costs due to the regulation. Because of subsequent consolidation in the industry, EPA believes that the number of affected small businesses may be overstated.
EPA considered various alternatives to lessen the impact of the proposed rule on small businesses, such as exemption from monitoring requirements, regulatory relief for oily waste treaters, and a less stringent NSPS for metals. EPA also considered three general options that would reduce the impacts of the regulation on small CWT companies. One, EPA proposed alternatives in the form of effluent limitations guidelines and standards, not specific requirements for design, equipment, work practice, or operational standards. Two, EPA considered less stringent control options for each treatment subcategory than were in the original 1995 proposal. Three, EPA specified a technology-based pretreatment standard for the oils subcategory that generally results in less stringent standards than the proposed technology-based BAT limitations.
Overall, small CWT companies are projected to fare better than medium sized or large companies. EPA concluded that the analysis does not support the need for regulatory relief. EPA expressed concerned that regulatory relief would encourage ineffective treatment at the expense of effective treatment. Despite considering several potential limitations to mitigate small business, EPA was unable to identify any effective options to incorporate into the proposal preserving that would preserve the benefits of the rule