EPA’S TOXIN RULE STILL HAS WASTEWATER STANDARDS IN THE COAL INDUSTRY’S CROSSHAIRSOctober 2, 2018
“That was my baby, and we saw it go down the toilet,” said Betsy Southerland, who was then the head of EPA’s Office of Water. “We did two briefings with Pruitt to try to salvage it, but he had made the decision.”
Weakening the wastewater standard represented the opening salvo in the Trump administration’s campaign to stem a nationwide wave of coal plant closures. Federal agencies under Trump have proposed weakening, suspending or eliminating 18 regulations governing coal mining or coal-burning power plants, according to a review of Harvard University’s deregulatory tracker.
But as the wastewater standards show, the deregulatory blitz has delivered a modest economic boost to the coal industry at considerable cost to public health and the environment.
Today, power companies have all but halted work to limit the discharges of dirty water. That has helped a small number of aging plants avoid paying for environmental upgrades that might prompt their retirement.
Those moves can affect local rivers and lakes. About 2.7 million Americans live within 3 miles of a coal plant that discharges pollutants into a public waterway, according to EPA estimates. The pollutants include lead, selenium and arsenic, which have been linked to cancer, cardiovascular disease and neurological disorders.
Flooding from Hurricane Florence, which led to a coal ash spill at a plant in North Carolina, illustrates the risk poised by the rollbacks. The wastewater standard would have limited the danger of such events in the future because it required power companies to adopt new ways for disposing their waste.
“From our perspective, there was a huge amount of environmental gain for a little amount of economic pain,” said Abel Russ, an attorney at the Environmental Integrity Project, referring to the Obama-era standards. “This was a huge opportunity to make a dent in the largest source of toxic industrial water pollution.”
Coal interests concede that the industry’s challenges extend beyond environmental regulation. Yet they say that Trump’s rollback provided tangible relief. It helps rebalance a regulatory scale that was left badly slanted after eight years of the Obama administration, they argue. The rules, they claim, were aimed at closing coal plants rather than protecting the environment.
And although they acknowledge that the rollbacks have not altered the downward trajectory of America’s coal industry, they say the moves deliver a critical boost at a time when wholesale electricity markets are not appropriately valuing the reliable power provided by coal plants.
“Without this administration’s commonsense approach to rewriting some of these environmental rules, that we think were burdensome, we would have seen even more coal retirements because they were extremely costly,” said Michelle Bloodworth, who leads the American Coalition for Clean Coal Electricity, a trade group representing power companies and mining firms.
In many respects, the Trump administration’s campaign is regulatory triage. With no plans for new coal plants on the horizon, the industry’s first priority is extending the life of existing plants. That’s a formidable challenge against the economic backdrop of low natural gas prices, increasing competition from renewables and weak power demand.
Roughly 5 percent of U.S. coal capacity is scheduled to retire this year, while Energy Department figures show that domestic coal consumption in the power sector slumped to a three-decade low in 2017 (Climatewire, March 15).
“They’re basically trying to stop the bleeding,” said Ari Peskoe, director of Harvard University’s Electricity Law Initiative. “But they still can’t stop their ultimate death.”
EPA isn’t acting alone. The Interior Department tossed out a moratorium on new federal coal leases, ditched a proposal to change the royalty payments paid by mining firms, and scrapped a rule aimed at keeping mine runoff out of streams and rivers. The Energy Department has sought to augment the rollbacks by exploring plans to directly subsidize coal facilities.
Still, EPA is at the heart of the Trump administration’s deregulatory program. The agency’s own analysis suggests the rollbacks come at a steep cost to public health and the environment.
EPA’s plan to replace an Obama-era rule to cap carbon emissions at power plants is projected to increase coal generation up to 2.9 percent by 2030. It would come at the cost of as many as 1,400 premature deaths, 48,000 lost work days and 140,000 school absences, according to agency estimates.
In Arkansas and Texas, the agency has rolled back rules requiring utilities to install or upgrade scrubbers that limit haze-forming pollutants linked to respiratory disease.
And in the case of wastewater standards, EPA under Obama estimated that its rule would have applied to 12 percent of the U.S. coal fleet, while helping to clean up 4,000 miles of river deemed unsafe to drink from.
Officially, the rule is still on the books. But it has been defanged. EPA postponed the first year of its compliance date until 2020, giving the agency time to decide whether to revise the standard. Environmentalists have challenged the postponement in court.
The vast majority of utilities are holding off on complying with the rule as envisioned by Obama regulators. Instead, they’re waiting for EPA to make a final judgment before deciding how to proceed.
Arsenic in unlined pits
E&E News contacted 10 power companies that fall short of meeting the 2015 wastewater standards. Only one, Duke Energy Corp., said it was proceeding with a compliance project to meet the goals of the Obama rule.
At one time, between 40 and 50 coal facilities were preparing to comply with the original rule, said James Peterson, CEO of Frontier Water Systems LLC, an engineering firm that was working with utilities on their compliance plans.
“That number is still there theoretically, but there are now only four moving forward,” he said.
Maryland stands as a notable exception to the trend. State regulators decided to uphold the initial Obama-era rule by using a provision that gives states more authority over power plant standards (E&E News PM, Aug. 14).
Officially known as the effluent limitation guidelines, the wastewater standards were in the coal industry’s crosshairs from the earliest days of the Trump administration.
When mining executive Bob Murray sent Energy Secretary Rick Perry an action plan for helping the coal industry in late March 2017, the effluent standards were the first listed for repeal.
Utility lobbyists had already been meeting with EPA by then to address weakening the rule. A trio of lobbyists met with Samantha Dravis, one of Pruitt’s top deputies, to discuss the standards on March 15, copies of her schedule show. The Utility Water Act Group, a nonprofit industry group, issued a formal petition on March 24, asking for the compliance dates to be suspended while the rule was reviewed. Pruitt granted the request on April 12.
“The Trump administration has sought to restore regulatory certainty to the American economy after the reckless overreach of the previous administration,” EPA spokesman Michael Abboud said in response to questions from E&E News about the rollbacks. “EPA isn’t interested in picking winners or losers and is simply executing the laws Congress passed.”
In an April 13, 2017, press release touting the rule’s suspension, Pruitt cited agency projections showing that the rule would cost power companies $480 million in annual compliance costs and $1.2 billion over its first five years.
The effluent guidelines address at least six sources of wastewater pollution from coal plants. Of those, two are the most controversial.
Some coal plants use water to rinse their scrubbers and flush bottom ash from their boilers. The water is discharged into unlined pits, which dump into nearby waterways when they overflow.
Under the Obama plan, companies would have been required to move to dry ash handling to dispose of bottom ash, a practice already employed across much of the industry. It would have also required utilities to install wastewater treatment to clean water used to rinse a plant’s scrubber.
The effluent standards were accompanied by the coal combustion residual regulation, which established protocols for ensuring the structural integrity of disposal pits. EPA has since weakened that rule, though it may face legal scrutiny after a federal court found that the original standard was not stringent enough.
Coal pits and hurricanes
Relaxing the effluent limits was intended to benefit plants like Santee Cooper’s Winyah Generating Station outside Georgetown, S.C., which today deposits toxic wastewater from its scrubber into unlined pits. EPA data show that the plant’s arsenic levels exceeded the standards set under the 2015 standard.
Santee Cooper, a state-owned utility, was among the most vocal in calling for repeal of the effluent standards. Stephen Fotis, a lawyer at Van Ness Feldman LLP, represented the power company at the meeting with Dravis, and he sought to arrange telephone conversations between EPA officials and Santee Cooper executives, according to documents obtained by the Sierra Club.
Santee Cooper would have needed to spend $90 million at Winyah and another large coal plant to comply with the standard, according to the industry petition filed with EPA. Fotis did not respond to a request for comment, but a Santee Cooper spokeswoman said the potential costs and short time frame for compliance made the rule a heavy lift.
“I think the thing we were concerned about was could we achieve what the rule required,” said Mollie Gore, the spokeswoman.
She noted that the power company was taking steps to close its coal ash ponds, part of an effort to comply with the rule on disposal pits. But work on the wastewater standards is stalled until EPA decides how to ultimately deal with the standards, Gore said.
Southerland, the former EPA official, rejected the argument that wastewater standards represented an expensive imposition on industry. The $1.2 billion figure cited by Pruitt represents a worst-case cost projection under a scenario where all power companies paid to comply with the rule immediately.
But if utilities paid for the upgrades upfront, their average annual compliance costs would be considerably lower than the $480 million figure Pruitt also touted in his statement. Citing the pair together, Southerland said, is like comparing apples and oranges.
“They cherry-picked what’s the worst case for if everyone pays the money upfront for short-term costs, and cherry-picked the worst case for average annual costs if everyone pays over a longer time,” she said.
A closer look at the agency’s analysis showed that only 5 percent of plants, or about 54 of the 1,080 facilities in operation at the time, would need to spend more than 1 percent of annual revenues to comply with the standards.
“Most industry wastewater has to have some treatment. They don’t put it in some unlined pond,” said Southerland, who left the agency shortly after the rule was suspended. But in the case of coal facilities, “that’s all they have to do. And it’s all they’ve had to do since the 1980s.”
In her mind, the deregulatory campaign is a recipe for a more costly disaster. She pointed to coal ash spills in North Carolina in 2014 and Tennessee in 2008 as examples of how much it can cost to clean up coal plant pollution. Cleaning up a coal slurry spill at the Tennessee Valley Authority’s Kingston Fossil Plant cost more than $1 billion.
In Duke Energy’s case, the company spent $20 million to clean up a spill on the Dan River near Eden, N.C. The utility is now spending $5 billion to close all its coal ash sites in the Carolinas.
Duke is dealing with another coal spill at its L.V. Sutton Power Station after heavy flooding during Hurricane Florence (Greenwire, Sept. 21). The effluent standards would not have prevented that spill, Southerland said. Even under the Obama administration’s timeline, utilities would have until 2023, at the latest, to comply with the rule.
But the standards would have lessened the risk of such events in the future because utilities would no longer use ponds to dispose of their waste, she said.