OMB Weakens EPA Proposal to Limit Fish Kills from Power Plants
by Guest Blogger, 9/4/2002
Using its regulatory review authority, the White House Office of Management and Budget (OMB) substantially weakened an EPA proposal to protect the trillions of fish and aquatic organisms that are sucked up and killed each year by power plants that use rivers, estuaries, and oceans to cool their systems. As originally prepared, EPA’s proposed rule sought to require the 59 largest plants in the most ecologically sensitive areas to meet the performance achievable by a closed-cycle cooling system, which reduces fish kills by up to 98 percent by recirculating or reusing water, withdrawing only 2 percent to 28 percent of the water used by older systems. This would have honored the Clean Water Act’s requirement to set the standard based on the “best technology available” -- which clearly is a closed-cycle system, currently in use by 69 facilities. EPA sought less stringent requirements for the roughly 500 remaining plants subject to the rule. Yet citing costs, and ignoring the requirements of the law, OMB’s Office of Information and Regulatory Affairs (OIRA) -- which must give its consent to major rules -- stripped out the closed-cycle standard for the most harmful plants, according to EPA documentation required by Executive Order 12866. Instead, OIRA embraced alternative, less protective measures urged by energy companies -- including Cinergy, Edison Electric, and Public Service Electric & Gas (PSE&G), among others -- which EPA published as a proposed rule for public comment on April 9. Specifically, OIRA substantially lowered the performance standard to require a 60 percent reduction in entrainment (from a baseline of no controls) -- where fish are sucked into the plant, resulting in the vast majority of kills -- and an 80 percent reduction in impingement -- where fish are caught and stranded on a plant’s intake screen. Moreover, under further OIRA changes, facilities would be allowed to plead special circumstances with state permit authorities, and avoid meeting even this watered-down standard. “This weak mandate would allow existing plants to kill 20 to 1000 times more fish per megawatt than [plants with closed-cycle systems], and continue to decimate aquatic life in U.S. waterways indefinitely,” according to Riverkeeper Inc., which brought suit against EPA resulting in a 2000 consent decree requiring a standard. The reduction targets pushed by OIRA are based on the performance achievable by lesser technologies, including better intake screens and fish return systems. In addition, OIRA altered EPA’s original proposal to allow plants to forgo even these minimal upgrades by instead employing “restoration measures,” such as fish restocking programs and the restoration of wetlands and aquatic habitat “that will result in increases in fish and shellfish in the watershed.” Yet such measures have proven highly unreliable, and don’t actually replace the aquatic life killed -- there is no requirement to put back the same amount, kind, age, etc., of fish killed, and indeed, this would be impossible. It appears that OIRA’s changes were driven by cost-benefit analysis, and its desire to maximize “net benefits” -- costs minus monetized benefits. In writing other standards based on the “best technology available,” EPA has never employed such a cost-benefit test. Indeed, Congress gave EPA no instruction or authority to base its decision on cost-benefit analysis, as it clearly was more concerned with solving what it saw as a significant problem. Rather, since the 1970s, EPA has sought to ensure that the costs of the technology are not “wholly disproportionate” with the benefits, imposing an “impracticable and unbearable burden.” Clearly, a standard based on a closed-cycle cooling system passes such a test. In fact, EPA found “net benefits” of $65 million for a closed-cycle standard based on location and the amount of water withdrawn. Nor are the costs “impracticable and unbearable.” For an option similar to its original proposal, EPA estimates $595 million in compliance costs (and $848.86 million in benefits). This sounds expensive to be sure. But when spread out over more than 500 facilities in a multi-billion dollar industry, the costs don’t seem so scary. For instance, “Of the 131 unique parent entities that own the facilities subject to this rule, 108 entities would incur compliance costs of less than .5 percent of revenues,” according to EPA. Only three would incur costs greater than 3 percent of revenue. These costs would likely be passed onto customers, raising electric bills by about 28 cents a month where closed-cycle systems are installed, based on a recent study done in developing the rule. Nonetheless, OIRA sided with the less protective option that showed fewer benefits, but greater “net benefits” by EPA’s estimates. Yet as EPA points out, there are significant benefits it was unable to monetize, and thus are not captured by a net benefits calculation. For instance, EPA’s benefit estimate does not incorporate losses of invertebrate species, such as lobsters, crabs, and shrimp, as well as endangered or threatened species, nor does it consider the interrelationships of the species affected. Rather, EPA’s estimate is based exclusively on the commercial value of the fish that would have been caught in the absence of impingement or entrainment. This accounts for less than 20 percent of the total fish killed by cooling systems. In comments on the proposed rule, Frank Ackerman, a Tufts University economist, pointed out the absurdity of basing decision-making on these monetized estimates, as OIRA has insisted upon. “In the private sector, a balance sheet that weighs all of the company’s income against some of its expenditures does not provide a useful picture of the company’s true financial condition,” he wrote. “Likewise, in the public sector, a comparison of complete costs and incomplete benefits does not provide an accurate picture of the net benefits to society.” Accordingly, he attempted to incorporate missing benefits into EPA’s figures, first factoring in “non-use” ecological benefits based on available literature, and second by accounting for those fish not expected to be caught, based on the premise they are needed to perpetuate future commercially valuable fish. Incorporating these adjustments yields “net benefits” drastically different from those found by EPA. Indeed, of the six options considered by EPA, its preferred option -- the least protective among them -- scores the worst with Ackerman’s adjustments (where before it scored the best). Options incorporating a closed-cycle system all score better, and an option based on dry cooling systems (where no water is used) best of all. Unfortunately, it seems unlikely that OIRA will listen to these findings. Contrary to the Clean Water Act, its clear concern is cost to energy companies. Further details are available below under the following categories:
- The Problem
- EPA’s Original Proposal
- OMB Changes
- Cost Considerations Preeminent
- Undervaluing Benefits
- Improving EPA’s Estimates Changes the Conclusion
- Sets weak performance standards. As stated above, EPA originally sought to require upgrades at 59 of the largest, most harmful plants to meet the performance achievable by a closed-cycle cooling system, which EPA says can reduce fish kills by up to 98 percent. Indeed, the Clean Water Act’s Sec. 316(b) requires that “cooling water intake structures reflect the best technology available for minimizing adverse environmental impact,” which would seem to dictate a closed-cycle cooling system -- by any measure, the “best technology available.” Yet OIRA vetoed this requirement, and instead lowered the performance standard to require only a 60 percent reduction (from a baseline of no controls) for entrainment at any facility operating at more than 15 percent capacity or that impacts more than 5 percent of the aquatic life in the area -- with no entrainment standard for those with smaller impact -- and an 80 percent reduction from impingement at all plants. In comments on EPA’s proposed rule, Riverkeeper argues, “This weak mandate would allow existing plants to kill 20 to 1000 times more fish per megawatt than [plants with closed-cycle systems], and continue to decimate aquatic life in U.S. waterways indefinitely.” These standards would allow for less reliable measures, such as better intake screens and fish return systems. Nothing would have to be done about the amount of water withdrawn, which is the critical factor in entrainment.
- Allows plants to avoid compliance by pleading special circumstances. Under changes pushed by OIRA, a plant can avoid the rule’s performance standards if it can “demonstrate” that compliance costs are “significantly greater” than EPA’s projections, or they significantly exceed benefit projections. If such a demonstration is made, state permit writers (who are chiefly responsible for enforcing the Clean Water Act) are to make a “site-specific determination” to devise a plan based on less costly measures. EPA originally considered this approach, which was pushed by energy companies, but rejected it as too unruly and burdensome on states, a conclusion overruled by OIRA. “Since even environmentally sympathetic regulators lack the resources needed to rebut, or in most cases fully evaluate, these arguments, [EPA’s proposed rule] will allow applicants to continue to obstruct and delay needed technology upgrades,” Riverkeeper argues. Moreover, this formulation turns the Clean Water Act on its head. Rather than focus on minimizing the impact on the environment through a uniform, national standard, as the law calls for, EPA’s proposed rule is largely concerned with minimizing impacts on power plants. EPA’s original submission to OIRA allowed facilities to appeal for alternative, less stringent measures, but made a point to clearly state, “The burden is on the person requesting the alternative requirement to demonstrate that alternative requirements should be imposed.” Moreover, EPA did not present this as a primary way to achieve compliance, as the rule approved by OIRA now does. With OIRA’s change, EPA’s proposed rule appears to invite a return to past (and current) practice, in which, absent a national standard, regulation of cooling water intake structures is done on an ad hoc basis by state permit writers. Yet the whole reason EPA is doing a standard is that this approach hasn’t worked.
- Allows “restoration measures” in place of preventing fish kills. Pressed by OIRA, EPA’s proposed rule allows facilities to forgo upgrades that would prevent fish kills in the first place by instead employing “restoration measures,” such as fish restocking programs and the restoration of wetlands and aquatic habitat “that will result in increases in fish and shellfish in the watershed.” While restoring habitat destroyed by human activity is worthwhile, these measures don’t actually replace the aquatic life killed by power plants -- there is no requirement to put back the same amount, kind, age, etc., of fish killed, and indeed, this would be impossible. Moreover, where it’s been tried, restoration measures have proven extremely unreliable, subject to high failure rates. For instance, the Salem Nuclear Generating Station, which is owned by PSE&G, has used habitat restoration measures most prominently. Yet according to Riverkeeper, “PSE&G has been unable to demonstrate that its restoration effort for the fish kills at its Salem plant is providing any benefit whatsoever to the fish populations of the Delaware estuary.” In fact, EPA has found no evidence where restoration measures have successfully replaced fish killed by a power plant. Yet under the Clean Water Act, such measures must be successfully employed by at least one facility before being incorporated into an EPA standard. Again, clean water standards are to be based on the “best technology available,” and cannot be based on experimental technology, which absent any evidence, clearly applies to restoration measures. EPA’s original proposal permitted facilities to “supplement” technology and operational upgrades with restoration measures only if the plant could demonstrate environmental improvements “to a level commensurate with that which can be attained by a closed-cycle recirculating system.” In other words, EPA originally did not permit restoration measures as a replacement to upgrades, as reflected in OIRA’s changes, and restoration measures could only be considered in the context of meeting the highest possible performance standard.
- First, based on the available literature, he assumes that “non-use” benefits are two times greater than benefits derived from recreational or commercial uses, which EPA’s estimates are based on. “Environmental economics increasingly recognizes the importance of non-use values: people place a substantial value on the mere existence of animals, ecosystems, wildernesses, and unique natural locations, quite apart from any past, present, or planned future use of those aspects of nature,” Ackerman writes.
- Second, Ackerman attempts to value total fish mortality. As stated above, EPA does not account for more than 80 percent of the fish killed by impingement or entrainment, because they would otherwise not be caught for commercial use. “The nonlanded fraction of these species -- the ones that survive uncaught -- have an obvious ecological value,” Ackerman writes. “If nothing else, their reproduction is the source of the catch in future years; that is, they are essential to the creation of future recreational and commercial values... I have conservatively assumed that nonlanded fish have a value equal to .25 times the value of landed fish of the same species.”