The Environmental Protection Agency (EPA) has proposed revisions to the effluent limitations guidelines and standards applying to the “Steam Electric Power Generating Point Source Category”(henceforth “steam electric industry”) under the Clean Water Act.1 The steam electric industry comprises approximately 1,000 plants generating electricity from fossil or nuclear fuel and using a steam/water system as a heat exchange. The regulations were last updated in 1982 and the EPA claims they no longer provide adequate control of wastewater discharges. The Clean Water Act requires the EPA to monitor and revise ELGs in terms of best available practices.2 The proposed ELGs lower wastewater discharges into surface waters and those going to publicly owned treatment works. The aim is to reduce metals and other pollutants discharged into surface waters. The EPA claims there will be reductions of between 0.47 billion to 2.62 billion pounds annually and reduced water use of 50–103 billion gallons per year, depending on which detailed option is selected. The EPA also claims that health benefits are associated with the reductions.3
It is important to realize that the ELGs are not enumerated as emissions limits, but rather are listings of best practice technologies for handling particular effluents (see table 1-2 in the Regulatory Impact Analysis for the proposals).4 The cost and other impacts analyzed in the rulemaking stem from modeling estimations of the impact of applying these technologies.
The proposed regulatory changes generally lower permitted wastewater discharges. For most existing sources of wastewater entering surface water, the same requirements are applied by each of the EPA’s four preferred regulatory alternatives, which differ in terms of the requirements applicable to existing discharges of pollutants found in two waste streams. The EPA estimates different levels of costs for the four alternatives. One criticism of starting with just four alternatives is that the alternatives being considered are, in fact, quite narrow. The major provisions of the alternatives for both existing sources and new sources of pollutants are summarized below, along with proposals for the control of new wastewater sources, for which there really are no alternative regulatory proposals. The EPA manages to count a total of eight alternatives for old and new sources by matching the proposals for new sources to the alternatives for existing sources. This is misleading because the proposals for new sources are just minor tweaks to the four alternatives for existing sources.
In proposing ELGs, the EPA’s principal focus is on the application of economically attainable best available technologies (BAT). These are the second most stringent standards possible (the EPA could instead use an average of best performances within an industry and then exercise considerable discretion in constructing the standards). The EPA decides exactly how it will combine factors such as age of plant, location, and non-water environmental impacts in identifying a BAT. The current approach does not identify any reason to impose standards that are available within the industry upon firms in the industry that are not using those standards. There is no fully developed benefit-cost analysis properly incorporating considerations of externalities. Rather, there is a hazy view of external costs that might exist, but are not accurately quantified.