Disposal of Coal Combustion Residues from Electric Utilities

Burning coal generates residues which must be captured and disposed of in special facilities. Citizens are affected when the stored residues are released into the water supply either rapidly through the sudden catastrophic failure of an impoundment or gradual release by leaching into the water supply. The analysis identifies ultimate harms to human health resulting from these pollutants reaching the water supply. The analysis also identifies reduced expenditures from groundwater remediation and reduced clean-up costs resulting from major spills.

The analysis clearly identifies benefits such as avoided cancer cases, and community and ecological benefits. Many, but not all, of these benefits are quantified. Those quantified benefits are monetized.

The analysis established a causal relationship between the emitted pollutants and increased risk of developing cancer. The analysis further asserts that increased regulation on combustion residue containment will be beneficial for communities and the environment. The analysis would have benefited from greater clarity to establish clearly that the regulation will reduce pollution as EPA indicates.

The analysis provides empirical support for the link between reduced pollution and health effects but does not provide support for the claim that the proposed mandate would solve this problem. The agency could have improved the analysis by measuring the effectiveness of such regulations where those are already in effect at the state level.

The analysis identifies some uncertainty, but for most cases it only reports point estimates. The agency does calculate multiple scenarios for one source of uncertainty: the impact regulation will have on alternative beneficial uses for coal residue (e.g., as a low cost constituent for dry wall) to address industry concerns about stigmatizing usage. However, the analysis contains no data to indicate the scope of uncertainty in this area and relies instead on hypothetical numbers. Ultimately, the analysis reports three sets of point estimates for different assumptions about beneficial usage and then argues that one of these assumptions (increased beneficial use) is more likely than the others. The agency could have better accounted for uncertainty by i) using Monte Carlo analysis to identify the interaction between independent uncertainties and the effect this will have on ultimate outcomes, and ii) identifying where uncertainties are interrelated and modeling these interactions appropriately.

The analysis provides more than a perfunctory statement but is insufficient to justify the claims made. The agency relies heavily on one example - a spill at a federally owned facility - and although the analysis does list other examples these also are anecdotal and fail to demonstrate that there is a systemic problem. The analysis does not offer evidence to support a claim that this is a federal problem but does include substantial evidence that many states have taken unilateral action.

The analysis argues pollution from coal combustion constitutes an externality where storage facilities do not bear the full cost of any pollution. In other areas, the analysis makes clear that firms hold legal responsibility for any costs associated with either clean up for a major spill, or harm to human health from contaminants leaching into the soil, indicating that firms should internalize any cost to human health. The analysis briefly argues this should not be the case because i) collective action problems may prevent people from effectively organizing law suits against site owners with greater financial resources and ii) because citizens may fail to observe the risk from leaching until after a harm has occurred that current law cannot provide preventative relief. However, the analysis does not cite any support for this theory in the economic literature.

EPA presents evidence that not all sites have adopted control technologies and provides a list of failures at facilities without control technologies. However, the analysis also demonstrates that nearly all new sites have adopted control technologies either by choice or in response to state laws. The analysis also shows that the amount of coal residue needing disposal is declining to zero as residue is increasingly used as a beneficial by-product, and that in Europe nearly all coal residue is used in this way. The empirical evidence does not therefore support the theory of a systemic problem.

The analysis documents uncertainty over the number of existing sites as well as the amount of waste, which may require disposal in the future but does not reflect this uncertainty in the final calculations.

Agency presents three options.

Options are very similar, differing largely on the extent to which they grandfather existing sources.

The analysis calculated total effectiveness for each option relative to the baseline, quantifying expected health benefits and monetizing those benefit.

The agency makes a significant effort to characterize the baseline. The analysis also adjusts for voluntary adoption of controls in the costs section but does not mention having made this adjustment in calculating benefits. The analysis also calculates the effect of expected increases in beneficial uses for coal residue (e.g. as a constituent in drywall or cement) that reduce the amount of coal residue that must be disposed of, but the assumptions rely on statistical inference without theoretical grounding. These limitations make it hard to extrapolate as far into the future as the analysis attempts. The analysis could also have been improved by mapping the trend toward increased state regulation.

Agency calculated incremental costs for each regulatory option. This included the potential stigma effect that classifying coal residue as hazardous material may have on beneficial uses (such as using coal ash in cement), which generate usage benefits and reduce the quantity of coal residue requiring safe disposal.

The analysis appears to identify most expenditures. Although each proposed option does not affect beneficial uses for coal residue which have private benefits and environmental benefits (e.g., in cement) the agency may ban uses which carry private benefits but not environmental benefits (e.g., as cheap fill in landscaping). The analysis could have been improved by including the cost of replacing coal residue for the latter set of uses.

Extensive analysis of the impact on the price of electricity (which is required) but the analysis concludes the effect is irrelevant because demand is inelastic and will therefore not affect electricity consumption. The analysis also considers the effect on price of fly ash for environmentally beneficial uses.

The quantity of residue produced is largely driven by the use of coal and by the adoption of environmental controls for air pollution. EPA does not consider how increasing the cost of disposal will affect adoption of these pollution control technologies. While the agency calculates elasticity of demand for electricity, the agency does not consider does not consider i) that long-term elasticity may be greater than short-term elasticity or, ii) if this regulation will induce a switch away from coal power.

The agency presents a range of costs for individual cost factors but fails to combine these to produce an overall range of estimates. Ultimately, the EPA produces a single point estimate rather than range.

The agency calculates costs and benefits for a number of options and presents these in a reasonably clear fashion. The agency reports several results with different assumptions for how the regulation will affect beneficial uses (either unchanged, reduced because of the stigma of branding coal residue a hazard, or increased because of higher costs of disposal). Which option maximizes benefits varies depending on this assumption. The analysis argues, based on sound economic reasoning, that these scenarios are not equally likely but that an increase in beneficial use is most likely. However, the analysis does not clearly show that any given option will maximize, but it could argue based on the analysis that any option it chooses maximizes benefits.

The agency clearly shows a calculation of outcomes and costs under 3 sets of assumptions for beneficial use. The analysis could have been improved by explicitly dividing costs by outcomes.

The analysis is fairly minimal here. EPA predicts that electric consumers will bear the whole cost.

Not possible to identify here specific individuals who will benefit from the rule. The agency predicts benefits will accrue to people living near coal sites, but discussion is minimal.